European Metals Share Discussion Threads

[myst1] 02/11/2017 10:24

Now this political hot air is beginning to blow over, how much should EMH be worth?

Just a reminder of how we are valued against our peers.



Things have moved on since this table was produced. Eg the value of AVZ has increased substantially and our value has decreased. The EV/ Resource figure for AVZ is currently $23 and our figure is $15.

Note that AVZ figures are based on an exploration target only and EMH figures don't include today's drill results.

Forget the fact that in comparison, Cinovec is centrally located for European end-users and is well serviced by infrastructure, a 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.

Based on this table if we were valued 10 times more we would still look cheap!

The reason for this anomaly can be summarized in two words Politics and Finance. The needs of the Czech Government and Europe as a whole require that these two issues will be dealt with imminently.

As I've said previously imo we now have the 'perfect storm' for serious share price appreciation.

[steeplejack] 02/11/2017 10:16

Good summary Simon

[simonsaid1] 02/11/2017 10:12

Hyper Al, you are missing 3 things. Firstly, the size of the resource itself. All studies so far are based on just a fraction of the whole mine, as it wouldn't be economic to try to operate across the whole mine area from the get-go, but that will come. This is an absolutely enormous area.

Secondly, the significant tin and tungsten changes the economics of the project (referred to in the RNS by their periodic table names, Sn and W respectively). The economic viability is based on the whole spectrum of extractable minerals, not just lithium. These are referred to as credits and are a huge part of the appeal and economics of Cinovec, which is after all a former tin mine with plenty left to give.

Thirdly, the standard we apply for lithium grades that can be extracted economically is changing, due to the soaring price of lithium. This is part of the investment case for Cinovec, a bet on future lithium shortage and price rises. This has already been happening in a big way in recent years.

The result of all this will be clear in the resource upgrade which is now being prepared.

The other factor to consider, with regards SP, is that the major question of forward funding looks like it's about to be answered, as Czech state enterprise Diamo looks set to take a significant stake/JV position. This will mean more funding for the project, a fantastic guarantor, and the removal of all-important red tape regarding the mining operations.

Combine all these factors together and you see why the trading pool here is so small, most EMH shares are 'sticky' for a reason.

[nibble] 02/11/2017 09:25

I think the play here is the potential massive European demand for Lithium in the near future. If you're looking longer term, the current mining economics may not be relevant.

Agree that the current political posturing isn't helping, but we'll have to wait and see how good EMH's in-country contacts are.

[bookwormrobert] 02/11/2017 08:21

Hyper Al - you hit the nail on the head here. Lithium grades are very low, in fact throughout Cinovec. Don't get me wrong, there is a vast amount of lithium there, but it will be expensive to mine. According to the PFS, EMH require $400m of capex and the IRR is only 21% (tin credits included). Usually, mine projects with financial figures like this simply don't get built. The current Czech politic game just adds to this project's problems.

[telbap] 31/10/2017 08:10

Sad as it seems unless these guys get a serious major behind them, we will be back at 5p before we know it. They either have to grab the bull by the horns and go for it with a huge raise , enough to get a CPR done, and facilitate us to working mine stage, then they will be queuing at the door.

[telbap] 31/10/2017 08:08

Nope, that end put.paid to that....30p here we come.

[luisfrg] 30/10/2017 12:50

Will bounce from 40p support level

[simonsaid1] 27/10/2017 13:44

Hi luxa, not sure where any of your numbers are coming from, sounds interesting?

[luxaeterna1] 27/10/2017 13:30

Do you reckon that 40% equity will be $180m investment by Diamo, 60% debt in the form of either $220m loans or forward-payment of a years supply of Lithium? (21kt).

[steeplejack] 24/10/2017 19:25

Yes it's about a fortnight old but the arguments hold good.

[simonsaid1] 24/10/2017 18:09

That article is old, but I still think higher royalties is a possible outcome. Not much of a problem for us with such enormous resource.

[steeplejack] 23/10/2017 07:25

Ano,led by Babis,take slightly less than 30% of the electoral vote.Democrat party second with around 12% of vote declare they won't engage in a coalition with Ano,leaving in prospect a three party coalition likely to involve the Communist Party.The Ano party is anti the Euro but broadly in favour of the EU but only as far as trade is concerned and certainly not in favour of extended Brussels political power like Macron.This result,whilst widely expected,means EMH will be overhung with political concerns.The Memorandum of Understanding signed ahead of the election doesn't have much import now.

[steeplejack] 20/10/2017 12:15

Article in today's FT about Cinovec .Comments by EMH about fund raising going forward.Costs to production estimated at $400m split 60:40 debt to equity.Reads well.

[jailbird] 18/10/2017 12:27

Steeplejack,

Thanks for that

ah well ..political issues and diversions here but it either way this is not good news in the near term for EMH

Prime Minister Bohuslav Sobotka of the Social Democrats said the debate surrounding the memorandum was an attempt to divert attention from the fact that the ANO leader, whose party is slated to win the elections, is charged with subsidy fraud.

“The party badly needs to divert attention from its own problems, because otherwise the public and media might ask how it is possible that the leader of ANO and his chief deputy, who are both charged with fraud, remain at the head of the party and are running in the elections. So they come up with a Wag the Dog scenario.”

After nine hours of heated debate, the house passed a resolution asking the government to annul the memorandum with the Australian based company European Metal Holdings and stating that the country’s reserves of lithium should be extracted by a state-owned company with the yields going to the state budget.

The resolution is not binding and many deputies openly admitted that the final session of the lower house had been little more than a hefty dose of election rhetoric broadcast live on national television.

However, the parties which provoked the debate in the lower house – ANO, the Communist Party and the Freedom and Democracy movement are satisfied with the outcome. Environment Minister Richard Brabec from ANO says his party tabled its opposition to the memorandum and even if the present government disregards the resolution it will be a pointer for the new administration.

Richard Brabec, photo: CTK
Richard Brabec, photo: CTK
“There are still four to five years left until the actual launch of lithium mining in the Czech Republic. This will give the next government and lower house time to consider the options so as to maximize the profit from this activity for all Czech citizens.”

European Metal Holdings has refrained from commenting on this latest development while the Czech firm Geomet, which holds a prospecting license for natural resources at the Cínovec mining site in the north of the country and is part of EMH ,said it was sorry to see the facts overshadowed by emotions, and warned insecurity could put off future investors.