With shares trading around 25 cents per share, the price target of 50 cents represents potential upside of 100%.
The company is building an integrated lithium business which began with its 13.8% interest in the operating Mt Marion Lithium Mine in Western Australia.
Recently, the company outlined plans to demerge its titanium and vanadium assets.
The spin-out will allow Neometals and the new company to separately focus on the development of their respective integrated lithium and titanium-vanadium strategies.
Euroz research report
The following is an extract from the Euroz report.
• NMT has announced its intention to demerge its Barrambie Titanium-Vanadium Project and associate non-lithium assets – completion set for Mar Q FY’19;
• This will provide for a vertically integrated lithium business to continue to evolve within the NMT structure whilst realise value for the emerging DSO Barrambie operation in the short to medium term;
• Longer term, NewCo will seek to advance potential development of downstream process flow sheets to produce high-purity vanadium and titanium chemicals;
• On our analysis, the demerger makes sense, with the market paying nothing for the remainder of the NMT business outside of its 13.8% stake in the Mt Marion lithium mine plus cash.
Market Sensitivity: Price Target: $0.50/sh - Valuation: $0.53/sh
Bull Scenario - $2.00/sh
NMT advances to commercialisation of Barambie DSO development and commercialisation of the LiOH processing plant and commercialisation of the Li-Ion Battery Recycling process.
Base Scenario - $0.50/sh
NMT advances to commercialisation of Barambie DSO development or commercialisation of the LiOH processing plant or commercialisation of the Li-Ion Battery Recycling process.
Bear Scenario - $0.25/sh
NMT fails to commercialise its other ventures outside of its core Mt Marion interest (EZL valuation - $0.26/sh)