European Metals Holdings agrees strategic deal with CEZ for Cinovec Project

European Metals Holdings has reached a conditional agreement with CEZ Group - one of central and eastern Europe's largest power utilities - over a potential strategic partnership and significant investment into the Cinovec Project, it announced on Wednesday.

The AIM-traded firm said that if concluded, the agreement would see, subject to the successful completion of due diligence, shareholder, and other approvals, CEZ become a 51% shareholder in Geomet - EMH’s Czech subsidiary and holder of the rights over the project - for consideration of €34.06m (£32.88m), by subscribing for new shares in Geomet.

It described CEZ, headquartered in the Czech Republic, as an established, integrated energy group with operations in a number of countries in central and south eastern Europe, as well as Turkey.

CEZ's core business is the generation, distribution, trading in, and sales of electricity and heat, the trading in and sales of natural gas, and coal extraction.

It has 33,000 employees and annual revenue of approximately €7.24bn.

The largest shareholder of its parent company is the Czech Republic with a stake of approximately 70%.

EMH said shares in CEZ are traded on the Prague and Warsaw stock exchanges, and included in the PX and WIG-CEE exchange indices, with the company’s market capitalisation approximately €10.08bn.

CEZ was planning to develop several projects in areas of energy storage and battery manufacturing in the Czech Republic and in central Europe.

EMH said it was also a market leader in e-mobility in the region, and had installed and operates a network of electric vehicle charging stations throughout the Czech Republic.

The automotive industry in Czechia was a significant contributor to GDP, and the number of electric vehicles in the country was expected to grow significantly in coming years.

“We are very pleased to have concluded another stage of negotiations with CEZ regarding the future development of the Cinovec Project,” said European Metals Holdings managing director Keith Coughlan.

“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.”

Coughlan said the potential investment by CEZ further demonstrated EMH's commitment to develop the Cinovec Project fully in conjunction with Czech industry, for the benefit of the country's involvement in the battery and electric vehicle 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.”

At 1540 GMT, shares in European Metals Holdings were down 6.98% at 20p.