Neometals Ltd - Barrambie Titanium Project PFS and Ore Reserve Update

Highlights

-       Neometals completes Class 4 Pre-Feasibility Study Update (“PFS Update”) for production of Direct Shipped Ore (“DSO”) and Mixed Gravity Concentrate (“MGC”) from Barrambie;

-       PFS Update includes mining from titanium-rich Eastern bands at Barrambie with a staged capital efficient approach to development:

-       Initial A$78.1m capital requirement for 1 year production of DSO with mining, crushing, and screening only;

-       Followed by a further A$137.2m to construct a crush, mill, beneficiate (“CMB”) plant for a further 12 years of MGC production.

-       Project NPV (pre-tax) of A$374.9m A and IRR of 45%;

-       Average free cash (before tax, depreciation, and amortisation) of A$103.3M p.a. over the first 5 years; and

-       Probable Ore Reserve update to 27.6 Mt at 22.3% TiO2, 43.7% Fe2O3 and 0.57% V2O5.

May 15, 2023 – Emerging sustainable battery materials producer, Neometals Ltd (ASX: NMT AIM: NMT) (“” or “the Company”), is pleased to announce the completion of an update to its Association for the Advancement of Cost Engineering (“AACE”) Class 4 (+/- 25%) PFS for the production of DSO and MGC from its 100% owned Barrambie Titanium Project (“Barrambie”)[i]. Following recent successful smelting trial results[ii] and announcement of an offtake term sheet with Jiuxing Titanium Materials (Liaonging) Co. Ltd (“Jiuxing”) (“Jiuxing Offtake Term Sheet”)[iii], the PFS Update has delivered compelling financial metrics allowing the project to move into a definitive feasibility study phase.

Figure 1: Highlights of PFS Update

The PFS Update uses the Neometals 2018 Mineral Resource Estimate[iv] as a basis to update its Ore Reserves, estimated using the guidelines of the 2012 edition of the Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (“JORC Code (2012)”).  The Barrambie Mineral Resources reported are inclusive of Ore Reserves. The production targets referred to in this announcement are based on 100% Probable Ore Reserves.

Neometals has invested in excess of $A40 million in the acquisition, exploration and evaluation of Barrambie since 2003. The Company has in more recent times maintained a primary focus on recovering a titanium product from Barrambie to realise maximum value for shareholders. The PFS Update assumes a CMB option at Barrambie on predominantly Eastern Band titanium-rich mineralisation to produce 12 months of DSO, followed by MGC. The PFS Update removes further processing of MGC via a low-temperature reduction roast (“LTR”) and magnetic separation at a second site alongside the Dampier to Bunbury Gas Pipeline east of Geraldton. This option can be considered in the future.

Chris Reed, Neometals’ Managing Director said:

The team has done an outstanding job updating the PFS for development of a concentrate-only operation contemplated in the Jiuxing Offtake Term Sheet, the results speak for themselves. This lower capital, staged development of Barrambie would speed the addition of approximately 4% to global supply. Our customer Jiuxing, is the largest chloride-grade titanium slag producer in the largest titanium market, China. The market-linked pricing and floor price mechanisms for the DSO and MGC products are evidence of the strong market fundamentals for titanium and emerging structural supply deficit. We look forward to taking the project through the final feasibility and approvals stages and developing this hugely strategic asset.”

Figure 1: 3D Representation of Barrambie CMB Site

Background

As previously announced2 a mixed gravity bulk sample from Barrambie mineralisation was successfully smelted at industrial scale with other commercially available titanium sources to produce +90% TiO2 chloride grade titanium slag (an intermediate product for production of pigment or sponge titanium) with potential offtake partner Jiuxing. With the Jiuxing Memorandum of Understanding (“Jiuxing MoU”)[v] [vi] expanded upon via the announcement of the Jiuxing Offtake Term Sheet, together with the completion of this PFS Update, the key data points are available for binding take-or-pay offtake with Jiuxing (“Offtake Agreement”). The Offtake Agreement is a key pillar in Neometals’ Barrambie strategy to derive value from the Mineral Resource on a capital light basis.

The Jiuxing Offtake Term Sheet outlines the key principles that will form the basis for the Offtake Agreement. The key commercial parameters contemplated include an initial 12 months of DSO supply followed by 48 months of MGC. The sales terms will see DSO on actual delivered cost CIF China Main Port basis (including royalties) plus a fixed margin. The MGC price is derived from Australian ilmenite concentrate 55-58% TiO2 CIF China Main Port basis, multiplied by a payability factor, subject to a floor price with annual upward only adjustments with reference to the greater of relevant CPI measure and a mechanism based on Australian gas, diesel and labour indices.

The PFS Update engineering capital and operating cost estimations are accurate as of November 2022 and consider the Barrambie value chain from DSO to production of MGC.

Table 1: Typical assay qualities of the various Barrambie product options

Neometals has commenced an early contractor engagement process and the PFS Update will form a key component of the due diligence required by a successful ‘build-own-operate’ partner. This development model was used successfully by Neometals and its partners to advance the Mt Marion Lithium Project in 2015, which is now the world’s second largest producer of spodumene (hard-rock lithium) concentrates; (Neometals sold its final equity position in the project in 2019 and its offtake right in 2021). The benefit of a staged development approach (DSO followed by MGC) is that the DSO operation could begin to generate cashflow whilst Neometals constructs the CMB plant with a ‘build-own-operate’ contractor in parallel.

Further, a staged development approach will enable Neometals to stage capital investments for earlier project cashflows.  Neometals has produced chloride grade slag (an intermediate for the production of pigment and titanium metal sponge) from the smelting of Barrambie MGC at Jiuxing’s commercial smelter in China reducing marketing risk and enabling offtake in a global market with transparent pricing.

Figure 3 shows an indicative timeline of next steps for the development of Barrambie.

Figure 3: Indicative Timeline – Barrambie

PFS Update Outcomes

Mineral Resources

Independent geology and mining consultants, Snowden Optiro, used the Barrambie Mineral Resource Estimate as reported on 17th April 20184 as a basis to undertake a detailed mine planning process and to estimate and report on the May 2023 Ore Reserve in accordance with the JORC Code (2012).

The Mineral Resource estimate, which is inclusive of Ore Reserves, contains total Indicated and Inferred Mineral Resources of 280.1 million tonnes at 9.18% TiO2 and 0.44% V2O5 to a maximum depth of 80m, reported above a cut-off grade of 10% TiO2 or 0.2% V2O5.

Table 2: Barrambie Project Mineral Resource Estimate as at April 2018

-          Reporting criteria: ≥ 10% TiO2 or ≥ 0.2% V2O5; small discrepancies may occur due to rounding; and

-          Mineral Resources reported are inclusive of Ore Reserves

ENDS

For further information, please contact:

Chris Reed

Managing Director

T +61 8 9322 1182

E [email protected]

Jeremy McManus

General Manager, Commercial and IR

T +61 8 9322 1182

E [email protected]

The entire press release of the company can be found here: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02665735-6A1150062?access_token=83ff96335c2d45a094df02a206a39ff4

About Neometals

Neometals is an emerging, sustainable battery materials producer. The Company has developed a suite of green battery materials processing technologies that reduce reliance on traditional mining and processing and support circular economic principles.

Neometals’ three core battery materials businesses, listed below, are commercialising these proprietary, low-cost, low-carbon process technologies in incorporated joint ventures:

-          Lithium-ion Battery (“LIB”) Recycling (50% equity) – to produce nickel, cobalt and lithium from production scrap and end-of-life LIBs in an incorporated JV with leading global plant builder SMS group. The Primobius JV is operating a commercial disposal service at its 10tpd Shredding ‘Spoke’ in Germany and is the recycling technology partner to Mercedes Benz. Primobius’ first 50tpd operation, in partnership with Stelco in Canada is expected to reach investment decision in Q4 2023;

-          Vanadium Recovery (72.5% equity) – to produce high-purity vanadium pentoxide via processing of steelmaking by-product (“Slag”). Targeting a 300,000tpa operation in Pori, Finland, underpinned by a 10-year Slag supply agreement with leading Scandinavian steelmaker SSAB. Finnish project investment decision with JV partner, Critical Metals, expected Q2 2023. MOU with H2Green Steel for up to 4Mt of Slag underpins a potential second operation in Boden, Sweden; and

-          Lithium Chemicals (earning 35% equity) – to produce battery quality lithium hydroxide from brine and/or hard-rock feedstocks using patented ELi® electrolysis process owned by RAM (70% NMT, 30% Mineral Resources Ltd). Co-funding pilot plant and evaluation studies for a 25,000tpa operation in Estarreja with Portugal’s largest chemical producer, Bondalti Chemicals S.A.

[i] For further details see Neometals announcement titled “Robust Outcomes from Barrambie Titanium Project PFS” dated 17th November 2022.

[ii] For further details see Neometals announcement titled “Successful Commercial-Scale Smelting Trials for Barrambie” dated 2nd November 2022.

[iii] For further details see Neometals announcement titled “Offtake Term Sheet with Jiuxing Titanium Executed” dated 20th April 2023

[iv] For further details see Neometals announcement titled “Updated Barrambie Mineral Resource Estimate” dated 17th April 2018.

[v] For further details see Neometals announcement titled “Barrambie - MOU for Cornerstone Concentrate Offtake” (“Jiuxing MoU”) dated 16th April 2021.

[vi] For further details see Neometals announcement titled “Barrambie Pilot Plant and Offtake update” dated 23rd December 2021.