European Metals PFS Update Delivers Outstanding Results

Rhea-AI Summary

European Metals Holdings Limited announces a significant update to the Cinovec Project. The 2019 PFS Update shows a 75% increase in NPV to US$1.94 billion and a 16% rise in lithium production to 29,386 tpa. The project’s new mining method, using paste backfill, enhances ore extraction and reduces environmental impact. With a post-tax IRR of 36.3% and a payback period of 2.5 years, this update reflects favorable market conditions for lithium hydroxide, significantly boosting the project’s economic viability.

Positive

• NPV increased from US$1.108B to US$1.938B, up 75%.
• Annual lithium production forecast increased from 25,267 tpa to 29,386 tpa, a 16% increase.
• Post-tax IRR projected at 36.3% with a payback period of 2.5 years.
• Utilization of 54% plant tailings for backfill enhances environmental ESG credentials.

Negative

• Up-front capital costs increased to US$644M due to backfilling plant and additional capital needs.

75% Increase in Cinovec NPV to US$1.94B

16% Increase in Production to 29,386tpa

HIGHLIGHTS

• 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.
• Annual production of battery grade lithium hydroxide monohydrate modelled to increase from 25,267 tpa to 29,386 tpa, an increase of 16%.
• NPV₈ (post tax) increases from US$1.108B to US$1.938B, an increase of 74.9%, based upon a lithium hydroxide price of USD17,000 per tonne which is significantly less than the current price.
• Post tax IRR of 36.3% and a payback period of 2.5 years from the commencement of production.
• Up-front capital cost due to backfilling plant and additional capital costs to produce 29,386 tpa lithium hydroxide increased to US$644m.
• This 2022 PFS Update assumes the life of mine extraction of 13.1% of the Measured and Indicated JORC Resources at Cinovec.
• Use of tailings for backfill will result in a far smaller environmental impact, further enhancing the Project’s already strong ESG credentials.
  
  

PERTH, Australia, Jan. 20, 2022 (GLOBE NEWSWIRE) -- European Metals Holdings Limited (EMH or the Company) (ASX & AIM: EMH, OTC – Nasdaq Intl ADS: EMHXY) is pleased to announce the results of the mining update to the 2019 Pre-Feasibility Study (2022 PFS Update), led by mining definitive feasibility study (DFS) consultant Bara Consulting, on the backfilling potential of the Cinovec mine, in which it has a 49% economic interest, in the Czech Republic.

As a result of the conclusions of the study, Geomet s.r.o. (Geomet) has changed the planned mining method for the Cinovec orebody from open stoping to longhole stoping with backfill using paste backfill. This change, together with other changes to the material assumptions outlined in this update, increases the Cinovec mine’s proposed ore extraction from 34.5mt up to 54.5mt, enabling an increase in the annual processing rate by approximately 33% per annum over the previous 21-year life of mine, from 1.69mtpa to 2.25mtpa over a now 25-year life of mine.

Keith Coughlan, Executive Chairman, said “I am very pleased to report to shareholders on the completion of this 2022 PFS Update for the Cinovec Project which adds significantly to the already robust forecast economics for the project. The results of the study are very positive for the overall economics, resulting in a far greater amount of the ore resource being utilised for production of lithium and increasing the after tax NPV₈ from USD1.1B to USD1.94B. The increased NPV assumes a long-term price for lithium hydroxide of US$17,000 per tonne. An increase in the lithium hydroxide price by 30% to USD 22,100 would increase the NPV₈ (post tax) to over USD 3B (refer to figure 13 on page 25). Given the current price of lithium hydroxide is in the vicinity of USD 40,000 per tonne it is clear that that the Cinovec Project will be critical to European battery self-sufficiency.

“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.

“The significant increase in lithium produced will further add to the supply security of the European battery industry. Importantly, even at this increased production rate, the resource is nowhere near fully utilised – paving the way for future assessment of further production increases.

“Cinovec is strategically located in central Europe, in close proximity to the continent’s vehicle manufacturers. With increasing demand for electric vehicles and the expected demands of grid storage capacity, the project is very well placed to supply the European lithium market for many decades.”

Full Announcement Click Here

https://www.investi.com.au/api/announcements/emh/7381a65f-d0b.pdf

CONTACT
For further information on this update or the Company generally, please visit our website at 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
Dennis Wilkins, Company Secretary	Tel: +61 (0) 417 945 049 Email: dennis@europeanmet.com

FAQ

What is the NPV increase reported for EMHXY's Cinovec Project?

The NPV increased from US$1.108 billion to US$1.938 billion.

How much is the annual lithium production expected to rise for EMHXY?

Annual lithium production is expected to rise by 16% to 29,386 tpa.

What is the estimated payback period for the Cinovec Project?

The estimated payback period is 2.5 years.

What mining method changes were made in the Cinovec Project update?

The mining method changed from open stoping to longhole stoping with paste backfill.

What are the implications of the increased capital costs for EMHXY?

The up-front capital costs have increased to US$644 million, which may affect initial profitability.