• The 2019 PFS Update for the Cinovec Project has been updated to demonstrate the effect of changes in the mining process to incorporate the use of paste backfill, which results in an increase in annual production, together with changes in lithium and by-product prices to reflect current and expected market conditions.
• Annual production of battery grade lithium hydroxide monohydrate modelled to increase from 25,267 tpa to 29,386 tpa, an increase of 16%.
• NPV8 (post tax) increases from US$1.108B to US$1.938B, an increase of 74.9%, based upon a lithiumhydroxide price of USD17,000 per tonne which is significantly less than the current price.
• Post tax IRR of 36.3% and a payback period of 2.5 years from the commencement of production.
• Up-front capital cost due to backfilling plant and additional capital costs to produce 29,386 tpa lithium hydroxide increased to US$644m.
• This 2022 PFS Update assumes the life of mine extraction of 13.1% of the Measured and Indicated JORC Resources at Cinovec.
• Use of tailings for backfill will result in a far smaller environmental impact, further enhancing the Project’s already strong ESG credentials.
European Metals Holdings Limited (EMH or the Company) (ASX & AIM: EMH, OTC – Nasdaq Intl ADS: EMHXY) is pleased to announce the results of the mining update to the 2019 Pre-Feasibility Study (2022 PFS Update), led by mining definitive feasibility study (DFS) consultant Bara Consulting, on the backfilling potential of the Cinovec mine, in which it has a 49% economic interest, in the Czech Republic.
The study updates the outcomes of the previously updated pre-feasibility study announced on 17 June 2019 (2019 PFS Update), for changes in the mining process as well as an increase in annual production and changes in lithium and by-product prices.
As a result of the conclusions of the study, Geomet s.r.o. (Geomet) has changed the planned mining method for the Cinovec orebody from open stoping to longhole stoping with backfill using paste backfill. This change, together with other changes to the material assumptions outlined in this update, increases the Cinovec mine’s proposed ore extraction from 34.5mt up to 54.5mt, enabling an increase in the annual processing rate by approximately 33% per annum over the previous 21-year life of mine, from 1.69mtpa to 2.25mtpa over a now 25-year life of mine.
[1] Dollar figures throughout the announcement are in US Dollars; increases refer to results in this announcement compared to 2019 PFS Update
Keith Coughlan, Executive Chairman, said “I am very pleased to report to shareholders on the completion of this 2022 PFS Update for the Cinovec Project which adds significantly to the already robust forecast economics for the project. The results of the study are very positive for the overall economics, resulting in a far greater amount of the ore resource being utilised for production of lithium and increasing the after tax NPV8 from USD1.1B to USD1.94B. The increased NPV assumes a long-term price for lithium hydroxide of US$17,000 per tonne. An increase in the lithium hydroxide price by 30% to USD 22,100 would increase the NPV8 (post tax) to over USD 3B (refer to figure 13 on page 25). Given the current price of lithium hydroxide is in the vicinity of USD 40,000 per tonne it is clear that that the Cinovec Project will be critical to European battery self-sufficiency.
“The use of approximately 54% of the plant tailings for backfill will result in a far smaller environmental impact, with much smaller dry stack tailings storage required, further enhancing the already strong ESG credentials of the Project.
“The significant increase in lithium produced will further add to the supply security of the European battery industry. Importantly, even at this increased production rate, the resource is nowhere near fully utilised – paving the way for future assessment of further production increases.
“Cinovec is strategically located in central Europe, in close proximity to the continent’s vehicle manufacturers. With increasing demand for electric vehicles and the expected demands of grid storage capacity, the project is very well placed to supply the European lithium market for many decades”
The Cinovec Project remains a potential low operating cost lithium hydroxide producer, due to a number of key advantages:
• By-product credits from the recovery of tin, tungsten and potash;
• Paramagnetic properties of zinnwaldite allow the use of low-cost wet magnetic processing to produce a lithium concentrate for further processing at relatively high recoveries;
• Relatively low temperature roasting at atmospheric pressure utilizing conventional technologies, reagent recycling and the use of waste gypsum from power stations;
• Low-cost access to extensive existing infrastructure and cost-effective grid power;
• Global warming potential (GWP) impact mitigation planning recently identified solar power, battery- electric mining fleet, Hypex Bio explosives and the potential use of green hydrogen for thermal energy which could make Cinovec’s lithium chemicals have some of the lowest CO2 intensity in the world if all impact mitigation strategies are pursued.
• Highly skilled workforce and comparatively low costs of employment;
• Historic mining and chemical plant region – strong support by the local community for job creation in areas that have both historic and current mining and chemicals operations;
• The deposit lies in a stable jurisdiction, located centrally to the rapidly expanding electric vehicle industry, which is forecast to be the main driver behind increasing lithium consumption; and
• Established and transparent mining code.