NMT Details 
Increase in mineral resource at Mt Marion: Neometals Limited (ASX: NMT) recently reported that construction of the Mt Marion spodumene project has been on track as per the September quarter updates. Specifically, the group is on track with commissioning of the crushing and beneficiation circuits. With the development so far, NMT has increased Mt Marion production plan 60% to 50kt lithium carbonate equivalent (LCE). The latest exploration drilling programme which was underway at Mt Marion led to an extension of the resource. The programme was completed in September; and as per the revised details released at the end of October, the current resource stands at 77.8Mt at a grade of 1.37% LiO₂. This is indicative of a 29% increase in mineral resource estimate with a slightly increased cut?off grade to align with pit optimisation parameters.
 

Mineral Resource and Exploration Target Snapshot (Source: Company Reports)
 
Under the Indicted category, a total of 28.9Mt at 1.35% LiO₂ is now being classified with the recent results. Further, exploration potential still exists to the north of Deposit 2 and north-west of Deposit 6. It has to be noted that the drill program undertaken from July 2016 through September 2016 comprised 18,915m over 105 holes bringing total drilling for the resource to 83,819m over 931 holes. 

Project Milestones (Source: Company Reports)
 
Update on Eli Processing Project: NMT completed the Feasibility Study in the September quarter and made suitable advancements on the project. The study has indicated for the production of 20,000tpa of lithium carbonate equivalent as lithium hydroxide at a plant located in Malaysia. This entails pre-tax NPV US$481M and 51% IRR for the 20,000tpa LCE Lithium Hydroxide plant. The project is expected to take a long time with regard to commercialisation and more conventional means may be required to enter the sector. The group’s business model aims to licence to existing brine producers in return for royalty stream which will de-risk ELi for own use later and provide quicker cashflow.
 
Other developments: NMT has signed an MoU with Mineral Resources (partner in the Mt Marion project) to evaluate options for downstream processing of spodumene concentrate. The processing of concentrate is being envisioned in Western Australia’s Eastern Goldfields region to produce lithium hydroxide for use in batteries. The company plans to leverage the efforts from Ganfeng (another partner at Mt Marion) while Ganfeng has been expected to be converting ROM Concentrates by FY 2017.
 
Stock Performance: NMT reported for cash and restricted access term deposits of $65.75 million and listed securities of $11.6 million, ending September 2016. The company also declared and paid two special dividends of 2 cents each in 2016. NMT stock has delivered 124% returns this year to date while falling 12% in the last three months (as at November 29, 2016) owing to some market volatility. However, the recent positive AGM update led to a rise of 8% in the stock price in last five days. We give a ‘Buy’ recommendation on the stock at the current price of $ 0.31

 
NMT Daily Chart (Source: Thomson Reuters)

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