European Metals Holdings Ltd has received a ‘buy’ rating and a ‘best-in-class’ designation from the broker Liberum, which has just started coverage.
EMH is developing the 49%-owned Cinovec integrated lithium project in the Czech Republic via a joint venture with Czech state-owned utility CEZ.
Working through the numbers, Liberum says Cinovec “could enjoy class-leading post-tax returns” even with recent rises in operating and capital cost forecasts.
Cinovec benefits from several advantages over rival projects, says the broker, notably amenability to bulk underground mining, processing advantages, proximity to extensive infrastructure and relatively benign fiscal terms.
Pluses from these offset its lower grades, believes the broker, while a combination of CEZ and the European Development bank, the EBRD, could fund the bulk of the construction costs.
Even applying a 50% haircut to the current NPV8% target, the share price target of 69p is 370% above the market price currently, notes the broker, hence ‘buy’ is the recommendation.