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CEZ gives European Metals funding, may partner on lithium project

16th July 2019

By: Reuters

  

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PRAGUE - Czech utility CEZ will provide a two-million euro convertible loan to European Metals Holding (EMH), the companies said on Tuesday, giving CEZ a potential majority stake in the company developing a large lithium deposit in the country.

The loan will mature on December 31, 2019 and carries a 7.5% interest rate. CEZ can convert the loan principal to shares at any time up to the maturity.

European Metals (EMH) controls the exploration licences to the Cinovec lithium/tin project in the Czech Republic, which it says is the largest lithium deposit in Europe.

Czech Prime Minister Andrej Babis backed the deal for CEZ, in which the State holds a 70% share, saying it allowed the country to keep control of an important material without disrupting foreign investment.

European Metals shares soared 11% in London while CEZ was 0.4% up in Prague.

"Potentially partnering with CEZ further demonstrates EMH’s commitment to develop fully the Cinovec Project in conjunction with Czech industry, for the benefit of the country’s involvement in the battery and EV industries," EMH Managing Director Keith Coughlan said in a statement.

Demand for lithium, an important component in batteries, is set to grow as the electric car market in Europe gains momentum.

The move is a new route for CEZ in the electric vehicle market as it is already planning to roll out power charging stations throughout the country.

"One of CEZ's strategic priorities is new energy. One of the phenomena of the future will be battery systems," CEZ CEO Daniel Benes told a news conference.

CEZ will have until the end of the year to decide to take a stake in EMH.

Edited by Creamer Media Reporter

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