Steel, Chemistry and Neometals’ Recent Rally
Perth-based explorer Neometals Ltd. (ASX: NMT) (“Neometals”) has been involved in the successful production of lithium concentrates from Western Australia’s Mt Marion operation since 2016. The project is jointly owned by Neometals (13.8%), one of China’s largest lithium producers Jiangxi Ganfeng Lithium Co., Ltd (43.1%) and a local mining services business (43.1%). Ganfeng signed a life-of-mine offtake agreement on Mt Marion, and as lithium prices have increased, so have Neometals’ earnings.
Now the company is looking to fast track the launch of its polymetallic Barrambie deposit on the back of a recovering steel market. A 2005 JORC Mineral Resource shows that Barrambie’s Eastern Band is one of the highest grade hard rock titanium deposits globally, boasting 47.2 million tonnes @ 22% TiO2, but the site also features significant vanadium and iron values that could be extracted alongside titanium using Neometals’ proprietary extraction processes.
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Crucially, Neometals already has a completed Definitive Feasibility Study regarding the production of ferrovanadium from Barrambie ore from 2009, and the company promises metallurgy that will facilitate the simple extraction of titanium, vanadium and iron values from its Barrambie ore at costs in the lowest quartile. Aside from the lithium market growth, share prices were further buoyed towards the end of 2017 when significant high-grade intercepts returned from recent drilling included 71.0 metres at 34.1% titanium oxide and 0.86% vanadium pentoxide from surface to end of hole.
Global steel production grew by 5.3% in 2017 compared to 2016 on the back of unexpected resilience in both developed and developing countries, The World Steel Association reports; China, which accounts for 49% of global steel production, showed particularly high growth of 5.7%, a deviation from its recent trend of slowing growth in steel production and use. With titanium and vanadium prices at near five-year highs, this accelerated development activity at Barrambie makes complete economic sense as long as Neometals can achieve production swiftly.
Thankfully, in 4Q17, the company prepared 2.7 tonnes of bulk samples of magnetic concentrate with an average of 36.1% titanium oxide and 0.73% vanadium oxide for testing at its pilot plant facility in Montreal, Canada. The company is exploring the option to ship ore directly into the market, presumably to generate revenues in support of the planned construction of a full processing plant to give high purity TiO2, V2O5 and Fe2O3. Neometals has already received regulatory approvals for the mining of a further 50,000 tonnes of bulk samples from the eastern band, indicating that operations are progressing well.
Neometals have patented numerous extractive metallurgical processes that are now available for commercial license. These processes include cyanide-free gold and silver processes, nickel laterite processing, titanium and vanadium processes, energy from sulphide-based ores and rare metals recovery processes and represent a key component of the company’s offering since they result in notably lower production costs. Good chemistry is fundamental to becoming integrated into the battery supply chain as it opens the door for recycling and direct extraction as sources of minerals, as well as granting the ability to directly manufacture battery components such as anodes.
Clearly, Neometals have already received significant benefit from entering the lithium space in 2016, but the company must diversify its offering to avoid unnecessary disruption caused by volatile markets during boom time. The lithium train has much steam yet, but Barrambie’s launch offers considerable security during the inevitable correction period.