Neometals' Chinese partner ups stake

Neometals shares have closed more than 9 per cent higher on news its Mt Marion joint venture partner Jiangxi Ganfeng has exercised its option to acquire an additional 18 per cent in the lithium project for $US27 million.

Neometals now holds a 26.9 per cent share in the project located south-west of Kalgoorlie, down from nearly half, while Ganfeng’s interest has nearly doubled to 43.1 per cent.

Mineral Resources’ subsidiary, Process Minerals International, which is building and will operate the Mt Marion project, retains a 30 per cent interest.

State One Stockbroking said Ganfeng’s increased stake illustrated the robustness of the project, which is expected to produce about 200,000 tonnes per year of spodumene concentrate, equivalent to 30,000t/year of lithium carbonate equivalent.

“The $US27.15m consideration equates to $US1.5m per 1 per cent equity interest and implies a project value (100%) of $US150m ($A211m); this is significantly above our estimated Mt Marion NPV of $A155m,” State One senior investment analyst David Brennan said.

Mr Brennan also speculated that a share buy-back or special dividend may be on the cards, due to Neometals having $31 million cash in the bank at the end of December 2015 and Ganfeng's cash injection due shortly.

Earlier this week, Business News reported on Neometals plans to finish construction on the project later this year and potentially embark on another joint venture to build a processing plant, most likely in Malaysia.

Neometals is also involved in a proposal to capitalise on Western Australia’s strong and growing lithium mining industry by developing a local manufacturing sector.

Neometals shares were up 9.4 per cent at 17.5 cents at the close of trade on the ASX today.