The share price of ASX junior mining company Neometals Ltd (ASX:NMT) has been on an absolute tear so far in 2021. After starting the year valued under 30 cents, shares in Neometals have surged close to 100% higher, and are now trading at $0.58. Let's take a look at some of the reasons why investors might be getting excited about Neometals.
Company background
After starting out life as more of a pureplay lithium miner, Neometals has used its industry expertise to transform itself into a diversified materials company. It now operates projects at various stages in the minerals value chain, from exploration through to production and refinement. The company's aim is to create sustainable, low-risk, long-term projects centred around innovations in energy storage and electronic vehicles.
Neometals now has three core, wholly-owned projects: a lithium-ion battery recycling plant, a lithium refinery project, and a titanium and vanadium project in Barrambie, Western Australia. In addition, Neometals also owns a long-term lithium and nickel exploration project called Mt Edwards, also located in WA. And it is pursuing other research and development initiatives, mostly focused on lithium production and refinement.
Demerger news
Neometals has released a flurry of announcements recently – mostly concerned with its Mt Edwards exploration project.
At the beginning of July, Neometals announced its intention to demerge its Mt Edwards nickel assets. This came shortly after Neometals reported significant estimation upgrades across multiple of its nickel resources at Mt Edwards.
The spinoff would create a new standalone company called Widgie Nickel Limited – named for the Widgiemooltha township in WA where the Mt Edwards project is located – which would then also seek to be listed on the ASX. Under the plan, existing Neometals shareholders would be offered free shares in the new entity and would then have the option to participate in a subsequent capital raise.
Speaking at the time of the announcement, Neometals' Managing Director, Chris Reed, stated that the demerger plan offered "shareholders the opportunity to realise the inherent long-term value of this exciting development story in a discrete, nickel focussed corporate vehicle."
Other recent news
Another notable development – announced at the beginning of June – was the sale of Neometals' offtake rights for lithium spodumene concentrate produced by the Mt Marion Lithium Project. Neometals agreed to sell the rights back to Reed Industrial Minerals, the company that currently owns the Mt Marion Project, for $30 million. The cash injection meant that the value of Neometals' cash, receivables and investments increased beyond $100 million.
How has the Neometals share price responded?
The Neometals share price has jumped almost 20% higher since the beginning of July and is now within touching distance of the 52-week high price of $0.59 it reached in early May. However, despite the gains already made so far this year, continuing developments at the company's Mt Edwards Project still make the Neometals share price one to watch over the next few months.
