Quarterly Activities Report

RNS Number : 6106O

European Metals Holdings Limited

31 January 2019

 

For immediate release

31 January 2019

EUROPEAN METALS HOLDINGS LIMITED

QUARTERLY ACTIVITIES REPORT - DECEMBER 2018

HIGHLIGHTS

·      DFS level drilling permits granted

·      Lithium hydroxide testwork commenced

·      Resource drilling commenced - geotechnical studies continue

·      Successful placing to raise $1.82m

·      Appointment of Joint Broker

POST QUARTER HIGHLIGHT

·      Drill Programme Update

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 December 2018.

RESOURCE AND GEOPHYSICAL DRILLING PERMITS GRANTED

Early in the quarter the Company announced it had received the permits required for the DFS resource drilling campaign. 

·      A total of 13 drill holes for a total drilled length of 3,386 metres were permitted.

·      The first 4 geotechnical drill holes at the proposed site of the mine portal were completed.

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).

LITHIUM HYDROXIDE TESTWORK COMMENCED

The Company 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.

RESOURCE DRILLING COMMENCED - GEOTECHNICAL STUDIES CONTINUE

On 5 November 2018, the Company provided a project update highlighting further significant advancements to the Cinovec Project including the following highlights:

·      The planned diamond drilling resource campaign has commenced.

·      A total of eight resource drill holes will be completed during this campaign with the first hole already completed.

·      Geophysical logging of the first four geotechnical drill holes at the proposed mine portal site has been completed.

·      A further five geotechnical drill holes are planned once resource drilling has been completed.

The Company confirmed that resource drilling commenced and that the first hole, CIS-10, had been completed at 340 metres, following the Company receiving permission from the statutory authorities in the Czech Republic for the commencement of this year's planned diamond drilling campaign. 

DRILL PROGRAMME UPDATE (Reported Post Quarter)

Post the quarter, the Company announced initial results from its current eight core-hole resource drilling programme at the Cinovec Project.  Drilling of five of the eight holes was reported as completed.  Drilling activities have been suspended and will resume after the end of the snow season.  Analytical result for the four of the drill holes from the Cinovec South deposit was also reported.

Key points:

·      Resource drill holes CIS-10, CIS-11, CIS-12 and CIS-13 have been completed including analytical reports.

·      Resource drill hole CIS-14 has been drilled with analytical results pending.

o  Hole CIS-11 returned 129.3m averaging 0.51% Li₂O, incl. 2m @ 0.93% Li₂O, 2m @0.93% Li₂O; 5m @ 0.56% Sn and 0.11% W, 5m @ 0.21% Sn, and 7m @ 0.11% Sn.

o  Hole CIS-13 returned 108m averaging 0.45% Li₂O and 0.11% Sn, incl. 4m @ 0.99% Li₂O; 6m @ 0.29% Sn, 5m @ 0.34% Sn, 3m @ 0.77% Sn and 0.12% W, and 2m @ 1.03% Sn, incl. 1m @ 1.92% Sn.

o  Hole CIS-10 returned 89m averaging 0.47% Li₂O, incl. 6m @ 1.02% Li₂O and 6m @ 0.91% Li₂O; 5m @ 0.26% Sn, 5m @ 0.14% Sn, and 7m @ 0.077% W.

o  Hole CIS-12 returned 93m averaging 0.48% Li₂O, incl. 2m @ 1.32% Li₂O, 2.4m @ 1.17% Li₂O and 3m @ 1.08% Li₂O; 8m @ 0.83% Li₂O and 0.18% Sn, 4m @ 0.13% Sn, and 5m @ 0.16% W.

CORPORATE

SUCCESSFUL PLACING TO RAISE APPROXIMATELY $1.82M

The Company announced that it had raised gross proceeds of £1,035,500 (~$1.82 M) via a share placing ("Placing") to Australian and UK investors.  The Placing's issue price of 20 pence per share (~35.1 cents) represented an approximate 13 percent discount to the closing price on 16 November 2018. A total of 5,177,500 new ordinary shares of no par value ("Ordinary Shares") in EMH were placed with new and existing investors ("Placing Shares"), including by way of the issue of depositary interests representing Placing Shares ("Depositary Interests").

The net Placing proceeds will be used to continue to advance EMH's corporate strategy including:

·      To progress the Company's drilling programme and upgrade its resource model to include measured resources and facilitate an estimation of proven reserves;

·      Begin the engineering process for a Definitive Feasibility Study;

·      Progress Environmental Impact Assessments for mining and processing;

·      Operate a pilot plant for production of samples for marketing; and

·      Progress discussions with potential strategic partners.

APPOINTMENT OF JOINT BROKER

The Directors announced the appointment of WH Ireland Limited as Joint Broker to the Company.

PERFORMANCE SHARES

As at 31 December 2018 the issued performance shares including the terms and conditions were as follows:

Number	Description	Summary Terms & Conversion Hurdles
1,000,000 1,000,000	A Class Performance Shares B Class Performance Shares	Convert into Shares and an equivalent number of CDIs upon the Company's Mineral Resource at Cinovec South and Cinovec Main being entered in the State Balance. The A Class Performance Shares and 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 1,000,000	A Class Performance Shares B Class Performance Shares	Convert into Shares and an equivalent number of CDIs upon the issuance of the preliminary mining licenses relating to the Cinovec Project. The A Class Performance Shares and 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 3,000,000	A Class Performance Shares B Class Performance Shares	Convert into Shares and an equivalent 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 A Class Performance Shares and 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 A Class Performance Shares and 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 A Class Performance Share and 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 of Quarter	Acquired/Disposed	Interest at end 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 @ 0.45% Li₂O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt @ 0.39% Li₂O and 0.04% Sn containing a combined 7.18 million tonnes Lithium Carbonate Equivalent and 263kt of tin reported 28 November 2017 (Further Increase in Indicated Resource at Cinovec South). An initial Probable Ore Reserve of 34.5Mt @ 0.65% Li₂O 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 reported 11 July 2018 (Cinovec Production Modelled to Increase to 22,500tpa 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% reported 19 April 2017 (PFS Confirms Potential Low Cost Lithium Carbonate Producer). 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.

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

 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 (Li₂O) content or percent lithium carbonate (Li₂CO₃) content.

Lithium carbonate equivalent ("LCE") is the industry standard terminology for, and is equivalent to, Li₂CO₃. 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 Li₂CO₃ value in percent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li₂CO₃ 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 Li	Convert to Li2O	Convert to Li2CO3
Lithium	Li	1.000	2.153	5.324
Lithium Oxide	Li2O	0.464	1.000	2.473
Lithium Carbonate	Li2CO3	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 Keith Coughlan, Managing Director Kiran Morzaria, Non-Executive Director Julia Beckett, Company Secretary	Tel: [phone] Email: [e-mail] Tel: [phone] Tel: [phone] Email: [e-mail]
Beaumont Cornish (Nomad & Broker) Michael Cornish Roland Cornish	Tel: [phone] Email: [e-mail]
Joint Broker Damon Health Erik Woolgar Shard Capital	Tel:  [phone]

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.

 

END

 

 

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