GCIZinnwald Lithium hails progress of lithium project during 1H21
The German-focused lithium development firm said it is ‘positioned to capitalise on unlocking the full potential of the project after acquiring the remaining 50% of Deutsche Lithium GmbH.
Just before period-end, Zinnwald acquired Deutsche Lithium for €1.5 million cash and 50 million new ordinary shares. By taking full ownership, the Company believes it is in a much stronger position to capitalise on unlocking the full potential of the Zinnwald Lithium Project.
Speaking on the significance of the project in south-eastern Germany, Zinnwald said: ‘As the importance of EV manufacturing grows so too does the importance of a local supply chain.’
As a result, it seems the shift towards electric vehicles ("EVs") is gathering momentum with Europe increasingly seeking to become an important global centre for EV production.
In fact, the EU has set itself a target of being carbon neutral by 2050, and battery storage, where lithium-ion is a leading technology, is a vital enabling technology for this. It has designated lithium a critical raw material and is seeking to encourage local production.
During 1H21, stronger than expected electric vehicle production and sales volumes and only modest battery raw material supply response resulted in a tightening lithium market situation.
‘As a result, both lithium carbonate and lithium hydroxide prices showed strong recoveries almost doubling from levels seen at the beginning of the year,’ the Company highlighted.
Zinnwald said the Project’s economics has already been demonstrated and it has identified a number of key work streams which will be required to advance it towards its production.
The Group is completing the first phase of the lithium hydroxide (LioH) test work which is delivering ‘encouraging results’ showing the potential to produce a high quality, battery grade LioH with the proven ability to produce battery grade lithium fluoride and lithium carbonate.
In 1H21, Deutsche Lithium was granted a five-year exploration licence (the "Sadisdorf Licence") covering around 225 hectares in the Ore Mountains region of Saxony, Germany to complement two other exploration licences already held by Deutsche Lithium in Germany.
Zinnwald said the grant of this licence coupled with the Falkenhain and Altenburg licences represents exciting expansion potential for Zinnwald and, based on the historical resource delineated by previous licence holders, ‘effectively increases its overall resource to greater than 1 million tons contained lithium carbonate equivalent ("LCE"), an increase of over 50%.’
During 1H21, the Group made a loss before taxation of €0.94m compared with a loss of €0.41m in 1H20 primarily due to a project impairment charge of €1.55m for Abbeytown together with the revaluation gain of €1.03m on the original investment in Deutsche Lithium.
Total net assets rose to €16.77m at 30 June 2021 from €3.45m at 30 June 2020, primarily due to the consolidation of Deutsche Lithium's net assets of €8.30m and the Goodwill intangible asset of €5.53m, offset by the full impairment of the Ireland and Sweden exploration assets.
In addition, the closing cash balance for the Zinnwald Lithium at the period end was €2.91m which is greater than the €1.27m at the end of the same period in the prior year, it reported.
Zinnwald’s focus over the next 12 to 18 months will be to undertake test work to ascertain the commercial viability of producing a wider range of lithium compounds. It said discussions with both off-take and financing partners will also take place as it seeks to advance the Project.
“I view the future with a high degree of confidence and would like to thank our shareholders for their continued support. With plenty of latent demand for lithium, a highly experienced team on the ground in Germany and access to a pool of additional skilled labour we look forward to updating you on our progress,” said Non-Executive Chairman, Jeremy Martin.
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