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
 
Successful testing of direct Lithium and Potassium extraction from Brines: Recently, Neometals Ltd (ASX: NMT) has announced outstanding results of test work on a titanium?based adsorbent, developed by the company, which has the potential to deliver a more cost effective and environmentally friendly method of extracting lithium and potassium from sodium rich brines as compared to traditional solar evaporation. Further, test work conducted by a leading independent Australian research facility has confirmed that Neometals’ adsorbent technology is able to successfully recover lithium and potassium from salar brines while rejecting all of the sodium in solution. Importantly, the continuous cycle testing demonstrates that the technology has the potential to replace the sodium removal by the conventional solar evaporation process used in the Andes region of South America. The conventional solar evaporation phase requires significant capital expenditure to construct a series of large evaporation ponds, significant maintenance of the operating ponds to harvest and store salt and has an approximate 12 months processing period. In comparison, the Proof of Concept test results indicated that lithium and potassium adsorption, and rejection of sodium, could be conducted using conventional process equipment with residence times of less than 30 minutes.
 

Exposure to energy storage revolution; (source: company reports)
 
The conceptual plan is to return stripped brine to the salar or aquifer and use a large processing volume coupled with short cycle time to extract lithium/potassium on a suitable scale. The company is also evaluating other technologies that can be coupled with the adsorption technology in an integrated flow sheet that completely replaces the salt removal and brine concentration/purification phases used in conventional brine flow sheets. Further, NMT has filed a provisional patent and PCT application as part of its strategy is to develop related technologies and commercialise the technologies with suitable partners for royalties and to retain the right to deploy it as principal.


Commercialization of technology with global partners; (source: company reports)
 
Exploiting cost advantage in recovery of Cobalt from Lithium Cobalt Batteries: Neometals Ltd has announced the results from lithium battery cycling test work and it demonstrated the superior performance characteristics of its Lithium Titanate anode material. In 2017, the company engaged a leading US test facility to commence 100?cycle cycle testing of coin cell batteries using Lithium Titanate (LTO) anode material made by the company at the CSIRO. Lithium Titanate is a leading anode (negative electrode) material, which can replace graphite. Its primary advantage over graphite is the surface area of the anode of LTO being around 100 square metres per gram in contrast to typically 3 square metres for graphite. The enlarged surface area enables electrons to enter and leave the anode much more rapidly, leading to ultrafast recharging, enhanced battery life and enhanced safety performance. Further, the conceptual plan is to develop a process producing a superior Lithium Titanate anode material from feed stocks generated from the company’s captive resources. Notably, NMT is developing multiple positions further down the Lithium?Ion Battery supply chain, consistent with its strategy to maximise returns from existing and future operations by producing higher value products.
 

Cathode material growth for recycling; (source: company reports)
 
Diversifying into the downstream lithium/battery material supply chain: Neometals Ltd (ASX: NMT) is diversifying into the downstream lithium/battery material supply chain, and expected to build a pilot plant in Canada to accelerate the commercialisation of the company’s technology to recycle lithium ion batteries to recover high value materials. Neometals has co-developed a technology to economically recover high-value cobalt (99.2% recovery) as a material that can be re-cycled within the battery manufacturing chain. The cobalt supply chain is under stress due to the rapid increase in demand from battery manufacturing and a supply chain that is dominated by co-production in high sovereign risk locations. It is currently estimated that less than 5% of used lithium-ion batteries are recycled as disposal is typically either paid-for recycling or land fill. Further, agreements have been executed to construct the pilot-scale hydrometallurgical plant at Neometals’ Montreal laboratory. The plant, which is anticipated to be operational in July, will complete continuous test work at a rate of 100kg/day of batteries, testing the recovery of high-purity cobalt, lithium, nickel and other base metals from lithium batteries typically used in the electric vehicles (Lithium-Nickel-Manganese-Cobalt or NMC). The plant will have the flexibility to treat lithium batteries from consumer electronics (laptops/phones) containing the Lithium-Cobaltate or LCO cathode formulation.
 

NMT’s positions in the supply chain; (source: company reports)
 
Production ramp up continuous during Q3FY17: Production ramp up continued during the quarter with first two shipments totalled 31,662t and the third shipment of 17,718t at Mt Marion Lithium Project. Further, the company has commenced sale process for its residual equity of 13.8% stake in the project vehicle, Reed Industrial Minerals Pty Ltd (RIM), for a price of US$96,001,080. The group has a cash and cash equivalents of A$53.5 million as of 31 March 2017 with further A$16.5 million in Receivables/Investments.
 

Mt Marion Lithium is the world’s largest lithium concentrator; (source: company reports)
 
Barrambie titanium project: Barrambie is one of the world’s highest-grade titanium deposits, containing total Indicated and Inferred Mineral Resources of 47.2Mt at 22.2% TiO2, 0.63% V2O5 and 46.7% Fe2O3, at a cut?off grade of 15% TiO2. During Q3FY17, the company produced titanium hydrolysate (Titanium Hydroxide Ti(OH)4) from leach solutions of Barrambie concentrates using the patented Neomet Process. Importantly, titanium hydrolysate product is considered to be the best suitable as a feedstock into either Sulphate of Chloride Titanium Pigment processes and higher?value specialty chemical applications.
 

High Quality Resource at Barrambie; (source: company reports)
 
Growing demand for Lithium and Titanium over next four years:  Lithium prices have remained high and are stimulating interest in construction of new processing capacity. The market demand is forecast to grow significantly for the next 4 years through to 2020 and will support the NMT’s plans to commence production of lithium hydroxide in 2020. The supply of lithium compounds, especially to battery applications, remained tight and spodumene concentrate supply is very constrained to any converter that has not entered into close partnership with concentrate producers. Further, China customs declared import price increase to approximately USD11,000/t Li2CO3. The addition of Chinese tariffs and taxes on the import price lifts the delivered prices for imported product broadly in line with the reported rates achieved by Chinese domestic producers of approximately USD15,000/t. The current median prices for battery?grade lithium hydroxide have had steep increases to approximately USD14,000/t, on a CIF basis to Europe and US, while now converged with Chinese prices average. Most of titanium feedstocks (an annual market of US$17 Billion or 85% by value) are used to produce titanium dioxide pigment, which is then used as an additive in paints, plastics, paper and ink with the balance (15%) used to produce titanium metal products. Notably, the company has entered into an off-take agreement with China’s largest, most diverse lithium producer Ganfeng Lithium and from 1 July it is moving to transparent Lithium Carbonate/Lithium Hydroxide linked formula, with floor price protection. Further, all payments are expected to be made by Letter of Credit (100% payment on invoice).
 
 

Company’s Titanium growth story for 2018; (source: company reports)
 
Recommendation: NMT stock declined by 21.1% in the last six months (as on June 14, 2017), while it was down 36.6% in the past twelve months. Further, the stock is currently trading at its 52 week low levels and seems to be bottomed out. Given the potential project developments and growing demand for Titanium and Lithium markets globally, we give a “Buy” recommendation on the stock at the current price of $ 0.275.
 
 
NMT Daily chart; (Source: Company reports)
 

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