European Metals Hldg - CEZ Potential Partnership & Significant Investment
For immediate release
POTENTIAL STRATEGIC PARTNERSHIP WITH CEZ
AND SIGNIFICANT INVESTMENT INTO CINOVEC PROJECT
If concluded, the agreement will see, subject to the successful completion of due diligence, shareholder, and other approvals, CEZ become a 51% shareholder in Geomet s.r.o. ("Geomet"), the Company's Czech subsidiary and holder of the rights over the Project, for consideration of approximately
Headquartered in the
The largest shareholder of its parent company, CEZ a. s., is the
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
CEZ is also a market leader for E-mobility in the region and has installed and operates a network of EV charging stations throughout
European Metals Managing Director
If concluded, this agreement will result in Cinovec being fully funded through to a construction decision and will assist greatly in the integration of Cinovec into the European battery market. The potential investment by CEZ further demonstrates EMH's commitment to develop fully the
Background to the Proposed Subscription
In July this year, EMH announced that CEZ was conducting due diligence on the Company and the
The Company considers that
Principal terms of the Proposed Subscription
Pursuant to the Exclusivity and Framework Agreement, CEZ has the option, but not the obligation, to subscribe, through its wholly-owned subsidiary SDAS, for such number of Geomet shares as will result in SDAS holding Geomet shares comprising fifty-one per cent. (51%) of the ownership interests and voting rights in Geomet, attached with the right to receive fifty-one per cent. (51%) of dividends, liquidation balance and other proceeds payable by Geomet to Geomet shareholders following completion of the subscription.
The amount to be paid by CEZ to Geomet under the option is in total approximately
Completion of the Proposed Subscription is conditional, inter alia, on the satisfaction of the following conditions:
(i) completion of due diligence in respect of the Company and the
(ii) EMH shareholder approval;
(iii) agreement of the initial work programme and budget for Geomet; and
(iv) CEZ and EMH agreeing the identity of the Chief Executive Officer, the Chief Operating Officer and the statutory auditor of Geomet to be appointed with effect from completion.
EMH has agreed to provide CEZ with a period of exclusivity under the Exclusivity and Framework Agreement, with certain break fees payable by EMH if it does not proceed with the Proposed Subscription. In particular, EMH and Geomet have undertaken until
EMH and CEZ have also agreed the form of the Geomet Shareholders' Agreement which sets out their rights and obligations as shareholders in Geomet should CEZ exercise the option. The Geomet Shareholders' Agreement includes certain minority shareholder protections with a number of reserved matters which require the approval of both CEZ and EMH, together with deadlock-breaking provisions in the event that on completion of the proposed work programme, the parties disagree on a construction decision.
Financial effects of the proposed subscription
The primary financial objective of the Proposed Subscription is to secure the funding for the next stage of the development of the
The addition of a partner with the financial strength of CEZ, and the strong significant business relationships that it brings, significantly enhances the attractiveness of the
The subscription proceeds from the Proposed Subscription will be used by Geomet to develop the
On completion of the proposed subscription by SDAS, EMH's ongoing interest in Geomet will reduce to 49%. Under the Geomet Shareholders' Agreement, Geomet will have a board of five directors. EMH will have the right to nominate two of the five Geomet directors.
Accordingly, on completion EMH will cease to consolidate Geomet's results within the EMH's consolidated accounts. As at
ASX Listing Rule 11.2
ASX Listing Rule 11.2 provides that an entity may not dispose of its main undertaking (that is, its main asset or business) without the approval of its shareholders. While the Proposed Subscription may be considered to constitute the Company disposing of its main undertaking, the Company will not be making any change to its main undertaking. That is, the Company will remain engaged in the same principal business activities following completion of the Proposed Subscription. Accordingly, the Company will be seeking Shareholder approval under Listing Rule 11.2 for completeness.
CEZ is not a related party of the Company, and Shareholder approval for the Proposed Subscription is not required for the purposes of ASX Listing Rule 10.1.
AIM Rule 15
The Proposed Subscription would constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules. The Proposed Subscription is therefore conditional on, inter alia, Shareholder approval which will be sought at a General Meeting of the Company to be convened in due course. The Company will, however, remain an operating minerals company under the AIM Rules given its remaining material interest and ongoing involvement in the
The completion of the Proposed Subscription will not result in any changes to the Company's Board or management.
The Company expects to publish shortly a circular to shareholders setting our further details of the Proposed Subscription, the Exclusivity and Framework Agreement and Geomet Shareholders' Agreement, together with notice of the General Meeting and a further announcement will be made in due course.
BACKGROUND INFORMATION ON CINOVEC
European Metals, through its wholly owned subsidiary, Geomet s.r.o., controls the mineral exploration licenses awarded by the Czech State over the
This makes Cinovec the largest lithium deposit in
The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.
The economic viability of Cinovec has been enhanced by the recent strong increase in demand for lithium globally, and within
There are no other material changes to the original information and all the material assumptions continue to apply to the forecasts.
For further information on this update or the Company generally, please visit our website at www. http://europeanmet.com or see full contact details at the end of this release.
Information in this release that relates to exploration results is based on information compiled by Dr
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
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 to Li
Convert to Li2O
Convert to Li2CO3
A copy of this announcement is available from the Company's website at www.europeanmet.com.
Tel: +61 (0) 419 996 333
Email: [email protected]
Tel: +44 (0) 20 7440 0647
Tel: +61 (0) 8 6245 2050
Email: [email protected]
Tel: +44 (0) 20 7628 3396
Email: [email protected]
Tel: +44 (0) 20 7186 9950
Blytheweigh (Financial PR)
Tel: +44 (0) 20 7138 3222
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
This information is provided by RNS, the news service of the
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