REG - Neometals Ltd - VRP receives EU supported capital injection

NeometalsAnnouncement

16/09/2024 07:00

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RNS Number : 2277E  Neometals Ltd  16 September 2024

This announcement contains inside information

 

16 September 2024

Neometals Ltd

("Neometals" or "the Company")

Finnish Vanadium Recovery Project receives EU supported capital injection

Highlights:

·  Neometals 88% owned entity, Recycling Industries Scandinavia AB
("RISAB"), executes project agreement with EIT RawMaterials GmbH ("EIT
RawMaterials") to support the development of the Finnish vanadium recovery
project ("VRP1");

·  EIT RawMaterials is co-funded by the European Union ("EU") and will
provide €0.5M (c. A$829k(1)) in grant funding to RISAB's 100% owned VRP1
holding company, Novana Oy ("Novana"), and become a minority shareholder in
RISAB at a pre-money valuation of €50M (c. A$82.9M(1)) ("Pre-Money
Valuation");

·  Funding to be applied towards progressing project financing, with
improved economics arising from an additional €15M (c. A$24.9M(1))
conditional investment grant ("the Conditional Grant") being provided by the
EU backed Finnish State NextGeneration fund and a potential new Finnish State
20% investment tax credit; and

·  EIT RawMaterials to also have the option to subscribe for up to a further
€10M (c. A$16.6M(1)) in additional RISAB equity at the Pre-Money Valuation.

 

Sustainable process technology developer, Neometals Ltd (ASX: NMT & AIM:
NMT) ("Neometals" or "the Company"), is pleased to announce the execution of a
project agreement ("the Agreement") providing funding and services to Novana
(indirect NMT 88% interest through RISAB). Novana is commercialising
Neometals' patent-pending vanadium recovery process ("VRP Technology") through
the development of VRP1 in Finland.

EIT RawMaterials is based in Berlin Germany and is a legally independent part
of the European Institute of Innovation and Technology, an EU entity. EIT
RawMaterials is mandated by the European Commission to lead and manage
the European Raw Materials Alliance (" (https://erma.eu/) ERMA
(https://erma.eu/) ") (https://erma.eu/) .

Under the Agreement, EIT RawMaterials will provide Novana with €0.5M in
grant funding and be issued approximately 1.1% of the issued capital of RISAB
at the Pre-Money Valuation. EIT RawMaterials funding and services, which are
contingent on the application of funds to pre agreed activities and milestone
dates, will support the project financing process for the development of a
plant to produce high-purity vanadium pentoxide ("V(2)O(5)") from
vanadium-bearing steel slag in Pori, Finland.

Neometals previously announced the results of the VRP1 feasibility study which
confirmed the potential for lowest-quartile operating costs, with a
low-to-negative carbon footprint(2). Following receipt of the Agreement funds,
Novana will formally commence a project financing selection process seeking
approximately €400M (targeting c. 40% equity, 60% debt) with leading Nordic
banks SEB and Aventum managing the equity and debt packages respectively, with
assistance from EIT RawMaterials.

In addition, EIT RawMaterials have the option, at the earlier of a) a period
of 18 months from signing the Agreement or b) the execution of a binding
agreement on an equity commitment for at least €160M into RISAB from one or
more (existing or new) investors, to subscribe for up to an additional €10M
(c. A$16.6M(1)) in equity funding in RISAB at the Pre-Money Valuation

The European Investment Bank ("EIB") conditionally approved Novana for debt
financing in November 2023. In addition, Business Finland, has offered the
Conditional Grant through the EU backed NextGeneration sustainable growth
fund. Draw down on the Conditional Grant will be determined by industry
standard terms which include Novana having first secured its project financing
package. As announced by the Finnish Ministry of Finance on the 28(th) June
2024 (Press Release 326/2024) the Finnish State is also proposing to introduce
a new 20% investment tax credit system for large industrial, energy transition
and recycling projects in Finland.

Novana holds the exclusive licence to Neometals' wholly owned VRP Technology
in the Nordics(3) and is required to pay a 2.5% gross revenue royalty on all
products generated from its use. Novana holds a long-term lease over the
proposed VRP1 plant site, has secured the project's environmental permit(4)
and has entered a binding offtake for 100% of VRP1's V(2)O(5) products with
Glencore International AG(5). Neometals does not intend to provide further
material funding to RISAB/Novana to develop VRP1 and expects to dilute its
current holding to a minority equity position.

 

Figure 1 - Overview of Royalty and Corporate Structure post EIT RawMaterials
investment.

 

A presentation relating to this announcement can be found at:
https://www.neometals.com.au/wp-content/uploads/2024/09/20240916-Vanadium-Recovery-Project-EU-Supported-Funding-WEB.pdf
(https://www.neometals.com.au/wp-content/uploads/2024/09/20240916-Vanadium-Recovery-Project-EU-Supported-Funding-WEB.pdf)

 

Neometals Managing Director Chris Reed said:

"We are delighted Novana and VRP1 have attracted a group of EIT RawMaterials
calibre as a shareholder and supporter of the project financing process. With
the VRP1 conditionally confirmed for EIB debt financing, we look forward to
formally securing the remaining equity and debt funding. We hope to capitalise
on the significant support from the Finnish State and EU and new incentives to
deliver Europe's first domestic producer of high-purity vanadium, a critical
material for the production of high-strength steel, aerospace titanium alloys
and stationary energy storage batteries."

Authorised on behalf of Neometals by Christopher Reed, Managing Director.

 

(1) Reserve Bank of Australia 0.603 Aud:Euro exchange rate, 11th September
2024.

(2) For full details refer to Neometals ASX announcement headlined "Vanadium
Recovery Project Delivers Strong Feasibility Results" released on 8th March
2023.

 

(3) Limited to Finland, Denmark, Sweden and Norway.

(4) For full details refer to Neometals ASX announcement headlined "Vanadium
Recovery Project Environmental Permit Granted" released on 24th October 2022.

(5) For full details refer to Neometals ASX announcement headlined "Vanadium
Recovery Project Offtake Executed with Glencore" released on 12th July 2023.

- ENDS -

 

For more information, please contact:

 

 Neometals Ltd
 Chris Reed, Managing Director & Chief Executive Officer       +61 8 9322 1182
 Jeremy McManus, General Manager - IP & IR                     +61 8 9322 1182

 Cavendish Capital Markets Ltd - NOMAD & Broker
 Neil McDonald                                                +44 (0)131 220 9771
 Peter Lynch                                                  +44 (0)131 220 9772
 Adam Rae                                                     +44 (0)131 220 9778

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
(https://www.neometals.com.au/) .

About EIT RawMaterials:

 

EIT RawMaterials is the largest and most active raw materials knowledge and
innovation network, with 300 partner organisations spanning the entire race
materials value chain and promoting the circular economy. EIT RawMaterials is
mandated to lead the European Raw Materials Alliance, with 750 members and an
investment pipeline of 30 projects with an investment potential of €10
billion. EIT RawMaterials is part of the European Institute of Innovation and
Technology and was established in 2015 to advance Europe's transition into a
sustainable economy, with a mission to secure a sustainable raw materials
supply for Europe, close materials loops, and design product solutions to
ultimately develop raw materials into a major strength for Europe by driving
innovation, education, and entrepreneurship.

 

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