First Quantum Sells Nickel Mine Stake to Posco
First Quantum Minerals Ltd has entered into a binding agreement to sell a 30% equity interest in the Ravensthorpe Nickel Operation in Western Australia for cash consideration of $240 million to POSCO. 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.
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 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. 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.
As part of the Transaction, First Quantum and POSCO have also entered into a Memorandum of Understanding 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.
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.