Future Battery Minerals Updates Nepean Nickel Project Sale Agreement
FUTURE BATTERY MINERALS LIMITED (FBM) Share Update September 2024 Tuesday 17th
Future Battery Minerals Revises Nepean Nickel Project Sale Agreement
Future Battery Minerals Limited (ASX: FBM) has announced a revision in the deferred payment terms for the sale of its Nepean Nickel Project tenements to Rocktivity Nepean Pty Ltd.
Instant Summary:
- Rocktivity was unable to meet its deferred payment obligation of $2,435,000.
- Deferred consideration revised from $7.2 million to approximately $1.04 million.
- Final payment of $773,656 due on or before 25 September 2024.
- Rocktivity to grant a 1% net smelter royalty on all minerals and metals produced.
- Additional $500,000 contingent payment based on specific milestones.
Background and Revision Details
Future Battery Minerals Limited (FBM) has been actively managing the sale of its Nepean Nickel Project tenements to Rocktivity Nepean Pty Ltd (Rocktivity). Initially, Rocktivity was required to make a deferred payment of $2,435,000 by 13 September 2024. However, due to current market conditions, Rocktivity was unable to meet this obligation.
After discussions, FBM agreed to revise the deferred consideration from $7.2 million to approximately $1.04 million. This includes a payment of $265,000 received on 18 June 2024 and a final payment of $773,656 due on or before 25 September 2024. This revision is in addition to the $2.8 million in cash consideration previously received under the Tenement Sale Agreement.
Additional Terms
As part of the revised agreement, Rocktivity will grant Eastern Coolgardie, a wholly-owned subsidiary of FBM, a 1% net smelter royalty on all minerals and metals produced and sold from the Nepean Nickel Project tenements. Additionally, Rocktivity has agreed to a contingent payment of $500,000, subject to the satisfaction of certain milestones. These milestones include the sale of the Nepean Nickel Project tenements for more than $5,000,000 or the delineation of a mineral resource of more than 300,000 ounces of gold.
Company Statement
FBM's Managing Director and CEO, Nick Rathjen, expressed satisfaction with the revised agreement, stating, 'We are pleased to have reached a positive and sensible commercial compromise with Rocktivity. This outcome allows us to conclude the successful disposal of the Nepean asset in a particularly depressed nickel market environment. The final payment from Rocktivity will further strengthen our cash position, reinforcing our commitment to advancing our flagship projects, the Kangaroo Hills and Miriam Lithium Projects.'
Implications for Shareholders
Shareholders should note that if the final payment is not made by 25 September 2024, the revised arrangements will cease to apply, and Rocktivity will be liable for the total consideration payable under the original Tenement Sale Agreement. If the payment is made on time, there will be no further cash payments from Rocktivity, except for the net smelter royalty and the contingent payment upon meeting the specified milestones.
The revision of the payment terms reflects the challenging market conditions for nickel. While the reduced deferred consideration may seem like a setback, the additional net smelter royalty and contingent payment offer potential long-term benefits. This strategic move allows FBM to focus on its key projects while maintaining a stake in the future success of the Nepean Nickel Project.
Investor Reaction:
Analysts are likely to view this agreement as a pragmatic approach to navigating current market challenges. The focus on advancing flagship projects like the Kangaroo Hills and Miriam Lithium Projects could bolster investor confidence in FBM's strategic direction.
Conclusion:
Investors should monitor the final payment due on 25 September 2024 and assess the potential long-term impacts of the revised agreement. FBM's ability to adapt to market conditions and focus on key projects will be crucial in maintaining investor confidence.