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

Lodged an Australian provisional patent application:Neometals Ltd (ASX: NMT) has filed an Australian provisional patent application related to their technology to produce lithium titanate oxide (LTO) used for lithium-ion batteries. The submission of this patent application is part of the group’s Intellectual Property strategy to protect their competitive advantage once the commercial viability emerges. The company’s goal is to justify the addition of a LTO circuit to the Lithium Hydroxide project to further multiply the value of the lithium units. Moreover, NMT has a dedicated subsidiary, Neomaterials Pty Ltd, which would hold the group’s interest in the intellectual property and patent applications for this advanced battery material process. The Freedom to Operate (FTO) search and opinion was exhaustive and more than 440 published patents were reviewed. Additionally, the test work results showed that the performance of the material in the larger scale pouch-cell was superior to the commercially available lithium titanate, and this was re-confirmed in multiple coin-cell tests with all tests having NCM (Nickel Cobalt Manganese) cathode and LTO anode. The group is undertaking optimization test work at CSIRO to quicken the commercialization of this advanced battery material technology. The program is expected to be finished by the end of the December quarter and the group would produce product for evaluation by many battery producers.
 

Commercialization Schedule (Source: Company reports)
 
First sub?license of the Neomet Process:The group’s wholly owned subsidiary, Alphamet Management Pty Ltd (Alphamet) has entered into the first sublicense agreement for the application of the Neomet Process technology. After the satisfactory pilot testing, the Neomet Process technology would be used at a steel mill in the Republic of Serbia to recover zinc, copper, iron, silver and lead from a new modular EAF Dust Processing plant. The group forecasts that this agreement would be a major step forward and NMT is on track to their strategy to develop and hold a portfolio of royalty interests from sub?licensing the technology in addition to deploying the process on its Barrambie Titanium Project. Moreover, NMT has a Strategic Alliance with Australian Engineers, Sedgman Limited, which would offer the platform for the commercialization of the technology, at no cost to NMT. The sub?license agreement would also enable the technology to be applied by a third?party joint venture between a steel producer and a European investment group specializing in industrial waste processing for a proposed electric arc furnace dust processing plant. The modular plant will be co-located at the steel mill and seek to recover quantities of zinc, copper, iron, silver and lead via their processing of electric arc furnace dust, that can have up to 35% zinc. Additionally, the group’s Alphamet would be responsible for managing the commercialization and development of the Neomet Process technology, and all the revenue received from the commercialization of the technology would be split 25:75 between Alphamet and the owners of the technology. Under the sub?license agreement, the sub?licensee must pay a royalty on the gross proceeds of any minerals or metals produced from the plant using the Neomet Process technology. As the first sub?licensee, the joint venture would get a three?year royalty holiday in return for the access to showcase the process to other prospective sub?licensees.
 
Update on Barrambie Titanium Project: The group has started the pilot?scale beneficiation test work as the company advanced the development plans for Barrambie Titanium Deposit in WA, which is one of the world’s highest?grade titanium deposits. The Pre?feasibility Study (PFS) with optimization test work results using the Neomet Process has been updated to produce Titanium Hydrolysate. The PFS study indicates that the Neomet Process could be integrated with the current titanium pigment plants at minimal cost and modification. The advantages of the revised combined process would be controlling operating costs, easier operations, higher purity final products and a better environmental footprint. The original PFS has indicated that the potential operating costs would be US$572/t titanium dioxide pigment. The current median price for high quality titanium dioxide pigment is US$2,950 per tonne on a CIF basis to USA. The revised Neomet Process is expected to undergo pilot trials in late 2017. NMT has planned to license the Neomet Process to titanium industry partners conditional on the entry into a long?term, take? or -pay offtake agreement for Barrambie titanium concentrates. Moreover, NMT has started the pilot scale beneficiation test work at Nagrom Metallurgical laboratories in Perth. The concentrate which would be produced would be supplied to Chinese titanium producers and for the pilot scale test work of the Neomet Process at the Company’s facility in Montreal, Canada. The results of the beneficiation test work are anticipated in the December Quarter and hydrometallurgical test work is expected to then start late in the December Quarter. Both are said to be major results important for the commercialization of the project.
 

Barrambie Project Geology showing location of recent drilling (Source: Company Reports)
 
Encouraging production at Mt Marion: The Mount Marion Lithium project in Western Australia with NMT interest of 13.8%, was reported to produce 156kt of spodumene in FY17, with production commenced in late 2016. The project’s output has been progressively ramped up over the year finishing the 4QFY17 at about 370ktpa run rate. The project is expected to produce 400ktpa in FY18. Medium term production target looks encouraging.
 
Strengthening of executive team:The group is significantly strengthening their executive team, and accordingly, appointed the experienced mining executive Mr Darren Townsend as Chief Development Officer. Given their plans to develop the Barrambie Titanium Project in WA, the group intends to build a core management team. Mr Darren would also monitor and look after various engineering studies that are currently underway for Neometals’ lithium business.
                                
Responded to the price query: NMT has recently responded to ASX price query dated October 09, 2017. NMT has noted that there has been a general increase in market sentiment for companies by the investors in the lithium sector in recent weeks and a number of companies across the sector are experiencing significant share price appreciation. As per their target market opportunity, most of the titanium feedstocks (which have 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. The current median price for high quality titanium dioxide pigment is US$2,950 per tonne on a CIF basis to USA.
 

Li-ion battery Commodities (Source: Company Reports)
 
Tactical Plan for FY 18: The group is planning to negotiate new master service agreement to enhance their offtake quality and revenues, as well as advance the local LiOH project with the vendor test work and licence Dexter and/or ELi to bring producer for royalties. Moreover, the company has planned to fast-track evaluation of recycling process pending Mini-Max Test work as well as is seeking to fast-track evaluation of Barrambie pending Mini-Max Test work and partner selection outcomes. NMT has also planned to build royalty portfolio from Neomet Process with Sedgman and Andritz.
 
Stock Performance: Neometals has $46.15 million of cash and term deposits on hand as of 30 June 2017. The shares of NMT delivered decent returns of 13% in the last four weeks (as on October 17, 2017) given their positive updates and we believe there is more upside to the stock. The group bought over 16,900,102 shares as of June 2017 via their on?market share buy?back program while paid a special dividend of 2 cents per share unfranked. Meanwhile, the group’s target market, the titanium pigment industry is 10x as big as the lithium compound industry, indicating a lucrative market opportunity. Exposure to Mount Marion, first sub-licence agreement for the use of Neomet Process technology, advancement of downstream processing technology for lithium hydroxide and lithium brine, and development of a lithium battery recycling plant seem to be the catalysts for deriving value. Given the potential, we put a “Buy” on the stock at the current price of $0.347
 

NMT Daily Chart (Source: Thomson Reuters)

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