Catalist-listed Silkroad Nickel, an established producer of laterite nickel ore based in Morowali, Central Sulawesi, Indonesia, has entered into an exclusive term sheet on Jan 15 with Ganfeng Lithium.
Ganfeng Lithium is one of the world’s largest lithium compound producers and its shares are dual-listed on the Shenzhen Stock Exchange and Hong Kong Stock Exchange.
The term sheet provides for the offtake of future raw materials, the funding for upstream and downstream expansion, and potential strategic partnership initiatives in the electric vehicle (EV) battery space between both companies.
Under the agreement, Ganfeng Lithium will invest in Silkroad Nickel a three-year convertible bond with a principal amount of US$15 million ($19.9 million) which bears interest at a rate of 7% per annum.
Ganfeng Lithium has the right to convert the entire principal amount into new shares amounting to a 25% stake in either FE Resources, Silkroad Nickel’s wholly-owned subsidiary in Singapore, or its Indonesian subsidiary PT Anugrah Tambang Sejahtera.
Ganfeng Lithium has a call option to subscribe for additional new shares in either subsidiary upon conversion of the bond.
The aggregate equity interest in FE Resources or PT Anugrah that Ganfeng acquires through the conversion of the convertible bond shall not exceed 50%, and Ganfeng will enter into a 10-year ore offtake contract with PT Anugrah for the supply of at least one million tonnes per annum.
Indonesia, as one of the world’s largest producers of nickel ore, is on an EV growth trajectory from nickel ore producer to EV producer in the next five years.
According to Silkroad Nickel, the company stands to benefit and capitalise on booming EV trends around the region through the partnership with Ganfeng Lithium.
“We are pleased to announce and embark on this exclusive partnership with Ganfeng Lithium, a world leader in lithium-ion batteries and electric vehicles. As the demand for EV accelerates across the world, Indonesia has emerged as a key player in the global EV ecosystem and we are excited to be part of this exciting supply chain,” says Hong Kah Ing, executive director and CEO of Silkroad Nickel.
“We are particularly pleased to partner with such an established and experienced player like Ganfeng Lithium, with operations across the world and best-in-class technology and experience, and we look forward to an exciting new chapter of growth,” Hong adds.
Shares in Silkroad Nickel closed flat at 43 cents on Jan 18.
