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European Lithium (ASX:EUR): Interview with Chairman Tony Sage
November 17, 2021
EUR, European Lithium, video
European Lithium (ASX: EUR): We spoke with Chairman Tony Sage about the locational advantages of its Wolfsberg Lithium Project in Carinthia state of southern Austria and the strong numbers the company generated in the recent Pre-Feasibility Study.
See full transcript below.
Read our most recent research on EUR here
Stuart: Hello, and welcome to Stocks Down Under. My name is Stuart Roberts, and I’m one of the cofounders of our publication. And joining me this morning from Perth, on the morning of 15th of November, is the legendary Mr. Tony Sage, who’s the chairman, amongst other things, of European Lithium, EUR. Tony, good morning.
Tony: Good morning. How are you going?
Stuart: I see you’re wearing Perth Glory gear, so I presume you’ve got a good new story you’re about to tell the world about, right?
Tony: Yes. We’ve secured Daniel Sturridge, so it’ll be his first full-on training session. So we’ve got the media down there, and we’ll do a little bit of a press conference with him.
Stuart: All right, good. Well, let’s not keep you. It’s fair to say that you’re sitting on a pretty valuable project in Wolfsberg in southern Austria. The preface that you did a little while ago is putting value somewhere between $250 million and about $450 million on that at an 8% discount rate. The spodumene process is like a dream, as far as I can tell. You’re in the heart of battery country. What can go wrong, potentially with Wolfsberg?
Tony: Oh, look, I don’t think anything can go wrong unless there’s a new alternative to lithium-ion batteries, which plenty of people have tried.
Stuart: That’s not gonna happen any time soon, Tony.
Tony: Look, hundreds of billions of dollars have been spent on this technology. It’s gonna take some brand-new technology a long, long time to overtake it now that the money has been invested. So really, what can go wrong is a collapse in the price, which I don’t think is gonna happen. No one thinks it’s gonna happen. I mean, we were sitting here six months ago when the hydroxide price was $7,000, it’s now passing $25,000. And in the PFS our numbers are very, very robust, I mean, the cost of production is around $6,500 a ton, so magic profit margin.
The biggest advantage, though, that we’ve got in Wolfsberg is the mines are already built. If I went along today and did a drilling program and found this deposit, I don’t think I’d be able to mine it, because we wouldn’t be able to get permission to dig out that much to get the attics and everything done. But because the mine is there, because the mining license has already been issued, we’ve got a huge advantage over every one of our competitors in Europe.
Stuart: All right. So talk to us about what the future holds in terms of the next 12 months for the development of Wolfsberg.
Tony: Oh, look, we’ve finished just about 80% of all the work. We’ve mined this deposit. We took out 1,500 tons. We gave that to Dorfner ANZAPLAN in Germany. They built a pilot plant. We put 300 tons of material through that pilot plan, so we now know we’ve got a high-grade hydroxide that we can produce. So the next 12 months basically is finishing the definitive or bankable feasibility study. That will be done by March, ’22, and then it’s just the financing. And if you look at basically every single equity raised in lithium, they’re oversubscribed. So we don’t think we’ll have any problem raising the capital, and then we just build the plant. Like I said, the license is there. We don’t really have to do much past March other than to get the financing put in place.
Stuart: Right. Any particular infrastructure constraints that you’re gonna be suffering from as you build this out?
Tony: No, no. We’re in an industrial area. You’d mentioned southern Austria, it’s got a town called Graz. Graz is 45 kilometers away.
Stuart: Birthplace of Schwarzenegger amongst other things.
Tony: Yeah, yeah, correct. Yeah, so it’s a highly industrialized area, plenty of land to put the hydroxide plant, the mine is built. We’ve got Samsung down the road, 45 kilometers away, the biggest battery factory in Austria. We’ve had talks to them about various things, so that’s good. And it’s in an area of Austria that’s got a low socio-economic impact, a high youth unemployment, so local government, state government in that area really want us to go ahead and build the mine out and the hydroxide plant so they could create jobs in the local area.
Stuart: Perfect. And it’s fair to say, you’ve benefited from some public policy support at the EU level and Austria, as well as the state of Carinthia. Is that a reasonable assumption?
Tony: Yeah, look, it is. We’ve already received government funds from Austrian government to develop the project. We’ve also received some money from the EU. So look, yeah, very, very supportive. I think if you add it all up, across total Europe and the EU, it’s about €3 billion on offer for EV type development. Now, we won’t get any funding for the mining itself, but we will get funding for the hydroxide plant area of the business. So as you know, there are two types of business, one is the mining side and one is then developing the concentrate into a hydroxide.
Stuart: Certainly. What motivated the decision to go all the way up the curve to be producing hydroxide rather than just shipping concentrates?
Tony: The Austrian government, basically. They want downstream processing in their country. They want to create this area into a downstream so they obviously are looking forward. And once the hydroxide plant is built, maybe someone will build a Giga factory. I noticed Ford is following Tesla and they wanna build a Giga factory in Europe, and what better place to build a Giga factory is right next to the hydroxide plant. So that’s their long-term view, it’s not our view. But it certainly helps us with government trying to get all the licenses for the hydroxide plant.
Stuart: Certainly. So basically, almost all systems go, except we’re gonna have to complete a DFS and then raise the capital. You’ve been a long-term believer in this project. We first talked to you about three years ago when the lithium price was nowhere near as attractive as it’s been at the moment. How do you feel going through that dip we had in lithium over the last couple of years?
Tony: Look, in our game, no matter what mineral, you’ve gotta be patient. I’ve got another company that had to suffer through two or three years of low iron ore prices and, all of a sudden, that shot up last year. So look, you’ve gotta be very patient. We knew it was a very good deposit. The advantages that we’ve got far outweigh every other restriction. And the restriction I mean is the amount of drilling that was done by the Austrian government in finding this deposit, was a restriction for us because we had to go back and re-drill certain areas to get our chalk number up. But being patient.
I founded this asset myself in 2012, so I’ve been involved almost nine years now. So it’s a long longer burn for us but now it’s accelerated and with the prices where it is now, we have no problem raising the finance, and we’re talking about 450 million U.S. to build both the hydroxide and the concentration plant. It’s a big spend.
Stuart: One final question. Obviously, a lot of investors are gonna be concerned about the ESG component here, as iis the state of Austria as well. What kind of extra hoops have you had to jump through to make sure that this is fully compliant with the best practice on ESG?
Tony: Yeah, look, a very, very good question. We’re three-quarters of the way through our ESG program now. By the time that the DFS is complete, we will have our full ESG certificate, both… And it’s difficult for us because we’re an Australian company so we’ve gotta comply here in Australia, but we also gotta comply with the EU rules. So we’re gonna be very, very strict in our application of the ESG, but we believe we’ll have our full certificate before the DFS is complete in March.
Stuart: All right. Well, Tony Sage, well done for what you and the team have managed to achieve at Wolfsberg. We’re looking forward to a really great outcome, so keep up the good work.
Tony: Okay. Thank you very much.