Company Overview: Neometals Ltd is a mineral project developer. The Company’s segments include Lithium, Titanium and Vanadium, and Others. The Company’s projects include Mount Marion Lithium Project, Lithium Hydroxide Project (ELi Process), Alphamet, Barrambie Titanium Vanadium Iron Project (Barrambie Titanium) and Forrestania Nickel Project. The Company's Mount Marion Lithium Project is located approximately 40 kilometers southwest of Kalgoorlie, Western Australia. The Company is also focused on the Mount Finnerty Project, which is located approximately 60 kilometers east of Koolyannobbing. The ELi Process has been jointly developed by the Company and Mineral Resources Limited. The Company’s Barrambie Titanium project uses a technology to manage titanium, vanadium and iron compounds. The Company’s Forrestania Nickel Project is located approximately seven kilometers north of the flying fox nickel sulfide mine in the Yilgarn region of Western Australia.


NMT Details

Neometals Limited (ASX: NMT) is advancing well with regards to its strategy to maximise the value of future lithium offtake that banks on downstream processing and battery recycling. The group is in discussions with many parties in the lithium battery supply chain with regards to commercialisation of downstream projects. Primarily, NMT has been maximising its return from existing operations by increasing margins via higher value products and by developing more growth options. NMT is also now admitted to Nasdaq International Designation, which is a home to a diverse range of companies in innovative industries across the globe.
 
Downstream Lithium Projects tracking well with strategy to add value: The group’s integrated lithium supply chain strategy to leverage the energy storage revolution for automotive and grid storage applications is tracking well. At its Lithium Hydroxide Project, the group secured supply chain based on offtake option rights for a minimum of 12.37% for Mt Marion production from February 2020, while vendor test work in USA is progressing well. The updated cost study report is estimated to be released in February 2018 while FEED Study proposals are still being evaluated. For the Lithium Battery Recycling Project, the group updated about near completion of construction of pilot plant facility in Canada with commencement of wet commissioning while pilot operation on NMC/NCA batteries has been scheduled for January?March 2018 which will include testing Electric Vehicle pack provided by leading carmaker. For the Lithium Titanate Research Project, NMT has applied for a provisional patent to obtain protection of the IP and conducted testing through CSIRO to optimise the production process. The group has engaged a leading US test facility for testing of pouch cell batteries using Lithium Titanate (which can replace graphite) and results of these tests are expected in January 2018.
 

Lithium Hydroxide Project integration (Source: Company Reports)
 
Successful advancement at Mt Marion Lithium Project: Mt Marion is a globally significant lithium deposit which contains total indicated and Inferred Mineral Resources that has amounted to tonnage of 77.8 Mt at 1.37% Li₂O and 1.09% Fe, at a cut-off grade of 0.5% Li₂O. During the year, NMT had successfully completed the construction and commissioning with 5.296 million tonnes of lithium mined, and the first commercial shipment of concentrates was reported for 116,298 tonnes of lithium. The retention by the company of its binding offtake option rights for a minimum of 12.37% of production from this project from February 2020 will provide supply to support the prospective development of its own processing plant.

Production at Mt Marion (Source: Company Reports)
 
Lithium Battery Recycling Technology linked to result as expected: Neometals has been co-developing a technology to economically recover high-value cobalt from batteries in a form that can by re-cycled within the battery manufacturing chain; and the scale test work which was done on lithium-ion laptop and phone batteries, indicated a strong potential for a viable processing operation under a modular plant to recover saleable cobalt product from used lithium-ion batteries. The superior performance of this recycling project resulted into a material known as Lithium Titanate anode which can replace graphite. The material is said to have an advantage in terms of its larger surface area compared to graphite. Currently, less than 5% of used lithium-ion batteries are recycled and disposal is typically either paid-for recycling or landfill.
 
 
Value adding strategy for Li-Ion Battery Supply Chain (Source: Company Reports)
 
Barrambie Titanium Deposit Project: This is one of the world’s highest-grade titanium deposits and the group’s current strategy is to advance the chemical processing plant development to a suitable stage of evaluation so that it can attract a titanium industry partner for construction of a plant linked to the development of Barrambie as a feedstock source. The company plans to commence its pilot testing in June Quarter 2018 after the Lithium-ion Battery Recycling pilot campaign that is slated to commence in December. Also drilling of 7 RC holes was successfully completed at Virgina Hills located 5 kilometres to the west of Barrambie. A Mining Proposal was lodged to cover the extraction of bulk sample which is a part of the evaluation of the production of Direct Shipping Ore. Neometals plans to license the Neomet Process to titanium industry partners (already entered first sub-license agreement) which will be conditional on the entry into a long term, take-or-pay offtake agreement for Barrambie titanium concentrates. In the Quarter ending on 30 September 2017, this project was demonstrated to have completed drilling of 20 core holes for pilot scale beneficiation test work to prepare concentrates for pilot scale hydrometallurgical test work in Canada, which will commence in early 2018 and the group also evaluated direct shipping operations to supply Chinese titanium concentrators.

 

Mineral Resources (Source: Company Reports)
 
Financial Performance: Cash and term deposits on hand as on 30 June 2017 were of the order of $46.15 million and included $4 million in restricted use term deposits to support performance bonds and other contractual obligation; whereas on 30 September 2017, cash and term deposits amounted to $42.1 million. On 30 June 2017, the investment in the equity associated(42%) with Hannans Limited was having a carrying value at $13.2 million, which was an excess of the market price of the investment based on the share price as on ASX on June 30, 2017. Neometals holds 13.5% of unlisted public company shares of Critical Metals Ltd and will help Critical to realise lithium, cobalt and carbon opportunities in Scandinavia. It also bought back shares amounting to 5% of the company’s issued capital. In 2017, cash reserves at Neometals Ltd fell by $32.10 million. In addition, the company used more cash to support its operations than it earned, posting a cash flow loss of $7.43 million. The company used $9.55 million on investing activities and also paid $15.04 million in financing cash flows. Net Profit was down from $83.8 million in FY16 to $4.7 million in FY17 and EPS also slipped from 15.68 cents (c) to 0.85c. Given the recent updates, the group might be able to witness an improved performance going forward.
 
Stock Performance: NMT stock has risen 35.7% in last six months but plunged 24% in last one month (as at December 12, 2017) owing to lithium sector volatility. However, the latest updates recognize the stock to have more potential going forward (up 2.6% on December 13, 2017). NMT’s return on equity and return on assets indicate for a bullish stance. Support from lithium prices that have been forecasted to grow by 2025 is expected to augur well with the group’s strategy. This has stimulated the construction of new processing capacity, and seem to help NMT in long-term. The group lately indicated for a change in the board in alignment with its goals and long-term strategy. In view of the recent stock price slip while NMT is regaining its potential, we believe that the stock is a “Buy” at the current price of $0.39


NMT Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.