PERTH (miningweekly.com) – ASX-listed Neometals on Tuesday resumed trading following the A$104-million divestment of its interest in the Mt Marion lithium operation, in Western Australia, pausing the need for a demerger of the company’s non-lithium assets.
The company sold of its 13.8% interest in the project to its joint venture partners Gangfeng Lithium Company and Mineral Resources.
In parallel with the sales agreement, the companies also inked a binding life-of-mine offtake option that would allow Neometals to take 57 000 t/y of Mt Marion’s 6% spodumene concentrate, linked to market prices, providing the company with potential feedstock for downstream processing into higher margin lithium chemicals.
Following the divestment of its interest in Mt Marion, Neometals had a cash balance of some A$131-million, and a further A$7-million in listed investments.
Neometals on Tuesday noted that the divestment of its Mt Marion stake, and the deferral of an investment decision on the Kalgoorlie refinery project removed the catalyst for the prompt implementation of a demerger of the non-lithium assets, as revealed to the market in August last year.
The Neometals board in 2018 agreed to the demerger of the Barrambie titanium/vanadium project, in Western Australia, along with associated technology assets, into a newly listed company.
The proposed demerger had been targeted for completion by the March quarter of this year.
However, the company on Tuesday said that while still holding to the strategic principles of the proposed demerger, it was now anticipated that the appropriate timing for the demerger would align with a development decision, or external financing requirement for one or more of its advanced growth projects, which would likely only be in the next financial year.
Neometals told shareholders that its core strategy remained to de-risk and develop long-life projects with strong partners and to integrate down the value chain to increase margins and return value to shareholders.
“We will continue to take a very measured approach to capital allocation and the timing of investment decisions of multiple advanced projects in our portfolio,” said MD Chris Reed on Tuesday.
“We are fortunate that despite challenging capital markets, we retain significant flexibility and optionality with respect to the timing, quantum and structure of investments into the development of our portfolio of exciting growth projects.”
Neometal’s flagship Barrambie project remained on track for a final investment decision in 2019.
An updated definitive feasibility study for the project is due for release in April this year, and will form the basis for formal offtake and financing negotiations.
Meanwhile, the company is also completing the lithium-ion battery recycling pilot and feasibility study in parallel with market qualifications, and partner and approvals processes, while also advancing design and approval activities for its lithium refinery project.