FPX Nickel [TSXV: FPX] has entered into a Global Generative Exploration Alliance with the Japan Organisation for Metals and Energy Security (JOGMEC).
The purpose of the Generative Alliance, which will be solely funded by JOGMEC, is to carry out worldwide mineral exploration activities for the identification and acquisition of high-quality properties which are prospective for the same style of awaruite nickel mineralization as contained at the FPX Nickel flagship Baptiste Nickel Project in central British Columbia.
The deal comes as both importers and end users of nickel are becoming more focused on securing future access to supplies, in anticipation of more demand from the batteries sector.
FPX’s flagship Baptiste Nickel Project is a greenfield discovery of nickel mineralisation in the form of awaruite, a naturally occurring nickel-iron mineral (Ni3Fe).
The Generative Alliance will benefit from the extensive global database developed by FPX during the 2010-14 period, when the Company performed reconnaissance exploration activities for awaruite nickel targets in over a dozen countries across four continents.
JOGMEC is a highly-regarded exploration group whose mission is to secure a stable and affordable supply of energy and mineral resources to strengthen Japan’s industrial base. Its interest in forming a Generative Alliance represents a significant endorsement of the technical and economic viability of awaruite nickel deposits, which represent a disruptive new source of low-carbon nickel supply for the electric vehicle battery supply chain.
The Generative Alliance has the potential to expose FPX’s shareholders to numerous exploration discoveries on a global scale, with the costs of the alliance to be borne entirely by JOGMEC over the next two years.
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Why FPX Nickel has been tapped for this deal
Through several stages of bench- and pilot-scale metallurgical testwork and technical studies, FPX has demonstrated that awaruite mineralisation can be economically recovered through conventional magnetic separation and flotation unit operations to produce a clean, high-grade nickel concentrate.
Due to the high nickel grade and general lack of sulphur and deleterious elements, awaruite concentrates can either bypass smelting for direct sale to the stainless steel industry or utilize a relatively simple refinery flowsheet to feed the burgeoning electric vehicle battery supply chain.
In parallel with exploration activities at Baptiste from 2010 to 2014, FPX Nickel performed reconnaissance exploration activities for awaruite nickel targets in over a dozen countries across four continents. The work performed during this period generated an extensive global database of prospective targets for awaruite mineralisation in several jurisdictions, providing a strong foundation for continued exploration activities to identify high-quality targets modelled on the Baptiste template.
Terms of the Generative Alliance
During the first phase of the Generative Alliance, JOGMEC will fund at 100% up to $650,000 per year for a minimum of two years. Each of the parties will appoint two representatives to a management committee to oversee exploration activities, and FPX will act as the operator over the initial two-year term, earning a fee equal to 10% of the General Alliance expenditures.
The parties said that one or more specific exploration targets identified by the Generative Alliance may be advanced to a second phase to be further developed as a separate designated project.
Each project will have its own work program and budget with the objective, including through drilling, to test and further develop the identified targets. For each project, JOGMEC and FPX will fund 60% and 40%, respectively, for approved work programs.
Concurrently with the formation of the Generative Alliance, the parties have entered into an earn-in agreement which provides JOGMEC the option to earn a beneficial interest in FPX’s Klow Project in central British Columbia.
