Neometals (ASX:NMT) has fallen -2% in Monday trades as it gets rid of one component of its business that right now is proving beneficial for many other companies part of a basket spearheaded by Metallium Ltd – its own lithium battery recycling business, from which it could recover key tech and critical metals.
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While it’s fair to say lithium batteries don’t pose too exciting a value proposition right now – the word “lithium” is key to that position – the assets do contain other metals, notably copper and graphite. But with the plan to ditch this part of its business in motion since last month, a German JV partner, SMS Group GmbH, has now picked up a 100% stake in the overall asset.
Neometals has walked away with $9M in cash; NMT cited on Monday it had $10M cash in the bank – suggesting that without this deal, the company would’ve been staring down its last million.
For those playing at home, NMT 1Y returns are down -40%. Perhaps unsurprisingly, as far as the HotCopper forums go, not all investors were happy with the move.
Neometals can retrieve another $12M from SMS over the next decade in a deal that sees 2% of revenues delivered back, but really, that means $1M a year, best case. And not all are overly confident in Neometals’ cash burn rates.
So what’s the company doing now? It most recently inked an MOU with Rio Tinto – non-binding – to examine a process that can turn lithium brine into hydroxide, which sounds promising, but then you’ve got the issue of lithium prices.
To that end, the company has landed upon a new value prop: It’s going to start mining gold. In an announcement from 10 days ago, the company flagged a series of hits under 10m grading at under 2g/t.
Make of that what you will.
NMT last traded at 4.9cps on Monday.
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