Korea’s SK Innovation has agreed to take 100% of nickel and cobalt produced from the project, comprising 12,000 tonnes of cobalt sulphate and 60,000t of nickel sulphate per year.

The initial term of the agreement is seven years, with an option to extend for a further six years.

The two parties have also signed an option agreement allowing SK to acquire up to 19.9% of Australian Mines.

If exercised, SK would invest A$80.2 million in Australian Mines via the purchase of 669 million shares at 12c per share, a premium to the last closing price of 9.1c.

SK will also help Australian Mines with the optimisation of the bankable feasibility study, which is due for release before the end of June.

The company was previously planning to have the study out by the end of April, but the scope will now be altered to align with SK’s product requirements.

The prefeasibility study released in March 2017 envisaged annual production of 3010t of cobalt sulphate and 24,240t of nickel sulphate, as well as 77t of scandium oxide, over at least 20 years.

Australian Mines managing director Benjamin Bell described the offtake agreement as a “landmark occasion” for the company and said the project was the most advanced of its type in Australia.

“Australian Mines is delighted to be partnering with a leading electric vehicle battery manufacturer in SK Innovation to develop the Sconi project – a company that has a solid track record in developing and operating multibillion-dollar resource projects around the world, and we are looking forward to a long relationship with them,” he said.

“Now that Australian Mines has secured an offtake partner for the Sconi project, we are the only company that is in a position to align the technical production and processing parameters of the bankable feasibility study with the demands of its end-user partner, who will also be our key strategic partner in the construction and financing of the overall project.”

 

Bell said the company was currently in separate talks with potential scandium offtake partners.