THE BOURSE WHISPERER: Metallica Minerals (ASX:MLM) has entered into a binding Heads of Agreement (HOA) with Bloom Energy for the sale of scandium oxide from the company’s wholly-owned SCONI Tri-Metals project inland of Townsville in North Queensland.
Metallica said it would be working with Bloom Energy to ensure the SCONI project is designed and developed in a manner that will allow Metallica to supply Bloom Energy with its scandium oxide requirements for its future growth plans.
Bloom Energy manufactures unique on-site power generation systems called Energy Servers, which utilise an innovative new fuel cell technology that Metallica said has roots to NASA’s Mars program.
The Energy Servers are claimed to be among the most efficient energy generators on the planet, providing for significantly reduced electricity costs and dramatically lower greenhouse gas emissions.
Metallica Minerals MD Andrew Gillies and Bloom Energy CEO Gavin
Becker at site in Sunnyvale, California in front of continuously
operating Scandium Oxide Fuel Cells (September 2012). Source: Company
“We are delighted to welcome Bloom Energy as our first base load customer to acquire a substantial portion of our planned future scandium production from the SCONI project,” Metallica Minerals managing director Andrew Gillies said in the company’s announcement to the Australian Securities Exchange.
“The agreement with Bloom Energy calls for the sale of scandium oxide at a price and quantum which underpins the commercial rationale to develop the SCONI project.
“With Bloom Energy as a baseload customer, we can proceed with confidence throughout our Feasibility Studies and accelerate towards project development.”
Under the terms of the HOA, Metallica will supply Bloom Energy with up to 30,000 kolgrams of scandium oxide per annum (based on production output and Bloom Energy’s global usage) with provision to increase supply up to 60,000 kilograms scandium oxide per annum (at Bloom’s election) over the term of the HOA under terms that remain commercial in confidence.
The HOA is conditional upon Metallica meeting certain SCONI project development timing milestones.
Metallica said it believes the project development milestones to be reasonable and achievable and are broadly in line with its previously published development schedule with some allowance for delays.
The project is expected to be completed in 2016.
Whilst all the key commercial terms are binding and commercial in confidence, Metallica and Bloom Energy have agreed to replace the HOA with a more detailed Offtake Agreement within 120 days, however, if this is not achieved, the HOA will continue to govern the parties’ relationship.