European Metals Holdings Limited Quarterly Activities Report (5577M)

TIDMEMH

RNS Number : 5577M

European Metals Holdings Limited

31 July 2017

For immediate release

31 July 2017

EUROPEAN METALS HOLDINGS LIMITED

QUARTERLY ACTIVITIES REPORT - JUNE 2017

HIGHLIGHTS

 
 
      *    Preliminary Feasibility Study confirms Cinovec as 
           potentially low cost Lithium Carbonate producer 
 *    Grant of permits 
 
 *    Infill drilling commenced 
 
 *    Maiden Ore Reserve 
 
 *    Board changes 
 
 *    Interim funding 
 
 

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 June 2017.

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.

GRANT OF PERMITS

The Company was informed in late January that the Cinovec South resource estimate was added to the Czech State Register of Mineral deposits, which was the first step towards achieving a mining licence. As a next step, the Preliminary Mining Permit (PMP) covering the majority of the Cinovec Project has now been awarded by the Czech Ministry of Environment.

In addition, the Company was awarded an additional exploration licence for the ground immediately south of the deposit which will allow preparatory geotechnical work for the exploration adit, including excavation of the adit itself when appropriate, to begin. A de-watering permit has also been obtained from the Ohře River Authority which will allow the Company to finalise the de-watering process of the partially flooded underground historic mine shafts well in advance to the commencement of operations.

INFILL DRILLING COMMENCES

The Company commenced a focused infill drilling program at Cinovec South. There are six core drill holes for a total of 2,800m planned in two areas where data density is low and there are 'gaps' in the resource model. This program is expected to add high grade resources in critical areas where mining will start and the results will be utilized during the DFS program to optimize the current mine plan.

MAIDEN ORE RESERVE

Based upon the Preliminary Feasibility Study undertaken for the Cinovec Project, the Company declared a maiden Probable Ore Reserve of 34.5 Mt @ 0.65% Li(2) O, as detailed below. The Probable Reserves have been declared solely from the Indicated Mineral Resource category and are classified based on a PFS level of study and category of Mineral Resource.

 
 CINOVEC ORE RESERVES SUMMARY 
----------------------------------------------------------------- 
                                              Li(2) 
                            Tonnes      Li      0      Sn     W 
-----------------------  -----------  -----  ------  -----  ----- 
 Category                 (Millions)    %       %      %      % 
-----------------------  -----------  -----  ------  -----  ----- 
 Proven Ore Reserves          0         0       0      0      0 
-----------------------  -----------  -----  ------  -----  ----- 
 Probable Ore Reserves       34.5      0.30   0.65    0.09   0.03 
-----------------------  -----------  -----  ------  -----  ----- 
 Total Ore Reserves          34.5      0.30   0.65    0.09   0.03 
-----------------------  -----------  -----  ------  -----  ----- 
 

Notes to Reserves Table.

1. Probable Ore Reserves have been prepared by Bara International in accordance with the guidelines of the JORC Code (2012).

2. The effective date of the Probable Ore Reserves is June 2017.

3. All figures are rounded to reflect the relative accuracy of the estimate.

4. The operator of the project is Geomet S.R.O. a wholly-owned subsidiary of EMH. Gross and Net Attributable Probable Ore Reserves are the same.

5. Any apparent inconsistencies are due to rounding errors.

The Ore Reserve was based on the Mineral Resource for the Cinovec deposit prepared by Widenbar and Associates and issued in February 2017. The Mineral Resource is reported in the report Cinovec Resource Estimation published by Widenbar and Associates and is reported in accordance with the JORC 2012 guidelines. The table below summarises the Mineral Resource declared:

 
                     CINOVEC 2017 RESOURCE 
--------------------------------------------------------------- 
                                           Li(2) 
              Cutoff     Tonnes      Li      O      Sn      W 
-----------  -------  -----------  -----  ------  -----  ------ 
                %      (Millions)    %       %      %       % 
-----------  -------  -----------  -----  ------  -----  ------ 
 INDICATED     0.1%      347.7      0.21   0.45    0.04   0.015 
-----------  -------  -----------  -----  ------  -----  ------ 
 INFERRED      0.1%      308.8      0.18   0.39    0.04   0.014 
-----------  -------  -----------  -----  ------  -----  ------ 
 TOTAL         0.1%      656.5      0.20   0.43    0.04   0.014 
-----------  -------  -----------  -----  ------  -----  ------ 
 

BOARD CHANGES

Mr Richard Pavlik was appointed to the Board to replace Mr Pavel Reichl, who resigned on his request to pursue other interests. Mr Pavlik is the General Manager of Geomet s.r.o., the Company's wholly owned Czech subsidiary, and is a highly experienced Czech mining executive. Mr Pavlik holds a Master's 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.

INTERIM FUNDING

The Company is actively engaged in discussions with potential European strategic partners with regards to the funding and development of the Cinovec Project. Given the high level of interest in Europe in the lithium market, the Company is confident of a successful outcome in the near term in this regard. In order to allow sufficient time to finalise discussions and properly assess the various options open to the Company, the Company arranged an interim funding facility to maintain momentum in developing the project.

This facility has been provided by an Australian based sophisticated investor, 6466 Investments Pty Ltd, and allows for the draw-down of up to AUD 2 million in tranches as required over 12 months. Any funds drawn down will convert to CDI's in the Company at a 10% discount to the 10 day vwap in the Company's securities. The funds will be used in the preparation of the Company's Definitive Feasibility Study, for further drilling and general working capital. The issue of shares pursuant to draw-downs does not require shareholder approval.

SUMMARY

European Metals has had another productive quarter with several key developments which are all very positive. The Company is now focused on accelerating the project towards development of the largest lithium resource in Europe through completion of the definitive feasibility study.

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 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. An initial Probable Ore Reserve of 34.5Mt @ 0.65% Li2O and 0.09% Sn has been declared to cover the first 20 years mining at an output of 20,800tpa of lithium carbonate.

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 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 
  indices"                 of the energy 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 
  separation"              minerals have 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 
  or "Indicated            Codes, is that part of a Mineral 
  Mineral Resource"        Resource which has been sampled 
                           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 
  "Inferred Mineral        Codes, is that part of a Mineral 
  Resource"                Resource for which the tonnage 
                           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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