Transcription of The Stock Network Interview with Neometals (ASX:NMT) Managing Director and Chief Executive Officer, Christopher Reed.
Lel Smits: Neometals is developing sustainable process technologies designed to recover critical materials from high-value brine and or hard rock feedstocks and steel making by-product streams. The company is now advancing its patented e-live process for producing lithium hydroxide from lithium chloride and hard rock feedstocks. This technology is co-owned 30% by major Australian materials sector company Mineral Resources.
Neometals is also progressing its VRP technology used to produce high-purity vanadium pentoxide from steel making waste. The company is planning to develop the first commercial plant utilizing this technology through a licensing business model. Joining me today is Neometals Managing Director and Chief Executive Officer Christopher Reed.
Chris, welcome to the Stock Network.
Christopher Reed: Thanks, great to be here.
Lel Smits: Now, Neometals patented e-live process for producing lithium hydroxide is now well into its development journey. Can you outline what this process entails?
Christopher Reed: Yeah, sure. So e-live we’ve been developing for more than a decade with our partner Mineral Resources. Essentially what it does, it’s a proprietary electrolysis process that can convert lithium chloride solutions into lithium hydroxide as a primary product, which we can then carbonate and make a lithium carbonate.
It’s a lower cost, lower carbon process. Essentially what we do is we replace the traditional chemical precipitation route where they use soda ash. So the South American brine producers have to bring in brine via ship from overseas and cart it to all sorts of exotic locations and do the conversion.
So we enable them to do that at site with almost eliminating reagents and utilizing electrons. In terms of maturity of the process, we recently announced that we have partnered with Rio Tinto. This was the culmination of 2 years of piloting in secret on one of their deposits and proving that it can produce very, very high purity products.
Our previous feasibility studies have indicated that it is lowest quartile cost. We’ve been consistent as we’ve been in pursuing this because it can be a game changer for the production of lithium chemicals.
Lel Smits: Excellent. Now your VRP technology is targeting the production of high purity vanadium pentoxide from steel making slag. How far progressed is the development of this technology and what are your plans really to commercialize this asset?
Christopher Reed: Yeah, sure. Look, you know, and then people would say, you know, vanadium, that’s an interesting sort of commodity.
The vanadium, the big driver behind that is stationary energy storage and the vanadium flow battery, which, you know, we’ve long held the belief it was invented in Sydney by Professor Maria Skilikazos. Apologies if I haven’t got the name right. And it is the best way to store electricity long-term.
And so we were presented with an opportunity to have access to the world’s highest grade steel slags, essentially, which come out of Scandinavian ores. And so we developed a process. We started in 2020.
So we developed the process ourselves from scratch. We couldn’t use acid because it would generate acid-bond tailings, which is a bit taboo up there. So we developed a gentle alkaline sort of leach to get the vanadium out of these steel slags.
We went through scoping pre-feasibility and feasibility studies. You know, we’ve published our numbers there. It’ll be the world’s largest source of high-purity vanadium, tailor-made for making into electrolyte for the vanadium batteries, or to alloy with titanium and aluminium for aerospace alloys.
I’m pleased that we have fantastic federal and European Union support. We have the European Union as a shareholder in the project. They have been providing funding into that, and we’re expecting to get more.
The Finnish government has given us great incentives, capital costs, subsidies, investment tax credits. So, you know, all things going well, and we are in the financing stage. So we have an equity partner selection process ongoing.
The vanadium prices are starting to turn. I mean, unfortunately for us, after we put out the study in the next 6-months, the price halved. They’re now recovering.
So, you know, we’re hopeful that we could get to an investment decision perhaps next calendar year and to be in production later on. You know, we’ve got a multiple sources of feedstock. So, you know, we’re very, very happy with that project.
Lel Smits: Excellent and finally, Chris, Neometals is now in the process of selling its 50% stake in the Promobius and the LIB recycling technology to joint venture partner, German plant builder, SMS Group, GMBH. What motivated Neometals’ decision to exit this business? And also, will the company report again from this transaction?
Christopher Reed: Yeah, good question. I mean, in terms of the decision to exit Promobius, it was one driven out of necessity. So we’ve been commercializing that technology. We originally started in sort of 2017.
We piloted it in 2018-19, did an MOU with SMS. Then we incorporated Promobius and were 50-50 shareholders in 2020. We had COVID interrupt a little bit.
We ended up building a pilot plan in and demonstrating that technology via commercial third-party recycling and making black mass. We were then piloting our HydroMet flow sheet for the backend. And then we secured a deal with Mercedes-Benz in 2022.
We’ve been designing them a plant in 2023. We got our first purchase order. So we’ve been building and now that’s in the commissioning stage.
I think that has taken a little longer than we thought. The Lithium prices, I think since sort of the end of 2022, have dropped precipitously. So that hasn’t helped the actual economics of recycling.
When the prices are high, those batteries have got an in-situ value of more than 10,000 USD a tonne. That would be sitting somewhere around 4,000 USD a tonne. And our operating costs would be about 4,000 a tonne.
So in terms of the economic drivers to do that, unless you are legally obligated, which in the EU they are, outside of that, there’s no real economic advantage in recycling because the prices are low. That won’t be permanent. But we would have to fund the working capital requirements through the generation of royalties that come off the commercial plants.
And the market is such that we just can’t commit to keep funding that. So we negotiated with our partner SMS and we announced the deal where we get money up front, just under AUD$9M equivalent, and we’ll pick up an index of AUD$12.5M via a commission on the sales of new plants. So SMS will be taking that business forward.
It will strengthen our balance sheet. It will enable us to sharpen our focus on developing our Barambi Gold project, advancing Eli with Rio Tinto. The VRP is largely funded by the EIT, but we still have ongoing commitments there.
And to answer your last point, yes, we are expecting to report a gain on disposal and the cash will definitely strengthen the balance sheet and alleviate the need to do any capital raisings for the foreseeable future. Well, great to hear. Thank you for the update from Neometals and look forward to seeing what happens next for the company.
Lel Smits: Thank you, Chris.
Christopher Reed: Very welcome. Have a great day, Lel.
Ends