23 Nov

CINOVEC TO PRODUCE LOW CARBON LITHIUM

23 November 2021 CDI’S ON ISSUE 17 5 . 4 M LCA QUANTIFIES CINOVEC LITHIUM CHEMICAL PRODUCTION CO 2 EMISSIONS AND MITIGATION SCENARIOS IDENTIFIED TO PRODUCE LOW CARBON PRODUCTS CEZ TO PROVIDE GREEN POWER TO PROJECT HIGHLIGHTS • Cinovec’s Global Warming Potential has been modelled using ISO - compliant LCA by consultancy Minviro Ltd, providing clear resolution of the drivers of the project’s emissions . • GWP Impact Mitigation Scenarios identified for the Cinovec Project , potentially including solar power, electric mining fleet, H ypex Bio explosives and use of green hydrogen for thermal energy (Cinovec Decarbonised Case) which could make Cinovec’s lithium chemicals have some of the lowest CO 2 intens ity in the world if all impact mitigation strategies are pursued . • CEZ plans to provide 100% renewable energy to power the mine, the Front - End Comminution and Beneficiation (FECAB) and Lithium Chemical Plants (LCP) • LCA also assessed Acidification Potential (AP) , Water Use and Land Use (per ISO standards). - AP is comparabl e to Chilean Brine but only 13% of the equivalent for Australian spodumene process ed in China . - Cinovec Water Use projected to be lower than all benchmarks and <5% of Chilean Brine Water Use even when water evaporated from the brine is not included in the water use calculation . European Metals Holdings Limited ( “ EMH ” , or “the Company ” ) ( ASX & AIM: EMH, OTC – Nasdaq Intl ADS: EMHXY ) is pleased to provide a n update in relation to the outcomes of the Life Cycle Assessment conducted by Minviro in relation t o lithium battery chemicals production from the Cinovec mine . Keith Coughlan, Executive Chairman, said “ We are extremely pleased that the Minviro LCA has confirmed what we have believed to be the case for a long time – Cinovec has the potential to have the low est overall environmental impacts compared to other conventional lithium battery metals project s not only in Europe but also on a global basis . With the use of s olar power and other optimisations the Cinovec Project will se t a standard by which all other conventional lithium producers could be judged . We expect the environmental credentials of the Cinovec Project will help make its product valuable to end users , parti cularly in light of the new EU requirements in relation to greenhouse emissions. Not only does the optimised model demonstrate very low CO2 emissions, the Project also delivers excellent results with regards to acidification and water consumption. As Cinovec is an historic u nderground mine with minimal social and environmental impacts, the entire ESG credentials of the Project are very strong. In addition , w e expect to shortly provide a market update covering the additional benefits of a mine backfill study and a revised PFS which update s the project economics and value of the Project. ” 23 November 2021 Page 2 of 11 MINE, FECA B AND LCP TO BE POWERED BY SOLAR POWER PLANT CEZ, EMH’s joint venture partner in in the Cinovec Lithium Project, plans to provide 100% renewable energy to power the mine, the Front - End Comminution and Beneficiation (FECAB) And Lithium Chemical Plants (LCP) . CEZ currently owns renewables installations with aggregate power generation capacity of 1720 MW. This capacity will increase by 1500 MW by 2025. The renewable energy sources will be capable of providing all the required power for all aspects of the Cinovec Project including the mine, the FECAB plant as well as the Lithium Chemical Plant under normal operating con ditions. The Company is also considering the use of electric mining equipment to further reduce the CO 2 footprint at Cinovec. CINOVEC LIFE CYCLE ASSESSMENT As previously announced, Minviro (a UK - based and globally recognised sustainability and life cycle assessment consultancy) was engaged to conduct a Life Cycle Assessment ( LCA ) for the Cinovec Project’s proposed lithium battery - grade chemicals, L ithium Carbonate ( Li 2 CO 3 ) and Lithium Hydro xide Monohydrate ( LiOH ) ( refer to the Company’s ASX release dated 10 June 20 21 ) . The LCA was completed at the end of 3Q21 and the full results under went independent external QA/QC peer review , including ISO compliance review, before finalisation . The Minv iro work has assessed the LCA for both Li 2 CO 3 and LiOH based upon the PFS studies published by EMH for Li 2 CO 3 ( refer to the Company’s ASX release dated 19 April 2017) and LiOH ( refer to the Company’s ASX release dated 17 June 2019 ) (together the PFS ) . The work included assessments of Global Warming Potential ( GWP ), Acidification Potential ( AP ) , Water Use and Land Use compared with the most relevant global benchmarks with proven flowsheets for lithium chemicals production (Chilean br ine; Australian spodumene; and US sedimentary clay). Minviro also assessed GWP reduction strategies being advanced by Geomet management (as part of the ongoing D efinitive F easibility S tudy ) to reduce the carbon footprint of Cinovec, including full electrif ication of the mine and mining vehicle fleet; sourcing all electrical power for both the mine and lithium processing plant from a proposed co - developed photovoltaic cell array adjacent to the Cinovec processing plant; and green hydrogen as replacement for conventional gas in the ore roasting process ( Decarbonization Case ) . The LCA was conducted according to the requirements of the ISO - 14040:2006 and ISO - 14044:2006, including a third - party review from LCA experts to ensure that the LCA study is scientificall y robust. Results of the L ife Cycle Assessment LiOH Production LiOH products can have different environmental impacts depending on the natural resource they are produced from and the process technology chosen in flowsheets. A comparison of how the Cínovec LiOH product will compare to existing process pathways is shown bel ow in Figure 1 . The GWP for the Cinovec PFS case is expected to be around 16. 6 kg CO 2 eq. per kg LiOH. For LiOH from Chilean brine, the GWP is estimated to be 6.6 kg CO 2 eq. per kg LiOH . For Australian spodumene converted in China the impact is 15.5 kg CO 2 eq. per kg LiOH . LiOH produced from Nevada sedimentary clay resources has a GWP that is calculated to be 20. 7 kg CO 2 eq. per kg LiOH . The GWP calculated for the Cinovec Decarbonised case which would involve a number of significant modifications to the pr oject as considered in the 2019 PFS could be one of the lowest in the world, estimated to be around 2.9 kg CO 2 eq. per kg LiOH For all five production routes shown in Figure 1 the chemical processing is the largest driver of the impact. Transport is mini mal for all routes except for the Australian spodumene route, where the spodumene concentrate is transported to China ; and the LiOH product from all production routes is transported 400 km from the Port of Rotterdam to provide the GWP impacts as delive red at the same end - users . 23 November 2021 Page 3 of 11 Figure 1 : GWP Impact of LiOH p roduced f rom Cinovec PFS (2019) , the t heoretical Cinovec Decarbonised Case , for Chilean Brine, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minviro The Acidification Po tential (AP) impact of the Cínovec product and the three comparison scenarios is shown in Figure 2. The AP impact for Chilean brine is the lowest: 0.03 mol H + eq. per kg LiOH, followed by the AP impact of the Cínovec project which is calculated to be 0.05 mol H + eq. per kg LiOH. The AP impact is much higher for the spodumene production route and the US sediment route: 0.47 and 0.36 mol H + eq. per kg LiOH respec tively. This is mainly due to the embodied AP impact of sodium hydroxide used in the process. The AP impact of the Cinovec Decarbonised scenario is not included, as for a number of decarbonised characterisation factors , no AP impact is currently available. 23 November 2021 Page 4 of 11 Figure 2: AP Impact of LiOH p roduced f rom Cinovec PFS (2019) and for Chilean Brine, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minviro The water use impact for the four scenarios is shown in Figure 3. The water use has been split into direct water use and the associated increase of the AWARE water scarcity factor. For all three comparison scenarios, a water scarcity factor is used accordi ng to the AWARE Methodology used by Minviro for comparing freshwater use at different locations. Since the Atacama is the driest place in the world, freshwater use is considered 100x more impactful to ecosystems than it is in places like the Czech Republic where there is plenty of water. Again, the Cínovec Decarbonised scenario is not included, as the impact on water use of the decarbonisation scenarios is not available. Figure 3 : Water Impact of LiOH p roduced f rom Cinovec PFS (2019) and for Chilean Brin e, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minv iro 23 November 2021 Page 5 of 11 Li 2 CO 3 Production As with LiOH , Li 2 CO 3 products can have different environmental impacts depending on the natural resource they are produced from and the process technology chosen in flowsheets. A comparison of how the Cínovec carbonates product GWP impact will compare to existing process pathw ays is shown below in Figure 4 . The GWP calculated for the Chilean brine is the lowest: 2.7 kg CO 2 eq. per kg Li 2 CO 3 . For the Cinovec PFS case, the Li 2 CO 3 product has a GWP of 15.2 kg CO 2 eq. per kg Li 2 CO 3 . Li 2 CO 3 produced from Nevada sedimentary clay resources has a GWP that is calculated to be 18.1 kg CO 2 eq. per kg Li 2 CO 3 . For Australian spodumene converted in China the impact is 24.2 kg CO 2 eq. per kg Li 2 CO 3 . Li 2 CO 3 produced from the Cinovec De - carbonised case has a GWP that is calculated to be 2.4 kg CO 2 eq. per kg Li 2 CO 3 . For all production routes shown , the chemical processing is again the largest driver of the impact. Transport impact is minimal for all routes except for the Australian spodumene route, where the spodumene concentrate is transported to China and the Li 2 CO 3 product from all production routes is transported 400 km from the Port of Rotterdam to provide the GWP impacts as delivered at the same end - users . Figure 4 : GWP Impact of Li 2 CO 3 p roduced f rom Cinovec PFS (2019) , the t heoretical Cinovec Decarbonised Case , for Chilean Brine, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minviro The AP impact of the Cínovec product and the three comparison scenarios is shown in Figure 5. The AP impact for Chilean brine is the lowest: 0.03 mol H+ eq. per kg Li 2 CO 3 . The AP impact calculated for the Cínovec PFS case is 0.05 mol H+ eq. per kg Li 2 CO 3 . The AP impact for Li 2 CO 3 produced from spodumene is again higher: 0.28 mol H+ eq. per kg Li 2 CO 3 . For US Sediment ary Clay , the AP impact is calculated to be 0.33 mol H+ eq. per kg Li 2 CO 3 . 23 November 2021 Page 6 of 11 Figure 5 : AP Impact of Li 2 CO 3 p roduced f rom Cinovec PFS (2019) , for Chilean Brine, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minviro The water use impact for the four scenarios is shown in Figure 6 . The decarbonised scenario is not included. The water use has been split into direc t water use and the associated regional water consumption increases due the AWARE water scarcity factor. For all three comparison scenarios the increase due to the water scarcity impact increases the water impact significantly compared to the direct water use and the water use of consumed electricity and materials. The water use impact of the Cin ovec Li2CO3 product is 68.7 kg water eq. per kg Li2CO3. Figure 6 : Water Impact of Li 2 CO 3 p roduced f rom Cinovec PFS (2019) , for Chilean Brine, Australian Spodumene c onverted in China and US Sedimentary Clay. Source: Minviro 23 November 2021 Page 7 of 11 GWP IMPACT MITIGATION SCENARIOS FOR THE CINOVEC PROJECT (CINOVEC DECARBONISATION CASE) 2030 Czech Electricity Grid mix CEZ s.a. notified Minviro that the electricity generation within the Czech R epublic will reduce it s reliance on c oal as a primary means of electricity generation by 2030. The revised grid mix was modelled by Minv iro. When assuming the Czech electricity grid mix for 2030 , the GWP of impact of the LiOH product decreases from 16. 6 to 12. 1 kg CO 2 eq. per kg LiOH . For Li 2 CO 3 , the GWP impact decreases from 15.7 to 11. 1 kg CO 2 eq. per kg Li 2 CO 3 for the Czech Republic 2030 electricity grid mix. Solar Power Plant When renewable electricity is incorporated from a photovoltaic source, the contribution of the GWP impact of electricity reduces from 7.9 kg CO 2 eq. per kg LiOH (Czech Republic grid) to 1 .0 kg CO 2 eq. per kg LiOH (photovoltaic). This is primarily due to the GWP intensity of the existing Czech grid, which is reliant on lignite coal. For a scenario where the electricity used by the Cínovec projects comes from a photovoltaic source, the GWP i mpact of the LiOH reduces from the original value of 16. 6 kg CO 2 eq. per kg LiOH to 9.7 kg CO 2 eq. per kg LiOH . Electric Mining Fleet For a scenario where the existing diesel fuelled fleet is replaced by an electric underground mining fleet, the contributio n of the GWP impact of the mining fleet reduces from 0.5 kg CO 2 eq. per kg LiOH (diesel fuelled) to 0. 1 kg CO 2 eq. per kg LiOH (electric, assuming a photovoltaic electricity source). For a scenario where the electricity from the Cínovec projects comes from a photovoltaic source and the mining fleet is assumed to be electric, the GWP impact of the LiOH product is 9.2 kg CO 2 eq. per kg LiOH . Hypex 50 Explosives When replacing the conventional emulsion with Hypex50 explosives, used to liberate the ore and for underground development, of which 96% consists of hydrogen peroxide and water, the contribution of the explosives to the GWP impact reduces from 0.3 kg CO 2 e q. per kg LiOH (conventional emulsion) to 0.1 kg CO 2 eq. per kg LiOH (Hypex50 bio explosives). For a scenario where the explosives are sourced from Hypex50, the electricity is sourced from a renewable photovoltaic source and the underground mining fleet is electric , the GWP impact o n the LiOH product is 9.0 kg CO 2 eq. per kg LiOH . Use of Hydrogen In the fourth scenario, it is assumed that the thermal energy provided to the underground mine and the chemical plant through the combustion of natural gas is supplied by hydrogen that is produced using photovoltaic electricity. When replacing natural gas by hydrogen as a thermal energy source for the chemical plant and underground mine, the GWP impact of the thermal energy requirements reduces from 5.7 kg CO 2 eq. per kg LiOH (natural gas) to 0.8 kg CO 2 eq. per kg LiOH (photovoltaic produced hydrogen). In a scenario where it assumed that all electricity consumed by the Cínovec project is produced from a photovoltaic source, the underground mining fleet is electric, the explosives are Hypex50 Bio and the thermal energy used by the underground mine and the che mical plant comes from hydrogen, the overall GWP impact o n the LiOH product reduces to 3. 3 kg CO 2 eq. per kg LiOH . 23 November 2021 Page 8 of 11 Impact Mitigation scenario analysis The GWP impact of the decarbonisation scenarios on mining, concentrating, chemical refining and transport stage of the Cínovec project’s LiOH product in the PFS case is shown in the waterfall chart contained below in Figure 7 . When all four decarbonizing scenarios are utilised, the GWP impact reduces from 1 6. 6 to 3. 3 kg CO 2 eq. per kg LiOH. Figure 7 : Reduction in GWP of LiOH for Decarbonization Scenarios. Source: Minviro These four scenarios also have been investigated for Li 2 CO 3 . The GWP impact of the decarbonisation scenarios on mining, concentrating, chemical refining and transport stage of the Cínovec project’s Li 2 CO 3 product in the PFS case is shown in the waterfall chart contained below in Figure 8 . When all four decarbonizing scenarios are ut ilise d , the GWP impact reduces from 15. 7 to 2.8 kg CO 2 eq. per kg Li 2 CO 3 . 23 November 2021 Page 9 of 11 Figure 8 : Reduction in GWP of Li2CO3 for Decarbonisation Scenarios. Source: Minviro BACKGROUND INFORMATION ON CINOVEC Cinovec Lithium/Tin Project Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Geomet has been granted a preliminary mining permit by the Ministry of Environment and the Ministry of Industry. The company is owned 4 9% by EMH and 51% by CEZ a.s. through its wholly owned subsidiary, SDAS. Cinovec hosts a globally significant hard rock lithium deposit with a total Measured Mineral Resource of 53.3 Mt at 0.4 7 % Li 2 O and 0.0 8 % Sn , Indicated Mineral Resource of 361.9 Mt at 0.45% Li 2 O and 0.04% Sn and an Inferred Mineral Resource of 295 Mt at 0.39% Li 2 O and 0.04% Sn containing a combined 7. 39 million tonnes Li 2 CO 3 Equivalent and 263kt of tin ( refer to the Company’s ASX release dated 13 October 2021 ) ( Resource Upgrade a t Cinovec Lithium Project ) . An initial Probable Ore Reserve of 34.5Mt at 0.65% Li 2 O and 0.09% Sn reported 4 July 2017 ( Cinovec Maiden Ore Reserve – Further Information ) has been declared to cover the first 20 years mining at an output of 22,500tpa of Li 2 CO 3 ( refer to the Company’s ASX release dated 11 July 2018 ) ( Cinovec Production Modelled to Increase to 22,500tpa of Li 2 CO 3 ). This makes Cinovec the largest hard rock li thium deposit in Europe, the fourth largest non - brine deposit in the world and a globally significant tin resource. The deposit has previously had over 400,000 tonnes of ore mined as a trial sub - level open stope underground mining operation. In June 2019 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD1.108B and an IRR of 28.8% and 23 November 2021 Page 10 of 11 confirmed that the Cinovec Project is a potential low operating cost, produc er of battery grade LiOH or battery grade Li 2 CO 3 as markets demand (refer Company’s ASX release dated 17 June 2019) . It confirmed the deposit is amenable to bulk underground mining. Metallurgical test - work has produced both battery grade LiOH and battery g rade Li 2 CO 3 in addition to high - grade tin concentrate at excellent recoveries. 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 so uth 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. The economic viability of Cinovec has been enhanced by the recent strong increase in dem and for lithium globally, and within Europe specifically. There are no other material changes to the original information and all the material assumptions continue to apply to the forecasts. CONTACT For further information on this update or the Company generally, please visit our website at www.europeanmet.com or see full contact details at the end of this release. WEBSITE A copy of this announcement is avai lable from the Company’s website at www.europeanmet.com. ENQUIRIES: European Metals Holdings Limited Keith Coughlan, Executive Chairman Kiran Morzaria, Non - Executive Director Dennis Wilkins, Company Secretary Tel: +61 (0) 419 996 333 Email: keith@europeanmet.com Tel: +44 (0) 20 7440 0647 Tel: +61 (0) 417 945 049 Email: dennis@europeanmet.com WH Ireland Ltd (Nomad & Joint Broker) James Joyce/ Darshan Patel (Corporate Finance) Harry Ansell/Jasper Berry (Broking ) Tel: +44 (0) 20 7220 1666 Shard Capital (Joint Broker) Damon Heath Erik Woolgar Tel: +44 (0) 20 7186 9950 Blytheweigh (Financial PR) Tim Blythe Megan Ray Chapter 1 Advisors (Financial PR – Aus) David Tasker Tel: +44 (0) 20 7138 3222 Tel: +61 (0) 433 112 936 The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of EU Regulation 596/2014, prior to its release. The person who authorised for the release of this announcement on behalf of the Compa ny was Keith Coughlan, Executive Chairman. 23 November 2021 Page 11 of 11 CAUTION REGARDING FORWARD LOOKING STATEMENTS Information included in this release constitutes forward - looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation, sta tements regarding plans, strategies and objectives of manag ement, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, p erformance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increas ed costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. Forward looking s tatements are based on the company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company’s business and operations in the future. The company does no t give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company ’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company ’s control. Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, t here may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to plac e undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this inform ation the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based . This announcement has been prepa red in compliance with the JORC Code 2012 Edition and the current ASX Listing Rules. PREVIOUSLY REPORTED INFORMAT I ON The information in this report relating to Exploration Results, Mineral Resources, Ore Reserves, production targets and forecast financial information derived from a production target is extracted from the Company’s ASX releases referred to in the body of the report and are available to view on the Company’s ASX announcements platform (ASX: EMH). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement s and, in the case of es timates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and co ntext in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
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