EUROPEAN METALS HOLDINGS LIMITED ORD NPV (DI) (LON:EMH) Managing Director Keith Coughlan caught up with DirectorsTalk to discuss the significant capex savings reported in their recent announcement, the significance of increased tin prices and expected news flow
Q1: Keith, you’ve put out another strong announcement today, can you tell us what the revised numbers mean?
A1: Certainly Giles, well the announcement today was largely about some significant reductions in our pre-production capital costs and these reductions over the numbers we published earlier in our scoping study of last year. So they were broken into 2 main parts, firstly there was a reduction of about $38 million in the mining capex and a further $47 million reduction in the capex of the lithium carbonate plant so in total the reductions were nearly $85 million which is obviously a significant amount, in fact that’s more than our current market capitalisation so it’s a very significant amount.
The numbers are significant because effectively it reduces dramatically the full amount we will have to raise through equity to finance this project and build the mine and the processing plant so it makes it more viable and more easily financed. We’ve always said that Cinovec would be a low cost producer of lithium carbonate on a per tonne basis and now we’re also able to say that from a capex view we’ll be towards the lower end of the cost scale as well.
Q2: Now you mention reporting on other facets of the preliminary mining study in the near future, what other facets are you alluding to?
A2: There are a number of other facets of the PFS that we’re working on, obviously we’re working on the entire PFS but that won’t be available, we believe, until early in the new year but certain facets of it such as these mining costs, the preliminary costs that we’ve just released, will become available and then we’ll release what we are able along the way. So there are a number of factors there that we’re still working on, one of the key facets I think that the market is waiting to see is what metallurgical process we’ll ultimately decide upon for Cinovec, we’re doing a lot of work on this particular issue and I believe we’ll be in a position to let the market know what’s going on with that in the not too distant future.
Q3: How important is the recent increase in the tin price to the economics of the project?
A3: Well actually the increase in the tin price is very important to us, obviously Cinovec is a very substantial lithium project, it’s the largest lithium resource in Europe and one of the largest non-brine lithium resources in the world and we are proceeding full steam ahead on that basis. However, what a lot of people perhaps don’t realise is that Cinovec also contains one of the largest undeveloped tin resources in the world as well and the revenue from tin production was estimated in that scoping study of last year as being somewhere in the vicinity of about $95 million per annum so it is quite significant.
It’s also important from a tin point of view that tin unlike lithium is a metal with a terminal market and is LME quoted so the likelihood of securing offtake for tin is significantly higher than it is for lithium or significantly easier and as the pricing has increased recently so has the interest in the metal from end users.
Q4: Now you’ve made 2 significant announcements in the past week following a quiet period for the European Metals Holdings Limited ORD NPV (DI) company, is this activity likely to continue?
A4: Yes you’re right, it has been a quiet period from the perspective of announcements to the ASX, although I have to say operationally it’s been anything but quiet, we’ve been very busy onsite and in the labs and what have you working through a large number of issues and processes. I think that the work that has been done in those what appear to be quieter months we’ll start to see the benefit of over the next few months. We will definitely see a more active period from the point of view of reporting, there’s a lot to come through from the drilling for example, not just the drilling results itself but from the implications of the drilling results on the project, on the potential upgrade of the resource so yes I think it’s going to be a busy time from an announcement perspective.
