Transcription of The Stock Network Interview with European Lithium (ASX:EUR, FRA:PF8, OTC:EULIF), Executive Chairman Tony Sage
Lel Smits: European Lithium has surged on the back of a proposed merger with Nasdaq listed Critical Metals Corp, positioning the company as a global critical minerals player across lithium and rare earths. Under the non-binding deal, European Lithium shareholders would receive Critical Metals Corp shares and own around 45% of the combined entity. I’m joined today by Executive Chairman Tony Sage to explain how the transaction could accelerate growth and global relevance, also his outlook for critical minerals.
Tony, welcome back to the Stock Network.
Tony Sage: Thanks for having me.
Lel Smits: Now, you’ve just announced a proposed merger with Critical Metals Corp. How does this deal really strengthen your position in the critical minerals space? And also, why do you think now is the right time to scale globally?
Tony Sage: Look, I think it’s a very important transaction for our European lithium shareholders, firstly, because the arbitration gap between the two stocks is just unbelievable. We’ve got $800 million worth of shares that we own in Critical Metals, and the value of our company is only $400 million, plus we’ve got $300 million in cash. So the value our shareholders were getting on market was below by more than half of the real value.
It helps Critical Metals because we’ve got a massive mine, as you know, ready to be developed. We need funds. There’s $300 odd million sitting in the EUR bank account.
So really, it’s for Critical Metals shareholders, it’s like doing a fundraise, but you end up with all these other assets. So it’s a fantastic deal for both companies. Our shareholders now in EUR, I’ve not had one shareholder complain about this transaction.
In fact, it’s been the opposite. I’ve had more congratulatory messages than I’ve ever had in my whole career. So a lot of people wanted that move.
It also saves a lot of funds, obviously, not being on the ASX saves us a lot of money, not having the compliance here saves us a lot of money. We lose a couple of directors as a part of this as well. So it streamlines it, obviously, staffing-wise.
So it’s a very good transaction on both sides and very, very important for Critical Metals in developing Tambry’s.
Lel Smits: Fantastic. You’ve done a great job outlining the strategy for that transaction in terms of the strategic assets you have, as mentioned, you’ve got exposure to Wolfsburg in Austria, also Tambry’s in Greenland. How important really do you think these assets are in terms of securing supply for Western markets?
Tony Sage: Look, it’s extremely important. I think I’ve banged on about this for a long, long time. I mean, I’m just going to talk about four of the heavies, Turbium, Niobium, Gallium and Hafnium.
Very, very important for the nuclear industry in the case of Hafnium. Over 70 reactors, a lot of people don’t know this, have been commissioned over the next 15 years to be built. Hafnium is a very, very, very important part of that.
And a lot of people don’t realise because no one talks about Hafnium, China controls 98% of the flow of Hafnium. They’re building 40 reactors themselves over the next 20 or 30 years. They need all that Hafnium.
They’re not going to export. So that’s just one mineral. Very, very important.
The other ones, Turbium, Gallium, Niobium, very important in the defence industries. For example, the US is going to be within 18 months run out of Gallium. So having Tambry’s, I’ll digress a little bit, there’s some of the competitors out there, MP Materials, Linus, they’re producing lights.
That’s fantastic. They’re going to make a lot of money doing that. But they’re not producing these four particular minerals in enough quantity to satisfy the demand from the United States, EU, NATO, for the defence industry.
So Turbium, Niobium, Gallium are those three. So Tambry’s, opening up Tambry’s, we estimate under full production, we’ll control about 50% of the market on those three minerals ourselves. So that reduces the reliance on China.
So it is very, very important. On the other side, Lithium with Wolfsburg, very, very important. That’s ready to mine.
We’re ready to push the button. The reason we haven’t done in the last two years is because the Lithium price, but Lithium is steadily rising. And I think that’s going to get a lot more upside, mainly on the robotics side, funny enough.
But this oil price is also increased demand for EVs. It’s gone up 20% in Europe. It’s unbelievable.
So you’ll see a tick up in Lithium. So supplying the Lithium out of Europe is going to also reduce the need for Chinese input.
Lel Smits: Absolutely. And Tony, I’m keen to get your outlook for the next perhaps three to five years. As you mentioned, demand for Lithium and rare earths is accelerating now. But in terms of looking ahead, where do you see the biggest supply gaps emerging?
Tony Sage: Look, at the moment, in particular minerals, the supply gaps are the defence industry ones, the Terbium, the Niobium, the Gallium.
And I can’t see that being fixed, not even with Tamburins. I mean, even now with this input of cash, we don’t have to go to the markets. Now in critical, we’re not going to be able to export for another three years.
And the problem after that is not only the mining, it’s the processing. So really, there’s only liners, MP materials. There’s a couple of smaller companies now emerging in the US, Realloys, Ucorp, who some of our products going to.
But the processing of these rare earths is going to be the bottleneck. We envisage that our processing plant, we’re building one in Europe, one in Saudi, and we’re exporting to two in the US. So we expect them to be in line in about three, three and a half years.
So we can find that we can actually mine the material, but getting it processed into the salts, into the metals is going to be the bottleneck. And I see that shortage lasting at least another three or four years.
Lel Smits: Certainly, very interesting times ahead for Critical Minerals and appreciate the update from European Lithium today and being part of our Critical Minerals Conference.
Tony Sage: No problems. Thanks very much for having me.
Ends