REG - European Metals Hldg - Quarterly Activities and Cashflow Report
29/07/2022 08:45
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RNS Number : 2281U European Metals Holdings Limited 29 July 2022
For immediate release
29 July 2022
QUARTERLY ACTIVITIES REPORT - JUNE 2022
European Metals Holdings Limited (ASX & AIM: EMH, OTCQX: EMHXY, ERPNF and
EMHLF) ("European Metals" or the "Company") is pleased to provide an update on
its activities during the three-month period ending 30 June 2022 highlighting
the continued progress in the development of the globally significant Cinovec
Lithium/Tin Project ("the Project" or "Cinovec") in the Czech Republic.
The quarter was marked by continued progress by the Company towards
finalisation of the Definitive Feasibility Study ("DFS") together with ongoing
discussions with potential offtakers and Project Finance participants. From a
macro perspective, the price for lithium remains very strong with the
expectation of continuing strong demand within the European Union for lithium
resulting from the announcement of approximately 20 new battery giga factories
to be built within the EU by 2030.
The timeline for the completion of the DFS is under review. Whilst the work on
the DFS is proceeding 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 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
and Project Finance matters.
During the reporting period, European Metals was accepted to trade on the
globally renowned US based OTCQX® Best Market Platform. The Company
commenced trading under the codes EMHXY, ERPNF and EMHLF on 12 May 2022.
Trading will accelerate exposure to major US investors. OTCQX® Best Market
adds to the Company's existing suite of active listings across the ASX, AIM
and European exchanges (refer to the Company's ASX release dated 12 May 2022)
(European Metals commences trading on the OTCQX® Best Market).
Also, during the quarter, the Company appointed David Koch as the new CFO and
Company Secretary. (refer to the Company's ASX release dated 27 April 2022)
(Change of Company Secretary).
CORPORATE AND ADMINISTRATION
QUARTERLY CASHFLOW REPORT
In accordance with the ASX Listing Rules, the Company will also today lodge
its cashflow report for the quarter ended 30 June 2022. Included in those
cashflows are cash receipts from Geomet of $275k and cash outflow for Cinovec
associated costs of $315k in respect of the Company's investment in the
Cinovec Lithium Exploration Project in the Czech Republic ("the Project").
The Company's total cash is in excess of AUD 19 million.
PAYMENTS TO RELATED PARTIES
As outlined in the attached Appendix 5B (section 6.1), during the quarter
approximately $159k in payments were made to related parties and their
associates for director salaries, consultancy fees, superannuation, and other
related costs. A portion of these expenses are to be reimbursed directly from
Geomet.
CORONAVIRUS
The potential effects of the Cov-19 pandemic continue to be monitored for
impact on the Company's operations. While the second wave has had more of an
impact than the initial wave (March - May 2020) the Company has continued to
use remote meeting tools (Zoom and MS Teams) to maintain project momentum,
albeit not as efficiently as physical meetings would have allowed. The
Executive Management team members closely monitor the ever-evolving Cov-19
circumstances and have determined that the pandemic has impacted the timing of
laboratory test work and other FEED and DFS activities and has therefore
contributed to the to delays in the completion of the DFS. Further updates
will be provided in respect to the completion of the DFS and FID as more
information becomes available (refer earlier comments on timelines on Page 1
of this Release).
The Executive Team has recommenced travel to the Czech Republic since the end
of the Quarter, and expects that having good access to the Project, the local
management team and the DFS providers will assist in accelerating the DFS
work.
PERFORMANCE RIGHTS
As at 30 June 2022 the company had on issue 5,800,000 performance rights.
GEOMET TENEMENT SCHEDULE
Table 3: Geomet Tenements
Permit Code Deposit Interest at beginning of Quarter Acquired / Disposed Interest at end of Quarter
Cinovec N/A 100% N/A 100%
Exploration Area
Cinovec II 100% N/A 100%
Cinovec III 100% N/A 100%
Cinovec IV 100% N/A 100%
Preliminary Mining Permit Cinovec II Cinovec South 100% N/A 100%
Cinovec III Cinovec East 100% N/A 100%
Cinovec IV Cinovec NorthWest 100% N/A 100%
This announcement has been approved for release by the Board.
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 fourth
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 has 33,000 employees and annual
revenue of approximately EUR 7.24 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 22.1
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.
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.
COMPETENT PERSON
Information in this release that relates to exploration results is based on
information compiled by Dr Vojtech Sesulka. Dr Sesulka is a Certified
Professional Geologist (certified by the European Federation of Geologists), a
member of the Czech Association of Economic Geologist, and a Competent Person
as defined in the JORC Code 2012 edition of the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr
Sesulka has provided his prior written consent to the inclusion in this report
of the matters based on his information in the form and context in which it
appears. Dr Sesulka is an independent consultant with more than 10 years
working for the EMH or Geomet companies. Dr Sesulka does not own any shares in
the Company and is not a participant in any short- or long-term incentive
plans of the Company.
The information in this release that relates to Mineral Resources and
Exploration Targets is based on, and fairly reflects, information and
supporting documentation prepared by Mr Lynn Widenbar. Mr Widenbar, who is a
Member of the Australasian Institute of Mining and Metallurgy and a Member of
the Australasian Institute of Geoscientists, is a full-time employee of
Widenbar and Associates and produced the estimate based on data and geological
information supplied by European Metals. Mr Widenbar has sufficient experience
that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity that he is undertaking to qualify as a
Competent Person as defined in the JORC Code 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Minerals Resources and Ore
Reserves. Mr Widenbar has provided his prior written consent to the inclusion
in this report of the matters based on his information in the form and context
that the information appears. Mr Widenbar does not own any shares in the
Company and is not a participant in any short- or long-term incentive plans of
the Company.
CAUTION REGARDING FORWARD LOOKING STATEMENTS
Information included in this release constitutes forward-looking statements.
Often, but not always, forward looking statements can generally be identified
by the use of forward looking words such as "may", "will", "expect", "intend",
"plan", "estimate", "anticipate", "continue", and "guidance", or other similar
words and may include, without limitation, statements regarding plans,
strategies and objectives of management, anticipated production or
construction commencement dates and expected costs or production outputs.
Forward looking statements inherently involve known and unknown risks,
uncertainties and other factors that may cause the company's actual results,
performance, and achievements to differ materially from any future results,
performance, or achievements. Relevant factors may include, but are not
limited to, changes in commodity prices, foreign exchange fluctuations and
general economic conditions, increased costs and demand for production inputs,
the speculative nature of exploration and project development, including the
risks of obtaining necessary licences and permits and diminishing quantities
or grades of reserves, political and social risks, changes to the regulatory
framework within which the company operates or may in the future operate,
environmental conditions including extreme weather conditions, recruitment and
retention of personnel, industrial relations issues and litigation.
Forward looking statements are based on the company and its management's good
faith assumptions relating to the financial, market, regulatory and other
relevant environments that will exist and affect the company's business and
operations in the future. The company does not give any assurance that the
assumptions on which forward looking statements are based will prove to be
correct, or that the company's business or operations will not be affected in
any material manner by these or other factors not foreseen or foreseeable by
the company or management or beyond the company's control.
Although the company attempts and has attempted to identify factors that would
cause actual actions, events or results to differ materially from those
disclosed in forward looking statements, there may be other factors that could
cause actual results, performance, achievements or events not to be as
anticipated, estimated or intended, and many events are beyond the reasonable
control of the company. Accordingly, readers are cautioned not to place undue
reliance on forward looking statements. Forward looking statements in these
materials speak only at the date of issue. Subject to any continuing
obligations under applicable law or any relevant stock exchange listing rules,
in providing this information the company does not undertake any obligation to
publicly update or revise any of the forward looking statements or to advise
of any change in events, conditions or circumstances on which any such
statement is based.
LITHIUM CLASSIFICATION AND CONVERSION FACTORS
Lithium grades are normally presented in percentages or parts per million
(ppm). Grades of deposits are also expressed as lithium compounds in
percentages, for example as a percent lithium oxide (Li(2)O) content or
percent lithium carbonate (Li(2)CO(3)) content.
Lithium carbonate equivalent ("LCE") is the industry standard terminology for,
and is equivalent to, Li(2)CO(3). Use of LCE is to provide data comparable
with industry reports and is the total equivalent amount of lithium carbonate,
assuming the lithium content in the deposit is converted to lithium carbonate,
using the conversion rates in the table included below to get an equivalent
Li(2)CO(3) value in percent. Use of LCE assumes 100% recovery and no process
losses in the extraction of Li(2)CO(3) from the deposit.
Lithium resources and reserves are usually presented in tonnes of LCE or Li.
The standard conversion factors are set out in the table 4 below:
Table 4: Conversion Factors for Lithium Compounds and Minerals
Convert from Convert to Li Convert to Li2O Convert to Li2CO3 Convert to LiOH.H2O
Lithium Li 1.000 2.153 5.325 6.048
Lithium Oxide Li(2)O 0.464 1.000 2.473 2.809
Lithium Carbonate Li(2)CO(3) 0.188 0.404 1.000 1.136
Lithium Hydroxide LiOH.H(2)O 0.165 0.356 0.880 1.000
Lithium Fluoride LiF 0.268 0.576 1.424 1.618
Appendix 5B
Mining exploration entity or oil and gas exploration entity quarterly cash
flow report
Name of entity
European Metals Holdings Limited (ASX: EMH)
ABN Quarter ended ("current quarter")
55 154 618 989 30 June 2022
Consolidated statement of cash flows Current quarter Year to date
$A'000
(12 months)
$A'000
1. Cash flows from operating activities 275 1,102
1.1 Receipts from associate
1.2 Payments for - -
(a) exploration & evaluation
(b) development - -
(c) production - -
(d) staff costs (91) (386)
(e) administration and corporate costs (759) (2,646)
1.3 Dividends received (see note 3) - -
1.4 Interest received - 12
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - 56
1.8 Other (Cinovec associated costs) (315) (769)
1.9 Net cash from / (used in) operating activities (890) (2,631)
2. Cash flows from investing activities - -
2.1 Payments to acquire or for:
(a) entities
(b) tenements - -
(c) property, plant and equipment - -
(d) exploration & evaluation - -
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal of: - -
(a) entities
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing activities - -
3. Cash flows from financing activities - -
3.1 Proceeds from issues of equity securities (excluding convertible debt
securities)
3.2 Proceeds from issue of convertible debt securities - -
3.3 Proceeds from exercise of options - 14,679
3.4 Transaction costs related to issues of equity securities or convertible debt - (886)
securities
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related to loans and borrowings - -
3.8 Dividends paid - -
3.9 Other (Loan CDIs received) - -
3.10 Net cash from / (used in) financing activities - 13,793
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 19,921 7,881
4.2 Net cash from / (used in) operating activities (item 1.9 above) (890) (2,631)
4.3 Net cash from / (used in) investing activities (item 2.6 above) - -
4.4 Net cash from / (used in) financing activities (item 3.10 above) - 13,793
4.5 Effect of movement in exchange rates on cash held 7 (5)
4.6 Cash and cash equivalents at end of period 19,038 19,038
5. Reconciliation of cash and cash equivalents Current quarter Previous quarter
at the end of the quarter (as shown in the consolidated statement of cash
$A'000
$A'000
flows) to the related items in the accounts
5.1 Bank balances 14,026 14,909
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Term deposit less than 3 months 5,012 5,012
5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 19,038 19,921
6. Payments to related parties of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to related parties and their associates included 159
in item 1
6.2 Aggregate amount of payments to related parties and their associates included -
in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity
report must include a description of, and an explanation for, such payments.
Amounts paid to directors as director remuneration. A portion of these
expenses are to be reimbursed directly from Geomet. Included in 6.1 are also
payments to Everest Corporate, a company controlled by the spouse of a
director for accounting and bookkeeping services of $40k.
7. Financing facilities Total facility amount at quarter end Amount drawn at quarter end
Note: the term "facility' includes all forms of financing arrangements
$A'000
$A'000
available to the entity.
Add notes as necessary for an understanding of the sources of finance
available to the entity.
7.1 Loan facilities - -
7.2 Credit standby arrangements - -
7.3 Other (please specify) - -
7.4 Total financing facilities - -
7.5 Unused financing facilities available at quarter end -
7.6 Include in the box below a description of each facility above, including the
lender, interest rate, maturity date and whether it is secured or unsecured.
If any additional financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing details of
those facilities as well.
8. Estimated cash available for future operating activities $A'000
8.1 Net cash from / (used in) operating activities (item 1.9) (890)
8.2 (Payments for exploration & evaluation classified as investing activities) -
(item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item 8.2) (890)
8.4 Cash and cash equivalents at quarter end (item 4.6) 19,038
8.5 Unused finance facilities available at quarter end (item 7.6) -
8.6 Total available funding (item 8.4 + item 8.5) 19,038
8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 21.39
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7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following
questions:
8.8.1 Does the entity expect that it will continue to have the current
level of net operating cash flows for the time being and, if not, why not?
Answer: N/A
8.8.2 Has the entity taken any steps, or does it propose to take any
steps, to raise further cash to fund its operations and, if so, what are those
steps and how likely does it believe that they will be successful?
Answer: N/A
8.8.3 Does the entity expect to be able to continue its operations and
to meet its business objectives and, if so, on what basis?
Answer: N/A
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2
and 8.8.3 above must be answered.
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters
disclosed.
Date: 29 July 2022
Authorised by: The Board
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying
activity report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and the effect
this has had on its cash position. An entity that wishes to disclose
additional information over and above the minimum required under the Listing
Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions in, and
provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash
flow report has been prepared in accordance with other accounting standards
agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities, depending
on the accounting policy of the entity.
4. If this report has been authorised for release to the
market by your board of directors, you can insert here: "By the board". If it
has been authorised for release to the market by a committee of your board of
directors, you can insert here: "By the [name of board committee - e.g. Audit
and Risk Committee]". If it has been authorised for release to the market by a
disclosure committee, you can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the
market by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations, the board should have
received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this
report complies with the appropriate accounting standards and gives a true and
fair view of the cash flows of the entity, and that their opinion has been
formed on the basis of a sound system of risk management and internal control
which is operating effectively.
WEBSITE
A copy of this announcement is available from the Company's website at
www.europeanmet.com (http://www.europeanmet.com) .
ENQUIRIES:
European Metals Holdings Limited
Keith Coughlan, Executive Chairman Tel: +61 (0) 419 996 333
Email: keith@europeanmet.com
Kiran Morzaria, Non-Executive Director Tel: +44 (0) 20 7440 0647
David Koch, Company Secretary Tel: +61 (0) 418 925 212
Email: david@europeanmet.com (mailto:david@europeanmet.com)
WH Ireland Ltd (Nomad & Broker)
James Joyce/Darshan Patel Tel: +44 (0) 20 7220 1666
(Corporate Finance)
Harry Ansell/Jasper Berry (Broking)
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
The information contained within this announcement is considered to be inside
information, for the purposes of Article 7 of EU Regulation 596/2014, prior to
its release. The person who authorised for the release of this announcement
on behalf of the Company was Keith Coughlan, Executive Chairman.
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