European Lithium Ltd. - Lithium for Europe from Europe Contributed by Wilhelm Simon | November 12, 2017 | markets
The listed Australian-European European Lithium Ltd. owns and develops one of the most promising lithium projects in Europe in Wolfsberg near Graz, Austria. This extensively developed exploration mine from state-owned raw material activities was created in the 1980s. The company plans to produce 80,000-100,000 tonnes of battery-grade lithium from 2020 onwards. It would be the first producing lithium mine of its kind in Europe. Lithium is currently being promoted mainly in Australia and South America, and almost all of the processing into battery-capable material is in China. 25% of the demand already comes from Europe and currently around 10 more battery plants are under construction or projected in Europe. Politicians and industry are therefore promoting local lithium production.
Stefan Müller:Thank you. Although European Lithium is an Australian company, both the project itself and an ever-increasing number of shareholders are located in Europe, so a strong focus on the capital market is a logical consequence. As a rule, foreign commodity companies are "promoting" their projects here with campaigns that have since become very critical, and thus only reach a specific group of mostly small and trading-oriented private investors. At European Lithium, on the other hand, we pursue a comprehensive investor relations approach. The company presents itself to investors as a local society. Information and communication takes place seriously, firsthand in German and not by so-called "promoters". The implementation of this investor relations strategy is my responsibility. Is this effort necessary or measurable?
Stefan Müller: With the listing on the Vienna Stock Exchange and the capital increase, which was mostly carried out with European investors recently, the local interest in what is arguably the first mine for battery-grade lithium was confirmed again. In any case, we have been seeing steadily rising sales in Europe for months, and there are now regularly more stocks here than in Australia. In addition, Australia has a large number of its own lithium mines in Inzischen and the local investors are of course more focused on these local companies. European Lithium will therefore focus its capital market activities more and more on Europe.
About the project itself: What are the next steps?
Stefan Müller: We recently commissioned the PFS (preliminary feasibility study), which is important for the development towards lithium production. The purpose of this study, conducted by an independent specialized company, is to demonstrate the economic feasibility of the mine operation. In addition, the PFS is subject to certain legal requirements, which is why the result for many institutional investors will probably be the beginning and the basis of a possible investment process.
When do you expect results and how will they fail?
Stefan Müller: The study is expected to be completed in February. At the beginning of the year, we commissioned a similar study for internal purposes and published its results in April. Key messages in this regard are the expected annual production of 80,000 to 100,000 tonnes of battery-capable lithium and a current project valuation of around 75 million euros. We assume that the official study now commissioned will not deviate significantly from these results. Currently, the company is valued at disallowed at around EUR 20 million.
Assuming a positive result, does this mean that you can start construction on the mine in the spring of 2018?
Stefan Müller: In principle, yes. But the implementation of such a project is preceded by the extensive planning phase and, of course, the choice of financing for the construction of the mine. We are currently planning to start lithium production in the first half of 2020.
Are there any concrete ideas for financing?
Stefan Müller: Of course, in addition to classic bank financing, we could imagine working with a strategic partner, eg from the lithium processing industry, to work together. Here we have talks in all directions and there are already several interested parties for the purchase of our lithium. Moreover, it is quite common in the extractive industry for mine projects, once they have reached a given stage, to be taken over and developed by one of the major mine operators.
Which is your "dream scenario"?
Stefan Müller: Now that we are a publicly traded company, the ultimate decision of the shareholders and we will try to achieve the maximum value for their investment. Lithium and everything around it, especially, of course, e-mobility, are currently in all mouth. Entire branches of industry are facing upheaval, global corporations must rethink completely and everything is on the move. We therefore see ourselves in a very comfortable situation with our project here in Europe and can act from a relatively sovereign position.
Stefan Müller, Managing Director of the Frankfurt investment banking firm DGWA GmbH, has recently become Non-Executive Director of European Lithium and coordinates the European capital market activities of the company.
EUR Price at posting:
5.1¢ Sentiment: Buy Disclosure: Held
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