Neometals have amassed an $80m war chest after banking another $19.65m paid by Mineral Resources, their partner in the Mt Marion Lithium project near Coolgardie in W.A.
Mineral Resources have exercised a call option to purchase another 13.1% of the Mt Marion project by paying Neometals another $19.65m.
Mineral Resources and Chinese partner, Ganfeng Lithium Co, now own 43.1% of the project each with Neometals now in a balance of power position between the parties with a 13.8% free carried interest.
The company is now sitting on around $80m in cash after progressively selling down their shareholding in Mt Marion despite already giving some back to shareholders by way of a dividend.
The company re-wrote the playbook for junior mining companies looking to develop big projects by putting together a solid and workable 3 way deal between the parties.
They first locked down Ganfeng for a 100% off take contract to sure up the project on paper and then convinced mining heavyweight Mineral Resources to pay for the construction of the plant in return for equity in the project.
The outcome of all this is that Neometals still only have 565m shares on issue, $80m cash in the bank and a free carried 13.8% interest in the project that local broking house Euroz say will earn them $12m next year and $16m the year after.
In fact Euroz have again upped their price target for Neometals to 60c – well above the last traded price of 47.5c.
Neometals have also formed a second 70:30 partnership with Mineral Resources for the purposes of creating the first Lithium downstream processing project in WA.
The partnership has developed a proprietary commercial process known as “Eli” for the purposes of building an LCE lithium hydroxide plant suitable for value adding to and upgrading Lithium that has been mined in WA.
They even have the feedstock locked down by cleverly negotiating with Ganfeng to claw back 50% of the Mt Marion off take from them after year 3.
By Matt Birney
