QEM sells QLD renewables project to Enel & INPEX

ASX News, Materials
ASX:QEM      MCAP $19.68M
15 January 2024 11:42 (AEST)

Wind turbines and solar panels. (Source: file)

Microcap QEM (ASX:QEM) has announced the sale of its QLD-based proposed renewables acreage to international renewables giant Enel.

The company’s Julia Creek Renewables Project (JCRP) has been in the pipeline for sale since last year, as the company ultimately looks for a collaborator to develop the play.

The company intends the JCRP to be built out so that it can renewably power a second project, QEM’s flagship – a vanadium ore and shale oil play in QLD.

To that end, QEM has inked a binding purchase agreement with EGPA – an entity owned by Enel Green Power, and, Japanese gas giant INPEX Australia.

Whole state to benefit

The deal, QEM wrote this morning, offers the “potential” for future royalty payments to QEM.

“In addition to the direct benefits for QEM in having access to renewable power for our vanadium project, the whole region will enjoy significant direct and indirect benefits from this scale of development,” QEM chief Gavin Loyden said.

Proponents expect the JCRP to become intertwined with the QLD government’s existing ‘CopperString 2.0’ project, a renewables transmission line project being built out in Australia’s other mining state.

The project is worth $5 billion, according to QEM, and ultimately is set to facilitate the green development of critical minerals projects in North Queensland.

Julia Creek will be a major ‘node’ for the project.

What is QEM getting in return?

QEM will net A$3 million for the project all in all, so long as key parameters are satisfied.

Those parameters largely deal with the project being all it was advertised to be – with equipment fully function and able to be run in line with “good operating practice”.

QEM then stands to net another $4 million from EGPA in separate tranches upon the achievement of development milestones, and, execution of a Final Investment Decision (FID).

QEM shareholders were moderately bullish on the news with shares up 2.6 per cent in the second hour of trade.

One-year returns are up 5.3 per cent; year-to-date performance is up 11 per cent.

QEM shares last traded at 20 cents.

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