Neometals Ltd shares plunged on Monday, after it said it has informed Critical Metals Ltd, its partner in the Finnish vanadium recovery project, that it does not wish to proceed with the construction of the facility.

Shares in Neometals were down 14% to 15.00 pence each in London on Monday afternoon.

The London-based sustainable battery materials producer said it decided it needed to preserve its cash balance and not contribute further material funding to evaluation activities on the project, as ‘the state of the global financial markets dictate’.

This was despite the ‘potential lowest-quartile operating cost and low-carbon footprint’, Neometals said.

Neometals also noted its cash and cash equivalents at the end of September stood at A$14.2 million, or £7.5 million, down 42% from A$24.6 million three months earlier.

Neometals earned a 72.5% interest in the project via its ownership in Recycling Industries Scandinavia AB, with Critical Metals holding 27.5%.

Recycling Industries Scandinavia has evaluated the feasibility of producing high-purity vanadium from steel slags under a conditional take-or-pay feedstock agreement, Neometals said, which requires a substantial prepayment and financial guarantees from Recycling Industries Scandinavia shareholders.

Neometals said the board believes it will not agree acceptable equity financing terms within the required timeline to consider a financial investment decision for the vanadium recovery facility, despite undertaking an ‘extensive’ technical due diligence process with its preferred equity and debt providers.

Neometals said that it has requested Recycling Industries Scandinavia consider alternative methods of funding, including selling the project holding company. However, Neometals also said it intends to revert to a technology licensing business model to commercialise its proprietary vanadium recovery process.

This is known as VRP Technology, of which Neometals retains 100% ownership via its wholly owned subsidiary Avanti Materials Ltd.

Neometals said it will continue to engage directly with potential partners, including steel makers producing suitable steel slags, under a low capital expenditure, low risk technology licensing business model to generate future royalty income.

‘Despite [the Finnish vanadium recovery project] having compelling cost and carbon footprint metrics, today’s commodity and financial market conditions preclude a positive investment decision at this time. We must realign our commercialisation strategy and pursue a technology licensing model going forward,’ said Neometals Managing Director Chris Reed.

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