viewNeometals Ltd

Neometals closer to completing $103.8 million sale of Mt Marion lithium interest

Purchaser Ganfeng Lithium Co Ltd has obtained Australian Foreign Investment Review Board clearance.

Acquisition sign
The company is pursuing a downstream integrated lithium strategy

Neometals Ltd (ASX:NMT) is moving towards completing the divestment of its 13.8% equity interest in the Mt Marion Lithium Project in Western Australia for $103.8 million in cash.

Purchaser Ganfeng Lithium Co Ltd advises that it has obtained clearance from the Australian Foreign Investment Review Board for its part of the transaction.

The only remaining condition to satisfy for the acquisition is confirmation by Chinese regulatory authorities of their acceptance of Ganfeng’s necessary filings.

READ: Neometals Ltd to gain $104 million by divesting Mt Marion lithium project interest

Ganfeng says that it is making good progress towards receiving confirmation regarding the principal filing with the Chinese National Development and Reform Commission.

Following this, Ganfeng will make the subsequent regulatory filings required to enable it to make the outbound completion payment to Neometals.

The parties have agreed that Ganfeng has until February 28, 2019, to satisfy the Chinese regulatory authorities’ condition. 

Completion of the divestment is due to occur within five business days of satisfaction of the condition.

Life-of-mine annual offtake

The sale agreement with co-shareholders Ganfeng and Mineral Resources Limited (ASX:MIN) will see Neometals retain a life-of-mine annual offtake of 57,000 tonnes of spodumene concentrate.

This will enable Neometals to pursue its downstream integration strategy involving the production of higher value lithium chemicals and capturing value from the recovery of critical metals, including lithium, from end-of-life lithium-ion battery recycling.

The strategy will be underpinned by certainty from proven feed supply.

The Mt Marion Lithium Project south of Kalgoorlie in WA.

READ: Neometals retains buy recommendation according to research report

It is intended that Neometals’ proposed lithium chemical refinery will process its future share of Mt Marion spodumene concentrates.

Neometals was approached by its co-shareholders to negotiate the divestment of its shareholding in Reed Industrial Minerals Pty Ltd (RIM), the joint venture company that owns Mt Marion.

Strong growth in valuation

The finalised price and terms for the divestment reflect strong growth in the valuation of RIM.

Neometals realised about $89 million in cash from its initial equity sales in RIM to Ganfeng and MinRes, which facilitated the development of what is now a globally significant lithium mine.

Total sale proceeds, including the latest divestment and Neometals’ October profit dividend, will total around $200 million on a Neometals investment with an historical cost of about $3 million.

READ: Neometals non-executive director shows confidence in downstream strategy through share purchase

Upon announcing the sale, Neometals managing director Chris Reed said: “We are delighted to have negotiated a strong outcome for Neometals shareholders.

“Neometals has realised significant further value from Mt Marion but of equal importance is the retention of our valuable offtake right which guarantees access to an industry-proven feed material for future lithium downstream processing.

 “We believe the timing is right to realise the value of Mt Marion and strengthen our balance sheet as we finalise multiple evaluation studies over downstream projects.

“The company is changing its focus and exposure away from upstream concentrates and pursuing a more holistic and integrated approach to the lithium battery thematic.”

Quick facts: Neometals Ltd

Price: 0.155 AUD

Market: ASX
Market Cap: $84.53 m

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Neometals secures lithium offtake and potential feedstock from Mt Marion...

Neometals Ltd (ASX:NMT) managing director Chris Reed updates Proactive Investors on the lithium developer’s recent divestment of its Mt Marion Lithium Project for $103.8 million.   As part of the sale agreement, Neometals has secured a binding life-of-mine annual offtake option...

on 27/3/19

3 min read