Shares in under-the-radar mining company Neometals Ltd (ASX:NMT) have zoomed 70% higher this year. Let’s look at the factors driving these massive gains.
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Neometals Ltd (ASX: NMT) shares have enjoyed a remarkable run recently. Since the beginning of 2021, the Neometals share price has skyrocketed over 70% higher and is currently trading at a new 52-week high price of 51 cents.
The gains have come on the back of a flurry of positive announcements for the ASX lithium company – the most recent of which was an agreement signed just last week with Chinese titanium slag producer Jiuxing Titanium Materials (Liaonging) Co. Ltd.
Originally a pure play on lithium, Neometals has expanded its business interests over the last few years and now markets itself as a diversified mining project development company. It currently operates three core wholly-owned assets: a lithium-ion battery recycling project, a lithium refinery project, and the Barrambie Titanium-Vanadium Project.
The company also has a long-term lithium and nickel exploration project called Mt Edwards, and a collection of other smaller mineral developments.
What has got the Neometals share price zooming higher?
The agreement signed last week with Jiuxing Titanium is a Memorandum of Understanding (MOU) between the two companies. While this doesn’t yet constitute a binding contract, it does set out the commercial foundations for a long-term offtake agreement. If enacted, the 5-year agreement would mean that Neometals would supply Jiuxing with mineral concentrates from its 100% owned Barrambie Titanium-Vanadium Project.
However, the Jiuxing agreement is only the latest in a string of positive announcements released this year by Neometals.
Earlier in April, the company announced the discovery of high-grade palladium at its Mt Edwards Nickel Project in Western Australia. Palladium is a rare mineral with a wide range of applications, most notably in fuel cells.
And in March, Neometals announced it had signed an MOU with Japanese multinational ITOCHU Corporation. The agreement could see ITOCHU and Neometals (through a joint venture named Promidius GmBH, owned 50:50 with German metals company SMS Group GmBH) create a new battery recycling corporation.
The project would involve ITOCHU supplying Promidius with stationary energy storage batteries, which Promidius would recycle in its material processing centres. Promidius would then sell back the recycled batteries to ITOCHU, creating what Neometals describes in its press release as a “circular economy”.
How has the Neometals share price performed versus its peers?
Other lithium miners have also enjoyed a strong start to 2021. The Galaxy Resources Limited (ASX: GXY) share price has soared over 50% year to date to a 52-week high price of $3.61, while the Pilbara Minerals Ltd (ASX: PLS) share price isn’t far behind, climbing almost 50% to $1.30. And the Orocobre Limited (ASX: ORE) share price has also rallied, up 37% so far this year to $6.20.
However, and perhaps a little surprisingly, the Neometals share price has outperformed all of them. New investors will, no doubt, now be watching closely to ensure that Neometals soon converts its assortment of MOUs into firm offtake agreements.
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Motley Fool contributor Rhys Brock owns shares of Galaxy Resources Limited, Neometals Ltd, and Pilbara Minerals Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.