(ASX: NMT) | NEOMETALS

May 30, 2022

Sentiment: Bullish

Type of Trade: Speculative

Industry: Lithium / EV (Electric Vehicles)

Sector: Materials

Neometals engages in mineral exploration and projects development aiming and proven to provide good returns to shareholders and investors. It operates through the lithium, Titanium/Vanadium and other segments. Its projects include Mount Marion Lithium Operation, Alphamet, and Barrambie. It also provides various processes to extract valuable metals for a range of base, light, and precious metal oxides, as well as for sulphides, intermediates, and waste feeds.

All company’s project gives investor massive exposure to EV related materials. The company aims to be recycler of choice for cell markers and carmakers with strong focus in European market (2nd largest LIB Production hub in the world).

✅ Strong Macroeconomics – Europe market generate the second largest volume of scrap and end-of-life batteries in the world.

Neometals has three core projects at advanced stages of evaluation, plus a mineral exploration portfolio and a range of longer-term opportunities;

The projects in advance stages are:

  • Lithium-Ion Battery Recycling Project, which is one of the main reason we are looking at this stock.
  • Lithium Refinery Project; and
  • Barrambie Titanium and Vanadium Project in WA.

The exploration and long-term projects include:

  • Mt Edwards lithium and nickel exploration project (WA);
  • Suite of minerals/material related technology developments.

Recent Announcements and Advancement since last BG Trading last analysis

✅ May 2022 – Neometals announced a cooperation agreement with one of world’s leading luxury car manufacturer Mercedes Benz (50:50). In this agreement (still subjected to PO), Primobius will support LICULAR on the commissioning of the Recycling Plant, obtaining permits, approvals and government funding for the Recycling Plant,train LICULAR’s employees and provide on-site engineering support on a cost-free basis (subject to a cap); o LICULAR will purchase from Primobius the necessary equipment for installation of the Recycling Plant; and o The parties will share information to optimise performance and jointly evaluate the possibility of commercialising the recycling technology and circular economy approach together during the phase of Recycling Plant operations.

✅ March 2022 – Neometals announced that Primobius has officially opened its 10tpd commercial lithium-ion battery (LIB) Recycling facility. The operation has been planned to commence in Q2 2022, which was pending receipt of operating permit which has been received in April.

✅ April 2022 – Neometals announced that Primobious GmbH has received its BlmSchG operating permit for its 10tpd commercial lithium-ion battery (LIB) recycling facility.

✅ May 2022 – Neometals announced that Primobious GmBH, the incorporated JV company owned 50:50 by the Company and SMS group GmbH (SMS) has executed a conditional binding agreement with Mercedes-Benz. In this agreement Primobious will enter into long-term research and development collaboration to recycle next generation cell formats and chemistries. The idea to develop the recycling plant that will be operated at an agreed Licular location (which Neometals expects to be Mercedes Benz’s Kuppenheim Operations in Germany.

Battery Recycling

The company has developed a sustainable proprietary process for the recovery of valuable constituents from cell production scrap and end-of-life lithium-ion batteries (LIB). The so called Neometals processing flowsheet targets the recovery of over 90% of all battery materials from Lithium Ion Batteries that might otherwise be disposed of in landfill or processed in energy-intensive pyrometallurgical recovery circuits.

The Revenue of the company encompasses 3 stream:

✅ Processing capacity for 50 tpd – 18,250 tpa with already local government approval to operate.

✅ Great Revenue by Recovered Elements in 1 Tonne of Batteries.

Current Stage of the company as per the last investor presentation in March 2022.

The company highlights that landfilling and stockpiling of LIBs is no longer an option given that:

  • Spent and crap LIBs are recognised as hazardous waste and pose a storage and transport fire risk;
  • Once liberated, LIB constituent materials are valuable in a direct economic sense but also due to forecast raw material;
  • Hydrometallurgical recycling (like Neometails) supports electrification Greenhouses Gas footprint with efficient material recovery rates;
  • Recycling is no longer optional i.e. Governments mandating recycling and industry stewardship to support circular economic principles.

Macro Economic Facts

✅ Massive need for sustainable and circular LIB recycling due the increase rapidly production for EV and electronics industry.

✅ Primobious’ development readiness dovetails with an explosion of EV and Cell Manufacturing Plants and large volumes of end of life EVS in the mid.

✅ Stakeholder expectations, corporate responsibility, regulations and economics  are driving the push for ethical disposal and recycling from what is a very low base today.

Advantages of this Project

  • Clear and credible path to commercialisation and cashflow via Primobius JV;
  • Unique patent pending technology;
  • Eco flow sheet enables true closed loop with low CO2 footprint that helps reduces greenhouse gas emissions;
  • Acceptance of broad battery chemistries;
  • No requirement to discharge spent LIBs;
  • Business model flexibility;
  • Production of high purity finished cathode, an intermediate product, displaces need to sell mixed metals to refiners; and
  • Hub and spoke model reduces transport complications with hazardous waste and means that shredding and refining don’t have to be co-located.

Demonstration Plan

  • Three years of R&D development including bench and pilot trials.
  • Feasibility studies and engineering has culminated in a recycling commercialization.
  • JV (“Primobius GmbH”) with German company, SMS group (leading supplier and builder of metallurgical plant). The JV will jointly fund construction of a showcase LIB recycling demonstration plant in Germany and complete feasibility and market evaluation ahead of a decision on commercial deployment.

According to last years Time frame for 50 Ton per day plan development, Neometals has achieve most of the steps:

The company now heads towards commence operations in JunQ2022, which confirmation shall boost the stock price to a new high if market conditions improve.

Lithium Refinery

Barrambie Titanium and Vanadium Project

Barrambie is located approximately 80km Northwest of Sandstone in Western Australia and is one of the largest vanadiferous-titanomagnetite (“VTM”) resources globally (280.1Mt at 9.18% TiO2 and 0.44% V2O5)*, containing the world’s second highest-grade hard rock titanium resource (53.6Mt at 21.17% TiO2 and 0.63% V2O5)* and high-grade vanadium resource (64.9Mt at 0.82% V2O5 and 16.9% TiO2) subsets based on the latest Neometals 2018 Mineral Resource Estimate*.

Barrambie is unique owing to its exceptionally high titanium resource grade coupled with high vanadium content and the weathered nature of the orebody. The project is well advanced with respect to permitting and development work which creates a significant opportunity to extract value, with partners, from both titanium and vanadium in a whole of deposit processing flowsheet.

Vanadium Recovery Project

Neometals has a collaboration agreement with unlisted Scandinavian mineral development company Critical Metals Ltd (“Critical”) to jointly evaluate the feasibility of constructing a recycling facility to recover and process high-grade vanadium products from vanadium-bearing steel by-product in Scandinavia. Neometals is Critical Metals’ largest shareholder and holds 15.4% of its issued capital.

✅ One of Neometals’ key strategies relates to identification and disciplined evaluation of mineral and materials projects that have direct exposure to the energy storage and electric vehicle mega-trend. As it relates to energy storage, vanadium solutions are the storage medium in the Vanadium Redox Flow batteries (“VRFB’s”) which are a leading stationary storage technology.

Approximately 75% of global vanadium supply is produced in China and Russia, and there exists a significant opportunity to supply the European and American markets from recycling SSAB’s Scandinavian feedstocks.

✅ Currently in pre-feasibility Stage.

✅ Recover high purity vanadium chemicals to go into LIB from the world higher grade vanadium stock piles in Sweden (50/50) Join venture with Critical Metals.

The company’s financial position is good and the company is well capitalised to continue its projects. We still believe that potential Capital raising could be a reality in a foreseen future, especially now that the stock is trading well above above $1.

Technical Analysis

The stock price has risen 186% in the last 52 weeks, but also showed over 350% growth before falling almost 40% from its ATH, on the back of tech stocks sell off in US. NMS is currently trading 15% below the SMA offering investors a technically discounted entry.

The current chart formation shows the green candle on Heiken Ashi, confirming a potential reversal whereas buyers have found value at $1.2 levels.

Since EV stocks are in strong demand due the the potential scarcity of anode materials in the next decade, NMT has a competitive place in the EV supply chain compared to the “conventional” lithium, manganese, nickel, cobalt and graphite explorer/producers that we have previously analyzed; simply because there will be a massive demand for recycling and non of the other companies have currently focused their projects on re-use of anode materials from scrap Lithium Ion batteries such as NMT’s recycling project.

Entry Details

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