The Neometals Ltd (ASX: NMT) share price is leaping higher on Friday after the company announced it could become a notably cheap producer of vanadium.
The company is working to obtain a 50% stake in a venture developing a project to recover vanadium from steel-making by-product, slag.
Now, an operating cost estimate has found the project could be among the lowest-cost producers of the mineral.
At the time of writing, the Neometals share price is $1.02, 3.55% higher than its previous close. Though, earlier today it hit a high of $1.06, representing a 7.6% gain.
Let's take a closer look at the latest news from the mineral explorer.
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Why is the Neometals share price lifting?
The Neometals share price is taking off following an update on the Vanadium Recovery Project's feasibility study.
An engineering cost study has found the project – expected to be located in Finland – could be capable of producing 19 million pounds of vanadium each year at an average net operating cost of US$4.38 a pound. That places it in the lowest quartile of the industry cost curve.
Such an operating cost is higher than the project's pre-feasibility study's prediction of US$4.25 a pound. However, the latest study is notably more accurate and predicts greater production.
The latest findings have increased the project's expected annual throughput from 200,000 tonnes per annum to 300,000 tonnes per annum. They've also increased its expected capital costs from US$183.4 million to US$341 million.
Neometals can earn a 50% stake in the venture – owned by Scandinavia's Critical Metals – by funding and managing the project's evaluation.
Today's announcement from the company notes the project "offers a compelling business case". That's underpinned by factors including access to very high-grade feedstocks and a low or net-zero greenhouse gas footprint.
Neometals managing director Chris Reed commented on the news driving the company's share price today, saying:
Security of supply is a key issue in Europe, vanadium has been on the list of Critical Raw Materials since 2017 and Russia supplied the bulk of Europe's vanadium feedstock in 2021. As Europe's only advanced high purity vanadium development project, [the project] is a strategically important asset.
Notwithstanding a reduction in technical risk, Neometals is cognisant of the global economic and geopolitical outlook, current state of financial markets, and the fall in the vanadium price which has increased the financial risk of the project.
