Neometals (NMT) - It's All Falling into Place at the Right Time

Neometals is an ASX-listed innovative project developer based out of Australia. The company is listed on the Australian Stock Exchange (ASX: NMT) and was recently scheduled to be listed on the Alternative Investment Market (AIM) by early October. Neometals has chosen Cenkos Securities, London as their preferred broker as a listing partner for AIM.

The company currently has 4 core projects. These include a Lithium battery recycling project, a demonstration plant in Germany, a high-grade Vanadium slag project in Scandinavia where high-purity Vanadium is recovered from slags, and a residual upstream mining asset-based in Australia. 

We met with Christopher Reed, Managing Director, and CEO, Neometals. Chris has over 3 decades of experience in the mining industry. He founded Reed Resources in 2001. He is also the former Vice President of the Association of Mining & Exploration Companies. 

We were also joined by Jeremy McManus, General Manager - Commercial and Investor Relations, and Darren Townsend, Chief Development Officer at Neometals. 

Company Overview

Neometals is a minerals and advanced materials project developed company focused on energy storage. The company was founded in 2001, based out of Australia.

Currently, the company has 3 fully-owned projects. The Lithium-Ion Battery Recycling Project, the Lithium Refinery Project, and Barrambie Titanium and Vanadium Project.

The company also has exploration projects in its portfolio that include the Mt. Edwards lithium and nickel exploration project and a host of mineral and material-related technology developments. The company has a strong background in commodities that have a direct impact on the EV (Electric Vehicle) market and the energy storage industry.

Neometals sold a part of their shares to a leading Australian institution recently. The company has garnered significant interest from both domestic and foreign institutions lately. The company's management team is the largest shareholder with a stock price range between $53- $57. 

Primobius (Lithium Recycling Project)

Primobius is a lithium recycling project through a joint venture between Neometals and SMS Group, Germany's largest engineering group. The operating and capital costs of these projects are estimated to be in the Class 4 level with a 25% deviation. The plant was originally based out of Kwinana, Western Australia, and was relocated to Germany.

During the intervening period, the company has already completed a year-long pilot program along with all the required estimates. Despite the changes in the scope and the infrastructure of the project, the operating costs rose by a mere 4%. Although the relocation will lead to an increase in operating costs, the project now offers a much larger scope along with significant improvements in quality and additional on-site equipment.

The company has an MOU (Memorandum of Understanding) signed with SMS Group with multiple protections in place. It also features an 18-month buyback option in a scenario where Neometals is presented with an opportunity to deploy a Lithium battery plant.

Battery Recycling Project

Neometals has built a demonstration plant for the battery recycling project along with SMS Group by way of a multi-million Euro investment. The site is being constructed at SMS's manufacturing headquarters that are based out of Hilchenbach, Germany. The trials for this project are scheduled to conclude in Q3, 2021. This will lead to a Class 3 accuracy project with improvements in the 10% - 15% range. The company is looking to make a FID (Final Investment Decision) in March 2022.

The company has already gained access to graphite, lithium, nickel, and cobalt without the need to develop a mine and as a direct result, the materials are high in purity and are free of carbon deposits. The demo facility in Germany offers scalability and safety. The feed required to run the operation has been soured from the industry pro bono. The company has EV batteries from the automotive sector, stationary energy storage at Itochu Corp., Japan.

The company is looking to run 2 trials during the demo process and will utilize both the low-value extract and high-purity material during the evaluation process. The low-value materials include plastics, aluminum, steel casings, and copper foils. The company plans to line up the feed for potential buyers to inspect the quality of specifications of the extracted material.

Processing Capabilities

The plant has the capacity to process 50t material on a daily basis, which is comparable to the production scrap generated by a Giga factory. This enables the plant to process 20,000t material on an annual basis.

The company can produce 10,000t Nickel sulphate from a supply of 20,000t/pa. In the case of NMC 811 cathode, 1,370t Cobalt sulphate can be recovered along with 2,500t lithium in hydroxide form.

Neometals has already surpassed the Chinese national specifications for nickel and cobalt sulphate recovery, which accounts for 85% of the company's revenue. There are several safety systems and redundancies built-in the plant by the company.

The plant also abides by the new European battery regulations as the recovery process does not produce emissions or water pollution. The by-product of this process is ammonium sulphate, which can be utilized as a fertilizer.

Cost-benefit Analysis and Margins

Neometals has put forward the recovery cost at $1,560/t. In the case of cell phone batteries, with NMC 811 that features minimum cobalt recovery, the company is able to recover $5,600/t of recyclable material. The company is focused on scaling up its operations and is looking to waive disposal fees, offering an attractive prospect for manufacturers. 

There's an ongoing study for a 200,000t plant that will recycle 90% of batteries at the end of their life cycle. This study has shown that Neometals can process the material at the lowest cost while maintaining a low carbon footprint, confirming local legislative norms. Over time, the company aims to reach a net-zero carbon footprint. 

The JV with SMS will enable Neometals to process car batteries near the end of their life cycle through ongoing supply contracts to ensure that the plant can operate at full capacity. 

Standing Out in a Competitive Landscape

Given the high rate of recovery along with lower costs, Neometals is capable of providing nickel sulphate, cobalt sulphate, lithium hydroxide, and lithium carbonate at competitive prices. 

While competitors employ pyrometallurgy to recover materials, Neometals utilizes a process that relates to the base metal industry solvent extraction. This process was invented at Mount Isa, Queensland. The company aims to place ion exchange columns in the demo plant as a way to make a Sumitomo-spec product. 

Barrambie Titanium and Vanadium Project

The Barrambie Titanium and Vanadium project has the potential to generate a net negative carbon footprint. This is achieved by recycling the batteries used in electric cars and efficiently recovering the materials that conform to industry norms. 

As the world moves towards renewable energy sources, the number of Giga factories across the world continues to grow. Neometals is focused on ramping up their production by a factor of 4-8 by the end of this decade. 

PFS Findings

The results of the PFS (Pre-Feasibility Study) have placed the operating costs at $4.25/lb which is the lowest quartile OpEx (Operating Expenditure) across the industry. The PFS levels are within the -20%/+25% range, the company also has a DFS scheduled for June 2022.

Based on the scoping study, the CapEx (Capital Expenditure) grew to $184M and the company is looking towards a pre-tax NPV (Net Present Value) of $230M with a 31% IRR (Internal Rate of Return). These numbers along with the potential to achieve a net negative carbon footprint places the company in a strong market position.

Neometals has a supply agreement with Critical Metals and SSAB for a 10 year supply of slag that would produce 13.5Mlbs of V205 on an annual basis. Furthermore, the company is looking for opportunities to deploy its technology in other parts of the world to scale up operations.

Notable Achievements

The company is producing high-grade Vanadium pentoxide which can be utilized in Lithium-Vanadium cathode batteries and Vanadium redox flow batteries for electrolyte solutions. 

The company developed the Mt. Marion site, the second-largest hard rock source of lithium production globally. The process included paying off-takes, de-risking by partial equity sales, and enrolling in operating agreements.

In the past 6 years, the company has de-risked the majority of its project by bringing large partner firms on board, sharing the operating and financial costs. Their projects are structured in a way that allows independent financing without the risk of dilution of the parent firm.

The shareholders collectively own each project in the company's portfolio. The company is looking for demergers to spin out the projects as separate entities, returning the shares back to the shareholders. 

The battery recycling project is planned for March 2022, while the Vanadium recovery project is scheduled for December 2022. 

To find out more, go to the Neometals Website.