Neometals (ASX:NMT) share price slides 7% on battery recycling update

The Neometals Ltd (ASX: NMT) share price is slumping lower today. The falls come after the company released capital and operating cost estimates for its lithium battery recycling plant in Germany.

At the time of writing, shares in the lithium and vanadium specialist are trading at 52 cents each – down 7.14%. By comparison, the All Ordinaries Index (ASX: XAO) is 0.3% higher.

Let’s take a closer look at today’s update.

What’s up with the Neometals share price?

The Neometals share price is in the red after the company provided an estimate of the capital and operating costs for its 50%-owned Primobius commercial recycling plant in Germany.

The top-line figures, operating costs, were estimated at 1,470 euros per tonne of batteries processed. Meanwhile, the capital cost estimate is 150 million euros, including a 10% contingency.

Both the capital and operating cost estimates have increased from the company’s 2019 scoping study. Neometals claims the capital increase can be “largely attributed” to constructing its own building instead of engaging a commercial lease, more equipment to increase production, and relocating the site to Germany. Operating cost estimates are only up by around 5% from the scoping study.

According to Neometals managing director Chris Reed, the jump in operating costs is smaller than expected.

“Importantly, the operating costs have increased by less than 5% from our 2019 Scoping Study estimates despite the jump from lab to pilot-scale, and the site relocation from Kwinana to Germany,” he said.

Breaking down the operating cost estimate, Neometals expects to spend around 23% on labour, 33% on consumables and 26% on utilities. The remainder is allocated to administration and maintenance.

In further news possibly impacting the Neometals share price, the company highlighted that the price of several of its feedstock products has increased markedly since its 2019 scoping study.

For example:

• Cobalt sulphate is up 79.7% to US$11,051.
• Lithium chloride is 68.8% higher to US$8,440.
• Nickel sulphate increased 47.5% to US$4,868.

Management commentary

Mr Reed also said the following in today’s announcement:

We are extremely encouraged with the robust potential economics for Primobius’ first proposed commercial plant.

We took the conservative step to include the cost of constructing dedicated industrial buildings until such time as we are able to identify and agree terms to leased premises. Naturally, we expected the capital costs to increase in line with the change in scope and increased estimation accuracy levels.

The safe production of, amongst other things, cathode-grade nickel and cobalt sulphates from a variety of battery feedstocks, using our patent pending process, augurs well for achieving our ambitions to build Europe’s leading sustainable recycling solution.

Neometals share price snapshot

Over the past 12 months, the Neometals share price has increased by around 250%. Since the beginning of 2021, it’s also jumped by around 90%.

Neometals has a current market capitalisation of $305 million.

More reading

• Why is the Neometals (ASX:NMT) share price in a trading halt today?
• Neometals (ASX:NMT) share price slides on dual-listing update
• What’s happening with the Neometals (ASX:NMT) share price?
• Why the Neometals (ASX:NMT) share price has surged to a 52-week high
• Why the Neometals (ASX:NMT) share price is shooting 8% higher

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. 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.

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