TIDMEMH
RNS Number : 8299F
European Metals Holdings Limited
31 October 2018
For immediate release
31 October 2018
EUROPEAN METALS HOLDINGS LIMITED
QUARTERLY ACTIVITIES REPORT - SEPTEMBER 2018
HIGHLIGHTS
-- Production modelled to increase to 22,500 tpa lithium carbonate
-- Update of PFS to reflect production of lithium hydroxide
commenced
-- Resource and geophysical drilling permits granted
-- Lithium hydroxide testwork commenced
European Metals Holdings Limited ("European Metals" or "the
Company") is pleased to report on its activities and continued
progress in the development of the globally significant Cinovec
Lithium / Tin Project ("the project" or "Cinovec") in Czech
Republic during the three-month period ending September 2018.
PRODUCTION MODELLED TO INCREASE TO 22,500 tpa LITHIUM
CARBONATE
The Company completed additional roast optimisation testwork
early in the quarter and reported that sustained improved
recoveries had resulted in a predicted increase in lithium
carbonate production to 22,500 tpa from the project.
Highlights:
* Average lithium carbonate production modelled to
increase from 20,800tpa to 22,500tpa due to improved
recoveries in the leach circuit of 94% being
modelled.
* Increased lithium production results in projected
increased cash margins of approximately 10%.
* Proposed use of low cost waste gypsum from local
power plants as a roasting reagent is a significant
positive environmental outcome for the region and a
reagent cost benefit to the project.
* Locked cycle testing and larger scale roasting
technology confirmation work to commence imminently.
* Preparation of 2 tonnes of lithium concentrate via
magnetic separation for lithium carbonate pilot plant
trials was almost complete.
The Company reported that the optimised reagent mix developed
during the testwork as compared to that reported in the PFS
resulted in the elimination of all high cost inputs to the roast
predicted previously. The mix now contains a higher proportion of
gypsum but the gypsum takes the form of a waste material sourced
from the scrubbing of power station off gases. The sample used
during the development of this reagent regime was sourced from a
power station in the region. Current indications are that this
material would be available at a highly competitive price. Also,
the PFS predicted the use of hydrated lime and sodium sulphate as
relatively high cost reagents to the process, all of which have now
been eliminated and replaced by the waste gypsum described, as well
as a small addition rate of limestone which can also be sourced at
competitive prices in the nearby regions.
These developments enabled the Company to initiate the next two
phases of testwork. Firstly, involving locked cycle testing to
confirm the flowsheet all the way through to the production of
battery grade lithium carbonate and secondly, to enable larger
scale roasting proof of technology testing to be completed in the
next few months. The Company will also undertake the production of
lithium hydroxide during the latter phase.
UPDATE OF PFS TO REFLECT PRODUCTION OF LITHIUM HYDROXIDE
The Company provided a project update on 4 September 2018,
highlighting further significant advancements made in the
development of the Cinovec project.
Highlights:
* Work had commenced on an update of the Preliminary
Feasibility Study to model the production of higher
value lithium hydroxide due to its increasing use in
lithium ion batteries.
* Leach recoveries of 94-95% lithium had been
replicated in confirmatory laboratory scale roasting
and water leaching tests in Germany. Locked cycle
testwork would then commence post the lithium
hydroxide study to model the selected route.
* Permits had been granted for the commencement of
geotechnical drilling at the project.
The Company announced the commencement of development of an
updated Preliminary Feasibility Study (PFS) modelling the economics
of the production of lithium hydroxide from Cinovec ore. The
updated PFS included a process flowsheet whereby battery grade
lithium hydroxide may be precipitated directly from the roast and
water leach steps.
The Company also recommenced testwork at Dorfner Anzaplan in
Germany. Initial testwork was focused on replicating results
obtained in laboratory scale roasting testwork, reported on 28
March 2018 (Lithium Recoveries Improved to 95%). Similar results
were achieved in 6 tests completed enabling the roasting feed blend
and chemistry to be locked in and the stated recovery improvements
to be used in future project and economic assessments. The plan was
then to commence locked-cycle pilot testwork in September 2018 at
Anzaplan with the selected lithium product (ie carbonate or
hydroxide).
RESOURCE AND GEOPHYSICAL DRILLING PERMITS GRANTED LITHIUM
HYDROXIDE TESTWORK COMMENCED
The Company announced further advancements made in the
development of the Cinovec Project which highlighted:
* Permits required for the DFS resource drilling
campaign had been granted.
* A total of 13 drill holes for a total drilled length
of 3,386 metres had been permitted.
* The first 4 geotechnical drill holes at the proposed
site of the mine portal had been completed.
* Testing of the revised lithium hydroxide product
flowsheet had commenced on schedule.
The Company received permission from the relevant statutory
authorities in the Czech Republic for the commencement of the
planned comprehensive diamond drilling campaign. The drilling is
aimed at converting a sufficient portion of the existing Indicated
Mineral Resource to the Measured Resource category to cover the
first 2 years of the scheduled mining plan. A total of 8 diamond
drill holes will be completed for 2,560 metres. This is a key
activity in terms of the ongoing ramp up of the project's
definitive feasibility study (DFS).
The Company also reported the completion of the initial 4
geotechnical holes reported on 4 September 2018 (CINOVEC PROJECT
UPDATE - SIGNIFICANT ADVANCEMENTS), for the portal area.
Geotechnical logging of the four holes was planned to be completed
in early October 2018. The rig would then continue with drilling a
further five geotechnical holes along the planned mining decline
route to allow final development ready designs to be completed for
the portal and decline designs.
European Metals also reported that testwork at Dorfner Anzaplan
in Germany had commenced on schedule. The first stage of the
testwork was focused on proving up a flowsheet developed for the
production of lithium hydroxide. It is the intention that this work
would be followed by locked cycle testing of the flowsheet settled
upon.
CORPORATE
As at 30 September 2018 the issued performance shares including
the terms and conditions were as follows:
Number Description Summary Terms & Conversion Hurdles
1,000,000 Class B Performance Convert into Shares and an equivalent
Shares number of CDIs upon the Company's Mineral
Resource at Cinovec South and Cinovec
Main being entered in the State Balance.
The B Class Performance Shares shall
convert into the number of Shares and
equivalent number of CDIs equal to 1,000,000
multiplied by 0.5 and divided by the
greater of: (A) $0.50 per CDI; and (B)
the volume weighted average price of
CDIs (expressed as a decimal of $1.00)
as calculated over the 5 ASX trading
days prior to the date the Mineral Resource
is entered.
-------------------- -------------------------------------------------
1,000,000 Class B Performance Convert into Shares and an equivalent
Shares number of CDIs upon the issuance of the
preliminary mining licenses relating
to the Cinovec Project. The B Class Performance
Shares shall convert into the number
of Shares and equivalent number of CDIs
equal to 1,000,000 multiplied by 0.5
and divided by the greater of: (A) $0.50
per CDI; and (B) the volume weighted
average price of CDIs (expressed as a
decimal of $1.00) as calculated over
the 5 ASX trading days prior to the date
the final preliminary mining license
is issued.
-------------------- -------------------------------------------------
3,000,000 Class B Performance Convert into Shares and an equivalent
Shares number of CDIs upon the completion of
a definitive feasibility study (DFS).
For clarity, the DFS must be: (i) of
a standard suitable to be submitted to
a financial institution as the basis
for lending of funds for the development
and operation of mining activities contemplated
in the study; (ii) capable of supporting
a decision to mine on the Permits; and
(iii) completed to an accuracy of +/-
15% with respect to operating and capital
costs and display a pre-tax net present
value of not less than US$250,000,000.
The B Class Performance Shares shall
convert into the number of Shares and
equivalent number of CDIs equal to 3,000,000
multiplied by 0.5 and divided by the
greater of: (A) $0.50 per CDI; and (B)
the volume weighted average price of
CDIs (expressed as a decimal of $1.00)
as calculated over the 5 ASX trading
days prior to date of receipt of the
completed DFS.
-------------------- -------------------------------------------------
(Together the Milestones and each a Milestone). For the
avoidance of doubt, the number of Shares and equivalent number of
CDIs which will be issued on conversion of the B Class Performance
Shares will not exceed a ratio of 1 for 1.)
If the Milestone is not achieved or the Change of Control Event
does not occur by the required date, then each B Class Performance
Share held by a Holder will be automatically redeemed by the
Company for the sum of $0.000001 within 10 ASX trading days of
non-satisfaction of the Milestone.
TENEMENT SCHEDULE
Tenement Interest at beginning Acquired/Disposed Interest at end
of Quarter of Quarter
Cinovec 100% N/A 100%
---------------------- ------------------ ----------------
Cinovec 2 100% N/A 100%
---------------------- ------------------ ----------------
Cinovec 3 100% N/A 100%
---------------------- ------------------ ----------------
BACKGROUND INFORMATION ON CINOVEC
PROJECT OVERVIEW
Cinovec Lithium/Tin Project
European Metals, through its wholly owned Subsidiary, Geomet
s.r.o., controls the mineral exploration licenses awarded by the
Czech State over the Cinovec Lithium/Tin Project. Cinovec hosts a
globally significant hard rock lithium deposit with a total
Indicated Mineral Resource of 372.4Mt @ 0.44% Li(2) O and 0.04% Sn
and an Inferred Mineral Resource of 323.5Mt @ 0.39% Li(2) O and
0.04% Sn containing a combined 7.18 million tonnes Lithium
Carbonate Equivalent and 262,600 t of tin. An initial Probable Ore
Reserve of 34.5Mt @ 0.65% Li(2) O and 0.09% Sn has been declared to
cover the first 20 years mining at an output of 20,800 tpa of
lithium carbonate.
This makes Cinovec the largest 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.
EMH has completed a Preliminary Feasibility Study, conducted by
specialist independent consultants, which indicated a return post
tax NPV of USD540m and an IRR of 21%. It confirmed the deposit is
amenable to bulk underground mining. Metallurgical test work has
produced both battery grade lithium carbonate and 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.
CONTACT
For further information on this update or the Company generally,
please visit our website at www. http://europeanmet.com or
contact:
Mr. Keith Coughlan
Managing Director
COMPETENT PERSON
Information in this release that relates to exploration results
is based on information compiled by Dr Pavel Reichl. Dr Reichl is a
Certified Professional Geologist (certified by the American
Institute of Professional Geologists), a member of the American
Institute of Professional Geologists, a Fellow of the Society of
Economic Geologists and is a Competent Person as defined in the
2012 edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves and a Qualified Person
for the purposes of the AIM Guidance Note on Mining and Oil &
Gas Companies dated June 2009. Dr Reichl consents to the inclusion
in the release of the matters based on his information in the form
and context in which it appears. Dr Reichl holds CDIs in European
Metals.
The information in this release that relates to Mineral
Resources and Exploration Targets has been compiled by Mr Lynn
Widenbar. Mr Widenbar, who is a Member of the Australasian
Institute of Mining and Metallurgy, 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 consents to the inclusion in this report of
the matters based on his information in the form and context that
the information appears.
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
below:
Table: Conversion Factors for Lithium Compounds and Minerals
Convert from Convert to Convert to Convert to Li(2)
Li Li(2) O CO(3)
------------------- ------- ----------- ----------- -----------------
Lithium Li 1.000 2.153 5.324
Li(2)
Lithium Oxide O 0.464 1.000 2.473
Li(2)
Lithium Carbonate CO3 0.188 0.404 1.000
------------------- ------- ----------- ----------- -----------------
WEBSITE
A copy of this announcement is available from the Company's
website at www.europeanmet.com.
ENQUIRIES:
European Metals Holdings Limited Tel: +61 (0) 419 996 333
Keith Coughlan, Managing Director Email: keith@europeanmet.com
Kiran Morzaria, Non-Executive Tel: +44 (0) 20 7440 0647
Director Tel: +61 (0) 8 6245 2057
Julia Beckett, Company Secretary Email: julia@europeanmet.com
Beaumont Cornish (Nomad & Tel: +44 (0) 20 7628 3396
Broker) Email: corpfin@b-cornish.co.uk
Michael Cornish
Roland Cornish
Joint Broker Tel: +44 (0) 20 7186 9950
Damon Health
Erik Woolgar
Shard Capital
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 arranged
for the release of this announcement on behalf of the Company was
Keith Coughlan, Managing Director.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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