07/04/2017 - 11:16

Neometals to sell Mt Marion stake for $125m

07/04/2017 - 11:16

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Neometals hopes to reap about $US96 million ($A125 million) from the sale of its interest in the Mt Marion lithium mine near Kalgoorlie, with the operation’s joint venture partners given a pre-emptive right to buy the stake.

Neometals to sell Mt Marion stake for $125m
Steven Cole says the sale would be timely for Neometals.

Neometals hopes to reap about $US96 million ($A125 million) from the sale of its interest in the Mt Marion lithium mine near Kalgoorlie, with the operation’s joint venture partners given a pre-emptive right to buy the stake.

Neometals told the market this morning it had given notice to joint venture partners Mineral Resources and China-based Jiangxi Ganfeng Lithium that it plans to sell its 13.8 per cent stake in Mt Marion for $US96 million.

Under the joint venture agreement, MinRes and Ganfeng hold pre-emptive rights to buy out Neometals’ interest in the mine. If they choose not to, the offer will be made to third parties.

Both MinRes and Ganfeng would have the option to either wholly acquire the stake or mutually acquire half each. If both parties were to acquire half, they would end up owning an equal 50:50 interest in the mine.

Neometals said it was advised that Ganfeng has convened a meeting to seek shareholder approval for the exercise of its right to buy the stake, while MinRes said in a statement today that it was also considering whether to exercise its first right of refusal.

If the sale is successful, MinRes said it would stand to own Neometals’ offtake entitlement under agreements between the two companies, meaning it would be entitled to 51 per cent of the total Mr Marion production from February 2020 regardless of whether MinRes acquires Neometals’ stake in the mine or not.

In a letter to shareholders, Neometals chairman Steven Cole and managing director Chris Reed said the decision put Neometals on the brink of one of the most exciting and transformative events in the company’s history.

“Although fully committed to the ongoing strength of the lithium battery thematic, leveraging against the continuing unprecedented demand for battery storage minerals, it is timely for Neometals to redirect its capital and energies to higher margin downstream opportunities, as well as the company’s titanium assets, where the company’s proprietary technologies add significant value,” they said.

“Assuming acceptance and timely completion by the remaining Mt Marion partners of their pre-emptive opportunity, Neometals’s projected unrestricted cash balance will be about $184 million.

“The proceeds from the sale will enable optimal value to be realised from the company’s exciting pipeline of other growth opportunities.”

Shares in Neometals were 6.4 per cent higher to 33 cents each at 10:45am.

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