CEZ, European Metals in conditional agreement over lithium project stake

PRAGUE, Nov 20 (Reuters) - Czech utility CEZ and European Metals Holdings have reached a conditional agreement that would give CEZ a 51% stake in the Cinovec lithium project, the companies said on Wednesday.

CEZ, central Europe’s largest-listed utility which is 70% state owned, has been carrying out due diligence on the project since giving European Metals (EMH) a 2 million euro convertible loan in July. Entering exclusive talks is another step.

EMH controls the exploration licences to the Cinovec lithium/tin project in the Czech Republic, which it says is the largest lithium deposit in Europe.

Under the proposed deal, CEZ would pay 34.1 million euros ($37.7 million) for the stake in EMH’s Geomet subsidiary, which controls the licences, by subscribing to new shares, EMH said in a statement.

London-listed EMH said if the deal was concluded, it would result in Cinovec being fully funded through to a construction decision.

CEZ said due diligence on the project was ongoing.

“Everything is conditioned on the results of due diligence,” a CEZ spokesman said.

The project has been backed by Czech government officials. It would help CEZ develop in energy storage and battery manufacturing.

Demand for lithium, an important component in batteries, is set to grow as the electric car market in Europe gains momentum.

$1 = 0.9038 euros Reporting by Jason Hovet; Editing by Mark Potter