Just how valuable is European Lithium’s Wolfsberg project in Austria? Well if its deal with NASDAQ-listed Sizzle Acquisition Corporation is any indication, pretty valuable indeed.

But just how valuable is valuable?

Under the agreement, European Lithium (ASX:EUR) will roll its wholly-owned subsidiary European Lithium AT (Investments) Limited, which rather neatly holds the Wolfsberg project and some other non-core interests, into a new company – Critical Minerals Group – that is forming with Sizzle.

In return, the company will be issued US$750m worth of shares in Critical Minerals, equivalent to an 80% interest.

Here’s where it gets really interesting is that Critical Minerals will have an implied market capitalisation of US$972m (AUD $1.5b) and pro forma enterprise value of US$838m.

Big Value

This clearly highlights the value placed on Wolfsberg given that the market capitalisation of the new company is more than an order of magnitude (10 times) greater than the company’s market capitalisation of $126m prior to its going into a trading halt on Monday, 24 October 2022.

And if that wasn’t enough, Sizzle’s contribution is a hefty $159m in capital before expenses to fund the new company’s activities, which will be focused on starting mining operations in 2025.

European Lithium will also retain control of Wolfsberg through its four board seats in Critical Minerals Group (with Sizzle holding one seat) with executive chairman Tony Sage and chief executive officer Dietrich Wanke expected to fulfil the same roles.

The company will now seek shareholder approval for the deal by the end of November with Sizzle to do the same in the first half of 2023 before closing the deal before the end of the same period.

This will then pave the way for Critical Minerals to list on NASDAQ.

Wolfsberg Lithium Project

Wolfsberg is located in Carinthia, 270km south of Vienna and 20km east of Wolfsberg, an industrial town, with established infrastructure, including access to the European motorway and railway network.

European Lithium plans to produce 10,500t of lithium hydroxide at a mining rate of 770,000tpa over a maximum period of 20 years, enough material to construct lithium-ion batteries for about 200,000 electric vehicles each year.

With its location right in the heart of Europe’s growing battery demand, the project is ideally to address concerns about supply chain security.

No wonder then that European Lithium already has a non-binding memorandum of understanding with BMW that could see the giant car maker make a US$15m upfront payment should a binding contract be reached.

Sampling at various prospects across the Weinebene and Eastern Alps lithium projects to the south and southeast of Austria, which the company holds 20% interests in and is included in the Sizzle deal, has also returned encouraging results averaging at 1.74% Li2O and topping up at 3.24% Li2O.

Partner EVR, which holds 80% of the projects, said the results and historical data underline their prospectivity – particularly the Millstätter Seerücken project area which it will focus future exploration on.

 

 

This article was developed in collaboration with European Lithium (ASX:EUR), a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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