Neometals to Demerge Their Vanadium Asset for Another Shareholder Win
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Neometals to demerge their vanadium asset for another shareholder win This year’s big story as we head towards Christmas has to be vanadium. Vanadium pentoxide has been trading near a 13 year high (currently at ~$US 31/lb) on the back of new safety standards in China, that mandates a higher proportion of the metal in the production of rebar-steel used in construction. This high strength metal is increasingly used in the aviation industry and has a growing market in vanadium flow batteries that store renewable energy. As a result of skyrocketing vanadium metal prices many companies are now looking at the metal with a new focus. Neometals Ltd. (ASX: NMT), an industrial minerals project developer, has recently announced the formal commencement of an update to their 2009 Definitive Feasibility Study for their 100% owned Barrambie Vanadium-Titanium-Magnetite project in Western Australia. The Barrambie project is one of the world’s largest and highest grade hardrock titanium-vanadium deposits. Barrambie sits on a granted mining lease with full native title agreements in place and historic approval for an open- cut mine and processing plant. It hosts a 280 million tonne resource at 9.18% titanium and 0.44% vanadium. Neometals to demerge their Barrambie vanadium asset On the back of surging prices for vanadium, Neometals looks to re-focus their Barrambie asset into a new company separate from their lithium business. Neometals shareholders will receive shares in the new entity via an in‐specie distribution. The demerger is expected to be completed in the March 2019 quarter, subject to approvals and consents. Neometal’s Managing Director Chris Reed said: “Barrambie has played second fiddle in recent years to our lithium endeavors, however it is to our knowledge, the most advanced, undeveloped green-fields vanadium project globally. Our extensive historical exploration and evaluation works will enable us to fast-track an updated Definitive Feasibility Study.” Neometals is looking at a staged development, starting with the direct shipping of ore being sold to processors in China, to be followed up by an onsite concentration and refining operation. Neometals will move quickly while prices are strong and demand is high for the supply of quality feedstock. Neometals lithium spodumene business at Mt Marion is doing well On November 15 2018 Neometals Ltd and its partners revealed excellent sale prices for their 6% spodumene concentrate from their 13.8% owned Mt Marion Lithium Project in Western Australia. The 6% spodumene concentrate prices for the two quarters post July 1, 2018 have been agreed as follows: For shipments departing July 1, 2018 to September 30, 2018: US$1,070.85 per dry metric tonne; and For shipments departing October 1, 2018 to December 31, 2018: US$930.80 per dry metric tonne Neometals continues to offer investment opportunities in lithium mining and processing (lithium hydroxide plant in planning), lithium-ion battery recycling (in planning and focus on cobalt), and proprietary technologies that assist downstream integration. Neometals is carving their own niche in the massively expanding battery sector, with an integrated lithium battery chain and the soon to be de-merged Barrambie Titanium-Vanadium Project, which is expected to be listed in Q1 2019 on the ASX. Neometals offers so much in the battery metals market that investors can potentially prosper from current or near term lithium, cobalt (recycling), vanadium and titanium projects. Based in Perth and hailing from the land down under Neometals has enormous potential for only a small market cap of AU$ 125 m. The Neometals lithium, nickel, titanium, vanadium, and in time cobalt (recycling) story Neometals is moving up the lithium value-add chain as well as into titanium and vanadium DSO production Neometals Ltd. (ASX: NMT) is an Australian lithium miner and so much more. Neometals owns a 13.8% share of the producing Mt Marion lithium mine, has a near term lithium hydroxide processing facility planned for near Kalgoorlie WA, a near term lithium-ion battery recycling business, and a very near term Barrambie Titanium-Vanadium-Iron Project very likely to soon start Direct Shipping Ore (DSO) production. Mt Marion lithium mine (13.8% owned) Neometals owns 13.8% of the Mt Marion mine, a large long life lithium spodumene mine in Western Australia. Partners are Mineral Resources (ASX: MIN) (43.1%), and Ganfeng Lithium (43.1%). The later has off-take agreements and is primarily concerned to secure lithium supply to feed their massive lithium conversion and other related businesses. This means Mt Marion should never have trouble selling their product. Furthermore from 2020 onwards Nemetals has an option for a minimum of 12.37% spodumene concentrates from Mt Marion. Lithium spodumene production capacity at Mt Marion is currently 450kt concentrates pa (~55kt LCE). Given Neometals 13.8% share this resulted in a H1 FY18 Profit of A$7.35m (NMT share). From 2021 Neometals should have potential to increase this if they have their own processing facility. Lithium hydroxide processing facility (planned to start by 2021) Neometals has already taken a 2 year option to sublease a 40 hectare site for their proposed lithium hydroxide processing facility. The site is 70 km by road from Mt Marion, and 5 km from the city of Kalgoorlie. Neometals has already put in place a feed source for their proposed facility – Mt Marion (as above) , Mt Edwards (100% owned), and Mt Holland (36% share owned via Hannans (ASX: HNR) equity holding). CapEx is expected to be about AUD$250m, and Neometals may bring in a partner to help fund the project. We will know more after the Feasibility Study is completed by March 2019. Note that Mt Edwards also has multiple historic nickel mines containing 120,000t+ of nickel metal (@ 1.7% Ni grade). Planned lithium hydroxide facility timeline Lithium-ion battery recycling business – Montreal Canada (50% share) Neometals is currently building a USD $4.5m pilot plant in Montreal, Canada. Neometals have completed a scoping study showing they can recycle cobalt from lithium-ion batteries for a cost of US$4.45/lb Co (US$10k/t). Neometals has 50% of the IP (5 US Prov. Pats) and exclusive licence to commercialise. The graphic below summarizes the timeline for Neometals three lithium projects as discussed above. Neometals horizons for growth Barrambie Titanium-Vanadium-Iron Project (100% owned) Barrambie has the world’s second-highest grade titanium deposit with 53 million tonnes @ 21% TiO2, and vanadium average grades of 0.63%. Neometals has just recently begun shipping bulk samples of Barrambie DSO to China for potential off-takers. Neometals is investigating DSO being toll beneficiated and smelted in China as a phase 1 operation with a parallel phase 2 development utilising on‐site processing options. This includes a potential update of the 2009 Definitive Feasibility Study based on an 11,200 tpa Vanadium Pentoxide operation, along with the scheduled piloting of the Neomet hydrometallurgical process. Current market cap is A$155m. As of March 30 2018, Neometals had cash balance of ~$41m, and no debt. They are currently cash flow positive. By comparison China’s giant lithium processing company Ganfeng Lithium has a market cap of CHY 41b (~US$6b). Neometals has always been well ahead of the curve. Their current strategy of increasing their share of the profits for each tonne of processed lithium ore, by having their own hydroxide processing facility is very wise. To help feed the new facility once opened they have already secured more lithium spodumene from Mt Edwards and Mt Holland. Finally they are on the verge of bringing in revenue from their titanium and vanadium project at Barrambie. Neometals is progressing fast to move up the lithium value-add chain. Neometals is definitely one of the most, if not the most, promising low market cap lithium miners around today. Neometals has huge potential to grow profits over the next 5 years, especially once they have set up their new value add operations. Neometals has lithium, nickel, titanium, vanadium, and in time cobalt (from recycling). And they have cash flow and a powerful off-take partner. Don’t miss this one. Reed on launch of Neometals lithium battery recycling business in Canada Christopher Reed, Managing Director of Neometals Ltd. (ASX: NMT) (“Neometals”) in an interview with InvestorIntel Senior Editor, Peter Clausi discuss their lithium battery recycling business. Neometals has developed a process to safely break out the cobalt from a lithium-cobalt battery and are now in the process of building a 100 kilograms a day lithium battery recycling pilot plant in Montreal, Canada. Christopher goes on to discuss Neometals’ lithium Mount Marion project in Western Australia, which is the world’s second largest producer of lithium concentrates. He also comments on Neometals’ Barrambie project, and states it world’s second richest titanium deposit. Peter Clausi: Neometals has three basic parts to their business, can you explain them? Christopher Reed: We have a share in the world’s second largest producer of lithium concentrates, the Mount Marion in Western Australia. We are looking to integrate that into lithium hydroxide production. We have got a lithium battery recycling business and we are commissioning a pilot plant up in Montreal this month. We have the world’s second richest titanium deposit. It also has the benefit of having one of Australia’s highest vanadium reserves as well. Peter Clausi: Let us start with the recycling…What are you doing and what is your time frame for success? Christopher Reed: We had a look at the lithium battery supply chain because obviously we are in the lithium industry. We had a look at some of the thematics and the one that stood out was that 60% of the cobalt is coming out of the DRC…to access the complete interview, click here Disclaimer: Neometals Ltd.