Zinnwald lithium project is now Europe’s 3rd largest

Germany-focused Zinnwald Lithium’s (LON: ZNWD) shares soared on Friday after it increased by 50% the minerals resource estimate for its flagship project in the eastern state of Saxony.

The lithium producer, which had previously forecasted an initial production of 12,000 tonnes per annum, is now expecting to churn out 16,000tpa to 18,000tpa of battery grade lithium at the project.

The update positions Zinnwald as the second largest hard rock lithium project in the European Union (EU) and the third biggest in Europe by both resource size and contained lithium, the company said. 

Europe’s largest hard rock lithium deposit and the world’s fourth-largest non-brine asset is the Cinovec lithium project in the Czech Republic, owned by European Metals (ASX, LON: EMH) and state-controlled utility CEZ.

Zinnwald has announced plans to conduct a pre-feasibility study (PFS) in light of the assessment update. The study aims to enhance the expanded project and explore the potential for a second phase of production. It will also address ways to minimize environmental and community impact while evaluating technical test work and trade-offs, the miner said.

Chief executive officer Anton du Plessis said the PFS should be completed in the first three months of 2025.

“We have already completed many workstreams, with several more underway or nearing completion,” du Plessis said. “Key upcoming milestones include ongoing metallurgical testwork, detailed mine planning, permitting and commercial activities.

While the company is in a secure financial position, it noted it was seeking German federal and state government support after receiving an invitation in June to apply for grant funding. The offer to participate was issued as part of Germany’s new initiative aimed at fostering the development of climate-neutral and strategically vital technologies.

If successful, 70% of the funding will be supplied by the federal government, while the remaining 30% will be contributed by the State of Saxony, which has already shown support for the battery-chain project.

Located in the heart of Europe’s chemical and car industries, the project, about 35km from Dresden, is expected to produce battery grade lithium carbonate, lithium hydroxide and lithium fluoride (Li2CO3, LiOH, LiF) or a combination.

Prices for lithium, once called “white oil”, have fallen dramatically over the past 18 months due to slowing growth in electric vehicle sales, including in the top EV consumer China, and a market oversupply. 

Spot market lithium hydroxide prices on a CIF China, Japan, and South Korea basis have fallen by 73% year on year, while lithium carbonate prices have lost 69% in the same period, according to data from Fastmarkets.

Zinnwald Lithium’s stock climbed nearly 5% on the announcement and were trading at 8.2p near closing time. This leaves the company with a market capitalization of £38.84 million ($50.4m).