QPM Energy And Incitec Pivot Execute Funding And Gas Sales Agreements

Queensland Pacific Metals Ltd (“QPM”) and Incitec Pivot Ltd (“IPL”) have finalised commercial agreements (“Agreements”) to support the completion of the Moranbah Project acquisition (“Transaction”) and to fast track gas production growth.

• Dyno Nobel, a wholly owned subsidiary of IPL, will provide an initial development funding facility of up to $80m, with an ability to increase this to $120m, if required. This facility will be used to accelerate development of the Moranbah Project by funding the capital costs of new infill production wells.
• QPM Energy (“QPME”) and Dyno Nobel have entered into a new Gas Supply Agreement (“GSA”), commencing in April 2026 upon the expiry of the existing GSA.
• IPL to provide Corporate Guarantees to cover fixed charge obligations under key Moranbah Project agreements.
• Completion of the Agreements is subject to a number of customary conditions for a transaction of this nature.

As foreshadowed in its announcement of 5 April 2023, Queensland Pacific Metals Limited (ASX:QPM) has now finalised negotiations with IPL regarding a package of financing support in connection with the Moranbah Project and entry into a new long term gas supply agreement, details of which are set out below.

Background

IPL’s wholly owned subsidiary Dyno Nobel, owns the Dyno Nobel Ammonium Nitrate plant located in Moranbah. Dyno Nobel currently purchases 7PJ gas per annum from the Project, under an existing gas supply agreement (GSA) expiring in March 2026. This GSA will be novated to QPME on completion of the Transaction.

Long term gas supply from the Project is a critical element of both QPM’s TECH Project and Dyno Nobel’s Moranbah operations. The two parties have now formalised strategic arrangements that secure this economical and long term gas supply following the execution of several commercial agreements:

• A Development Funding Facility under which Dyno Nobel will provide funding to QPME for the drilling of new infill wells to underpin and expand gas production from the Project;
• A new GSA between QPME and Dyno Nobel; and
• A Corporate Guarantee under which IPL will issue guarantees to enable consent for the novation of key commercial contracts for the Moranbah Project to QPME;

Development Funding Facility (“DFF”)

Current gas production at the Moranbah Project is approximately 10PJ per annum. Following completion of the Transaction, QPM is targeting an increase in gas production to 12-13PJ per annum within six months. This would allow higher quantities of gas to be sent to Townsville Power Station (“TPS”), resulting in increased revenue from electricity generation.

In order to fund the capital costs associated with increasing gas production, Dyno Nobel will provide a facility with an initial aggregate limit of $80m with an ability to increase this to $120m, if required. This facility will be repaid by the delivery of gas over the term of the new GSA (summarised below)

The DFF will fund the drilling of 16 new wells over a 2 year period. QPME intends to commence development works as soon as possible following completion of the Transaction.

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