European Metals Holdings PLC (LON:EMH) hailed a pre-feasibility study at Cinovec in the Czech Republic as confirmation it can be one of the world’s lowest cost hard rock lithium carbonate deposits.
On a study based on around 10% of the deposit, the report indicated Cinovec can produce 20,800 tonnes of lithium carbonate annually for 21 years at a cost of US$3,483 per tonne.
Total capital cost would be US$393mln, with the return over the mine’s life over and above this outlay (net present value) estimated at US$540mln.
WATCH: European Metals' boss "comforted" by pre-feasibility study ...
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Analysts suggested the internal rate of return of 21% was on the low side, while Shore Capital was also nervous about the effect on the numbers of a drop in assumed lithium prices.
Keith Coughlan, managing director, was pleased with the outcome and said Cinovec had unique geological and metallurgical characteristics and coupled with the macro outlook for the lithium industry, particularly in Europe, it was a very attractive project.
“It is 500 miles away from annual car production of 6-7mln cars, with an increasing number of those electric,” he said.
Definitive study the next step
A definitive feasibility study to give a more detailed assessment of the deposit (and its economics) will get underway almost immediately, he added and take about a year to complete.
“We need to get in to production as soon as we can”.
There will be by-products of tin, potash and tungsten but “lithium is the key driver of the project".
According to Deutsche Bank, global lithium demand increased 15% year on year. There may be some 'retracement' in 2017, but the medium-term demand looks robust, it added.
Shares fell 15% to 64.9p, but that is more than 300% higher than a year ago.
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