First Quantum Minerals Ltd. ("First Quantum" or the
"Company") (TSX:FM) today announced that it has
entered into a binding agreement to sell a 30% equity interest in
the Ravensthorpe Nickel Operation (“Ravensthorpe”) in Western
Australia for cash consideration of $240 million to POSCO, one of
the world’s largest steel producers (the “Transaction”). First
Quantum will retain a 70% interest in Ravensthorpe and continue to
be the operator. The proceeds of the transaction will be used to
reduce the Company’s debt. In addition to the Transaction, POSCO
and First Quantum have also agreed to evaluate a strategic
partnership to produce battery precursor materials from production
at Ravensthorpe.
TRANSACTION SUMMARY
Under the terms of the Transaction, POSCO will
acquire a 30% equity interest in Ravensthorpe for cash
consideration of $240 million. POSCO will be provided with a
long-term offtake agreement for 7,500 tonnes of nickel in mixed
nickel-cobalt hydroxide precipitate (“MHP”) per year produced at
Ravensthorpe, beginning in 2024. The balance of Ravensthorpe’s
production will continue to be marketed by First Quantum. The
Transaction is subject to certain conditions including approval by
the Australian Foreign Investment Review Board (“FIRB”). The
transaction is expected to close sometime in the third quarter of
2021. The proceeds of the Transaction will be applied to the
outstanding amount on the Company’s revolving credit facility,
continuing the Company’s debt reduction.
STRATEGIC PARTNERSHIP
POSCO is South Korea’s largest, and the world’s
fourth largest, steel producer. POSCO is also a leading integrated
producer of cathode and anode materials for the electric vehicle
(“EV”) battery sector and is undertaking an expansion of its
secondary battery material business for which Ravensthorpe will
provide a portion of the feed.
As part of the Transaction, First Quantum and
POSCO have also entered into a Memorandum of Understanding (“MoU”)
to explore a partnership to produce battery cathode precursor
materials, likely in the form of nickel sulphate, by utilizing the
MHP from Ravensthorpe. First Quantum and POSCO will work together
over the coming months to advance this potential partnership.
“We are pleased to welcome POSCO as our new
long-term strategic partner in Ravensthorpe,” Philip Pascall,
Chairman and CEO said. “Our respective organizations have
complementary skillsets which will allow us to maximize the
strategic value of Ravensthorpe as a key long-term supplier of
nickel to the EV battery sector. We look forward to working closely
with POSCO at Ravensthorpe and exploring options to broaden our
relationship.”
ABOUT RAVENSTHORPE
Ravensthorpe is a large-scale, open pit nickel
and cobalt operation located in Western Australia, 150km west of
Esperance. Ravensthorpe produces a high quality MHP which is a
sought-after feedstock for the production of EV battery cathode
materials. Following a successful restart of operations in the
first quarter of 2020, the mine is now transitioning to the
Shoemaker Levy deposit which will provide stable feed to the plant
for the next twenty years. Completion of construction and
commissioning works at Shoemaker Levy, including a 10km conveyor,
is expected this quarter.
Ravensthorpe is strategically-positioned as a
clean, sustainable source of nickel for the EV battery value chain
with industry leading ESG credentials and a small carbon emissions
footprint.
These features are expected to become
increasingly important to brand name manufacturers of EVs and
include:
- Unique integrated design, including
power generation using waste heat from the onsite acid plant,
allowing Ravensthorpe to be self-sufficient with respect to power
and water;
- Adherence to best in class water
and discharge management with a closed water balance and zero
discharge;
- Tailings storage facilities
designed and built in accordance with the highest international
standards;
- Ravensthorpe provides a supply of
cobalt from an established mining jurisdiction with stringent ESG
regulations;
- The ore from the newly accessed
Shoemaker Levy deposit will be transported by overland conveyor to
Ravensthorpe’s existing processing facility, further reducing
reliance on the diesel haul truck fleet; and
- Potential to utilize renewable
energy technologies within the current operational footprint.
OUR NICKEL BUSINESS
First Quantum has significant nickel resources
which complement its world-class copper operations, underpinned by
Ravensthorpe and the Enterprise Nickel Project in Zambia.
Enterprise is a 100% owned, largely-constructed, high grade nickel
sulphide project located 15km from the Company’s Sentinel Mine. The
4 million tonne per year process plant for Enterprise was completed
in 2016 and was temporarily used to process copper ore during the
commissioning of Sentinel. Enterprise is expected to produce an
average of 28,000 tonnes of nickel concentrate per year over the
estimated 11-year mine life. It is anticipated that Enterprise’s
high grade concentrate will be suitable to feed into the battery
metals supply chain. Dewatering and preliminary pre-strip works
will commence at Enterprise in 2021 in anticipation of the Company
making a final decision to proceed with the project later this
year.
ADVISORS
Standard Chartered Bank served as financial
advisor and MinterEllison served as legal advisor to the Company
for the purpose of the Transaction.
For further information, visit our website at
www.first-quantum.com or contact:Lisa Doddridge, Director, Investor
Relations(416) 361-3400 Toll-free: 1 (888) 688-6577E-Mail:
info@fqml.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATIONCertain statements and information herein,
including all statements that are not historical facts, contain
forward-looking statements and forward-looking information within
the meaning of applicable securities laws. The forward-looking
statements include estimates, forecasts and statements as to the
Company’s expectations of production and sales volumes, and
expected timing of completion of project development at Enterprise
and post-completion construction activity at Cobre Panama and are
subject to the impact of ore grades on future production, the
potential of production disruptions, potential production,
operational, labour or marketing disruptions as a result of the
COVID-19 global pandemic (including but not limited to the
temporary suspension of labour activities at Cobre Panama
implemented in April 2020), capital expenditure and mine production
costs, the outcome of mine permitting, other required permitting,
the outcome of legal proceedings which involve the Company,
information with respect to the future price of copper, gold,
nickel, silver, iron, cobalt, pyrite, zinc and sulphuric acid,
estimated mineral reserves and mineral resources, First Quantum’s
exploration and development program, estimated future expenses,
exploration and development capital requirements, the Company’s
hedging policy, and goals and strategies. Often, but not always,
forward-looking statements or information can be identified by the
use of words such as “plans”, “expects” or “does not expect”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “anticipates” or “does not anticipate” or “believes” or
variations of such words and phrases or statements that certain
actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved.
With respect to forward-looking statements and
information contained herein, the Company has made numerous
assumptions including among other things, assumptions about
continuing production at all operating facilities, the price of
copper, gold, nickel, silver, iron, cobalt, pyrite, zinc and
sulphuric acid, anticipated costs and expenditures and the ability
to achieve the Company’s goals. Forward-looking statements and
information by their nature are based on assumptions and involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements, or industry
results, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements or information. These factors include,
but are not limited to, future production volumes and costs, the
temporary or permanent closure of uneconomic operations, costs for
inputs such as oil, power and sulphur, political stability in
Zambia, Peru, Mauritania, Finland, Spain, Turkey, Panama, Argentina
and Australia, adverse weather conditions in Zambia, Finland,
Spain, Turkey, Mauritania, Australia and Panama, labour
disruptions, potential social and environmental challenges
(including the impact of climate change), power supply, mechanical
failures, water supply, procurement and delivery of parts and
supplies to the operations, the production of off-spec material and
events generally impacting global economic, political and social
stability.
See the Company’s Annual Information Form for
additional information on risks, uncertainties and other factors
relating to the forward-looking statements and information.
Although the Company has attempted to identify factors that would
cause actual actions, events or results to differ materially from
those disclosed in the forward-looking statements or information,
there may be other factors that cause actual results, performances,
achievements or events not to be anticipated, estimated or
intended. Also, many of these factors are beyond First Quantum’s
control. Accordingly, readers should not place undue reliance on
forward-looking statements or information. The Company undertakes
no obligation to reissue or update forward-looking statements or
information as a result of new information or events after the date
hereof except as may be required by law. All forward-looking
statements and information made herein are qualified by this
cautionary statement.
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