Shares in Neometals Ltd (ASX: NMT) are catching bids today and now trade 6.22% higher at $1.11 apiece.
Investors are driving up the Neometals share price following a company announcement on a new commercial agreement with a Portugal-based chemical company. Here are the details.
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What did Neometals announce?
Neometals advised that its co-owned company, Reed Advanced Materials Pty Ltd, has entered into a binding co-operation agreement with Portugal's largest chemical producer, Bondalti Chemical.
Reed, a holding company that is 70% owned by Neometals with the remaining 30% claimed by Mineral Resources Limited (ASX: MIN), is also the holding company for the ELi processing technology.
Neometals says that ELi replaces conventional, carbon-intensive chemical conversion of lithium chloride solutions with electrolysis to produce lithium chemicals, potentially utilising renewable energy.
ELi substantially reduces the requirement and transport of reagents. This presents the opportunity to improve sustainability, operating and capital costs for both spodumene and brine lithium projects.
To date, the process has successfully produced battery quality lithium hydroxide from operating spodumene and brine operations, according to the announcement.
The company has agreed to terms with Bondalti to evaluate commercialisation of its ELi lithium process in Europe. A proposed 25,000 tonne-per-annum (tpa) lithium refinery in Portugal will be the first ELi deployment to produce battery-quality lithium hydroxide and lithium carbonate, per the release.
Under the agreement, Bondalti and Reed will co-fund construction and operation of a pilot plant in Portugal. The companies will complete evaluation studies over 18 months at a shared cost of US$4 million.
The pilot plant and proposed commercial refinery will be integrated with Bondalti's existing chlor-alkali operations,
which share "significant processing commonalities with the ELi process."
If the agreement plus ongoing feasibility and evaluation studies are successful, the parties may establish a new entity called JVCo. Reed would then provide JVCo with a royalty-free licence to use the ELi process in the refinery operation.
Management commentary
Speaking on the announcement, managing director of Neometals Chris Reed said:
We are eager to take another step towards commercialising our ELi® process and building a globally competitive, high purity 'battery quality' lithium chemical facility. Bondalti is a highly credentialed chemical producer and operator of chlor-alkali facilities which use electrolysis to produce sodium hydroxide. Moreover, Bondalti's existing by-product hydrogen and chlorine gases provide a ready market for the by-products of the ELi® process.
Reed added:
The synergies of first-class technical skills and infrastructure at Estarreja maximise the probability of technical success in the full scale pilot plant trials and enhance the potential financial metrics of its first commercial application. This is another demonstration of our ability to secure strong operating partners to co-fund the commercialisation of our project pipeline. The co-operation is an exciting milestone for Neometals and its ELi co-owner, Mineral Resources Ltd, who have been steadfast supporters of this potentially game-changing technology since its genesis in 2012.
Neometals share price snapshot
In the past 12 months the Neometals share price has soared over 436%. It has rallied 328% just this year to date.
It has reversed course in the past month, however, and is 1.32% down in that time. Furthermore, it has slid another 4% in the last week of trading.
