Please see attached for full report.
Secondary ‘mega trend’ assets are adding up to be meaningful Investment Case NMT is in JV to develop a LIB (“lithium-ion battery”) recycling business with an initial footprint in Europe. It is very advanced, with the demonstration scale plant due for commissioning in coming months. FID for subsequent commercial starter plant (20ktpa capacity) is early CY22. The potential growth is substantial, and industry tailwinds (mega-trends) are extremely strong. NMT also has several secondary projects. The secondary European project is vanadium recovery from stockpiled steel slags in Finland and Sweden. A third project is the very large Australian Barrambie titanium/vanadium deposit, likely to be exported as a high margin concentrate. The longer-term projects are a lithium conversion facility to process Mt Marion offtake (current plan is India) and the Mt Edwards nickel & PGE early stage development/exploration. Key Points ·As a reminder, we assume the LIB recycling facility capex (for 100%, NMT share is 50%) is A$140m and EBITDA of A$74m pa for 20tkpa of feedstock. The JV is targeting modular growth to 200ktpa; ·NMT has recently updated the market on the economics of its two vanadium assets; ·We view both as secondary, and our Buy recommendation has instead been based on the lithium battery recycling opportunity (higher NPV, much larger growth potential); ·In the current bull market for resources though, the vanadium assets have potential for meaningful value; ·We value the Vanadium Slag (59% NMT) opportunity at 7cps. This is significantly lower than the Company estimate of around 33cps, but we use a higher discount rate (12% versus 10%), and we use lower vanadium prices and higher costs. On spot prices (US$10/lb), our NPV12 increase to 30cps. Momentum in vanadium prices, plus current shortages suggest prices could continue to rise. Prices are still well below previous peaks; ·We value the Barrambie vanadium/ilmenite/iron opportunity (100% NMT) at 11cps. We assume A$175m capex (2.4Mtpa) and opex US$140/t and selling prices of US$165/t. Our assumptions err closer to tin / tantalum capex requirements (crush, mill, spiral, no flotation), but given the significantly higher feedstock grade, we hope we are drastically too high for our capex assumption. On our assumptions, Barrambie generates A$35m pa post tax free cash flow (100% basis). On spot prices (we estimate around US$265/t), our Barrambie NPV increases to 99cps (100% basis), or free cash flow of A$127m pa. We expect a partner to fund capex and earn an interest in the project; ·Separately, we are also watching with interest the Mt Edwards (Nickel in WA) project. The recent palladium grades were very interesting. If palladium is proven to exist in payable quantities the potential for a re-rating is high. For now, we only attribute a small nominal project value; ·Our NMT valuation is $1.02, of which over three quarters is the LIB recycling opportunity. On spot prices, our valuation increases to $1.53/sh and the non-core assets contribute over half our valuation; ·Consequently, the longer a bull market in resources continues, and the more NMT can de-risk the development assets, the more diversified the company will become, in our view; ·We maintain our Buy recommendation.
Estimated project contribution – Base Case | 
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