Member Info for CiaranC

This was what Google AI answered about the relationship with the Czech Republic and the EBRD. Apparently there was a "temporary mandate" as a result of Covid.

The Czech Republic requested to “graduate” from receiving EBRD development funds in 2007.

To graduate from receiving European Bank for Reconstruction and Development (EBRD) development funds means a country has successfully transitioned to a mature, self-sustaining market economy. It signifies that the nation no longer requires subsidised international development loans, or special financial aid to function. Graduation fundamentally shifts the relationship between the country and the bank. The country transitions from being a "country of operations" (a recipient of aid) to purely a donor and shareholder that helps fund other developing nations.

The EBRD’s temporary mandate in the Czech Republic started in 2001 and ended in March 2026, marking the conclusion of a special five-year program focused on post-Covid economic recovery.

The primary goals during this timeframe were to:

• Support the Green Transition: The bank provided critical policy advice on renewable energy regulations and offered credit lines for energy-efficiency investments to help reduce the heavy use of coal in the country. [1, 2]

• Boost Venture Capital: The EBRD funded high-growth, innovative small and medium-sized enterprises (SMEs) that had limited access to traditional financing.

• Develop Capital Markets.

I must admit being surprised at the way the vote went, usually these things stir up some moaning, but then sail through. However it is more significant that the board also misjudged the mood of the investors. Perhaps Keith needs to get out more! It is notable that even Pavlick's vote went through on a pretty small percentage, although most on here agreed that it was deserved. So what does this tell us about the mood of the shareholders? Presumably if they felt badly enough they would sell, so possibly this suggests that most continue to hold but just felt aggrieved at Keith for lack of communication and perhaps the cheek of asking for a big reward for a very low bar, given the current share price (not all of which is down to Keith of course). Hopefully Keith will get his reward (along with the rest of us) when he manages to get a really great price for selling the company. And now he knows that he cannot just expect the shareholders to fall in line.

Option 2. If POSCO buys out EMH then there is a potential for a future uncertainty. What if POSCO merges with another company, or wants to sell all, or part of their ownership? But this could be the cheapest option for ČEZ in the short term, although they could lose out on profits in the longer term.

Option 3 depends on the political position. Is the state happy with some foreign ownership or do they want complete state ownership of the project?

It is also possible that ČEZ could buyout EMH and would then be free to structure the new terms with POSCO (or another). Possibly the agreement could even allow a more limited holding or ownership.

I wonder if this is as much a political as a business decision and perhaps has already been decided? Perhaps any Czech posters could give their views?

Since we are speculating;

The problem for any third party buying out EMH is that Geomet is not an ordinary company.

Any third party would be a minority owner of Geomet. They likely will find themselves restricted in what they can do and even an unwanted party from the point of ČEZ.

ČEZ is 70% owned by the Czech government.

ČEZ will have their own plans, which is why they have brought their AGM forward and have announced a restructuring. And those plans will have political vision behind them.

It looks like the restructuring is about raising funds and moving towards full nationalisation of ČEZ although the time scale on this is prior to the next election in 2029. That may mean that ČEZ will want to buyout EMH as part of the proceedings.

The problem for a fully state run Geomet is that they have no experience of building or running a lithium mine and the processing facilities. The politicians may be willing to take that risk.

The other option is to bring in a partner that they feel they can work with. Presumably POSCO fits the bill.

In which case we have three possibilities for Geomet from the ČEZ perspective;

1. ČEZ takes over the EMH share and runs Geomet with the likely risks. This would be crazy.

2. POSCO buys out EMH and works with ČEZ. Swaps one foreign owner for another and does not provide full state ownership.

3. ČEZ takes over EMH shares and contracts with a third party (POSCO) to build and run the mine but without any ownership in the project. This seems to me to be the most likely path. The issues then are how long before the buyout and what is the offer?

Just doing a bit of digging via AI on takeover options.

Obviously AI can make mistakes. However I found some of its conclusions surprising.

AI on the ROFR clause.

The ROFR clause with CEZ applies to the Geomet entity.

The Project Level (Geomet): The ROFR is a contract signed strictly between ČEZ and EMH. It states that if EMH wants to sell its physical shares in Geomet, ČEZ has the right to buy them first.

The Upstream Level (EMH PLC): EMH is a publicly traded corporate entity listed on stock exchanges (ASX/AIM). ČEZ does not own EMH; it only shares a joint venture with them.

This provides an option to buy the shell (EMH) and not the assett (Geomet).

The only way ČEZ could block this is if their Joint Venture agreement includes a strict "Change of Control" clause. This clause would state that if EMH PLC undergoes a change in ownership above a certain percentage (usually 50%), it triggers the ROFR anyway. Apparently there is no such clause.

Furthermore; Quoting from AI again.

According to the European Metals Holdings Limited Equity Incentive Plan and public proxy notices, if an outside entity triggers a Change of Control Event (i.e., acquiring >50% of EMH shares via a public tender offer or scheme of arrangement), all outstanding unvested performance shares, performance rights, and director options immediately vest and convert to ordinary shares. WOW!!!

The Operational Impact: Rather than protecting the asset from being acquired, this clause acts as an internal corporate trigger. As noted in EMH shareholder proxy discussions, a low-ball hostile takeover bid landing on EMH would simply result in a massive immediate payout (golden parachute) for managing directors like Keith Coughlan, as their performance milestones automatically convert on the change of control.

Under Chapter 6 of the Australian Corporations Act, any entity attempting an upstream corporate acquisition of EMH that exceeds a 20% voting power threshold must launch a formal, transparent public takeover bid to all shareholders.

While this guarantees a fair market premium for retail investors, it does nothing legally to block an asset-hungry buyer from purchasing the company out from under ČEZ.

EMH’s filings show that the company is built to be acquired. The "Change of Control" clauses present are designed to accelerate management equity payouts upon a takeover, rather than acting as a poison pill or asset-protection lock to defend ČEZ’s position.

Presumably the directors shares gives them a commensurate vote in any proposed buyout. In which case the more shares we give them then the more they can shaft us, or is that just too cynical, even for AIM?

Indeed Lucky, the pieces are aligning and the share price, and even "fair value", now vs the share price in a few months could be radically different.

But any circling potential buyers know this, so it would be in their interests to move sooner rather than later.

I would hope that Keith, and the board, would be aligned with us shareholders, to fend off any buyouts in the short term, but my experience of AIM is that, usually, some kind of deal is done with the board and shareholders often get "done over". Fingers crossed.

I also wondered about AMG buying up the EBRD shares. The "fair value" argument applies if CEZ make a bid. But if AMG or Posco make a bid for EMH then that does not apply. However CEZ can block this and make their own bid. Does the CEZ bid then still have to be "fair value" or just to match the third party bid?

However CEZ are in control so a third party bidder would have to navigate this. The big question is, does CEZ want to fully takeover, or are they happy to continue with a partner such as AMG?

Wasn't much of a factor in the buyout of ZNWD. As it is not included in the DFS then I cannot see it being much of a factor in the buyout of EMH. I could be wrong.

For these peanuts prices maybe CEZ or Cinovec or Posco should put a counter bid in for ZNWD. Might make sense to unify the projects.

I am never impressed by claims that a resource will last for 10, no 20, no 50, no 100+ years. How do you price the value of something in 100 years?

Lithium's value is mainly due to it's requirement in batteries. It was a niche market prior to 2000 then expanded dramatically with the use of EVs in the 2010s and BESS in the last few years. As such lithium is a requirement of technology. There are already some alternatives to lithium. It is probably safe to say that the lithium market will continue to grow for the next 5 years and maybe 10 or so but who knows what technology will be like in 50 years or 100. We certainly won't be using coal and likely not LION batteries. A mine builder certainly needs a "credible" project lifespan to justify the investment and in this case 26 years is sufficient. As a shareholder we will likely not be "owners" of the resource in even a few months, talking of an investment having a "potential" productive span of 100+ years is fantasy. Of course if that specious argument gets EMH owners a higher SP then full steam ahead.

With ZNWD they were a sitting duck for a low ball takeover. And the directors had to want to get on board with the offer. I don't think that ZNWD were ever realistically going to jump the many hurdles all the way to a working mine. The intention of the directors was always to sell out, and they took this moment. With lithium prices rising this is likely a buy at a good price for AMG.

I am sure that our directors also want to take the money and run, sooner rather than later. But with EMH we have a major partner in CEZ. Somebody cannot just come along and buyout EMH without CEZ being in agreement. If CEZ wants to be the 100% owner of the mine then they have to be the buyer. The questions then are; what would CEZ be willing to offer and what price would our directors be willing to deal at?

Agree with Loolie, Hunter, Jemesa and others. This is not about "punishing" Keith for past lack of performance. If the SP was soaring then all that would be forgotten. But, as a shareholder, it is all about the SP. Keith has failed to convince the market that the company is worth buying. In the same way, his sales pitch to shareholders, to give him more shares, has been derisory and failed to convince me to vote positively to give Keith more shares. If he had been able to make a more compelling offer then the answer might have been different, but he wasn't, or couldn't be bothered.

I, perhaps foolishly, asked AI "On what basis does a buyout of European Metal Holdings have to be at "fair value"?"

As expected it came back with a patched up answer including;

AIM rules; "ensure that investors should receive a "fair price"." Well that is not encouraging looking at cases such as BCN.

Role of key shareholders; "The presence of the EBRD as a shareholder ensures a focus on fair pricing and corporate governance, reducing risks for minority investors during a potential takeover." LOL.

"Because EMH is domiciled in Australia any agreement has to take into account Australian legal standards regarding fair treatment." Again this sounds like AIM protections, not up to much.

It seems that the optimists are relying on the legal agreements between CEZ and EMH which state that CEZ has the right to acquire EMH stake at "Fair market value as determined by an independent expert". The hope is that the independent expert would rely on the NPV from the DFS to reach a figure.

Personally I am not counting my chickens but still hanging on to my shares (since 2022).

It is generally agreed that a buyout offer is coming and the offer will be from CEZ.

Some are of the view that the offer will follow past examples of share price plus a premium of perhaps 50%. That would be approx 25p.

Others are of the view that the offer will have to be based on a "fair value" figure based on the NPV as stated in the DFS. Jemesa suggested a figure of around £1.14.

The logic from this seems to be that if the offer is based on share price then the management should be doing everything possible to boost the share price. But if the offer is based on the NPV in the DFS then that is a fixed amount and management actions will not change this. In which case why grant them 3.6 million shares?

My feeling is that, if the Czech government wants to buy us out in the next few months, then I would prefer Keith to be spending time and money on whatever can improve the sale price in the short term. Of course there will be longer term matters, such as negotiations with the German side, and late stage grants etc, and EMH can certainly engage in such matters, but EMH will not be able to do much here in the limited time. So I would like to see a focus on those near term wins that will put shareholders (including directors) in the best possible position; EIA approval, MOU on offtakes, FID, and if time a legal completion of offtakes, and any progress on project funding (such as grants).

Seems to be a lot of groundless and possibly giddy speculation going on here.

There were certain parties who were saying what a great thing that the EBRD were shareholders. It made shareholders feel more secure that a serious offer would need to be made in the event of a buyout offer. Then all that changed and people are saying what a good thing it is that EBRD are selling out their holding. Then more speculation about who they might be selling their shares to.

The other speculation that I find a bit OTT is the speculation on what the project is worth. If we assume the price of lithium is X and if we add in the tin and tungsten credits, and speculative cost savings and a future ramp up, plus assumed grants, then the NPV could be Y.

As far as I am aware the “fair value” calculation will be based on what the project is worth at the point of the buyout. The future owners may, or may not, decide to process the tin or tungsten. The future owners may, or may not, be able to ramp up production. The future owners may, or may not, be able to avail themselves of potential cost savings. The NPV of the project in a year ,or five, may be totally different, but what I expect we will get (if we are lucky) is a fair value offer on the project as it is now. The improving price of lithium may affect it. If we get an offtake agreement it might help, but nobody is going to offer to pay extra for speculative future value which is not even included in the DFS, so I don’t see how that helps us.

As to whether the share price will re-rate up or down. Again the share price is not the same as the “fair value” calculation. That is what the agreement is supposed to protect us from. Having said that I would be very happy if the SP starts to rocket up, but EMH history suggests that may not happen.

CityOfDelight; If CEZ are indeed in the driving seat then I think new management of EMH would not be able to do much. Clearly the directors are plotting their exit strategy. The question is how much does it align with the rest of the shareholders? We need to see what they can offer in return for the 3.6 million shares. If we are lucky then they will do everything they can to maximise the share price of the buyout. Just my opinion.

I agree, the success metrics for the 3.6 million shares for directors are critical. What are they offering for our votes? But then how much is EMH even in control now. Are they able to announce anything positive to affect the share price? Are they just hoping for a last minute cash-in?

As an ancillary question; can EMH even land any off-take agreements, or will those have to wait till Posco are onboard?

Fact is that EBRD sold some of their shares at a loss. Therefore this was a strategic decision.

What I am getting from the comments is that the most likely reasons are;

Either the start of an exit as the project transitions to a new stage.

Or the EBRD wants to be below the regulatory threshold where they have to disclose their actions. This would also make sense as the EBRD does not want to get sucked into the bun fight over their voting on decisions such as director performance rights, and eventually the actual buyout. These things can get messy and one side will complain if things do not go their way. And with the Czech government involved it could also get political.

Does this seem logical or have I got this wrong?