Neometals has stunned the market by delivering another cash windfall to its shareholders with a 2 cent, partially franked dividend set to hit their bank accounts on April 3rd. The ‘mine to market’, battery metals innovator will pay out A$10.9m of its December 31st cash balance of over $100m to fund the dividend which comes on top of $45m worth of cash returns paid in the last four years.
Neometals’ $100m pile of cash comes largely from its uber- successful development of the Mt Marion lithium mine near Norseman in WA. As a relatively small cap, Neometals pretty much re-wrote the playbook when it comes to attracting majors to do the heavy financial lifting whilst maintaining a reasonable free carried percentage along the way.
Over a series of deals, Neometals shuffled Mt Marion onto mega miner, Mineral Resources and Chinese off-taker Gangeng, successfully lining its pockets along the way.
It now has a number of battery metals-based exploration and technology plays under way including some lucrative looking nickel exploration ground at Mt Edwards, in WA’s Eastern Goldfields.
The Chris Reed run company said that Mt Edwards, located 40km south of Kambalda, currently has a total mineral resource of 7.718Mt at 1.7 per cent nickel for 130,480t contained nickel across eleven deposits, including an abandoned open pit at its Armstrong deposit.
The company’s 100 per cent owned Lithium-ion battery recycling project is the most advanced project for Neometals and it is moving to a 50:50 JV with Germany-based SMS Group to build a pilot plant in Europe this year to commercialise its proprietary recycling process. The SMS Group is a leading partner in the global metals industry with expertise in metal plants, from concept to fabrication.
Neometals also owns 100 per cent of the Barrambie VTM project in WA’s Murchison region where it is looking to mine hard rock titanium and vanadium where it is aiming to produce both high-purity titanium and vanadium chemicals. The company said pilot testing had successfully produced 98 per cent pure titanium, a key economic driver for this project and it was now looking at a 50:50 JV with IMUMR, a Chinese metallurgical group, to co-fund ongoing studies.
Management said it also has an MOU in place with Manikaran Power for a jointly funded evaluation of the first lithium refinery in India. Manikaran is the 3rd largest Indian Power trading company with extensive renewable energy interests. A feasibility study is due to be completed for that project at the end of this year.
In a letter to shareholders today, Neometals’ Chairman, Steven Cole and Managing Director, Chris Reed said: "In sharing a portion of the company’s cash reserves via a dividend payment, it is important to note that this is not done at the expense of our growth opportunities. Even after dividend, your company maintains a robust cash reserve over and above its corporate overhead and project level funding requirements in the medium term.”
“Neometals recognizes that COVID‐19 is a rapidly evolving situation impacting us all. Whilst acknowledging the disruption to global commerce, Neometals has materially completed its test work for its core projects and is transitioning to engineering studies for the remainder of calendar year 2020.”
“In the current financial year Neometals entered into three agreements to jointly evaluate and potentially joint venture its three core projects. The lithium battery recycling project is the most advanced, with due diligence and legal documentation scheduled for completion next month.”
Neometals portfolio has all the elements of a ‘mine-to-market’ solution in the strategic battery metals space, including potential mine sites, recycling plants and refineries to deliver lithium, titanium, vanadium and nickel to the EV battery market across the globe.
Even after the recent dividend payment, Neometals’ balance sheet is still well sandbagged against the Coronovirus that is ripping the heart out of the market.
No doubt shareholders will be thankful for the cash windfall in the current environment.
Is your ASX listed company doing something interesting ? Contact : matt.birney@businessnews.com.au
By Matt Birney
