This announcement contains inside information

22 August 2024

Neometals Ltd

("Neometals" or "the Company")

Neometals Strategy Update

Sustainable process technology developer, Neometals Ltd (ASX: NMT, AIM: NMT & OTCQX: NMTAY) ("Neometals" or "the Company"), provides a strategy update with the following key measures to be implemented immediately:

·      Restructuring and right-sizing of the organisation and its underlying cost base to reflect a new strategic refocus;

·      Prioritising the progression of Primobius, the LiB Recycling joint venture with SMS group GmbH, through industrial validation to commercialisation; and 

·      Capital management initiatives through the targeted sale of non-core assets and strategic partnering to facilitate the ongoing development of the Company's other technologies.

Neometals has adapted its corporate strategy in response to prevailing battery materials prices and market sentiment. A simplified structure and focus on the Primobius plant building joint venture targets an optimum path to creating and realising shareholder value.

These steps and the Company's existing austerity plan are expected to lower the corporate and administrative cost base by approximately 40% year-on-year. This, coupled with the recently announced placement raising approximately A$4.5M,^[1] is intended to support the commercialisation of Primobius with the aim of becoming a leading supplier of LiB Recycling plants to the global EV supply chain.

Primobius' patented recycling process is being industrially validated through the delivery of a 2,500 tpa plant for Mercedes-Benz in Kuppenheim, Germany. Once successfully commissioned and accepted by the client, Primobius plans to then offer larger plants to its growing pipeline of licence holders, MOU counterparties and new customers.  Primobius' preferred business model is to offer plant supply contracts and technology licences, rather than operating recycling plants as principal.

The pre-commercial lithium and vanadium recovery technologies have been developed to pilot scale but require significant additional capital to demonstrate proof-at-scale. Despite the prolonged lithium and vanadium commodity price downturns, the engineering cost studies indicate both technologies can potentially deliver users a step change in operating costs and carbon footprints of materials, critical for the long-term energy transition. Neometals is actively supporting these distinct business units to become independently funded and will consider options to potentially sell down beneficial ownership, by procuring commercial partners for those business units.

Neometals Managing Director Chris Reed said:

"We have taken these tough but necessary decisions to simplify our strategy, focus and organisation to prioritise the growth of the Primobius revenue base and forward order book. Primobius is a market leader, delivering a first-of-a-kind integrated recycling plant for Mercedes-Benz, a global marquee carmaker. The headwinds in the battery materials sector dictate that we must adapt to suit conditions by conserving capital, securing partners to fund our pre-commercial technologies and divesting non-core assets".

Updates have been provided below in alignment with the Company's corporate strategic pillars. These pillars represent Neometals' key areas of focus:

Capital

In addition to the recent injection of capital, Neometals will continue and intensify its austerity plan to further reduce cash outflows and extend its capital horizon. The board will allow the option to acquire a precious metal recovery process and plant in the US to lapse.² As at 21 August 2024, Neometals has approximately $9.3M in cash and no debt.

People

The necessary restructure to match the scope and scale of the new strategy unfortunately impacts a number of roles within the organisation which have been made redundant. The individuals affected have been notified and Neometals is supporting them as it works through the required processes. The LiB Recycling team, headed by Jenny Purdie (COO), retains its capacity to deliver the work packages managed by Neometals on behalf of Primobius.

Product Readiness

Primobius' commercial scale recycling plants (~20,000 tpa) are the closest "Product" to being commercially ready for sale within Neometals' portfolio, under plant supply and technology licensing business models. A precondition to "Product Readiness" is the successful commissioning and acceptance of the 2,500 tpa Mercedes Pilot Plant. The acceptance testing for the shredding and beneficiation section of the Mercedes Pilot Plant ("Spoke") is currently expected in the 1H CY25 and the refinery section ("Hub") in the 2H CY2025, with other commercial milestones aligned accordingly.^3[2]

Partners

Neometals' key partner is SMS group GmbH, the 50% co-owner of Primobius. Neometals' partner in its lithium processing technology ("ELi™") is Mineral Resources Ltd (30%).

Neometals will focus on securing additional partners to fund the further development of its other pre-commercial technologies through the demonstration, industrial validation and commercial stages.

Portfolio

Neometals is focused on reshaping its portfolio of assets to become less complex and more easily understood and is prioritising the delivery of its highest-value, near-term growth opportunities. This includes the planned divestment of its upstream mining assets with the freed capital available to support its priority projects. The Company remains committed to its core competency of developing processes for the recovery of critical materials from high-value waste streams through urban mining.

All intellectual property is held in special purpose vehicles separate from their commercialisation vehicles. The commercialisation vehicles hold technology licences and they aim to prosecute business models ranging from plant supply to principal operations. Primobius has a low-capital plant supply and low-risk licensing business model and is core to Neometals' portfolio.

For more detailed information please refer to the updated presentation available at: https://www.neometals.com.au/en/investors/presentations/

Authorised by the Board of Neometals

- ENDS -

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About Neometals

Neometals facilitates sustainable critical material supply chains and reduces the environmental burden of traditional mining in the global transition to a circular economy.

The Company is commercialising a portfolio of sustainable processing solutions that recycle and recover critical materials from high-value waste streams.

·      Neometals' core focus is its patented, Lithium-ion Battery ("LiB") Recycling technology (50% NMT), being commercialised in a 50:50 incorporated JV (Primobius GmbH) with 150-year-old German plant builder, SMS group GmbH. Primobius is supplying Mercedes-Benz a 2,500tpa recycling plant and operates its own LiB Disposal Service in Germany. Primobius' first 21,000tpa commercial plant will be offered to Stelco under an existing technology licence for North America.

Neometals is developing two advanced battery materials technologies for commercialisation under low-risk, low-capex technology licensing business models:

·      Lithium Chemicals (70% NMT) - Patented ELi™ electrolysis process, co-owned 30% by Mineral Resources Ltd, to produce battery quality lithium hydroxide from brine and/or hard-rock feedstocks at lowest quartile operating costs. Pilot scale test work and Engineering Cost Study update planned for completion in DecQ 2024; and

·      Vanadium Recovery (100% NMT) - Patent pending hydrometallurgical process to produce high-purity vanadium pentoxide from steelmaking by-product ("Slag") at lowest-quartile operating cost and carbon footprint.

For further information, visit: www.neometals.com.au.