See our exclusive index of companies on the move:Explore Stocks
- Top Stocks
- Top Australian Gold Stocks
- Top ASX Copper Stocks
- Top ASX Nickel Stocks
- Top ASX Rare Earth Stocks
- Top Battery Metals Stocks on the ASX
- Top Australian Lithium Stocks
- Top Graphite Miners on the ASX
- 10 ASX Cannabis Stocks
- Top ASX Tech Stocks
- Top AI Stocks on the ASX
- On Site
- About Australian Cannabis Investing
- About Australian Resource Investing
- About Australian Tech Investing
- About Australia Investing
- Of Interest
- ASEAN-Australia-New Zealand Trade Agreement
- Association of Southeast Asian Nations (ASEAN)
- Australian FAQ on ASEAN
- Australia Government on Foreign Investments
- Top Stocks
- Resource Investing
- Technology Investing
- Cannabis Investing
- Australia Stocks
- INNvestor Reports
European Metals Holdings Limited (ASX & AIM: EMH, NASDAQ: EMHXY) (“European Metals” or the “Company”) is pleased to provide an update on its activities during the three-month period ending 31 March 2022 highlighting the continued progress in the development of the globally significant Cinovec Lithium/Tin Project (“the Project” or “Cinovec”) in the Czech Republic.
During the reporting period, the Company made two very significant announcements.
The first of these was an update to the 2019 Preliminary Feasibility Study, highlighting significant increases in the key financial parameters of the Project, an increase in overall lithium production, and further enhancements to the ESG credentials. The 2022 PFS Update shows an NPV8 of US$1.938B (post tax); an up-front capital cost of US$644M; and an increase in the overall annual production of battery-grade lithium hydroxide to 29,386 tpa. In addition, the post-tax IRR has increased to 36.3% (refer to the Company’s ASX release dated 19 January 2022) (PFS Update delivers outstanding results).
Secondly, the Company successfully completed a capital raising of approximately AUD 14.4 million and welcomed Ellerston Capital, a leading Sydney-based fund manager, and another institutional fund to the register. (refer to the Company’s ASX release dated 19 January 2022) (Successful Placing to raise AUD14.4M)
The quarter was marked by continued strong progress by the Company towards finalisation of the Definitive Feasibility Study (“DFS”) together with ongoing discussions with potential offtakers for the products of the Project. From a macro perspective, prices for the Project’s two key products, lithium hydroxide and tin, continued to increase significantly with lithium hydroxide prices exceeding USD 70,000/tonne and tin exceeding USD45,000/tonne during the period. These prices compare very favourably to the prices that were used in the 2022 PFS Update being USD17,000 for lithium hydroxide and USD24,000 for tin.
The timeline for the completion of the DFS is currently under review. Whilst the work on the DFS is proceeding very well, there have been delays in the DFS process caused in part by COVID-19 issues in laboratories, the dramatic upturn in the workload of laboratories and therefore reduction in laboratory availability due to increase in demand in the lithium space, and logistical issues in the industry caused by the Ukrainian situation. The Company is currently reviewing the project timelines and will advise the market when it has completed this review. It is not expected that this will delay the critical path of the Project, as during this time the Company will be in the process of finalising permitting matters.
Post the reporting period, the Company appointed David Koch as the new CFO and Company Secretary.
PFS UPDATE DELIVERS OUTSTANDING RESULTS
As announced on 19 January 2022, the 2019 PFS Update for the Cinovec Project has been updated to demonstrate the effect of changes in the mining process to incorporate the use of paste backfill, which results in an increase in annual production, together with changes in lithium and by-product prices to reflect current and expected market conditions.
The effect of the use of the paste backfill option was to enable the mining schedule to increase the mine life to 25 years whilst increasing the amount of ore mined to 2.25mtpa, thereby increasing the amount of lithium hydroxide produced each year from 25,267 tonnes to 29,386 tonnes.
The use of approximately 54% of the plant tailings for backfill will result in a far smaller environmental impact, with much smaller dry stack tailings storage required, further enhancing the already strong ESG credentials of the Project.
NPV8 (post tax) increases from US$1.108B to US$1.938B, an increase of 74.9%
The 2022 PFS Update highlights the very strong increase in value which results from the increase in the price of battery-grade lithium hydroxide when combined with the use of backfill, and an increase in the overall production of battery-grade lithium hydroxide to 29,386 tpa. The 2022 PFS Update shows a NPV of US$1.938B (post tax, 8%) and an up-front capital cost of US$644M.
This article includes content from European Metals Holdings Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
With a combination of climate change worries and energy security constraints afflicting the many nations of Europe, the European Union is looking to accelerate its already substantial green commitments. The EU’s Green Deal, which outlines the pathway to energy transition, is ambitiously aiming to become the first climate-neutral continent by 2050.
In addition to a commitment to spend at least 1 trillion euros on climate initiatives by 2030, the Green Deal also stipulates measures such as CO2 targets and includes a Strategy for Sustainable and Smart Mobility which calls for a 90 percent reduction in emissions from vehicles. In order to meet such an ambitious goal, 30 million zero-emission vehicles will need to be on the roads by 2030.
The Green Deal is turbocharging an already buoyant industry with electric vehicles gaining momentum around the world. The EV market now accounts for 29 percent of all passenger car sales in Europe in 2021, surpassing diesel vehicle sales. A new study indicates EV sales could double in 2022 and fully overtake internal combustion engines (ICEs) by 2025.
However, to sustain this growth and satisfy its aggressive targets the European Union knows it needs more lithium, which was added to its critical raw materials list in 2020. The EU aims to develop a sustainable battery supply chain that covers the battery industry’s entire life cycle from sourcing of raw materials to end-of-life recycling.
Yet, an official study reveals local production of lithium concentrates, which are essential for batteries which power EVs, is insignificant at 110 tonnes across the continent. So, how is the EU going to reach its goal of a sustainable supply chain? It comes down to having development-ready projects to create a local supply chain.
One such company is European Metals (ASX:EMH, AIM:EMH, NASDAQ:ERPNF), which is developing the Cinovec project, the largest hard rock lithium deposit in Europe. Cinovec is not only the largest deposit, it's bigger than every other hard rock lithium deposit in the European Union combined. It also possesses one of the largest undeveloped tin resources in the world.
European Metals is not only blessed with scale, it also sits in an attractive neighborhood. The Cinovec project is located on the Czech Republic’s border with Germany, placing it centrally amongst Europe’s biggest battery and EV manufacturers – all of which are looking to secure a greater supply of lithium, which is critical to ongoing production.
European Metals’ Czech Republic location affords the company access to a number of key networks within the stable political system. Three organisations are already playing an important role in the project’s development:
- CEZ Group is the Czech Republic’s 70 percent state-owned power company which is also the largest utility and biggest public company in Central and Eastern Europe. The company is increasingly looking to transition away from gas and coal, leading the charge to build a lithium-ion battery industry within the country. CEZ is a key financial partner, having invested €29 million at the project level to date.
- European Metals holds a collaborative agreement with the European Institute of Innovation and Technology, a body of the European Union which provides support for offtake, financing, construction, and commercialisation. The organisation is the primary facilitator of the European Battery Alliance and is aiming to secure raw materials for the European battery market overall.
- SMS Group is European Metals’ lead engineering consultant. SMS is a German-owned company widely regarded as specialists for plant construction and engineering technology. The group is increasingly expanding its expertise in projects that involve critical metals. For European Metals, SMS is responsible for creating full process integration, taking raw materials from ore to battery-grade lithium. Importantly, SMS have agreed to provide process and product specification guarantees, further increasing confidence in the Cinovec operations.
European Metals has maintained an excellent ESG profile throughout the development of Cinovec. The project is located in a historic mining district with strong community support, the existing underground workings ensure minimal disruption of the landscape and recycled water/reagents all contribute to a positive profile. Additionally, integrating solar power and an electric mining fleet has been proposed to further reduce the environmental impact of the operation.
Executive chairman Keith Coughlan discusses the importance of ESG in a recent interview, “It’s a positive to tick all the ESG boxes, which we have. But it means not all projects are alike. If you kick that down to the next stage, the people who buy our lithium and put it into their electric vehicles, when they’re assessed on their CO2 footprint for that vehicle — it goes all the way down the supply chain,”
“That’s another reason why the EU wants to develop its own resources. The CO2 impact of shipping long distances increases the emissions of that end product, that end vehicle. Nobody can operate in isolation anymore, it’s the whole supply chain that’s interrogated. We don’t want to cause more problems than we solve,” added Coughlan.
European Metals recently announced an updated Prefeasibility Study for 2022 that revealed a 74.9 percent increase in post-tax NPV from US$1.10 billion to US$1.94 billion, alongside a 16 percent increase in production to 29,386 tpa from 25,267 tpa. The NPV is based on a very conservative lithium price of US$17,000 per tonne, while current pricing is soaring to all-time highs and lithium hydroxide forecasted to rise to US$18,940 in 2023.
A strong, experienced management team is at the helm and guiding the company towards production executive chairman Keith Coughlan has 30 years of experience in funds management and stockbroking. Executive director Richard Pavlik brings another 30 years of experience working in the Czech mining industry and has a master’s degree in mining engineering. Kiran Morzaria, non-executive director, has both management and engineering experience within the mining industry. Lincoln Bloomfield, non-executive director, is a former US ambassador who specialises in foreign policy and international security, providing directly applicable experience working with governments and companies in the private sector. The Company’s board is also flanked by a number of impressive geological, metallurgical and corporate consultants, further improving European Metal’s impressive credentials.
- European Metals is currently developing its Cinovec asset, which is the largest hard rock lithium deposit in Europe
- The company has forged partnerships with three organisations that each provide an important specialty to the project: CEZ Group is seeking to advance the lithium-ion battery industry within the Czech Republic, the European Institute of Innovation and Technology is supporting overall development and offtake, and SMS Group is engineering a processing facility
- European Metals is dedicated to maintaining a positive ESG profile which not only attracts significant interest from potential financiers and offtake partners but also ensures the project is not doing more harm than good
- The company’s recent 2022 PFS update indicated a 16 percent tpa increase and a 74.9 percent increased NPV8 (post-tax), reaching an impressive US$1.938 billion
- The company’s management team has decades of experience in corporate administration, mining engineering and foreign policy, which builds confidence in the project
Cinovec is home to a lithium project larger than every other hard rock lithium deposit in the EU combined. Lithium is an irreplaceable element used in manufacturing long-range batteries that power EVs. Cinovec is located on the German border of the Czech Republic, facilitating shorter, lower emissions transportation of the raw materials to nearby manufacturers. Additionally, the Czech Republic is politically stable and business-friendly, along with providing world-class infrastructure.
- High-Quality Infrastructure: Cinovec is adjacent to rail lines that facilitate transportation of raw materials and includes an all-important processing site with an established water supply
- Positive ESG Profile: Maintaining an excellent ESG profile is crucial for lithium miners since their environmental impact is reflected back on those who purchase its lithium.
- Historic Mine: The presence of a historic mine minimises the environmental impact of the entire operation
- Utilising Tailings for Backfill: On top of the excellent ESG profile, the project will make use of tailings for backfill and create a smaller environmental impact
- 2022 PFS Update Builds Confidence: The study illustrated a post-tax IRR of 36.3 percent with a payback period of 2.5 years, once production commences. This update assumes the life of mine extraction of 13.1 percent of the Measured and Indicated JORC Resources at Cinovec.
Keith Coughlan - Executive Chairman
Keith Coughlan has almost 30 years of experience in stockbroking and funds management. He has been largely involved in the funding and promoting of resource companies listed on the ASX, AIM and TSX. He has advised various companies on the identification and acquisition of resource projects and was previously employed by one of Australia’s then-largest funds. Coughlan was previously the Non–Executive Chairman of ASX listed Talga Resources Limited. He is currently the Non-Executive Chair of Doriemus PLC and a Non-Executive Director of Calidus Resources Limited. Coughlan is a member of the Audit & Risk Committee, Remuneration Committee and Nomination Committee.
Richard Pavlik - Executive Director
Richard Pavlik is the Chief Advisor to the CEO of Geomet s.r.o., the Company’s Czech subsidiary, and is a highly experienced Czech mining executive. He holds a Masters Degree in Mining Engineering from the Technical University of Ostrava in the Czech Republic. He is the former Chief Project Manager and Advisor to the Chief Executive Officer at OKD. OKD has been a major coal producer in the Czech Republic. He has almost 30 years of relevant industry experience in the Czech Republic. Pavlik also has experience as a Project Analyst at Normandy Capital in Sydney as part of a postgraduate programme from Swinburne University. He has held previous senior positions within OKD and New World Resources as Chief Engineer, and as Head of Surveying and Geology. He has also served as the Head of the Supervisory Board of NWR Karbonia, a Polish subsidiary of New World Resources (UK) Limited. He has an intimate knowledge of mining in the Czech Republic. Pavlik is a member of the Audit & Risk Committee, Remuneration Committee and Nomination Committee.
Kiran Morzaria - Non-Executive Director
Kiran Morzaria is currently Chief Executive Officer and Director of the Company’s largest shareholder, Cadence Minerals. Morzaria holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School. He has extensive experience in the mineral resource industry working in both operational and management roles. Morzaria spent the first four years of his career in exploration, mining and civil engineering before obtaining his MBA. He has served as a director of many public companies in both an executive and non-executive capacity. Morzaria is the Chair of the Audit & Risk Committee and a member of the Remuneration Committee and Nomination Committee.
Ambassador Lincoln P. Bloomfield, Jr. - Non-Executive Director
Lincoln Bloomfield is a former US official specializing in foreign policy and international security, having held policy positions in five previous administrations, most recently in 2008 as a Presidential Envoy with the rank of Ambassador. He has dealt with a wide range of issues and has experience working effectively with governments in Europe and around the world. He also has many years of experience working with companies in the private sector, primarily involving renewable energy technology, private equity, and security issues. For eight years until 2016, Bloomfield was Chairman of the Stimson Center in Washington DC, one of the top-rated think tanks in America. During his service as US Assistant Secretary of State for Political Military Affairs, Lincoln was the US Government regulator responsible for industry compliance with defence export law and regulation. He serves and has previously served on for-profit and nonprofit Boards
Dennis Wilkins - Company Secretary
Dennis Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural resources industry. Since 1994 he has been a director of, and involved in the executive management of, several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. He was the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was acquired by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas’ initial public offering. From July 2001 Wilkins has been running DWCorporate Pty Ltd, where he provides advice on the formation of, and capital raising for, emerging companies in the Australian resources sector. He is currently a Non-executive Director of Key Petroleum Limited.
Wendy Lim - CFO
Wendy Lim is Finance Director at Everest Corporate, the Company’s Corporate Services provider. Lim trained at a Big Four Accounting Firm and spent 12 years with a mid-tier accounting firm before joining Everest. Wendy has over 15 years of experience in multiple disciplines including financial and management reporting, auditing and valuation and brings a wealth of technical accounting knowledge to the team.
Dr. Pavel Reichl - Geological Consultant
Pavel Reichl has over 15 years of experience in precious, base and PGE metals exploration and production and has a Ph.D. from the University of Montana. Reichl was formerly Business Unit Manager of a Canadian listed minerals exploration company responsible for Europe and Central Asia. He was the former head of the Newmont acquisition program in Eastern Europe and exploration manager for Kyrgyzstan and Uzbekistan. Reichl is fluent in English, Czech and Russian.
Simon Edwards - Corporate Development Manager and Chief Operating Officer, Geomet s.r.o
Simon Edwards has over 25 years’ experience in advising and financing companies across mining, industrial, technology and financial sectors, having qualified as a Chartered Accountant (ICAEW) with Coopers & Lybrand, then moving to corporate finance roles in leading London-based bank/brokers. Since 2005, he has been exclusively engaged in advising and managing mining companies. Edwards studied Metallurgy & Science of Materials at Oxford University. He joined European Metals in July 2019 and became COO of Geomet, the operator of the Cinovec Project, in April 2020.
Grant Harman - Metallurgical Consultant
Grant Harman is one of the world’s foremost lithium metallurgists and he’s played a significant role in the Company’s successful PFS. Harman was previously Manager Lithium Chemicals for Talison Lithium and was involved in the management of the Talison Lithium Carbonate Plant from Scoping Study to Definitive Feasibility Study. He was involved in the design and technical direction of the Talison Test Facility and has more recently been a technical consultant on the Sonora Lithium Project in Mexico. Harman has had previous roles with UGL, SNC Lavalin, CleanTeq and Ausenco.