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Neometals Ltd www.neometals.com.au/
Full Neometals Ltd profile here

Neometals Ltd (ASX:NMT) is focused on the Mt Marion Lithium Project with the aim of becoming an integrated producer of lithium battery materials.

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Neometals to return capital to shareholders, share buy-back

Wednesday, February 24, 2016 by Proactive Investors

Neometals to return capital to shareholders, share buy-back

Neometals Ltd (ASX:NMT) will reward its shareholders with a return of capital and buying back its own shares on-market to tighten issued capital.

A cash payment of $0.02 per share will be paid to shareholders in equal part capital reduction and payment of an unfranked dividend.

Once a tax ruling from the Australian Taxation Office is received, a meeting of shareholders is expected to be held in April 2016 with a likely late March 2016 time frame for cheques to be mailed to shareholders.

The capital management strategy evolved from the recent cash injection, strong balance sheet and projected future cash flows from participating as a 26.9% shareholder in the Mt Marion Project.

Neometals is expected to hold cash reserves of between A$66 million and A$68 million by March-end to effect the capital management strategy - the envy of many a near term producer.

The company will be a producer of spodumene (lithium oxide mineral) concentrate by mid 2016 at Mt Marion.

Euroz projected Neometals' EBITDA from Mt Marion of $17 million per annum at a 26.9% equity or $9 million per annum at a 13.8% equity stake depending on option exercise.

Ganfeng Lithium Co., Ltd will accelerate the exercise of its option to acquire an additional 18.1% of Reed Industrial Minerals Pty Ltd from Neometals.

Proceeds of US$13.575 million have been received or 50% of the proceeds and the balance to be released on or before 31 March 2016.

Neometals will use about $5 million buy back its own shares to a maximum of 5% of issued capital over 12 months and also unmarketable parcel sale facility for small shareholdings.


Strong portfolio to progress growth

Apart from the shareholding in the Mt Marion Project, Neometals will have a 70% shareholding in Reed Advanced Materials Pty Ltd, owner of the patented ELi process to produce lithium hydroxide directly from spodumene concentrates.

A Definitive Feasibility Study for this is due for completion in June 2016.

Neometals is also looking to commercialise the Canadian process technology which the company holds exclusive rights to and potential partnership with a global EPC engineering company.

It may also crystallise value from the Barrambie Titanium project and cash from divestment of its nickel tenements.


Analysis

This is a fine time to be a Neometals shareholder; a soaring share price (8-bagger since March 2015), near term lithium oxide mineral production, a dividend cheque not far away and a share buy back to tighten share capital to enhance potential for further share price gains.

Even after the capital initiatives, NMT will hold about $50 million in cash and no doubt NMT's MD Chris Reed has other corporate transactions under the microscope.

 

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