Neometals Ltd. agreed to sell its 13.8% stake in the Mount Marion lithium mine in Western Australia to project partners Ganfeng Lithium Co. Ltd. and Mineral Resources Ltd. for A$103.8 million in cash. Both buyers will secure a 6.9% additional stake each in Mount Marion, taking their respective stakes to 50% each.
The seller also secured a binding life of mine off-take option for 57,000 tonnes per annum of the project's 6% spodumene concentrate production at market-linked prices starting in February 2020, according to a Dec. 21 news release. In order to close the deal, China's Ganfeng Lithium will need Australian Foreign Investment Review Board approval, possibly along with Chinese regulatory backing.
Neometals expects to close the deal at the start of February 2019 and said it plans to set up a lithium chemical refinery, without giving a timeline. The divestment is intended to support its move to higher-value downstream operations, possibly involving critical minerals recovery from recycling lithium ion batteries, according to the release. Upon closing the deal, the company expects to have a total of A$130 million in cash on hand.
The seller added that it realized total sale proceeds of roughly A$200 million on its investment in Mount Marion, which had a historical cost of about A$3 million.
Neometals added that it would suspend the planned Barrambie vanadium-titanium project spinoff in order to fully review the impact on its demerger structure, and its timing, following the Mount Marion stake sale. It intends to update the market on the spinoff after financial close for the Mount Marion deal.