European Metals Holdings Ltd (LON:EMH) has today announced continued progress in the development of its 100% owned globally significant Cinovec Lithium/Tin Project in Czech Republic during the September quarter.
HIGHLIGHTS:
· SIGNIFICANT CAPITAL SAVINGS IN REVIEWED SCOPING STUDY
· PRE-FEASIBILITY UPDATE
· APPOINTMENT OF LEAD ENGINEER TO THE PFS
· CONTINUED POSITIVE RESULTS FROM CURRENT DRILLING PROGRAMME
SIGNIFICANT CAPITAL SAVINGS IN REVIEWED SCOPING STUDY
Late in the quarter the Company announced a significant reduction of pre-production capital costs, based on a review of the scoping study. The review was undertaken as part of the pre-feasibility study and resulted in the identification of significant reductions to the previously-released capital expenditure estimations (CAPEX) for Cinovec.
The key points of the review were:
· Project economics enhanced
· Significant reduction in CAPEX costs
· USD 38 million saving on mining CAPEX costs
· USD 47 million saving on lithium plant CAPEX costs
· Improved design and operating procedures based on independent studies and market benchmarks
· Savings, designs and operating procedures to be included in improved pre-feasibility study
Summary of savings identified:
| Capital Costs | Original cost | Reduced Cost | Saving | Reduced by |
| (pre-production) | (USD millions) | (USD millions) | (USD millions) | |
| Mining | 90 | 52 | 38 | 42% |
| Lithium Carbonate Plant | 164 | 117 | 47 | 29% |
| Totals | 254 | 169 | 85 | 33% |
PRE-FEASIBILITY UPDATE
The Company released a PFS update to the market in July. The key points of the update were:
Recruitment of key members of the PFS team and a selection of owner-consultants for the metallurgical studies:
· Lead engineering, metallurgy, mining and geological consultants had been short-listed or appointed
· Metallurgical testwork to support the PFS was well under-way at a number of leading technology centers across the globe. Inclusive of large scale (300kg) bench scale testwork
· Preliminary analysis regarding a re-design of the mining process to access the high grade areas of the deposit provide strong indications of a positive impact on the economics of the project had begun
· Drilling – third rig on site which had commenced drilling as part of a 7,500m programme
· Improved design and operating procedures based on independent studies and market benchmarks
· Savings, designs and operating procedures to be included in improved pre-feasibility study
APPOINTMENT OF LEAD ENGINEER TO THE PFS
Shortly after the release of the PFS update, the Company announced the appointment of Ausenco Limited as the Lead Engineer to the PFS. Ausenco is a global engineering procurement, construction management, and operations service provider to the resources sector. They have significant recent relevant experience having completed an updated Feasibility Study for Talison Lithium’s lithium carbonate plant in Australia and the PFS for Bacanora Minerals’ Sonora Lithium Project in Mexico. They are the process engineers for Sonora’s current Feasibility Study.
CONTINUED POSITIVE RESULTS FROM CURRENT DRILLING PROGRAMME
The Company’s current drilling programme has progressed well throughout the quarter and there have been a number of recent updates released. The programme began late the previous quarter and aimed to target the higher grade, shallower lithium zones in the north and west of the Cinovec deposit. This is a 7,500 metre programme that is aimed at converting a significant portion of the currently inferred resource for lithium and tin into the indicated category. The programme will also provide significant material for further metallurgical test work.
The key highlights of the drilling prgramme for the quarter were:
· Drillhole PSn13 returned main mineralised intercept of 167.1m averaging 0.36 % Li2O
· This intercept included high-grade intervals of 12m averaging 0.77 % Li2O and 7m averaging 0.87 % Li2O, as well as a tin-enriched interval of 8m averaging 0.16 % Sn
· Several other lithium intervals were intercepted at shallower depth, of which the best was 19.5m averaging 0.42 % Li2O. This interval included a 2m wide high-grade tin-tungsten zone grading 0.75 % Li2O, 1.46 % Sn and 0.55 % W
· Drillhole CIW-11 returned two main mineralized intercepts of 89.95m averaging 0.61% Li2O and 109.4m averaging 0.38% Li2O
The first intercept included a high-grade interval of 63.85m @0.76% Li2O, which hosts an internal very high grade interval of 12m @1.04 %Li2O. In addition, two sections of this lithium interval contain significant tin and tungsten mineralization: 2.85m averaging 0.27% tin and 0.053% tungsten; and 6m averaging 0.18% tin and 0.009% tungsten. This yields the best Li intercept recorded by the Company to date.
Drilling continues in the main section of the deposit, targeting near-surface mineralization on the flanks of the historic underground mine. Altogether, five drillholes (1,644m) have been completed this year up to the end of the September quarter. The Company has reported on further drilling updates since the end of the quarter.
DEVELOPMENTS POST REPORTING PERIOD
Capital Raising
The Company announced that it has raised $3 million from its largest shareholder, Rare Earth Minerals Plc (“REM”) via the combination of a placement and the exercise of options. The placement will raise $2.6 million via the issue of 5 million CDI’s at an issue price of $0.52 per CDI. The placement is subject to shareholder approval which will be sought at the Company’s AGM in November. In addition, REM exercised 2 million unlisted options, which were due to expire on 19 October 2016. This exercise resulted in a further $400,000 being raised by the Company. The issuance of the placement CDI’s and the option exercise will take REM’s relevant interest in European Metals to 20.92%.
The funds raised will be utilised to further develop the Cinovec Project, complete the Company’s Preliminary Feasibility Study (PFS), and for working capital.
Shallow lithium mineralization intersected
Shortly after the end of the September quarter the Company announced analytical results for two confirmation drillholes CIW-19 and CIW-20 at Cinovec.
The key points were:
· The two drillholes are the most northern drilled by the Company and are collared near the old main shaft
· Significant lithium mineralization was intersected from less than 30m depth in both holes, these are the shallowest intervals to-date
· Drillhole CIW-19 returned two main lithium-mineralized intercepts of 53.1m averaging 0.35%Li2O (25-78.1m) and 144m averaging 0.37%Li2O (85-229m), with a high-grade interval of 10.8m@0.71% Li2O (103-113.8m)
· Drillhole CIW-20 returned three main mineralized intercepts: 98m averaging 0.35%Li2O (28-126m), 16.85m averaging 0.33% Li2O (132.15-149m) and 60m averaging 0.49%Li2O (154-214m), with the latter containing high-grade intervals of 9m@0.67%Li2O (160-169m) and 12.1m@0.85%Li2O (174-186.1m).
· Significant tin and tungsten mineralization was intersected in upper part of both drillholes: 3.1m@0.20%Sn and 0.021%W, 4.75m@0.13%Sn and 0.015%W, 2.45m@0.17%Sn and 0.003%W and 1.35m@0.122%W and 0.07%Sn in drillhole CIW-19; 3m@0.37%Sn and 0.003%W, and 1m@0.36%Sn and 0.004%W in drillhole CIW-20
Drilling continues in the western part of the Cinovec deposit (targeting highgrade zones near the rhyolite/granite contact) and in the central part (targeting near-surface mineralization on the flanks of the historic underground mine). Altogether, eight drillholes have been completed this year (2,791m) with three other underway at this time.
Outstanding lithium recoveries
More recently the Company announced the completion of the concentration testwork for lithium as part of the on-going pre-feasibility study (“PFS”). The testwork has improved recoveries significantly from those used in the scoping study which when combined with the lower operating costs of wet magnetic separation versus flotation will significantly boost the economics of the project.
The key points of the release were:
· Wet magnetic separation (“WMS”) achieved a near pure lithium mica concentrate grading 2.85% Li2O with a lithium recovery of 92%
· Lithium recoveries are 10-15% higher than those achieved via floation in the scoping study
· Coarse grind of p100 passing 250 micron reduces milling power consumption substantially
· Wet magnetic separation plant has a smaller footprint and water demand than flotation
· Reduced operating cost and lower environmental impact as no need to import expensive reagents
· The ore is suitable for a single stage jaw crush and SAG mill which further decreases operating and capital costs.
SUMMARY
It has been a very productive quarter for European Metals with a number of key and very positive developments. These developments indicate significant enhancements to the economics of the Cinovec Project. Drilling continues at site and the Company continues work on the preliminary feasibility study.
BACKGROUND INFORMATION ON CINOVEC
PROJECT OVERVIEW
Cinovec Lithium/Tin Project
European Metals owns 100% of the Cinovec lithium-tin deposit in the Czech Republic. Cinovec is an historic mine incorporating a significant undeveloped lithium-tin resource with by-product potential including tungsten, rubidium, scandium, niobium and tantalum and potash. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 49.1Mt @ 0.43% Li2O and an Inferred Mineral Resource of 482Mt @ 0.43% Li2O containing a combined 5.7 million tonnes Lithium Carbonate Equivalent.
This makes Cinovec the largest lithium deposit in Europe and the fourth largest non-brine deposit in the world.
Within this resource lies one of the largest undeveloped tin deposits in the world, with total Indicated Mineral Resource of 15.7Mt @ 0.26% Sn and an Inferred Mineral Resources of 59.7 Mt grading 0.21% Sn for a combined total of 178kt of contained tin. The Mineral Resource Estimates have been previously released on 18 May 2016. The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.
A Scoping Study conducted by specialist independent consultants indicates the deposit could be amenable to bulk underground mining. Metallurgical test work has produced both battery grade lithium carbonate and high-grade tin concentrate at excellent recoveries with the Scoping Study. Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active 22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has strong community support.
CONTACT
For further information on this update or the Company generally, please visit our website at www. http://europeanmet.com or contact:
Mr. Keith Coughlan
Managing Director
