12. 6. 2018

KGI Sends Open Letter to the Board of EMH

Press release

Krupa Global Investments, formerly known as Arca Capital Group, is one of the largest shareholders of European Metals Holdings (EMH). We are deeply concerned by recent troubling developments in regards to the lithium mining project at Cínovec.

Specifically, we take issue with the following matters the methods of EMH management, the approach of EMH representatives to the Czech government and the unsatisfactory way in which EMH communicates with shareholders.

KGI therefore proposes to convene a General Meeting of the Company in Prague as soon as possible. We are proposing  a vote to replace current board members for the purpose of bringing in leaders with experience in crisis management and a vote to move the headquarters to the Czech Republic for the purpose of eliminate costs, streamlining operations and to ensure transparent ownership structure.

In October 2017, Krupa Global Investments became the 9th biggest shareholder in European Metals Holdings with the objective of increasing its initial 1.36% share significantly. Moreover, we viewed the Cínovec lithium mining project opportunity as extremely promising. KGI held regular negotiations with EMH representatives, provided  EMH management with recommendations to progress with the project. We recommended, among other things,  making strategic partnerships, creating a transparent ownership structure, conducting a PR campaign, and streamlining the communication with the Czech Government. KGI strongly supported the Cínovec lithium mining project from the very beginning. KGI organized  a series of meetings both with potential business partners as well as with the Czech government institutions. Although EMH representatives agreed with our proposals and our activities, we have not noticed sufficient activity and effort to achieve significant progress in this project.

In recent months, perception of the lithium mining project in the Czech Republic among policymakers has changed for the worse thus putting the project’s success in jeopardy. EMH must take immediate action to resolve this troubling political situation.

We call on the Board and the executive directors of EMH to start active communication with representatives of the Czech Government with the objective of building strong relationships and finding common ground on which to move forward to a mutually satisfactory solution. Additionally, EMH must work with the European Union to make sure that a consensus is reached with the relevant stakeholders.

We request EMH management to duly inform the company’s shareholders regarding the update of its strategy and procedure in the Cínovec Lithium project, results of research activities and information on approval processes for the mining permission including the work schedule related to the EIA approval. With regard to our concerns, we also request information regarding the actual need of the company’s equity, the needs of project funding and a description of the project budget for the following 12 months. Moreover, we request a clarification of EMH’s negotiations with third parties regarding strategic partnerships.

KGI proposes to convene a General Meeting of EMH as soon as possible (July/August 2018) to discuss the following points:

  • Election of the Board of Directors of EMH where KGI suggest their candidates to who have knowledge of crisis management;
  • Transfer of the seat and executive management of EMH from Australia to the Czech Republic (Prague);
  • Discussion and a vote on membership in the European Battery Alliance;
  • Discussion and a vote on the entry of EMH’s equity or a strategic partnership with battery producers;
  • Developing an action plan with a schedule of activities and deadlines for the further development in context of strategic partnerships;
  • Discussion of a strategic partnership with the Zinnwald project management in Germany.

In our perspective it is absolutely essential that the ownership structure of the company is made transparent and that the headquarters be transferred from Australia to Prague. This will help reduce costs and facilitate more effective communication with Czech authorities and European regulators.