European Metals Targets $112M Cinovec Tunnel Kiln Cost Savings

European Metals Delivers Potential US$112 Million Capex Saving at Cinovec Through Tunnel Kiln Innovation

European Metals Holdings Ltd (ASX & AIM: EMH) has reported preliminary tunnel kiln testwork results for the Cinovec Lithium Project in the Czech Republic that point to potential European Metals Cinovec tunnel kiln cost savings, specifically a US$112 million reduction in capital expenditure (capex) and US$10 million per annum in operating cost (opex) savings compared with the Definitive Feasibility Study (DFS) rotary kiln design.

When these potential savings are viewed together with the previously announced Lithium Chemical Plant (LCP) flowsheet optimisation, European Metals Holdings Ltd reports a combined possible benefit of ~US$112 million in capex savings and ~US$64 million per year in opex savings. The company notes that the impact of these changes on Cinovec's DFS metrics will only be known once the DFS is updated.

Keith Coughlan, Executive Chairman, European Metals Holdings Ltd, commented:

"The use of a tunnel kiln is a potentially important change from the DFS of the Cinovec Project. If adopted this change could result in a significant reduction in the capex as a result of the use of off-the-shelf components, modular construction as well as considerable opex reductions relating to the reduction in the roasting temperature of the Zinnwaldite concentrate and the option to use electricity instead of gas to fire the kilns. The use of green electricity to fire the kiln could also drastically reduce the carbon footprint of the Project enabling Cinovec to be a leading low carbon producer of Lithium Carbonate."

According to the announcement, a final decision on adopting the tunnel kiln configuration is expected by Q4 2026, after which project company Geomet s.r.o. would update the DFS.

What Is Being Changed and Why It Matters

The Cinovec DFS, released in December 2025, describes a pyrometallurgical stage within the LCP that uses two gas-fired rotary kilns to heat zinnwaldite concentrate and roasting reagents to 950°C for one hour, followed by leaching in water at 60°C. Extensive testwork for that study indicated a 93.2% lithium extraction into pregnant leach solution.

European Metals Holdings Ltd is now assessing a change from the DFS configuration of two rotary kilns to a single tunnel kiln. According to the company, the tunnel kiln is expected to:

• Allow heating by gas or electricity
• Operate at a lower target solids temperature of 850°C
• Reduce heat losses and energy demand
• Avoid product vitrification in the kiln
• Lower capex and opex for the processing plant

The company advises that the tunnel kiln option is not expected to affect the overall project timeline, as the tunnel kiln is modular, generally simpler to design and construct, and is typically not a long-lead item.

For investors, the key relevance of the European Metals Cinovec tunnel kiln cost savings lies in:

• Potentially lower upfront capital requirements
• Reduced ongoing processing costs
• Optionality to use electricity, which could support lower emissions if green power is sourced
• No expected adverse impact on schedule, based on the current assessment

Understanding the Technology: Tunnel Kiln vs Rotary Kiln

How Does the Rotary Kiln in the DFS Work?

A rotary kiln is a large, slowly rotating cylindrical furnace. Material moves through the kiln as it rotates and is heated by a single large burner.

In the Cinovec DFS design:

• Gas temperature is reported to run more than 100°C higher than the solids
• Target solids temperature is 925°C for one hour
• There is a 30–50°C potential overshoot in solids temperature due to the single-burner configuration

This overshoot can cause vitrification, where material partially melts into a glass-like phase. The announcement explains that this can:

• Trap lithium, lowering recovery
• Create a vitrified ring inside the kiln, hindering movement of solids
• Require shutdowns for clean-out and replacement of damaged refractory lining

Rotary kiln availability in the DFS is therefore assumed at 85% to accommodate such downtime, and a mill is required after roasting to deal with vitrified material.

What Is the Tunnel Kiln Configuration Being Evaluated?

A tunnel kiln is a long, stationary furnace. Material is transported through it on cars or conveyors, passing through zones heated by multiple burners or electric elements, with recirculating hot air.

For Cinovec, European Metals Holdings Ltd reports that tunnel kiln operation is expected to involve:

• Maximum solids temperature around 850°C
• Gas temperature of approximately 870–880°C
• Temperature control accuracy of ±10°C along the kiln
• Operation at ground level, with modular construction
• Lower heat losses and reduced gas exhaust volumes

The more precise temperature control is described as:

• Avoiding vitrification of the roast feed
• Potentially limiting sintering to levels that may only need low-energy milling
• Reducing energy requirements in the pyrometallurgical area

Furthermore, recent testwork has confirmed that maintaining the solids at 850°C for 30 minutes can achieve the same or slightly higher lithium roast/leach extraction as the DFS rotary kiln conditions of 925°C for one hour.

Technical Comparison

These changes directly affect:

• Energy demand due to lower operating temperature and better heat management
• Maintenance requirements by avoiding vitrification-related shutdowns
• Plant footprint, with the tunnel kiln process train fitting within the existing rotary kiln layout at the Prunéřov site

Testwork Programme: Four Years of Tunnel Kiln Evaluation

European Metals Holdings Ltd, through Geomet s.r.o., has been assessing tunnel kilns for Cinovec since 2022, starting with a scoping-level engineering study. Testwork and design have been led by Dr Jeff Claflin, who previously worked on tunnel kiln designs for the Sonora Project, which were incorporated in that project's DFS.

Phase 1 Testwork (2024)

The first phase focused on confirming that tunnel kiln use for Cinovec zinnwaldite concentrate had no fundamental technical flaws. According to the announcement, this phase:

• Achieved 93.2% lithium recovery in leach at 850°C for 1 hour, matching the DFS rotary kiln result at 950°C
• Confirmed that a single tunnel kiln could handle the project throughput
• Estimated that using electrical heating powered by renewable energy could reduce CO₂ emissions by 50 million Nm³ of gas, equating to approximately 98,000 tonnes per year
• Produced initial estimates of capex and opex savings

Phase 2 Testwork (Q3 2025 Onwards, Now Complete)

The second phase aimed to generate engineering design criteria suitable for DFS-level assessment for the Prunéřov plant site. According to European Metals Holdings Ltd, this work included:

• Pilot-scale briquetting of 1,500 kg of roast charge on commercial equipment, testing the strength of "green" (unroasted) briquettes
• Bench-scale and pilot-scale roasting to refine:
  • Target solids roast temperature
  • Required residence time
  • Lithium recoveries
  • Briquette competence for crushing and leaching

• Reagent optimisation, reducing quantities of roasting reagents
• Assessment of drying and pre-calcination needs for the zinnwaldite concentrate and reagents
• Preparation of DFS-level budget quotes from kiln equipment manufacturers

Phase 2 testwork outcomes reported in the announcement include:

• 93.4% roast/leach lithium recovery
• Confirmation of the 850°C target roast temperature
• No statistical difference in lithium recovery between 30 and 60 minutes at 850°C, suggesting that residence time may be reduced below 60 minutes
• Demonstrated viability of recycling mixed-salt by-product from the downstream lithium phosphate reactor back into the kiln charge, which boosts lithium recovery and reduces by-product salt mass
• Identification of a significant reduction in pyrometallurgical energy requirements, with the exact quantum to be detailed in the updated DFS
• Confirmation that the tunnel kiln and associated equipment fit within the existing rotary kiln footprint at Prunéřov, avoiding major site redesign outside the pyrometallurgy area

The capex and opex estimates comparing gas-fired rotary kilns with a gas-fired tunnel kiln are:

• Capex reduction: approximately US$112 million
• Opex reduction: approximately US$10 million per year

European Metals Holdings Ltd has stated that the precise effect on project economics will be quantified through a rigorous DFS update process once a final decision is made.

Combined Savings: Tunnel Kiln and LCP Flowsheet Optimisation

The tunnel kiln work builds on the LCP flowsheet optimisation reported on 24 June 2026. That earlier optimisation targeted the hydrometallurgical stages of the Lithium Chemical Plant.

The company has presented the combined potential savings as follows:

Management has noted that these changes, if adopted and confirmed in the updated DFS, have the potential to materially improve project metrics such as NPV8. However, all such outcomes remain subject to formal DFS revision.

For investors, the key point is that European Metals Holdings Ltd is working on both front-end thermal processing efficiency through the tunnel kiln and downstream chemical flowsheet efficiency in the LCP, which together target both capital intensity and operating margin.

Educational Section: How Pyrometallurgy and Kilns Affect Lithium Project Economics

What Is Pyrometallurgy?

Pyrometallurgy refers to processing ore and concentrates using high temperatures to bring about physical and chemical changes. At Cinovec, the pyrometallurgical stage involves:

• Mixing zinnwaldite concentrate (a lithium-bearing mica) with reagents
• Forming this mix into briquettes
• Heating it in a kiln to convert lithium into a form that is easily leached into solution

The goal is to maximise the percentage of lithium that moves from the solid concentrate into the liquid solution for further refining. This percentage is often called roast/leach recovery.

Why Does Kiln Design Matter?

For a lithium project such as Cinovec, kiln performance impacts:

• Recovery: If the temperature is too low, reactions are incomplete. If it is too high, vitrification can lock lithium in a glassy material.
• Energy cost: Higher temperatures and poor heat management increase fuel or power usage.
• Availability: Kilns that require frequent shutdowns for maintenance reduce effective throughput.
• Capital cost: Complex, elevated rotary kiln installations can be more expensive than modular ground-level tunnel kilns.

The tunnel kiln approach being evaluated by European Metals Holdings Ltd seeks to balance these factors by running at a lower solids temperature (850°C vs 925°C), achieving precise temperature control (±10°C), avoiding vitrification and related downtime, recovering heat from hot solids to dry and pre-heat reagents, and reducing dust and off-gas volumes, which can decrease gas cleaning requirements.

Consequently, for investors, kiln technology influences the cost per tonne of lithium carbonate, the reliability of production, and potentially the emissions profile of the operation.

Emissions and Energy: Pathway to Lower-Carbon Lithium

European Metals Holdings Ltd notes that the tunnel kiln can be heated by gas or electricity. If electrical heating is used and is supplied by renewable power, testwork suggests:

• A reduction in gas consumption of 50 million Nm³ per year
• A corresponding reduction in CO₂ emissions of approximately 98,000 tonnes per year

Geomet's partner, CEZ a.s., is a major Central European energy group with a strategy called Clean Energy for Tomorrow, focused on decarbonisation and the development of renewable and nuclear power sources.

While the announcement does not quantify specific power supply contracts for Cinovec, the ability to operate the tunnel kiln on electricity provides optionality for aligning with lower-emission energy sources in the Czech Republic. This optionality may be relevant for:

• Battery manufacturers in Europe that are subject to strict emissions reporting
• Potential offtakers seeking low-carbon lithium carbonate supply
• Financiers assessing environmental performance metrics

Cinovec Project Context: Scale and Positioning

The background information in the announcement reiterates key DFS metrics for Cinovec.

Mineral Resource and Ore Reserve

A Proven and Probable Ore Reserve of 54.4 Mt at 0.58% Li₂O has been declared, intended to support the first 26 years of mining at an output of 37,500 tpa of lithium carbonate.

The DFS concluded that this supports:

• 37,500 tpa battery-grade lithium carbonate steady-state production
• Around 5.2% of forecast EU lithium carbonate demand in 2030
• Sufficient lithium for more than 900,000 50 kWh EV batteries per year
• An operating life of 28+ years

Cinovec is described as the largest hard rock lithium deposit in Europe and the largest such deposit in the European Union.

Project Structure and Location

Key structural and location features include:

• Project company Geomet s.r.o.:
  • 49% owned by European Metals Holdings Ltd
  • 51% owned by CEZ a.s. through subsidiary SDAS

• Preliminary mining permit granted by the Czech Ministry of Environment and Ministry of Industry
• Processing plant comprising Front-End Comminution and Beneficiation (FECAB) and the Lithium Chemical Plant (LCP)
• Planned location of the processing plant at the Prunéřov 1 Power Station site, approximately 59 km by rail from the Cinovec mine

The project also benefits from established regional infrastructure, including a sealed road adjacent to the deposit, rail lines 5 km north and 8 km south, an existing 22 kV transmission line to the historic mine, and a location in an active mining region of the Czech Republic.

Policy and Funding Framework

According to European Metals Holdings Ltd, Cinovec has:

• Been designated a Strategic Project by the European Union under the Critical Raw Materials Act
• Been declared a Strategic Deposit by the Czech Government
• Received US$36 million in grants from the EU Just Transition Fund
• Received approval for up to €360 million in Czech Government grants

These figures are referenced as background to the project's policy and funding environment, separate from the technical kiln and flowsheet

Want to Know More About European Metals and the Cinovec Lithium Project?

With a potential US$112 million capex saving and US$64 million per year in combined opex reductions now on the table, European Metals Holdings Ltd (ASX & AIM: EMH) is making significant strides in strengthening the economic case for what is already Europe's largest hard rock lithium deposit. For investors looking to understand the full scope of the Cinovec project — from its DFS metrics and strategic funding position to the latest processing innovations — visit europeanmet.com to explore the investment opportunity in detail.