SEC approves European Lithium (ASX:EUR) $1.1Bn merger for Critical Metals

Tony Sage-chaired European Lithium has its ducks in a row after the US Securities and Exchange Commission approved its Wolfsberg merger with Sizzle Acquisition Corp.

The SEC’s tick-off of European Lithium’s $A1.1 billion ($US750 million) merger was validation of shareholders’ January 20, 2023 approval of the Sizzle (NASDAQ:SZZL) marry-up.

The declaration of effect for the merged company Critical Metals Corp spiked the EUR’s share price by 31% by lunchtime on the Australian Securities Exchange in Sydney on Thursday, Australian Eastern Daylight Savings time (UTC/GMT +11 hours).

High-profile British-Australian businessman and European Lithium executive chairman Tony Sage said the company was excited its Form F-4 Registration Statement of Critical Metals had been declared effective by the SEC.

“We look forward to the completion of the transaction and the proposed listing on the NASDAQ that offers increased access to US capital markets as the Critical Metals team works to successfully commercialise Wolfsberg,” the Western Australian entrepreneur said on Wednesday night in US time zones.

Announcing the tick-off, Sage acknowledged the NASDAQ listing was expected to lead to a “significant” uptick in shareholder value.

European Lithium currently trades on the Australian, Frankfurt and US over-the-counter OTC markets (ASX:EUR, FRA:PF8, OTC:EULIF) while Sizzle trades on NASDAQ (NASDAQ:SZZL).

The duo’s combined lithium exploration and development company Critical Metals is expected to trade on NASDAQ with the ticker CRML.

Sizzle is likely to hold a virtual shareholder-meeting about January 23, 2024 to get the North American company’s investor-approval of the transaction.

If Sizzle’s investors agree, European Lithium will be issued $US750 million worth of ordinary shares in newco Critical Metals.

Perth-based European Lithium had a current market capitalisation of about $A120 million on the ASX after Thursday morning’s share price gains.

European Lithium was up 2.2c or 31% to 9.4c by lunchtime, AEDT.

About Wolfsberg

European Lithium’s wholly owned Wolfsberg Lithium project is in Carinthia, 270 kilometres south of Vienna in Austria.

The licensed project is about 20km east of the industrial town of Wolfsberg, near rail and motorway infrastructure.

European Lithium hopes to fast-track the development of the project and put it into production about 2025, subject to factors such as government approval and funding.

The West Leederville company completed a positive pre-feasibility study for the project in the June quarter of 2018, giving the project a net present value of $US339.4 million ($A494.2 million at current exchange rates) at an NPV8 before-tax cut-off.

The PFS was based only on measured and indicated resources of 6.3 million tonnes at 1.17% Li2O, while the internal rate of return or IRR was 25.6% pre-tax.

The study’s accelerated case was based on the M&I resource only, and predicted annual production of 10,129 tonnes (metric tons) a year of lithium hydroxide.

It put mine life at 10-years-plus, with average annual production of about 720,000t a year over the decade.

Wolfsberg has 22 original and 32 overlapping exploration licences and a mining licence over 11 mining areas.

The exploration licences expire at the end of calendar year 2024, with European Lithium noting they can exist in perpetuity if the company maintains compliance with Austrian mining authority licence conditions.

Post-merger assets

After the European Lithium’s merger with Sizzle is executed, their merged company will wholly own the Austrian lithium exploration assets, which include the BretsteinLachtal, Klementkogel and Wildbachgraben projects.

European Lithium is about to start an initial works program at the Austrian lithium projects which cover 114.6 square kilometres about 70km north of Wolfsberg.

The projects feature 245 exploration licences and include lithium-prospective ground where explorers discovered 3.98% Li2O during initial soil sampling.

European Lithium will bring its own assets to the Wolfsberg newco, including an 11.3% stake in the Sage-executive-chaired West Australian explorer-developer Cyclone Metals (ASX:CLE) which has the Iron Bear magnetite iron ore project in Canada’s Labrador trough.

Cyclone has produced encouraging metallurgical test work of 70.65% Fe with a silica level of only 1.2%.

Other assets European Lithium will roll into Critical Metals are 15,000,000 shares in another Sage-executive-chaired company, WA iron ore exporter CuFe (ASX:CUF), and a 7.5% equity interest in Greenland rare earths developer Tanbreez Mining Greenland.

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