European Metals Holdings Limited Quarterly Activities Report (6551D)

TIDMEMH

RNS Number : 6551D

European Metals Holdings Limited

28 April 2017

For immediate release 28April 2017

EUROPEAN METALS HOLDINGS LIMITED

QUARTERLY ACTIVITIES REPORT - MARCH 2017

HIGHLIGHTS

 
 
       *    Drilling program completed & appointment of Czech 
            Country Manager 
 *    Initial steps towards mining licence achieved 
 
 *    Final drilling results 
 
 
        *    Substantial increase in Indicated Resource at Cinovec 
 
        *    Preliminary Feasibility Study confirms Cinovec as 
             potentially low cost lithium carbonate producer 
 

European Metals Holdings Limited ("European Metals" or "the Company") (ASX & AIM: EMH) is pleased to announce continued progress in the development of its 100% owned globally significant Cinovec Lithium/Tin Project in Czech Republic during the three month period ending March 2017.

DRILL PROGRAM COMPLETED & APPOINTMENT OF CZECH COUNTRY MANAGER

The planned core drillhole programme was completed in mid-January 2017 on time and on budget and without time loss incidents. In total 17 drillholes were drilled to a summary depth of 6,081 meters.

The Company also announced the appointment of Richard Pavlik, a highly experienced mining executive to the role of Country Manager. Mr Pavlik holds a Masters Degree in Mining Engineer from the Technical University of Ostrava in Czech Republic. He is the former Chief Project Manager and Advisor to the Chief Executive Officer at OKD. OKD has been a major coal producer in the Czech Republic. He has almost 30 years of relevant industry experience in the Czech Republic.

Mr Pavlik also has experience as a Project Analyst at Normandy Capital in Sydney as part of a postgraduate programme from Swinburne University. Mr Pavlik has held previous senior positions within OKD and New World Resources as Chief Engineer, and as Head of Surveying and Geology. He has also served as the Head of the Supervisory Board of NWR Karbonia, a Polish subsidiary of New World Resources (UK) Limited. Mr Pavlik's primary responsibilities will be to manage the in-country aspects of the Cinovec development programme, coordinate technical work and liaise with Government authorities on permitting and licensing of the project.

INITIAL STEPS TOWARDS MINING LICENCE ACHIEVED

The Company was informed in late January that the Cinovec South resource estimate was approved by a Committee of Experts and was subsequently added to the Czech State Register of Mineral deposits, which is the first step towards achieving a mining licence.

FINAL DRILLING RESULTS

The analytical results from the final seven drillholes were received by early February and they were excellent in terms of Lithium grade and the length of the mineralised intervals. A summary of the results are as follows:

 
 
        *    Hole CIW-22 contains the best lithium intercept to 
             date from the Company's drill programme of 264.5m 
             averaging 0.54% Li(2) O. This hole, collared in the 
             central part of Cinovec main, also contains 
             significant tin, tungsten, niobium and tantalum 
             mineralisation. An unexpected bonus was the 
             high-grade zone of tungsten, intersected by drillhole 
             CIW-22 at 238m depth which graded almost 3% of 
             tungsten 
 
        *    Centrally located, hole CIW-25 contains the Company's 
             longest lithium intercept to date with a length of 
             361.5m averaging 0.43% Li(2) O, including a high 
             grade lithium interval of 14.7m averaging 0.93% Li(2) 
             O, and significant intervals of Sn and W 
 
        *    Hole CIW- 23, also located in the central part of 
             Cinovec main, returned an interval of 261.1m 
             averaging 0.50% Li(2) O 
 
        *    Hole CIW-26, located at the western edge of the 
             deposit, returned an interval of 236.25m averaging 
             0.49% Li(2) O 
 
        *    Hole CIW-10, also located at the western edge of the 
             deposit, returned an interval of 233.9m averaging 
             0.43% Li(2) O 
 
        *    Hole CIW-27, located in the central part of Cinovec 
             main, retuned a Li intercept of 235m averaging 0.49% 
             Li(2) O incl. high grade zones of 14m @ 0.97% Li(2) O 
             and 2m @ 1.79% Li(2) O 
 
        *    Hole CIW-06, also centrally located, returned a Li 
             intercept of 258.5 m averaging 0.44% Li(2) O 
             including high grade zones of 3m at 1.11% Li(2) O, 
             2.75m at 0.91% Li(2) O and 2m at 1.03% Li(2) O 
 

SUBSTANTIAL INCREASE IN INDICATED RESOURCE AT CINOVEC

On completion of the extensive seven-month drilling program, the Company has successfully been able to increase the confidence in the resource base and substantially upgrade a significant part of the resource from the Inferred category to the higher confidence JORC compliant Indicated Mineral Resource category as follows;

 
 
        *    Lithium Indicated Resource increased 50% to 3.9 Mt 
             LCE, contained in 347.7 Mt @ 0.45% Li(2) O and 0.04% 
             Sn (0.1% Li cut-off) 
 
        *    Lithium Total Resource increased 11.8% to 7.0 Mt LCE, 
             contained in 656.5 Mt @0.43 % Li(2) O and 0.04% Sn 
             (0.1% Li cut-off) 
 
        *    Total contained tin in the Total Mineral Resource 
             increased to 262,600 tonnes 
 
        *    Lithium Exploration Target remains 350 to 450 Mt @ 
             0.39% to 0.47% for 3.4 Mt to 5.3 Mt of LCE 
 

DEVELOPMENTS POST REPORTING PERIOD

Preliminary Feasibility Study confirms Cinovec as potentially low cost lithium carbonate producer

The company successfully completed the Preliminary Feasibility Study and the results highlight that Cinovec can be a low cost lithium carbonate producer. The highlights of the study are as follows ($ figures quoted in USD):

 
                                                                     - $3,483 / tonne 
        *    Net overall cost of production                           Li(2) CO(3) 
                                                                     - $540 M (post 
        *    Net Present Value (NPV)                                  tax, 8%) 
                                                                     - 21% (post tax) 
        *    Internal Rate of Return (IRR) 
 
        *    Total Capital Cost                                      - $393 M 
                                                                     - 20,800 tonnes 
        *    Annual production of Battery Grade Lithium Carbonate 
 
        *    Study based on only 9.9% of defined Indicated Mineral 
             Resources 
 

The completion of the PFS follows a comprehensive metallurgical testwork campaign managed by European Metals. The PFS was undertaken by independent consultants who are specialists in the required areas of work. These included:

 
 
        *    Resource Estimation - Widenbar and Associates Pty Ltd 
 *    Mining - Bara Consulting Ltd 
 
 
        *    Front--End Comminution and Beneficiation ("FECAB") - 
             Ausenco Limited 
 *    Lithium Carbonate Plant ("LCP") - Hatch Pty Ltd 
 
 

The study is based upon a mine life of 21 years processing on average 1.7 Mtpa of ore, producing 20,800 tpa of battery grade lithium carbonate via a sodium sulphate roast.

SUMMARY

It has been another productive quarter for European Metals with a number of key developments which are very positive for the company. These developments indicate significant enhancements to the economics of the Cinovec Project which have now been reflected in the Preliminary Feasibility Study. The company will now move directly into a definitive feasibility study to accelerate the project towards development.

BACKGROUND INFORMATION ON CINOVEC

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

European Metals owns 100% of the Cinovec lithium-tin deposit in the Czech Republic. Cinovec is an historic mine incorporating a significant undeveloped lithium-tin resource with by-product potential including tungsten, rubidium, scandium, niobium and tantalum and potash. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 348Mt @ 0.45% Li(2) O and 0.04% Sn and an Inferred Mineral Resource of 309Mt @ 0.39% Li(2) O and 0.04% Sn containing a combined 7.0 million tonnes Lithium Carbonate Equivalent and 263kt of tin.

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%. It confirmed the deposit is be 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.

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 European Metals Director 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 (Li(2) O) content or percent lithium carbonate (Li(2) CO(3) ) content.

Lithium carbonate equivalent ("LCE") is the industry standard terminology for, and is equivalent to, Li(2) CO(3) . 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 Li(2) CO(3) value in percent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li(2) CO(3) 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   Convert     Convert to 
                                to Li     to Li(2)    Li(2) CO(3) 
                                          O 
-------------------  -------  --------  ----------  ------------- 
 Lithium              Li       1.000     2.153       5.324 
                      Li(2) 
 Lithium Oxide         O       0.464     1.000       2.473 
                      Li(2) 
 Lithium Carbonate     CO3     0.188     0.404       1.000 
-------------------  -------  --------  ----------  ------------- 
 

WEBSITE

A copy of this announcement is available from the Company's website at www.europeanmet.com.

TECHNICAL GLOSSARY

The following is a summary of technical terms:

 
 "ball and rod            Indicies that provide an assessment of the energy 
  indices"                 required to grind one tonne of material in a ball 
                           or rod mill 
 "carbonate"              refers to a carbonate mineral such as calcite, 
                           CaCO(3) 
 "comminution"            The crushing and/or grinding of material to a smaller 
                           scale 
 "cut-off grade"          lowest grade of mineralised material considered 
                           economic, used in the calculation of Mineral Resources 
 "deposit"                coherent geological body such as a mineralised 
                           body 
 "exploration"            method by which ore deposits are evaluated 
 "flotation"              selectively separating hydrophobic materials from 
                           hydrophilic materials to upgrade the concentration 
                           of valuable minerals 
 "g/t"                    gram per metric tonne 
 "grade"                  relative quantity or the percentage of ore mineral 
                           or metal content in an ore body 
 "heavy liquid            is based on the fact that different minerals have 
  separation"              different densities. Thus, if a mixture of minerals 
                           with different densities can be placed in a liquid 
                           with an intermediate density, the grains with densities 
                           less than that of the liquid will float and grains 
                           with densities greater than the liquid will sink 
 "Indicated"              as defined in the JORC and SAMREC Codes, is that 
  or "Indicated            part of a Mineral Resource which has been sampled 
  Mineral Resource"        by drill holes, underground openings or other sampling 
                           procedures at locations that are too widely spaced 
                           to ensure continuity but close enough to give a 
                           reasonable indication of continuity and where geoscientific 
                           data are known with a reasonable degree of reliability. 
                           An Indicated Mineral Resource will be based on 
                           more data and therefore will be more reliable than 
                           an Inferred Mineral Resource estimate 
 "Inferred" or            as defined in the JORC and SAMREC Codes, is that 
  "Inferred Mineral        part of a Mineral Resource for which the tonnage 
  Resource"                and grade and mineral content can be estimated 
                           with a low level of confidence. It is inferred 
                           from the geological evidence and has assumed but 
                           not verified geological and/or grade continuity. 
                           It is based on information gathered through the 
                           appropriate techniques from locations such as outcrops, 
                           trenches, pits, working and drill holes which may 
                           be limited or of uncertain quality and reliability 
 "JORC Code"              Joint Ore Reserve Committee Code; the Committee 
                           is convened under the auspices of the Australasian 
                           Institute of Mining and Metallurgy 
 "kt"                     thousand tonnes 
 "LCE"                    the total equivalent amount of lithium carbonate 
                           (see explanation above entitled Explanation of 
                           Lithium Classification and Conversion Factors) 

 "lithium"                a soft, silvery-white metallic element of the alkali 
                           group, the lightest of all metals 
 "lithium carbonate"      the lithium salt of carbonate with the formula 
                           Li(2) CO(3) 
 "magnetic separation"    is a process in which magnetically susceptible 
                           material is extracted from a mixture using a magnetic 
                           force 
 "metallurgical"          describing the science concerned with the production, 
                           purification and properties of metals and their 
                           applications 
 "Mineral Resource"       a concentration or occurrence of material of intrinsic 
                           economic interest in or on the Earth's crust in 
                           such a form that there are reasonable prospects 
                           for the eventual economic extraction; the location, 
                           quantity, grade geological characteristics and 
                           continuity of a mineral resource are known, estimated 
                           or interpreted from specific geological evidence 
                           and knowledge; mineral resources are sub-divided 
                           into Inferred, Indicated and Measured categories 
 "mineralisation"         process of formation and concentration of elements 
                           and their chemical compounds within a mass or body 
                           of rock 
 "Mt"                     million tonnes 
 "optical microscopy"     the determination of minerals by observation through 
                           an optical microscope 
 "ppm"                    parts per million 
 "recovery"               proportion of valuable material obtained in the 
                           processing of an ore, stated as a percentage of 
                           the material recovered compared with the total 
                           material present 
 "resources"              Measured: a mineral resource intersected and tested 
                           by drill holes, underground openings or other sampling 
                           procedures at locations which are spaced closely 
                           enough to confirm continuity and where geoscientific 
                           data are reliably known; a measured mineral resource 
                           estimate will be based on a substantial amount 
                           of reliable data, interpretation and evaluation 
                           which allows a clear determination to be made of 
                           shapes, sizes, densities and grades. Indicated: 
                           a mineral resource sampled by drill holes, underground 
                           openings or other sampling procedures at locations 
                           too widely spaced to ensure continuity but close 
                           enough to give a reasonable indication of continuity 
                           and where geoscientific data are known with a reasonable 
                           degree of reliability; an indicated resource will 
                           be based on more data, and therefore will be more 
                           reliable than an inferred resource estimate. Inferred: 
                           a mineral resource inferred from geoscientific 
                           evidence, underground openings or other sampling 
                           procedures where the lack of data is such that 
                           continuity cannot be predicted with confidence 
                           and where geoscientific data may not be known with 
                           a reasonable level of reliability 
 "SAGability"             testing material to investigate its performance 
                           in a semi-autonomous grinding mill 
 "spiral concentration"   a process that utilises the differential density 
                           of materials to concentrate valuable minerals 
 "stope"                  underground excavation within the orebody where 
                           the main production takes place 
 "t"                      a metric tonne 
 "tin"                    A tetragonal mineral, rare; soft; malleable: bluish 
                           white, found chiefly in cassiterite, SnO(2) 
 "treatment"              Physical or chemical treatment to extract the valuable 
                           metals/minerals 
 "tungsten"               hard, brittle, white or grey metallic element. 
                           Chemical symbol, W; also known as wolfram 
 "W"                      chemical symbol for tungsten 
 

ADDITIONAL GEOLOGICAL TERMS

 
 "apical"        relating to, or denoting an apex 
 "cassiterite"   A mineral, tin dioxide, SnO2. Ore of tin with specific 
                  gravity 7 
 "cupola"        A dome-shaped projection at the top of an igneous 
                  intrusion 
 "dip"           the true dip of a plane is the angle it makes with 
                  the horizontal plane 
 "granite"       coarse-grained intrusive igneous rock dominated 
                  by light-coloured minerals, consisting of about 
                  50% orthoclase, 25% quartz and balance of plagioclase 
                  feldspars and ferromagnesian silicates 
 "greisen"       A pneumatolitically altered granitic rock composed 
                  largely of quartz, mica, and topaz. The mica is 
                  usually muscovite or lepidolite. Tourmaline, fluorite, 
                  rutile, cassiterite, and wolframite are common 
                  accessory minerals 
 "igneous"       said of a rock or mineral that solidified from 
                  molten or partly molten material, i.e., from a 
                  magma 
 "muscovite"     also known as potash mica; formula: KAl(2) (AlSi(3) 
                  O(10) )(F,OH)(2) . 
 "quartz"        a mineral composed of silicon dioxide, SiO2 
 "rhyolite"      An igneous, volcanic rock of felsic (silica rich) 
                  composition. Typically >69% SiO(2) 
 "vein"          a tabular deposit of minerals occupying a fracture, 
                  in which particles may grow away from the walls 
                  towards the middle 
 "wolframite"    A mineral, (Fe,Mn)WO(4) ; within the huebnerite-ferberite 
                  series 
 "zinnwaldite"   A mineral, KLiFeAl(AlSi(3) )O(10) (F,OH)(2) ; mica 
                  group; basal cleavage; pale violet, yellowish or 
                  greyish brown; in granites, pegmatites, and greisens 
 

ENQUIRIES:

 
 European Metals Holdings            Tel: [phone] 
  Limited                             333 
  Keith Coughlan, Chief               Email: [e-mail] 
  Executive Officer                   Tel: [phone] 
  Kiran Morzaria, Non-Executive       0647 
  Director                            Tel: [phone] 
  Julia Beckett, Company              Email: [e-mail] 
  Secretary 
 Beaumont Cornish (Nomad            Tel: [phone] 
  & Broker)                          3396 
  Michael Cornish                    Email: [e-mail] 
  Roland Cornish 
 

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.

This information is provided by RNS

The company news service from the London Stock Exchange

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April 28, 2017 02:00 ET (06:00 GMT)