European Metals Holdings Ltd (LON:EMH) Managing Director Keith Coughlan caught up with DirectorsTalk to discuss the AU$3 million raised from their largest shareholder Rare Earth Minerals Plc (LON:REM), news flow about the PFS and the significance of the increased tin price
Q1: Now Keith, news out this morning about raising money, why have you raised money from one existing shareholder and why not from the market in general?
A1: Ok, now firstly we’ve raised the money from our largest shareholder Rare Earth Minerals PLC (REM), now REM have been our largest shareholder for the past 15 or so months and they had built a position in the company of about 20% over that period of time which they did via a couple of placements but also buying stock on market. Now the company had a number of listed options due to expire in June, a couple of months ago, and the options were well in the money at expiry so the vast majority then were exercised in the fully paid CDI’s and that had the effect of diluting REM’s percentage ownership of the company so effectively this placement just allows them to just get back to the position that they were already in. Secondly, Rare Earth Minerals are a long term shareholder of European Metals Holdings, they believe in Cinovec, they believe in our project, they believe in the lithium market and what’s happening there going forward so they’re very good long term shareholders , they’re the sort of long term shareholders and the sort of investors that we want to see on our register. So they’ve been nothing but god long term supportive shareholders for some considerable time, they also took the placement at a small premium to the market which is beneficial to all shareholders as well.
Q2: AU$3 million is not a large amount of money, is that sufficient for the European Metals Holdings’ needs?
A2: Yes it is Giles, we have a couple of million dollars in the bank currently so at the conclusion this should have about AU$5 million and that’s more than enough to get us through our preliminary feasibility study which will conclude earlier in the year and not just get through it but get through it in a strong financial position. We will need to go back to the market next year post the PFS to raise development capital but we believe we will be well re-rated by that time because of the feasibility study being out there and the market being aware of the project and what the financial parameters of it are.
Q3: Now speaking of the PFS, should shareholders expect to see further information released?
A3: Yes absolutely, as we’ve been saying for some time we are having drill results coming through on a regular basis, I believe the next round of results will be out very soon followed by some more closely after that and then they’ll be released at consistent intervals for the rest of the year. The drilling results are really important from a couple of different points of view, obviously it’s nice to see the intersections and the mineralisation where we expect to see it and we are seeing that with every hole we put into the deposit, it’s very consistent and the results are pretty much in line with what we expect to see. One of the most significant parts of the drilling is more about the eventual result of upgrading the resource, as you might recall the majority of our resource, of our 5.7 million tonnes of lithium carbonate equivalent, is in the JORC inferred category and the results of this drilling programme is very likely to enable us to upgrade a substantial portion of that resource to the JORC indicated category which is very important from the view of the ongoing study. Apart from the drilling there will be other updates regards things like metallurgy, the metallurgical work we’re doing, the lithium extraction process that we end up selecting and work on the front end, the engineering work, all those sorts of things will be a very significant announcement to the market over the course of the next few months.
Q4: I notice that the tin price continues to move upwards, that’s significant for European Metals Holdings isn’t it?
A4: Well yes Giles, it is significant for us, the tin price is very significant, Cinovec is an old historic tin mine, it is one of the largest underdeveloped tin resources in the world, still as it stands. It’s not just the tin price moving up that’s significant but the reduction that we’re seeing LME stock piles, the London Metal Exchange stock piles of tin so there’s been significant reductions in the tin stock piles which suggests that this upward price movement in the metal may continue. To give you some idea of the effect that has on us and on the financials of Cinovec, when we did our scoping study in March of last year the tin price was around about 22,000 dollars a tonne and on those numbers the revenues from tin to the project were in the vicinity of $95 million (US) per annum so with tin heading back towards those prices you can see that it’s a significant co-product credit for the Cinovec project going forward. So we are keeping one very keen eye on the tin price.
