Neometals PFS points to $1b free cash over 10.5 years

ASX-listed Neometals has tabled an impressive pre-feasibility study on the proposed production of high-purity vanadium pentoxide from high-grade vanadium-bearing steel making by-products or slag in Finland. The Perth-based company says its vanadium recovery project is tipped to generate total free cash flows before tax of $US764 million or almost $A1 billion at an average of about $US72.7 million a year across an estimated plant operating life of 10.5 years.

Neometals has the right, subject to funding certain evaluation studies, to enter into a 50:50 joint venture with Scandinavian resources outfit, Critical Metals to develop a vanadium recovery project.

The companies are currently evaluating the viability of building a facility designed to process and recover high-grade vanadium chemicals from a vanadium-bearing steel making by-product generated by the Scandinavian steel maker group, SSAB.

Vanadium pentoxide is seen as an emerging cathode material for lithium-ion batteries.

Neometals’ pre-feasibility study points to annual production of 13.4 million pounds of high-purity vanadium pentoxide per annum, which has been underpinned by the 10-year slag supply agreement with SSAB.

Neometals Managing Director, Chris Reed said: “(The pre-feasibility study) has confirmed the robust economics of combining this high-grade feed stock with our innovative process flow sheet to deliver some of the highest-grade, lowest-cost vanadium chemicals globally with a zero-carbon footprint.”

“The collaborative relationship (with Critical Metals) has delivered a realistic and realisable project which can provide this emerging critical battery material into Europe from existing industrial by-products, truly embracing their circular-economy desires.”

Neometals is Critical’s largest shareholder, holding almost 20 per cent of its issued capital.

Other key metrics in Neometals’ pre-feasibility study are a CAPEX of $US183.4 million, a capital payback period of less than four years, a pre-tax net present value of $US230.5 million and an internal rate of return of 31.2 per cent.

Significantly, according to the company, net operating costs of recovered vanadium pentoxide are forecast to average $US4.25 per pound, placing the project in the lowest quartile on the industry operating cost curve.

Construction of a pilot plant is already well under way.

Neometals says pilot plant trials remain on schedule to be completed in July this year, around the same time as a definitive feasibility study has been slated to kick off. A final investment decision is on the cards in the second half of calendar 2022.

The proposed development scenario envisaged in the pre-feasibility study involves a vanadium recovery processing plant, with an annualised throughput capacity of 200,000 tonnes per annum, being built at a designated industrial site at Tahkoluoto Port in Pori.

Critical Metals’ slag purchase agreement means the JV would not need to rely on a mine and a concentrator like existing primary producers, Neometals says.

Feed stock is to be sourced from steel by-product slag grading 3.93 per cent vanadium pentoxide.

Time-line assumptions made in the pre-feasibility study include commencement of construction in mid-2023 and production start-up in December 2024.

Neometals says the positive pre-feasibility study supports its pivot towards more sustainable materials recovery and recycling projects to complement its upstream mineral projects.

In the wake of what appears to be a very encouraging study, the company intends funding the next stage of evaluation studies, comprising the pilot plant testing phase and definitive feasibility study.

Critical Metals will work on government and environmental approvals for the vanadium recovery project and manage the SSAB relationship, Neometals says.

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