Neometals viewed as substantially undervalued as it moves to near-term profitability

Date: May 9, 2018

The company will be turning a profit as plenty of other players in the sector are a long way from generating first revenues.

Arlington’s sum of the parts valuation of $1.43 implies upside of about 360% to the company’s recent trading range

Neometals Ltd (ASX:NMT) has dispatched a 53-tonne bulk sample from its Barrambie Titanium Vanadium deposit in Western Australia as it prepares for a direct shipping ore (DSO) operation.

The sample targeted typical high-grade titanium and vanadium mineralisation from the eastern band of the deposit, which is potentially the main feed source for the planned DSO operation.

This is an important development in accessing Chinese markets, as it should confirm the optimal pathway for the extraction of titanium, vanadium and iron products.

The results of these tests will form a basis to negotiate offtake pricing.

Chief executive officer Chris Reed said: “As we progress the dual track evaluation of DSO and integrated titanium/vanadium chemical production, it is critical we give comfort to potential Chinese customers of the quality and value of the Barrambie DSO product.”

A truly diversified asset rich company

However, there is much more to Neometals than the Barrambie project and looking across the company’s range of assets, its market capitalisation of $170 million appears conservative.

It was only in mid-April that Neometals released a 48,200-tonne nickel resource within the Mt Edwards lithium project in Western Australia.

READ: Neometals reveals nickel JORC resource at Mt Edwards

The March acquisition of this brownfields lithium exploration project appeared to slip under the radar.

While it is arguably a sleeper in Neometals’ impressive portfolio of assets, expect ongoing newsflow given the highly prospective location just 40 kilometres south of Mt Marion.

Arlington sees share price upside of 360%

Indeed, Mark Fernley from the UK-based Arlington Group views the company as substantially undervalued.

His sum of the parts valuation of $1.43 implies upside of about 360% to the company’s recent trading range.

The broker recently reflected on the meshing together of Neometals’ Mt Marion lithium operation and its potential to assist in developing Barrambie.

Mt Marion complementary to Barrambie

Fernley said: “NMT’s 13.8% share in the Mt Marion lithium mine should continue to yield strong cash flow for many years.

“This should potentially allow NMT to develop the Barrambie titanomagnetite DSO project and continue to develop the associated titanium dioxide (TiO2) project.

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