European Metals Cinovec Lithium Plant Optimisation Targets $54M Annual Savings

European Metals Cinovec Lithium Plant Optimisation Cost Savings: Key Outcomes

European Metals Holdings Ltd (ASX/AIM: EMH) has reported preliminary outcomes from its lithium chemical plant (LCP) design optimisation for the Cinovec Lithium Project in the Czech Republic. According to the 24 June 2026 ASX announcement, the work points to potential reductions of US$51 million per annum in major reagent costs and more than 25% in specific LCP power consumption, estimated at US$3.4 million per annum, based on Definitive Feasibility Study (DFS) pricing assumptions.

European Metals Holdings Ltd stated that these changes, taken together, have the potential to increase the pre-tax NPV8 of US$1.455 billion reported in the December 2025 DFS, although the precise impact will only be known once the DFS is updated with confirmed testwork data.

Keith Coughlan, executive chairman of European Metals Holdings Ltd, commented: "The LCP optimisation programme delivers a compelling improvement in the economics of the Cinovec Project. The potential reductions in reagent consumption and power represent a material improvement in operating costs relative to the DFS, and if adopted, the scaled-down plant infrastructure required to process lower reagent volumes is expected to also reduce capital costs relative to the initial capex of US$1.72bn established in the DFS."

What the LCP Optimisation Programme Actually Achieved

The optimisation review focused on reconfiguring the LCP process flowsheet, which is the step-by-step chemical route used to extract and purify lithium from the leach solution.

The DFS flowsheet already separated lithium effectively from other dissolved metals, particularly during the lithium phosphate precipitation stage. However, that configuration consumed large volumes of three key reagents:

• Tri-sodium phosphate (TSP)
• Caustic soda (NaOH)
• Sulphuric acid (H₂SO₄)

European Metals Holdings Ltd reported that the revised design changes the way the solution is routed. The majority of solubilised lithium now goes directly to crude lithium carbonate precipitation, whilst the remaining lithium, together with most of the other Group I cations such as sodium and potassium, is treated in a side-stream lithium phosphate precipitation reactor and recycled.

How Was the New Flowsheet Modelled?

The reconfigured flowsheet was modelled using SysCAD, a widely used process simulation platform in hydrometallurgy. The company used partition coefficients and testwork data from locked cycle tests performed in 2022 and 2024.

According to the announcement, SysCAD modelling indicates the following changes at run-of-plant scale:

In addition, the modelling suggests a small uplift in LCP lithium recovery:

• DFS recovery: 90.8%
• Optimised flowsheet: 91.1%

This recovery increase is modest but directionally positive, indicating that the reagent savings are not, at this stage of analysis, projected to come at the expense of lithium yield.

Power Consumption Improvements

Power consumption within the LCP, specifically in the post-roast and leach filtration area, has been assessed using a factored estimation based on known DFS unit process power demands. European Metals Holdings Ltd reported a greater than 25% reduction in power consumption, equating to an indicative saving of US$3.4 million per annum at DFS power prices.

Furthermore, the company has emphasised that this power saving estimate is indicative only until physical testwork has been completed and the DFS has been updated.

Educational Section: Understanding NPV and Project Economics

What Is NPV and Why Does It Matter for Cinovec?

Net Present Value (NPV) is a key measure for assessing whether a project is financially attractive. It calculates the value today of all future cash flows:

• Cash inflows such as product sales revenue.
• Cash outflows such as operating costs (opex) and capital costs (capex).

These future cash flows are discounted back to the present using a selected discount rate that reflects time value of money and project risk. A higher NPV means, in simple terms, that the project is expected to generate more value after accounting for timing and risk.

For Cinovec, the December 2025 DFS reported a pre-tax NPV8 of US$1.455 billion, using an 8% discount rate, with initial capex estimated at US$1.72 billion. The DFS was based on production of 37,500 tonnes per annum of battery-grade lithium carbonate over a 28+ year operating life.

Every reduction in annual operating costs can support a higher NPV, provided production and revenue assumptions remain broadly consistent. In this European Metals Cinovec lithium plant optimisation cost savings update, European Metals Holdings Ltd has outlined:

• US$51 million per annum potential saving in major reagent costs, based on DFS reagent prices.
• US$3.4 million per annum indicative saving in LCP power consumption, based on DFS power prices.
• Combined, this represents US$54.4 million per annum in potential opex reductions.

If these savings are confirmed through testwork and implemented over the mine life, they would consequently feed directly into higher cash margins. The company has stated that these changes have the potential to increase the pre-tax NPV8 above the DFS level, although the exact figure will only be clear once the DFS is formally updated.

Key Finance and Technical Terms Explained

To support investors and non-specialists, several commonly used terms in the Cinovec disclosure are summarised below.

• NPV8: Net Present Value calculated using an 8% annual discount rate. A higher NPV8 generally indicates stronger economic potential.
• Opex (operating expenditure): Ongoing costs required to run the plant, such as reagents, power, labour and maintenance.
• Capex (capital expenditure): The upfront cost to build the mine, processing plant and associated infrastructure.
• LCE (Lithium Carbonate Equivalent): A standard way of expressing lithium quantities, converting different lithium compounds to the equivalent amount of lithium carbonate.
• DFS (Definitive Feasibility Study): A detailed technical and financial study that supports project financing and development decisions.
• SysCAD: Specialist software used to simulate complex processing plants, enabling engineers to test flowsheet changes virtually before committing to physical pilot work.

For investors assessing European Metals Holdings Ltd, these metrics help gauge the potential profitability, funding needs and risk profile of the Cinovec Project.

Independent Review and Validation of the New Flowsheet

The proposed LCP flowsheet reconfiguration has been reviewed through a fatal flaw analysis conducted by Dr Stephen La Brooy of Ausenco Services Pty Ltd. A fatal flaw analysis is a targeted review that aims to identify any fundamental technical issues that could prevent a process from working in practice.

According to the announcement, Dr La Brooy concluded that the proposal "may be expected to be viable", subject to confirmation through testwork. He has, however, recommended additional testwork to:

• Confirm the SysCAD modelling results.
• Validate the extent of reagent reduction that can realistically be achieved.
• Confirm any increase in lithium recovery.
• Ensure that the final product retains battery-grade quality.

Dr La Brooy has over 46 years of experience in metallurgical testwork, hydrometallurgical process development and technical review, and holds a PhD in Chemical Metallurgy. From an investor perspective, the involvement of an experienced, independent metallurgist is relevant for assessing technical risk. It indicates that the proposed changes are being scrutinised against established industry practice rather than only in-house assumptions.

Tunnel Kiln Programme: A Second Optimisation Stream

In parallel with the LCP flowsheet optimisation, the Cinovec project team is progressing advanced testwork on the potential replacement of the current gas-fired rotary kiln with a tunnel kiln for the roasting step.

According to European Metals Holdings Ltd, the tunnel kiln may be fuelled by electricity from renewable sources and/or gas, and initial indications from testwork suggest it may lead to further downward revision of both capex and opex. The company intends to update the market on this programme as results are consolidated.

Roasting is one of the more energy-intensive stages in many lithium processing flowsheets. Consequently, any improvement in energy efficiency, fuel flexibility or capital intensity can have a material impact on long-term operating margins and emissions profiles. However, specific numbers for the tunnel kiln programme have not yet been disclosed.

Next Steps Toward an Updated DFS

European Metals Holdings Ltd has outlined a structured pathway to move from modelled improvements to bankable study inputs. The key steps are:

1. Run new locked cycle tests — Conduct a new series of locked cycle testwork runs across the full optimised LCP flowsheet. Locked cycle tests repeatedly recycle process streams to simulate steady-state plant conditions.
2. Update the SysCAD model — Feed the new testwork data into the SysCAD model to refine process predictions and balance mass and energy flows.
3. Re-run locked cycle tests — Undertake a final round of locked cycle tests to confirm that the flowsheet delivers stable chemistry, recoveries and product quality that align with the updated model.
4. Update the DFS — Once process stream compositions and recoveries have stabilised to the satisfaction of independent reporting chemical engineers, the company expects to update the Cinovec DFS.

The DFS update is likely to be a key reference point for investors, as it will quantify the final projected capex and opex reductions, and the resulting change in pre-tax NPV8 relative to the December 2025 study.

EIA Process and Permitting: Status Update

Alongside the LCP optimisation work, European Metals Holdings Ltd has reported progress on environmental permitting. The Environmental Impact Assessment (EIA) public hearing was held on 17 June 2026, and the company stated that no new substantial questions or comments were raised by local stakeholders beyond those previously discussed with the project management team.

All questions at the hearing were reported as answered by project executives, and the EIA process is expected to conclude by the end of 2026. Once the EIA is completed, Geomet s.r.o., the project company, will be able to apply for a Mining Permit and a Construction Permit. Issuance of these permits would enable construction of the Cinovec underground mine, the Dukla transfer portal, and the Lithium Chemical Plant.

For investors tracking timelines, EIA completion is a key regulatory milestone. It is, however, a prerequisite for project construction but does not, on its own, guarantee subsequent approvals or funding.

Cinovec Project Snapshot and Partnership Structure

The announcement also reiterates background information on the Cinovec Lithium Project and its ownership.

Project Ownership and Location

Project company Geomet s.r.o. holds the exploration licences over Cinovec, with ownership split between 49% European Metals Holdings Ltd and 51% CEZ a.s. via its subsidiary SDAS. Cinovec is located in the Czech Republic, in a region with existing mining activity and established infrastructure.

Resource Base and Reserves

According to the DFS and supporting releases referenced in the ASX announcement:

The DFS describes Cinovec as the largest hard rock lithium deposit in Europe and the largest such deposit within the European Union.

Processing and Infrastructure

The Cinovec processing plant is planned to comprise a Front-End Comminution and Beneficiation (FECAB) circuit and the Lithium Chemical Plant (LCP). The combined facility will produce lithium carbonate end products and will be located on the Prunéřov 1 Power Station site, approximately 59 km by rail from the mine site.

Existing infrastructure includes a sealed road adjacent to the deposit, rail lines 5 km north and 8 km south, and an active 22 kV transmission line to the historic mine. This context illustrates why the European Metals Cinovec lithium plant optimisation cost savings programme is economically material: the project already has a large resource base, long mine life and a defined DFS-level plan, so unit-cost improvements apply across significant production and time.

Why Investors Are Paying Attention to the Optimisation Results

For investors assessing European Metals Holdings Ltd and exposure to European lithium supply, several aspects of this announcement are likely to be of interest:

• Existing DFS baseline — The Cinovec DFS already reported a pre-tax NPV8 of US$1.455 billion with long-life production and defined capex. The optimisation programme aims to refine and improve that base case rather than build it from the ground up.
• Magnitude of potential opex reduction — Modelled reductions of US$51 million per annum in major reagents and US$3.4 million per annum in power consumption, if confirmed, represent a substantial annual saving over a multi-decade life.
• No new untested unit processes — The flowsheet reconfiguration has been designed without introducing new untested process units, indicating a focus on rearranging and improving existing proven steps, which may be seen as a more conservative risk profile compared with wholesale technology changes.
• Potential capex benefits — As highlighted by Keith Coughlan, lower reagent volumes are expected to allow scaled-down plant infrastructure, with the potential to reduce capital costs relative to the US$1.72 billion DFS capex.
• Layered optimisation — The LCP flowsheet work and the tunnel kiln programme represent two parallel avenues for possible cost reduction, one targeting chemical usage and the other targeting roasting technology and energy use.
• Progress on permitting — The EIA hearing occurred as planned with no new substantial issues reported, and the EIA is expected to conclude by the end of 2026, which is relevant for project schedule planning.

As the optimisation results move from modelled to tested status, the next major data point for European Metals Holdings Ltd will be the updated DFS. That document is expected to incorporate confirmed reagent consumption, power usage, capital cost changes and revised economic metrics — including the updated NPV8 — providing the market with an integrated view of how the LCP optimisation affects overall project value.

Ready to Explore What the Cinovec Optimisation Could Mean for Your Portfolio?

With potential opex savings of up to US$54.4 million per annum and an updated DFS on the horizon, European Metals Holdings Ltd is advancing one of Europe's most significant lithium development projects. To learn more about the Cinovec Lithium Project, the LCP optimisation programme, and what this means for the company's investment case, visit the European Metals Holdings Ltd website.