Robert Friedland and Jiang Zhaobai, Co-Chairmen of Clean TeQ Holdings, and Sam Riggall, Chief Executive Officer, have announced the signing of a Heads of Agreement with Metallurgical Corporation of China Ltd (MCC), confirming the selection of MCC as a key project delivery partner for the Clean TeQ Sunrise nickel/cobalt/
“The selection of an EPC delivery model and the appointment of MCC as a project delivery partner is an important milestone, which is expected to deliver significant benefits, including: leveraging MCC’s strong experience in the design, construction and operation of lateritic nickel/cobalt mining, processing and refining operations; decreasing the financial and project execution risk to Clean TeQ via the transfer of risk via the EPC contracting arrangements; providing opportunities for low cost procurement and pre-assembly through MCC’s extensive network of suppliers; enhancing the debt carrying capacity of the project and potentially opening up opportunities for Chinese capital support for Clean TeQ Sunrise.”
Having signed a Heads of Agreement, Clean TeQ and MCC will now move to finalise negotiations on the Front-End-Engineering and Design (FEED) contract, which is expected to be concluded in
coming weeks. Under the FEED contract, MCC and one of its subsidiaries, China ENFI Engineering Corporation, will work with Clean TeQ’s owners’ team to manage project scope, critical design criteria and equipment and materials selection during this phase. This approach is expected to help ensure good alignment between activities in China and Australia and strong collaboration between the parties as the optimal plant design and selection of critical materials and equipment is determined.
Once the FEED contract is agreed, Clean TeQ and MCC will work toward negotiating a detailed fixed-price EPC contract for detailed engineering and construction of the process plant infrastructure, based on the summary terms and conditions contained in the Heads of Agreement. Several critical commercial aspects of the EPC contract have already been agreed as part of the Heads of Agreement negotiation, with a final detailed and binding EPC contract containing a lump-sum price expected to be agreed during the first halof 2019. To support its on-site activities, MCC is planning to engage experienced, tier-one Australian construction contractors during the construction phase.
The indicative EPC proposal received from MCC includes a capital cost estimate that is not materially different from the capital estimate contained in the Definitive Feasibility Study (announced on 25 June 2018). Accordingly, there is no material impact on the outcomes of the Definitive Feasibility Study or the National Instrument 43-101 Technical Report titled, “Sunrise Nickel Cobalt Project, New South Wales, Australia NI 43-101 Technical Report”, with an effective date of 25 June 2018 (the NI-43-101 Report announced on 7 August 2018).
A majority of the FEED work will be run from Clean TeQ’s Perth office, resourced with an integrated owner’s team of engineers and project managers. As the project progresses to detailed engineering, work will migrate to engineering offices located in China. A handover of engineering activities and mobilisation of the team has commenced. This handover is expected to result in a small delay to the overall project schedule of around three months, with formal construction expected to commence by mid-2019. In parallel with FEED activities, a China-based Clean TeQ owner’s team, focused on engineering oversight, procurement, quality control and assurance and pre-assembly activities will be established in Beijing.
Clean TeQ intends to separately appoint an Australia-based contractor to manage design and construction of the non-process plant (ie non-MCC scope) infrastructure required for the project.
Non-process plant infrastructure will include the accommodation facilities, water pipeline, power line, tailings facility, water storage pond and ancillary support infrastructure. A number of parties
are being assessed by Clean TeQ for this role, with a formal appointment to be announced in due course.
