FPX Nickel Corp. [TSXV-FPX] has announced a $14.4 million strategic equity investment from Sumitomo Metal Mining Canada Ltd. (SMM), a unit of Sumitomo Metal Mining Co. Ltd. of Japan. Proceeds are earmarked for FPX’s Baptiste nickel deposit in central British Columbia.
Under the terms of a private placement deal, FPX will issue 30.1 million common shares to Sumitomo at a price of 48 cents per share, a move that will leave Sumitomo with a 9.9% stake in FPX.
“This strategic investment by Sumitomo Metal Mining represents another significant technical validation of FPX’s Baptiste Nickel Project and underscores our view that Baptiste is a class-leading asset,’’ said FPX President and CEO Martin Turenne. “SMM is one of the world’s largest nickel producers with a peer-leading expertise in mining, processing and refining products in the stainless steel and electric vehicle battery supply chains,’’ he said. “FPX is pleased to be one of SMM’s preferred partners as they look to expand their nickel production profile and diversify their supply chain to allied partners in North America.’’
FPX shares eased 1.5% or $0.005 to 32 cents on volume of 134,650. The shares are currently trading in a 52-week range of 61 cents and 25 cents.
Baptiste is located in the Decar Nickel District, a greenfield discovery of nickel mineralization in the form of a naturally-occurring nickel-iron alloy called awaruite. Covering 245 square kilometres, it represents a promising target for bulk tonnage, open pit mining, the company has said.
Back in April, 2023, FPX delivered an updated resource estimate for its Baptiste deposit, which has the potential to produce an average of 59,100 tonnes of nickel annually over a projected lifespan of 29 years, the company has said.
The indicated resource at Baptiste is pegged at 1.8 billion tonnes at 0.129% nickel, 0.0035% cobalt and 2.40% iron (2.435 million tonnes of contained nickel). On top of that is an inferred resource of 339 million tonnes at 0.131% nickel, 0.0037% cobalt and 2.55% iron (444,000 tonnes of contained nickel).
“We expect this investment will establish a strong relationship between SMM and FPX, with the aim to contribute to SMM’s long term production target of 150,000 tonnes of nickel per year,’’ said SMM Executive Officer and General Manager Eiichi Fukuda.
“We have a long business history in Canada with a variety of partners, and we are excited to be working with FPX,’’ he said.
The private placement is expected to close on January 22, 2024 and is subject to certain customary conditions, including acceptance by the TSX Venture Exchange, as well as execution of an investor rights agreement and ROSO (right of second offer) agreement.
FPX will grant the right of a second offer that provides Sumitomo the right, so long as it continues to hold all of the private placement shares, to negotiate, at market terms, one or more offtake agreements with FPX for an aggregate of 60,000 tonnes of nickel from the project. The timing and annual volume of any offtake is to be negotiated at a later date. Sumitomo’s offtake right will rank secondary to the offtake right previously granted by FPX to Outokumpu Oy.
