European Metals has been given a buy rating and ‘best-in-class’ tag from 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 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.
Shares were up 4.5% at 14.5p today.