European Metals Holdings Ltd (LON:EMH) shares advanced in Thursday’s early deals as it confirmed an agreement that sees state-owned CEZ receive the option to invest €34.06mln and take a 51% stake in the company’s Czech subsidiary Geomet.
The Czech unit holds the Cinovec asset which is described as a “globally significant lithium project”, as it is presently the largest known lithium resource in Europe.
CEZ has exclusivity during the option period and the completion of the proposed investment is contingent upon due diligence, approval at AGM/EGM, agreement over future work programmes and budgets along with agreement over a new management team (including a chief executive and chief operating officer for Geomet).
In a document sent to its shareholders, European Metals said: “The company considers that CEZ group is an ideal strategic and financial partner for the Cinovec project.
“In addition to CEZ's financial strength, the Board believes that CEZ provides strong strategic relationships within the Czech Republic, the European Union and abroad.
“CEZ is a leader in power generation and distribution in the region and has plans to become heavily involved in the development of new energy systems.”
The proposed €34.06mln (£29.15mln) share subscription compares to the EMH market capitalisation of £32.88mln on the day prior to November’s initial news announcement concerning the possible share subscription.
In Thursday’s early deals European Metals shares rose by 3.82% to 17p, which values the company at £26.57mln.