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(KDNC) Cadence Minerals Share Chat

Discussion in 'General Share Chat (KDNC.L)' started by Inspiration, Jul 29, 2015.

  1. Keith Mullins

    Keith Mullins Mullins58

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  2. Groucho

    Groucho Member

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    20 November 2019

    EUROPEAN METALS HOLDINGS LIMITED

    POTENTIAL STRATEGIC PARTNERSHIP WITH CEZ

    AND SIGNIFICANT INVESTMENT INTO CINOVEC PROJECT


    European Metals Holdings Limited ("European Metals" or "the Company") is pleased to announce that it has today reached conditional agreement with CEZ Group ("CEZ"), one of Central and Eastern Europe's largest power utilities, regarding a potential strategic partnership and significant investment into the Cinovec Project ("Cinovec" or "the Project").



    If concluded, the agreement will see, subject to the successful completion of due diligence, shareholder, and other approvals, CEZ become a 51% shareholder in Geomet s.r.o. ("Geomet"), the Company's Czech subsidiary and holder of the rights over the Project, for consideration of approximately EUR 34.06 million (approximately £32.88 million) by subscribing for new shares in Geomet (the "Proposed Subscription").



    Headquartered in the Czech Republic, CEZ is an established, integrated energy group with operations in a number of Central and Southeastern European countries and Turkey. CEZ's core business is the generation, distribution, trade in, and sales of electricity and heat, trade in and sales of natural gas, and coal extraction. CEZ Group has 33,000 employees and annual revenue of approximately EUR 7.24 billion.



    The largest shareholder of its parent company, CEZ a. s., is the Czech Republic with a stake of approximately 70%. The shares of CEZ a.s. are traded on the Prague and Warsaw stock exchanges and included in the PX and WIG-CEE exchange indices. CEZ's market capitalization is approximately EUR 10.08 billion.


    As one of the leading Central European power companies, CEZ intends to develop several projects in areas of energy storage and battery manufacturing in the Czech Republic and in Central Europe.



    CEZ is also a market leader for E-mobility in the region and has installed and operates a network of EV charging stations throughout Czech Republic. The automotive industry in Czech is a significant contributor to GDP and the number of EV's in the country is expected to grow significantly in coming years.



    European Metals Managing Director Keith Coughlan said,"We are very pleased to have concluded another stage of negotiations with CEZ regarding the future development of the Cinovec Project. CEZ is one of the largest companies in the Czech Republic and one of the leading companies in Central and Eastern Europe, having a strong vision with regards to the construction of battery production facilities, renewable energy and power storage.


    If concluded, this agreement will result in Cinovec being fully funded through to a construction decision and will assist greatly in the integration of Cinovec into the European battery market. The potential investment by 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. With their blend of technical foresight, historic mining experience, strong balance sheet and involvement in the rapidly growing European Battery Industry, CEZ is the ideal partner for the Company."


    Background to the Proposed Subscription


    In July this year, EMH announced that CEZ was conducting due diligence on the Company and the Cinovec Project, and that the successful outcome of the due diligence process could result in CEZ potentially becoming the Company's largest shareholder and co-development partner for the Cinovec Project. Since then, EMH and CEZ have held detailed discussions on the framework for CEZ's participation in the Cinovec Project and today EMH and CEZ entered into the Exclusivity and Framework Agreement (further details of which are set out below).


    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. Through these battery industry activities, CEZ is expected to assist greatly in the securing of off take agreements for the Project.


    Principal terms of the Proposed Subscription


    Pursuant to the Exclusivity and Framework Agreement, CEZ has the option, but not the obligation, to subscribe, through its wholly-owned subsidiary SDAS, for such number of Geomet shares as will result in SDAS holding Geomet shares comprising fifty-one per cent. (51%) of the ownership interests and voting rights in Geomet, attached with the right to receive fifty-one per cent. (51%) of dividends, liquidation balance and other proceeds payable by Geomet to Geomet shareholders following completion of the subscription.


    The amount to be paid by CEZ to Geomet under the option is in total approximately €34.06m, equivalent to approximately £29.15m and AUD55.25m. This compares to EMH's market valuation of approximately £32.88m (€38.42m; AUD62.32m) based on the closing price of an EMH share in London of 21.8 pence on 19 November 2019, the day immediately before announcement by EMH of the Proposed Subscription. The amounts in GBP and AUD included above have been calculated using an average exchange rate for EUR/GBP and EUR/AUD respectively as at 18 November 2019.


    Completion of the Proposed Subscription is conditional, inter alia, on the satisfaction of the following conditions:


    (i) completion of due diligence in respect of the Company and the Cinovec Project to the satisfaction of CEZ at its sole discretion;

    (ii) EMH shareholder approval;

    (iii) agreement of the initial work programme and budget for Geomet; and

    (iv) CEZ and EMH agreeing the identity of the Chief Executive Officer, the Chief Operating Officer and the statutory auditor of Geomet to be appointed with effect from completion.


    EMH has agreed to provide CEZ with a period of exclusivity under the Exclusivity and Framework Agreement, with certain break fees payable by EMH if it does not proceed with the Proposed Subscription. In particular, EMH and Geomet have undertaken until 31 March 2020 not to conduct discussions or negotiations or enter into any agreement or arrangement with any person or entity other than CEZ or SDAS in respect of an acquisition of an interest over or in, and/or establishment of a joint venture, partnership or other cooperation in connection with, the Cinovec Project and/or Geomet, by any means.


    EMH and CEZ have also agreed the form of the Geomet Shareholders' Agreement which sets out their rights and obligations as shareholders in Geomet should CEZ exercise the option. The Geomet Shareholders' Agreement includes certain minority shareholder protections with a number of reserved matters which require the approval of both CEZ and EMH, together with deadlock-breaking provisions in the event that on completion of the proposed work programme, the parties disagree on a construction decision.


    Financial effects of the proposed subscription


    The primary financial objective of the Proposed Subscription is to secure the funding for the next stage of the development of the Cinovec Project and to provide a strong platform for the Cinovec Project to progress into production. Whilst the Board believes from the extensive PFS work undertaken to date that Cinovec is a robust project with strong economics, the funding of large mining and processing projects requiring significant capital expenditure is very challenging for smaller mining companies in current economic and market conditions.


    The addition of a partner with the financial strength of CEZ, and the strong significant business relationships that it brings, significantly enhances the attractiveness of the Cinovec Project at this important stage of its development.


    The subscription proceeds from the Proposed Subscription will be used by Geomet to develop the Cinovec Project through completion of the Definitive Feasibility Study ("DFS"), complete all permitting processes and advance the Cinovec Project to a decision to construct. The DFS will bring together the detailed operational and financial implementation plan, including geological, technical, engineering, metallurgical, environmental and financial technical expert reports. The Company has prepared the detailed budget and business plan for the delivery of the DFS, together with the front-end engineering design programme, which is expected to take up to 18 months to complete. In order to facilitate the timely progressing of the DFS, Geomet will enter into a service contract with one or more third party contractors, provided that EMH will be appointed to provide services of managing the Cinovec Project development.


    On completion of the proposed subscription by SDAS, EMH's ongoing interest in Geomet will reduce to 49%. Under the Geomet Shareholders' Agreement, Geomet will have a board of five directors. EMH will have the right to nominate two of the five Geomet directors.


    Accordingly, on completion EMH will cease to consolidate Geomet's results within the EMH's consolidated accounts. As at 30 June 2019, Geomet's total assets amounted to AUD$12.17 million. In the year ended 30 June 2019 Geomet's loss before taxation amounted to AUD$0.287 million.
     
  3. Keith Mullins

    Keith Mullins Mullins58

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  4. Groucho

    Groucho Member

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  5. Keith Mullins

    Keith Mullins Mullins58

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  6. Keith Mullins

    Keith Mullins Mullins58

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  7. Keith Mullins

    Keith Mullins Mullins58

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    Macarther Min

    2 minutes in

     
  8. Keith Mullins

    Keith Mullins Mullins58

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  9. Keith Mullins

    Keith Mullins Mullins58

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    Posted on LSE Ivybush

    @observer842 "I try to ignore ...belittling ..of the BOD but it does influence me"

    I reckon I might feel likewise had I not had face to face conversations with all the BOD who were present
    at the last AGM. Last September one of the board members told me that he had scraped together all
    of his personal savings and more, to buy into the placing re Amapa.
    As Degsie repeatedly points out £400m was raised for investment by the BOD in their own names as Directors.

    This underlines their personal commitment to kdnc and the Amapa project. No doubt those who have not met
    the CEO will have other views but for myself I was convinced he is prepared to back this project wholeheartedly.

    Only time will tell whether the doubters are right and I am wrong: so as always research is vital.
     
  10. Groucho

    Groucho Member

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