Silkroad Nickel teams up with Ganfeng Lithium to tap growing electric vehicle industry

CATALIST-listed nickel-ore producer Silkroad Nickel has entered into an exclusive term sheet with lithium-compound producer Ganfeng Lithium to tap the growing electric vehicle (EV) industry.

In a bourse filing on Monday, the firm said it will stand to benefit from the booming EV trends around the region by building a strong and synergistic partnership with Ganfeng Lithium.

Silkroad Nickel added that it will ensure the availability of raw materials through its mine's laterite ore, which contains both nickel and cobalt, two key metal components used in lithium-ion battery production. Ganfeng Lithium in turn, will be able to access and participate in the South East Asian market with confidence, and expand its growing business in the EV industry together with Silkroad Nickel.

Under the exclusive investment partnership, Ganfeng Lithium will invest a three-year convertible bond of a principal amount of US$15 million, which has an interest rate of 7 per cent per annum.

Ganfeng Lithium, at its sole option (subject to both parties obtaining legal advice), has the right to convert the entire principal amount of the convertible bond six months after the issue of the convertible bond into new shares, amounting to a 25 per cent equity interest in either Silkroad Nickel's wholly owned subsidiaries FE Resources (FER) or PT Anugrah (PT ATS) in Singapore and Indonesia respectively.

Ganfeng Lithium also has a call option to subscribe for additional new shares in either FER or PT ATS upon conversion of the convertible bond; however, the aggregate equity interest in FER or PT ATS that Ganfeng Lithium acquires shall not exceed 50 per cent, subject to a final agreed valuation.

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In addition, Ganfeng Lithium will enter into 10-year nickel-ore offtake contract with PT ATS for the supply, at market price, of at least a million tonnes per annum with an option to increase the volume by an additional 0.5 million tonnes per annum and extend the offtake contract for a further five years.

Silkroad Nickel in its bourse filing: "The group foresees many mutual benefits and synergistic opportunities from this partnership, and views it as a step forward in its vision towards becoming a vertically-integrated key nickel and cobalt supplier and processor to the EV industry."

Hong Kah Ing, executive director and chief executive officer of Silkroad Nickel said: "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."

Shares of Silkroad Nickel ended Monday flat at S$0.43.