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Is EMH set to supply clean lithium to the EU?

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Is EMH set to supply clean lithium to the EU?

European Metals Holdings Limited (ASX:EMH; AIM:EMH; NASDAQ:ERPNF) is currently developing the fully integrated Cinovec lithium, tin, tungsten deposit located in the northern Czech Republic.

This is the largest hard rock lithium resource in the European Union.

EMH provides a compelling play in the green energy materials sector, particularly given the location of its Cinovec Project, which is not only strategically positioned in terms of its potential client base, but also benefits from being situated in a mining friendly jurisdiction.

The location is also prime real estate in the electric vehicle (EV) revolution.

The EU is rapidly switching from petrol transport to EVs, as part of the “European Green Deal” which plans to make Europe carbon neutral by 2050.

€750BN has been allocated to generous EV subsidies, alongside penalties for CO2 emissions.

This transition in energy consumption and use has become a key driver of the need for a local source of lithium.

The EU currently has no local supply and requires imports from China and South America.

A significantly sized lithium industry is about to emerge in the EU, with EMH well placed to capture a significant portion of this market share.

The EU is aiming for 80% local lithium production by 2025.

EMH’s Cinovec project is located in the northern Czech Republic, in the epicentre of over a dozen new and planned lithium-ion battery factories, on the doorstep of dozens of potential customers.

Geomet s.r.o. controls the Cinovec project’s mineral rights and is owned by EMH (49%) and CEZ (51%).

CEZ is the seventh largest European Union power utility by customers and the tenth biggest by market cap (US$13 billion), domiciled in the Czech Republic.

The Czech Republic Government is CEZ’s largest shareholder with a 70% stake in the group.

CEZ has a balance sheet of €28 billion, and a clear strategic need to ensure EMH’s project moves into production.

EMH intends to supply a minimum of 25,267 tpa of lithium hydroxide or 22,500 tpa of lithium carbonate over the long term.

About the Cinovec Project

The Cinovec deposit is covered by three Exploration Permits and three Preliminary Mining Permits (PMP) that cover a combined area of nearly 19 square kilometres.

EMH’s strategy is to combine the three permits and progress the mine permitting and environmental studies that will support the proposed definitive feasibility study (DFS).

As illustrated below, Cinovec is by far the largest hard rock lithium project in Europe.

The deposit also contains a globally significant tin resource, and this is fully funded through to Final Investment Decision, expected early 2022.

The Cinovec deposit is covered by three Exploration Permits and three Preliminary Mining Permits (PMP) that cover a combined area of nearly 19 square kilometres.

EMH’s strategy is to combine the three permits and progress the mine permitting and environmental studies that will support the proposed definitive feasibility study (DFS).

In short:

Cinovec hosts a hard rock lithium deposit with:

  • a total Indicated Mineral Resource of 372.4 million tonnes at 0.45% Li2O and 0.04% Sn and
  • an Inferred Mineral Resource of 323.5 million tonnes at 0.39% Li2O and 0.04% Sn.

The deposit contains a combined 7.22 million tonnes of Lithium Carbonate Equivalent and 263kt of tin.

An initial Probable Ore Reserve of 34.5 million tonnes at 0.65% Li2O and 0.09% has been declared to cover the first 20 years mining at an output of 22,500 tonnes per annum of lithium carbonate.

Could EMH meet supply demands?

Independent industry analyst Roskill is expecting demand for lithium next year to increase significantly with carbonate to reach 165,000 tonnes LCE, up from 139,000 tonnes in 2020, while demand for hydroxide should total 132,000 tonnes LCE.

EMH expects to commence production in 2024 as the supply/demand dynamics for the battery grade hydroxide market look set to drive prices higher.

The demand side of the equation will be driven by an increase in CO2 compliance in the European Union that will commence in 2025.

The European Union is committed to investing 550 billion Euro in climate change initiatives between 2021 and 2027.

Of further significance for EMH is the goal of becoming self-sufficient in terms of lithium production, and by 2025 regulatory bodies are aiming for 80% regional production.

Further initiatives include the establishment of a 40 billion Euro Just Transition Fund aimed at assisting in the transition from fossil fuels to green energy.

High profile end-users such as Tesla, Samsung and Volkswagen are already on the move, and they are at various stages of increasing/adapting capacity to cater for an uptick in demand for electric vehicles and the broader power storage sector – note Cinovec’s central proximity to its potential clients.

European Metals could become a compelling play in the green energy materials sector, particularly given the location of the Cinovec Project and its strategic position in terms of its potential client base.

A focus on ESG

While ESG is focused on delivering a sustainable lithium product to the European market, it is also doing its ESG (environmental, social, governance) credential no harm.

EMH has adopted a set of ESG metrics and disclosures as released by the World Economic Forum (WEF) and is reporting their quarterly progress on ESG metrics.

The single roast, low heat process outlined in the PFS minimises the use of power, and a combination of recycled water and the use of benign reagents adds up to environmentally friendly production.

The application of EMH’s process also provides the company with options to produce battery grade lithium carbonate or lithium hydroxide, opening up multiple markets and which translates to client diversification.

What to expect

There are several potential share price catalysts that could help the company re-rate in the near to medium-term.

This includes the completion of a definitive feasibility study (DFS) which should occur in the next 12 months.

With EMH sending samples to potential customers in 2021, there is the likelihood of end users negotiating offtake agreements, particularly given that analysts are already predicting supply constraints.

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Materials

Q&A With StockPal – Tao Commodities Ltd (ASX:TAO)

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Q&A with StockPal - Taso Arima, Managing Director of TAO Commodities (ASX:TAO)

Watch Taso Arima, Managing Director of TAO Commodities (ASX:TAO), explaining about the impact of COVID-19 on its business and various projects that they are working on.

0:11 – What is TAO Commodities all about?
1:41 – How did your company cope with the COVID-19 pandemic?
3:51 – What projects are you currently working on?
5:19 – What is your target timeline for production?
6:47 – What is TAO Commodities’ competitive advantage?
9:43 – How are you currently engaging with investors and what should they be looking forward to?

Visit TAO’s website: https://taocommodities.com.au/

Email editor@stockpal.asia if you are or represent a listed-company and is keen to be in our interviews.

Want to be on the list next time this company raises capital? Open an account with Fresh Equities and start exploring capital raises – freshequities.com

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Q&A With StockPal – Ardea Resources (ASX:ARL)

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Q&A with StockPal - Andrew Penkethman, Managing Director and CEO of Ardea Resources Limited (ASX:ARL)

Watch Andrew Penkethman, Managing Director and CEO of Ardea Resources Limited (ASX:ARL), as he explains about Ardea’s mining projects in the exciting nickel-cobalt space.

0:00 – Intro

0:14 – What is Ardea all about?

1:05 – How did your company cope with the COVID-19 pandemic?

2:06 – What projects are you currently working on?

3:32 – What is your target timeline for production?

4:39 – What is Ardea’s competitive advantage?

6:14 – How are you currently engaging with investors and what should they be looking forward to?

Visit Ardea’s website: https://ardearesources.com.au/

Email editor@stockpal.asia if you are or represent a listed-company and is keen to be in our interviews.

Want to be on the list next time this company raises capital? Open an account with Fresh Equities and start exploring capital raises – freshequities.com

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Materials

Several catalysts are on the horizon for Auroch Minerals

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Several catalysts are on the horizon for Auroch Minerals

Shares in Auroch Minerals Limited (ASX:AOU) have soared roughly 300% in the last six months, but there could be more upside to come.

Today, the company announced that it has commenced diamond drilling at its Leinster Nickel Project in Western Australia.

This nickel sulphide focused base-metal resource company, is building value through targeted high-impact exploration in Western Australia.

AOU has three nickel projects in Western Australia and all sit in the Norseman-Wiluna Greenstone Belt, home to some of the best nickel projects globally including Leinster, Mt Keith, Kambalda and Widgiemooltha.

All of AOU’s projects, including Leinster, Saints and Nepean are highly prospective for near surface, high grade nickel sulphide mineralisation.

High-grade nickel is a feature of the Leinster region and today’s results show that the second hole (HNDD002) has confirmed thick shallow high-grade nickel-copper-PGE sulphide mineralisation, with the logged massive sulphides interval reporting 7.3 metres at 2.2% nickel, 0.53% copper from 143 metres.

The first hole accepted 4.1 metres of high-grade nickel-copper sulphide mineralisation grading 2.4% nickel and 0.61% copper from 119 metres.

Both the quality of the grades and the near-surface nature of the mineralisation suggest that this could be a highly economical project.

The drill programme at Leinster consists of four diamond drill-holes and will be followed by reverse-circulation (RC) drilling to test strike potential and some of the more-advanced regional targets across the Leinster tenure.

The combined diamond and RC drill programmes will consist of approximately 1200 metres of diamond drilling and 1800 metres of RC drilling.

Drilling success at Leinster would be highly material given that BHP has expressed a desire to ramp up its nickel production to meet growing global demand fuelled by the shift to electric vehicles.

Mining giant BHP could boost production on commercially viable terms and has commenced trying to source contracts with Nickel Sulphide deposits to feed into its Nickel West refineries.

Nepean could be the game changer

AOU is also expecting the delivery of assay results from its maiden drilling program at the Nepean Nickel Project.

The Nepean Nickel Project contains the historic high-grade Nepean nickel sulphide mine and was the second producing nickel mine in Australia, producing just over 1.1 million tonnes of ore between 1970 and 1987.

The ore was treated by Western Mining Corporation (WMC, now BHP Group Ltd) at its Kambalda processing facilities.

The Nepean mine closed in 1987 due to low nickel prices, leaving significant nickel sulphide resources unmined.

At the end of 1986 when a fight or flight decision had to be made, the nickel price was hovering in the vicinity of US$1.60 per pound, about 80% below current levels.

Today, the nickel price is over US$7.00 per pound.

The Nepean nickel mine has a remnant high-grade JORC (2004)-compliant resource: 13,250t contained nickel @ 2.20% Ni. (It should be noted that the resource is JORC(2004) only (i.e. historic estimate) and not compliant with the JORC (2012) code required now.)

There is high potential at Nepean to build on the existing remnant resources with drill targets along strike and at depth.

Nepean is just 70km from BHP’s Kambalda Nickel Concentrator and Smelter and again the presence of nearby processing facilities operated by third parties, including BHP’s Kambalda smelter, is a substantial benefit for AOU as BHP looks for more nickel supply.

AOU has identified several high-priority areas at Nepean, and a 3,500 metre reverse-circulation (RC) drill programme has already yielded some extremely promising results including 3 metres at 3.7% nickel, including 2 metres at 5.1% nickel, as well as one metre at 5.6% nickel.

With plenty more drilling results to filter through in the coming weeks, there are plenty of catalysts investors can look forward to.

Looking beyond this drilling program, AOU expects to complete a resource estimate by year-end, enabling it to fast track Nepean to production.

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