RE: Shard Report31 Mar 2020 11:14
" by the first milestone, significant expenditure will
have been sunk into the project. To be clear, it does not mean that entire €29.1m will have to be
returned. Whatever amount has already been spent by the first withdrawal date along with an additional
€250,000 that stays with Geomet will not be returned.
? Example. If you pick a number, assume say €10m in total was spent for the first milestone, then Geomet
would return €18.85m (€29.1m-€10m-€0.25m) and CEZ would exit with a 17.5% interest in Geomet,
being the pro-rata share of the target 51% investment (34.3% of 51%)."
" EMH expects the DFS and FEED to take up to 18 months to complete. In an
uncertain world, this alleviates development funding pressure with a clear pathway to “button pushing
time”. It also means EMH should not need to suffer any significant equity dilution during this phase. "
"Clear path. Although by the conclusion of the agreement, EMH will become a minority holder in Cinovec,
this shouldn’t be the sole focus. Junior miners rarely, if ever get to retain a true majority stake in a
globally significant project. EMH will remain the project manager with a steady source of cashflow during
development. Furthermore, better a minority in a large project on the path to production than a sole
owner of a stranded asset. Having CEZ as a partner will also likely unlock further financing and off-take
opportunities for the big build. Ultimately there are very few lithium projects with such a clear path and
the option of producing carbonate or hydroxide depending on the preferred battery chemistry outlook of
key future partners"
"EMH is not short of value in Cinovec and the
current Mkt cap remains unchallenging in our view. "