First Berlin Equity Research has published a research update on European Lithium Limited (ISIN: AU000000EUR7). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 0.14 to EUR 0.22.

Abstract
Early in 2024 European Lithium (EUR) formed the NASDAQ-listed Critical Metals Corp (CRML) – EUR’s current stake 45% – into which it inserted its Austrian Wolfsberg Lithium Project (WLP). CRML was formed to access financing from the U.S. capital market for both the WLP and other lithium and critical minerals projects, including the Greenland rare earths project, Tanbreez. Tanbreez has been the focus of development efforts at CRML this year and great progress has been made. In March CRML published a resource estimate/preliminary economic assessment (PEA) for the project and in H2 has announced two offtake LOIs in the U.S. (with Ucore and REalloys) as well as a Romanian downstream processing JV backed by a state-owned nuclear energy company, Nuclearelectrica. CRML will receive 50% of the value-add from the Romanian refinery and the production of metals and magnets. For good measure CRML also received an LOI from the Export-Import Bank of the United States, indicating support for a funding package of USD120m. However, these funds now appear largely surplus to requirements. EUR and CRML were able to raise capital during the spike in the CRML share price caused by the October rare earths standoff between the U.S. and China. We estimate that the two companies’ joint cash position now stands at over USD205m. This compares with the initial CAPEX figure of USD150m announced in the Tanbreez PEA. Some commentators have suggested that leaching of the Tanbreez eudialyte ore is an insurmountable hurdle due to the formation of unfilterable silica gel. However, pilot scale leaching of Tanbreez concentrate (36kg) was successfully demonstrated in 2019 by Friedrich et al as part of the EU’s EURARE project. We now base our valuation solely on Tanbreez as we expect this project to remain the focus of development at EUR/CRML in the medium term. We now see fair value for the EUR share at €0.22 (previously: €0.14). Our recommendation remains Buy (upside: 170%).