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The Board of European Lithium Limited ( ASX: EUR, FRA: PF8, OTC: EULIF) (the Company) is pleased to present its activities report and Appendix 5B for the three months ending 31 March 2022.
SUMMARY OF KEY UPDATES
- Subsequent to the quarter end, placement to raise proceeds of $30m (before expenses)
- Completion of tranche 2 placement with Millstone to raise funds of $2.5m
- E47/4144 located in the northwest Australia is continuing to progress through the WA Mining Act regulatory application process.
- COVID-19 pandemic and government enforced rules related to international travel continues to impact operations and force EUR to observe closely any changes in government restrictions in Europe, Austria specifically, and Australia.
- Due to the Company’s strict COVID safe rules and other mitigation measures, no COVID19 incidents or cases were reported by staff and contractors since the start of the pandemic in 2020. The Company has continued its Austrian operations while monitoring changing COVID-19 rules within the European Union, the pandemic is expected to continue to impact the Company for the foreseeable future. World Health Organization (WHO) recommendations remain in place and are applied into national law despite seasonal decreases in case numbers.
- DRA Global (DRA) as lead consultant managing the Definite Feasibility Study (DFS) has advanced both technical and financial planning work during the quarter.
- Subsequent to the quarter end, the Company announced an interim DFS progress report showing a pre-tax NPV6 for the accelerated case of A$862 million with the final DFS anticipated to be completed in the third quarter of 2022.
- Dorfner/Anzaplan has been appointed to plan the layout for the conversion plant QA/QC laboratory to ensure consistent high quality of the battery grade products.
- EUR continues to collaborate with a research group from University of Graz to develop local production of lithium hydroxide from recycled Lithium-Ion-Batteries.
- Planning underway for zone 2 exploration drilling
- Discussions in progress with Traxys and other industry players regarding future off-take contracts
- GREENPEG (EU-funded) supported infield and underground work continues.
CORPORATE MATTERS
Shareholder Meeting
On 21 January 2022, the Company held its annual general meeting (AGM) of shareholders. All resolutions were carried at the AGM.
Millstone Placement
On 4 November 2021, the Company announced that it has entered into binding agreements under which EUR will acquire European Lithium Ukraine LLC (formerly Petro Consulting LLC) (European Lithium Ukraine), a Ukraine incorporated company that is applying (through either court proceedings, public auction and/or production sharing agreement with the Ukraine Government) for 20-year special permits for the extraction and production of lithium at the Shevchenkivske project and Dobra Project in Ukraine (Figure 1), from Millstone and Company Global DW LLC (Millstone)(Millstone Transaction). In addition, under the terms of the agreement, Millstone will subscribe for $20m in shares in the Company, with $2.5m invested immediately, $2.5m subject to shareholder approval and the balance of $15m following completion of the acquisition of European Lithium Ukraine.
During the quarter, the Company received funding of $2.5m from Millstone in respect to tranche 2 of the placement proceeded to issue shares pursuant to the placement following receipt of shareholder approval at the AGM held on 21 January 2022.
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European Lithium
Overview
As the global push to halt climate change gains momentum, the European Commission is looking to regionalize the battery supply chain to capitalize on the rapid electric vehicle (EV) growth and limit its dependency on other countries through heavy investment and policy changes. Europe’s electric vehicle market value reached US$29.49 million in 2021 and is projected to increase up to US$143.08 million by 2027, indicating a compounded annual growth rate of 23.4 percent in that period.
Even though Europe is one of the largest global producers of motor vehicles, it currently does not have a local supply of lithium hydroxide which is heavily used in EV battery technology. According to experts, the market is set to remain in a structural shortage until 2025
One company that aims to become the first local lithium supplier into an integrated European battery supply chain is European Lithium (ASX:EUR,FRA:PF8), a mining exploration and development company focused on exploring, identifying and acquiring lithium in Europe. The company is led by a management team with decades of experience and success in the mining and finance markets.
“Our aim is to be the first supplier of lithium from Europe, for Europe,” European Lithium chairman Tony Sage said.
The company is focused on its wholly owned Wolfsberg Lithium project located in Carinthia, Austria. The pre-existing mine is located in a mining-friendly region with multiple mineral discoveries in the surrounding area. The property features a high-grade lithium resource at an average grade of one percent lithium hydroxide, with a total resource of 12.88 million tonnes based on resources measured, indicated and inferred in zone 1 only.
The Wolfsberg Lithium project resource has the potential to double based on positive drill results in another zone on the property.
Based on the definitive feasibility study (DFS) released in March 2023, Wolfsberg Lithium Project is well positioned to become a leading producer of battery-grade lithium hydroxide in Europe. It is set to deliver high returns, leveraging low operating costs, and benefiting from a lithium market that is anticipated to be in structural undersupply during most of the life of mine. The battery-grade lithium hydroxide monohydrate (LHM) prices modeled in the DFS are projected to be at a 39-percent discount to current spot prices in 2025 and then escalate by 2 percent per annum. The estimated capex is US$866 million which supports a post-tax NPV of US$1.5 billion.
European Lithium has established several strategic relationships with an aim to deliver value to the Wolfsberg Lithium Project through development and during production. This includes a partnership with KMI for liaising with Austrian authorities.
The company commissioned Dorfner Anzaplan to construct the pilot plant, which was successfully completed on schedule. Anzaplan has also overseen the completion of metallurgical test work on bulk ore extractions. Testing will allow significantly higher recovery rates at the start of production as opposed to only assessing metallurgical data from the core as other mining companies often do, giving European Lithium the advantage of a streamline refinement process.
The company has support from the European Battery Alliance, GREENPEG and other government initiatives, believing it has the potential to become a major, first-to-market producer of lithium in Europe. The company also remains committed to clean production in an effort to support sustainability.
Based on the DFS, the company plans to begin the permitting process of its Wolfsberg Lithium project and prepare the mining plan for the mining authority to authorize the mine and concentrator construction. Afterward, the company will determine the approval requirements of the carbonate hydroxide conversion plant with the Energy Information Administration (EIA) and then initiate the final financing plan.
European Lithium, through its wholly owned Austrian subsidiary ECM Lithium Aľ GmbH (ECM), signed a binding long-term lithium offtake agreement with top-tier European auto manufacturer BMW to secure the company’s first offtake of battery grade lithium hydroxide from its Wolfsberg Lithium Project in Austria.
The company is aiming to commence production of lithium hydroxide from the project in 2027 — subject to funding and approvals by the Austrian government.
In a bid to expand its project portfolio, European Lithium executed a binding Heads of Agreement with 2743718 Ontario Inc., a subsidiary of Richmond Minerals (TSXVRMD), to acquire 100 percent of the rights, title and interest in the Bretstein-Lachtal Project, Klementkogel Project and the Wildbachgraben Project, a group of exploration licenses covering 114.6 square kilometers, targeting lithium with known occurrences in the Styria mining district of Austria.Company Highlights
- European Lithium is a mining exploration and development company focused on exploring, identifying and acquiring lithium in Europe.
- The company aims to become the first local lithium supplier into an integrated European battery supply chain.
- The company’s focus is on its wholly owned advanced Wolfsberg Lithium Project (Wolfsberg) located in Carinthia, Austria.
- Wolfsberg is a high-grade lithium resource at an average grade of one percent lithium oxide, with a total resource of 12.88 million tonnes based on measured, indicated and inferred resources in zone one only.
- Wolfsberg’s definitive feasibility study results demonstrate potential to deliver high returns, leveraging low operating costs, and benefiting from a lithium market that is anticipated to be in structural undersupply during most of the life of mine.
- The Wolfsberg resource estimate has significant upside with the potential to double based on positive drill results.
- Through its wholly owned Austrian subsidiary ECM Lithium Aľ GmbH (ECM), European Lithium signed a binding long-term lithium offtake agreement with top-tier European auto manufacturer BMW AG (BMW) to secure the company’s first offtake of battery-grade lithium hydroxide from Wolfsberg.
- The company has signed a binding agreement to build a Saudi Arabia-based hydroxide processing plant in partnership with Obeikan and deliver significant cost savings.
- The company is led by a management team with decades of experience and success in the mining and finance markets.
- European Lithium entered into a business combination agreement with Sizzle Acquisition, a US special purpose acquisition company, to which European Lithium will sell down its interest in its wholly owned Wolfsberg Lithium Project (Wolfsberg and Wolfsberg Lithium Project) and merge with Sizzle via a newly formed, lithium exploration and development company named, Critical Metals Corp.
- European Lithium has acquired 100 percent of the rights, title and interest in the Bretstein-Lachtal Project, Klementkogel Project and the Wildbachgraben Project, a group of exploration licenses covering 114.6 square kilometers, targeting lithium with known occurrences in the Styria mining district of Austria and nearby the Wolfsberg Lithium Project
- The company received high-grade lithium assays from sampling undertaken at various prospects within the Eastern Alps Lithium Satellite Projects, located in Austria, which are held 20 percent by European Lithium and 80 percent by EV Resources Limited (ASX: EVR).
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