Neometals Looks For Value Via Nickel Spin-out

Neometals has taken the shrewd step of demerging its Mt Edwards nickel sulphide project near Kambalda in Western Australia into a new company, Widgie Nickel, which will seek to list on the ASX. Management says the move will benefit shareholders by providing a dedicated nickel-focused entity to advance Mt Edwards, whilst Neometals can focus on its core battery recycling and vanadium extraction businesses.
The 100 per cent owned Mt Edwards tenure covers more than 300 square kilometres and takes in some 50km of strike over and around the “world-class” Widgiemooltha Dome structure that has hosted several historical nickel mines.
The Mt Edwards resource base features 11 deposits stretching along some 15km of strike along the Widgiemooltha Dome.
Neometals believes the nickel sulphide resources and exploration potential at Mt Edwards warrant the sole focus of a new exploration and development company.
A new estimate has bumped up Mt Edwards resources to 10.2 million tonnes at 1.6 per cent nickel for an eye-catching 162,510 contained nickel tonnes.
Management says that via Widgie Nickel the Mt Edwards project can be aggressively advanced to tap into surging demand for nickel from traditional steel and surging lithium-ion battery markets.
Neometals Managing Director Chris Reed said:“The demerger and return of our Mt Edwards asset offers existing Neometals shareholders the opportunity to realise the inherent long-term value of this exciting development story in a discrete, nickel focussed corporate vehicle … established to devote the technical, human and financial resources that the Mt Edwards project deserves. We are excited by what Widgie Nickel can achieve with the assets.”
Under the proposed demerger Neometals plans to distribute 100 per cent of Widgie shares to Neometals shareholders.
Eligible Neometals shareholders will at no cost receive Widgie shares in proportion to their existing Neometals shareholdings.
Once the demerger is complete Widgie shareholders will be eligible to partake in an entitlement offer for additional shares in the company.
ASX listing of Widgie Nickel is projected for the fourth quarter this year with a new board and management team to be appointed.
The proposed demerger is subject to shareholder approval and other conditions being met.
Neometals’ core focus will remain on the lithium-ion battery industry.
The company is firmly entrenched in the battery recycling market via its Primobius project, an equal joint venture with leading German supplier of metallurgical equipment and services, SMS Group.
The duo is building a showcase demonstration plant in Germany aiming to recover valuable materials such as cobalt, nickel, lithium and copper from end-of-life batteries.
A feasibility study and final investment decision on the operation is due next year.
Neometals also has the right to enter a 50-50 joint venture with Scandinavian resources outfit, Critical Metals, to develop a vanadium recovery project in Finland.
The companies are evaluating the viability of building a facility to process and recover high-grade vanadium chemicals from a vanadium-bearing steel making by-product generated by the Scandinavian steel maker group, SSAB.
A pre-feasibility study on the operation has forecast total free cash flow before tax of $US764 million across an estimated plant operating life of 10.5 years.
Vanadium pentoxide is seen as an emerging cathode material for lithium-ion batteries.
Construction of a pilot plant is underway.