REG - European Metals Hldg - EBRD Strategic Investment in EMH

European Metals HoldingsAnnouncement

21/07/2023 08:00

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RNS Number : 7807G  European Metals Holdings Limited  21 July 2023

For immediate release

 

 

21 July 2023

 

European Bank for Reconstruction and Development

€6m Strategic Investment

Highlights:

-     The European Bank for Reconstruction and Development ("EBRD") has
agreed to invest €6 million to support the Company's development of the
Cinovec Project in the Czech Republic.

-     ERBD's investment and expertise will be beneficial to the Company as
the Cinovec Project moves through permitting, project financing, and
completing its Definitive Feasibility Study ("DFS").

-     As part of its due diligence, EBRD engaged an independent,
international mining consultancy to conduct a technical review of the Cinovec
Project.

-     EBRD is an International Financial Institution owned by the European
Union, European Investment Bank and 71 countries, including the Czech
Republic.

-     The investment is to be implemented by way of a private placement of
12,315,213 shares of the Company to be issued to EBRD at a price of £0.423
per share (the "Placement"). This equates to AUD 0.803 per share. 1  (#_ftn1)

European Metals Holdings Limited (ASX & AIM: EMH, OTCQX: EMHXY, ERPNF and
EMHLF) ("European Metals" or the "Company") is pleased to announce the entry
into a strategic investment agreement under which EBRD has agreed to invest
€6 million to support the Company's development of the Cinovec Project in
the Czech Republic.

As part of the due diligence process, EBRD engaged an independent,
international mining consultancy to undertake a technical review of the
Cinovec Project. EBRD also performed a review of the Cinovec Project in
respect to compliance with EBRD's Environmental and Social Policy.

Keith Coughlan, Executive Chairman, said:

"The Company welcomes EBRD's strategic investment, which is a strong
endorsement of the Cinovec Project's value and its commitment to the highest
environmental and social standards.  The EBRD investment aims to fund the
project's predevelopment work and opens a pathway to potentially securing
project financing.  The successful completion of the technical due diligence
process is a testament to the quality of the Cinovec team, the work which has
been done to date and a strong vote of confidence in the project.

"The EBRD investment is confirmation that the Cinovec Project is a vital part
of establishing a strong, sustainable European electric vehicle battery supply
chain to support Europe's accelerating transition to e-mobility.

Natalia Lacorzana, Head of Natural Resources at EBRD said:

"We are pleased to support the Cinovec project, the first lithium project
financed by the Bank, on its path to become a responsibly mined source of
battery grade lithium for Europe.  EBRD is committed to supporting the global
transition to a green economy, the move towards wider adoption of electric
vehicles, in particular, via providing necessary funding and know-how to
junior miners of critical and/or strategic raw materials."

The Company's relationship with EBRD is expected to be highly strategic as the
European Union charts a path towards greater lithium supply security and
sustainability.  Support for the Company's lithium, tin and tungsten Cinovec
Project aligns with these EU goals.  The investment is to be implemented by
way of a private placement of 12,315,213 shares of the Company to be issued to
EBRD at a price of £0.423 per share (the "Placement"). 2  (#_ftn2)  Upon the
closing of the Placement, EBRD will hold approximately 6% of the Company's
shares on issue (on a non-diluted basis).

In connection with the Placement, European Metals and EBRD have an agreement
whereby, subject to certain conditions, the EBRD has been granted rights that
allow participation in future financings to maintain its pro rata equity
interest in the Company.  The agreements also provide for the Cinovec Project
to be developed according to EBRD's Environmental and Social Policy.

The proceeds from the Placement will be used to assist in funding
pre-development works and studies for the Cinovec Project including
environmental works and working capital expenditures for the period up to the
completion of the DFS.

The Placement is subject to normal and customary conditions precedent for a
transaction of this nature. The shares will be issued without shareholder
approval utilising the Company's existing placement capacity under ASX Listing
Rule 7.1.

About the European Bank for Reconstruction and Development

The EBRD is an international financial institution established in 1991 to
foster the economic transition process and to promote private and
entrepreneurial initiative in its countries of operations including Central
and Eastern Europe, former Soviet Union and Eastern Mediterranean through
provision of loans, equity investments, conducting policy dialogue and
providing technical cooperation. It has since played a transformative role and
gained unique expertise in fostering change in the region - and beyond -
investing €170 billion in more than 6,400 projects including nearly EUR 3bn
in some 70 mining projects across 15 countries of operation.

 

This announcement has been approved for release by the Company's Board.

CONTACT

For further information on this update or the Company generally, please visit
our website at www.europeanmet.com (http://www.europeanmet.com) or see full
contact details at the end of this release.

BACKGROUND INFORMATION ON CINOVEC

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech
State over the Cinovec Lithium/Tin Project. Geomet has been granted a
preliminary mining permit by the Ministry of Environment and the Ministry of
Industry. The company is owned 49% by EMH and 51% by CEZ a.s. through its
wholly owned subsidiary, SDAS. Cinovec hosts a globally significant hard rock
lithium deposit with a total Measured Mineral Resource of 53.3Mt at 0.48%
Li(2)O and 0.08% Sn, Indicated Mineral Resource of 360.2Mt at 0.44% Li(2)O and
0.05% Sn and an Inferred Mineral Resource of 294.7Mt at 0.39% Li(2)O and 0.05%
Sn containing a combined 7.39 million tonnes Lithium Carbonate Equivalent and
335.1kt of tin (refer to the Company's ASX release dated 13 October 2021)
(Resource Upgrade at Cinovec Lithium Project).

An initial Probable Ore Reserve of 34.5Mt at 0.65% Li(2)O and 0.09% Sn
reported 4 July 2017 (Cinovec Maiden Ore Reserve - Further Information) has
been declared to cover the first 20 years mining at an output of 22,500tpa of
lithium carbonate (refer to the Company's ASX release dated 11 July 2018)
(Cinovec Production Modelled to Increase to 22,500tpa of Lithium Carbonate).

This makes Cinovec the largest hard rock lithium deposit in Europe, the fifth
largest non-brine deposit in the world and a globally significant tin
resource.

The deposit has previously had over 400,000 tonnes of ore mined as a trial
sub-level open stope underground mining operation.

On 19 January 2022, EMH provided an update to the 2019 PFS Update, conducted
by specialist independent consultants, which indicates a post-tax NPV of
USD1.938B and a post-tax IRR of 36.3% and confirmed that the Cinovec Project
is a potential low operating cost producer of battery-grade lithium hydroxide
or battery grade lithium carbonate as markets demand. It confirmed the deposit
is amenable to bulk underground mining (refer to the Company's ASX release
dated 19 January 2022) (PFS Update delivers outstanding results).
 Metallurgical test-work has produced both battery-grade lithium hydroxide
and battery-grade lithium carbonate in addition to high-grade tin concentrate
at excellent recoveries. Cinovec is centrally located for European end-users
and is well serviced by infrastructure, with a sealed road adjacent to the
deposit, rail lines located 5 km north and 8 km south of the deposit, and an
active 22 kV transmission line running to the historic mine.  As the deposit
lies in an active mining region, it has strong community support.

The economic viability of Cinovec has been enhanced by the recent strong
increase in demand for lithium globally, and within Europe specifically.

There are no other material changes to the original information and all the
material assumptions continue to apply to the forecasts.

 

BACKGROUND INFORMATION ON CEZ

Headquartered in the Czech Republic, CEZ a.s. is an established, integrated
energy group with operations in a number of Central and South-eastern European
countries and Turkey.  CEZ's core business is the generation, distribution,
trade in, and sales of electricity and heat, trade in and sales of natural
gas, and coal extraction.  CEZ Group is one of the ten largest energy
companies in Europe, has 28,000 employees and annual revenue of approximately
EUR 9.97 billion.

The largest shareholder of its parent company, CEZ a.s., is the Czech
Republic with a stake of approximately 70%. The shares of CEZ a.s. are traded
on the Prague and Warsaw stock exchanges and included in the PX and WIG-CEE
exchange indices.  CEZ's market capitalization is approximately EUR 17.7
billion.

As one of the leading Central European power companies, CEZ intends to develop
several projects in areas of energy storage and battery manufacturing in the
Czech Republic and in Central Europe.

CEZ is also a market leader for E-mobility in the region and has installed and
operates a network of EV charging stations throughout Czech Republic.  The
automotive industry in the Czech Republic is a significant contributor to GDP,
and the number of EV's in the country is expected to grow significantly in the
coming years.

ENQUIRIES:

 European Metals Holdings Limited

 Keith Coughlan, Executive Chairman           Tel: +61 (0) 419 996 333

                                              Email: keith@europeanmet.com (mailto:keith@europeanmet.com)

 Kiran Morzaria, Non-Executive Director       Tel: +44 (0) 20 7440 0647

 Shannon Robinson, Company Secretary          Tel: +61 (0) 418 675 845

                                              Email: shannon@europeanmet.com (mailto:shannon@europeanmet.com)

 WH Ireland Ltd (Nomad & Broker)

 James Joyce / Darshan Patel / Isaac Hooper   Tel: +44 (0) 20 7220 1666

 (Corporate Finance)

 Harry Ansell (Broking)

 Panmure Gordon (UK) Limited (Joint Broker)

 John Prior                                   Tel: +44 (0) 20 7886 2500

 Hugh Rich

 James Sinclair Ford

 Harriette Johnson

 Blytheweigh (Financial PR)                   Tel: +44 (0) 20 7138 3222

 Tim Blythe

 Megan Ray

 Chapter 1 Advisors (Financial PR - Aus)

 David Tasker                                 Tel: +61 (0) 433 112 936

 

 

 1  (#_ftnref1)               The issue price was calculated by
reference to the volume weighted average trading price of the Company's shares
on the AIM on the five trading days preceding the date of signing of the
Subscription Agreement.

 2  (#_ftnref2)               The issue price was calculated by
reference to the volume weighted average trading price of the Company's shares
on the AIM on the five trading days preceding the date of signing of the
Subscription Agreement.

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