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$829k¹) 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$82.9M¹) ("Pre-Money Valuation");

·  Funding to be applied towards progressing project financing, with improved economics arising from an additional €15M (c. A$24.9M¹) 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$16.6M¹) 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 ("ERMA"). 

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 ("V₂O₅") 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 footprint². 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$16.6M¹) 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 Nordics³ 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 permit⁴ and has entered a binding offtake for 100% of VRP1's V₂O₅ products with Glencore International AG⁵. 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

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:

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.

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.