European Metals Holdings Limited (LON:EMH) has expects to produce more metal in the early stages of its flagship Cinovec lithium/tin project in Czech Republic after successful metallurgical test work.
Roast optimisation led to improved recoveries and an increase in lithium carbonate production to 22,500tpa.
The miner said all recent roast/leach tests reliably achieved lithium extractions in the region of 94%, which would result in an approximate 10% increase in [EBITDA] margins for the project.
A modest increase in roasting temperature significantly increased lithium recovery, it said.
Cinovec has an indicated resource of 348mln tonnes grading 0.45% Li2O and 0.04% tin, supported by an inferred resource of 309mln tonnes at 0.39% Li2O and 0.04% tin.
That adds up to a combined 7mln tonnes Lithium Carbonate Equivalent and 263,000 tonnes of tin.
What’s more, there’s also an initial probable ore reserve of 34.5mln tonnes at 0.65% Li2O and 0.09% tin, which should cover the first 20 years mining at an output of 20,800 tonnes per year of lithium carbonate.
This makes Cinovec among the largest lithiums deposit in Europe, the fourth largest non-brine deposit in the world and a globally significant tin resource.
Economic case for development looks favourable
A preliminary feasibility study demonstrated the economic viability of the project and specifically that it offers a post-tax NPV of US$540 mln and an internal rate of return of 21%.
Prime location should support development decision
Cinovec is situated just across the border from Southern Germany, a region where much of Europe’s car manufacture takes place.
As the auto industry accelerates its conversion to electric cars, spurred on by the Volkswagen emissions scandal, a secure and local source of lithium is likely to become crucial. Furthermore, as the deposit lies in an active mining region, it has strong community support.
Kiran Morzaria, chief executive of Cadence Minerals PLC (LON:KNDC), which owns approximately 20% of the equity in European Metals, said: "The strategic importance of the Cinovec lithium project as a future supply hub for the European EV industry cannot be overstated."
He added: "That the optimisation tests conducted by European Metals are already showing a significant improvement in lithium recovery and increased cash margins is not only great news for the EV industry but could in future help to meet any lithium supply shortfall if, as we expect, there is a sustained increase in demand."
At 22.75p per share, European Metals is worth £32.9mln