Chalice Mining in funding, technical talks with Mitsubishi Corporation for Toodyay green metals mine

Chalice Mining investors have been left underwhelmed by a handshake deal with Mitsubishi to potentially develop its billion-dollar green metals mine in Toodyay, fearing it will be another year before a financing and technical backer is locked in.

The Alex Dorsch-led explorer revealed a long-awaited memorandum of understanding with the Japanese industrials giant on Wednesday.

Under the deal, the pair will work towards potentially firming up a binding partnership or joint venture to develop the miner’s Gonneville nickel-copper-platinum group elements discovery, but only once a pre-feasibility study is finished in mid-2025.

Chalice has been on the hunt for a financial and technical partner for the project, which could cost anywhere between $1.6 billion and $2.3 billion to turn into a mine, since April 2023.

The breakthrough with Mitsubishi was not enough to excite investors in the Tim Goyder-backed explorer. Chalice’s share price lost 19.5 per cent by the end of the day to close at $1.22.

Mr Dorsch suspected the market had expectations of a “more definitive transaction” but he was confident the MOU marked the start of a “long-term relationship” between Chalice and Mitsubishi.

That could take shape as an equity investment, offtake deal or joint venture deal, he said.

“Given where the project is in terms of the early stage studies, and also the way Japanese trading houses like Mitsubishi behave, they typically do MOU type framework agreements initially, which then lead into more definitive transactions over time,” he told The West Australian.

“Mitsubishi don’t just put their name to any project.”

A note to clients from Argonaut — which rates the stock a speculative buy — said the delay was “disappointing”.

“However we believe Mitsubishi Corporation’s willingness to be named at this point bodes well for CHN to move to a binding partnership in 2025,” head of research Hayden Bairstow said.

The new non-exclusive agreement sets out discussions for talks on the technical, financing, marketing and offtake requirements of Gonneville, but does not guarantee an investment or formal partnership with Mitsubishi.

Mitsubishi’s battery minerals general manager Kota Ikenishi said the project’s “US Inflation Reduction Act qualifying suite of metals could have strategic importance for Japan in the future”.

“We are excited to work together with Chalice and leverage our complementary skillsets to advance the project as we explore the possibility of formalising a potential long-term partnership.”

It follows what Mr Dorsch told the market had been “extensive due diligence and discussions over the past 12 months”.

“From the outset of the strategic process, Mitsubishi was always considered one of the most impressive and best suited strategic partners for the Gonneville Project, based on its decades-long development, operational and trading track record.”

Both parties have agreed in “good faith” that they will discuss entering a formal arrangement within 90 days of the pre-feasibility study finishing. There is no obligation on either to reach a binding deal.

The scale and potential of Gonneville’s nickel sulphide and platinum group elements resource combined with huge buzz around critical minerals resource made the Gonneville discovery famous in 2020.

It comes after lithium developer Liontown Resources on Tuesday revealed it had signed a significant funding deal with South Korean battery manufacturer LG, instead of proceeding with a debt package from Federal government and bank lenders.

If and when operational, Gonneville promises to deliver 470,000 ounces of palladium, platinum and gold per year, and about 16,000 tonnes of nickel and 16,000 tonnes of copper over 18 years. Construction is expected to start in 2027 and will create about 1200 jobs.