(Alliance News) - European Metals Holdings Ltd on Wednesday said it has signed a conditional agreement with CEZ Group for a potential partnership and signifiant investment in the Cinovec project.
Cinovec is a lithium/tin project located in the Krusne Hore mountains, which divide the Czech Republic from Germany. Should the agreement conclude as planned, CEZ will become a 51% shareholder in Geomet sro, European Metals' Czech subsidiary and rights holder for the Cinovec project. European Metals' holding will then reduce to 49%.
CEZ, a power utilities firm in eastern Europe with annual revenue of around EUR7.24 billion, would pay EUR34.1 million for the stake via a subscription for new Geomet shares. CEZ's parent company is CEZ AS, which is 70% owned by the Czech Republic.
Keith Coughlan, managing director at European Metals, said: "We are very pleased to have concluded another stage of negotiations with CEZ regarding the future development of the Cinovec Project. CEZ is one of the largest companies in the Czech Republic and one of the leading companies in Central and Eastern Europe."
Coughlan added that: "If concluded, this agreement will result in Cinovec being fully funded through to a construction decision and will assist greatly in the integration of Cinovec into the European battery market."
Shares in European Metals were down 3.5% at 20.75 pence in London on Wednesday afternoon.
Cadence Minerals, which holds approximately 19% of the equity in European Metals, noted the announcement from European Metals.
Cadence Chief Executive Kiran Morzaria said: "The proposed funding and development partnership between [European Metals] and utility giant CEZ further underscores the importance of Cinovec as a key future battery grade lithium supplier to the European lithium market. As a major shareholder in EMH, we fully support the board in this major milestone step for the company."
Shares in Cadence were down 1.5% at 8.25p in London on Wednesday.
By Anna Farley; annafarley@alliancenews.com
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European Metals Holdings (EMH)
Cadence Mineral (KDNC)