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Mining explorer Critical Metals sinks in Nasdaq SPAC debut

Inside a planned lithium mine in Austria, which will be developed by company Critical Metals

Inside a planned lithium mine in Austria that will be developed by Critical Metals. Image courtesy of Critical Metals

Shares in mining exploration company Critical Metals plunged by more than 20% on Wednesday morning in its Nasdaq debut, following the completion of its SPAC.

Why it matters: Facing headwinds for both SPACs and the lithium market, the move is a bold play to test the public market's appetite for European lithium for EVs.

Zoom in: The key asset of the company is a mine in Austria, called the Wolfsberg Lithium Project, south of Vienna, which is expected to produce enough lithium to power about 200,000 EVs per year.

  • Shares of Critical Metals, trading under the symbol CRML, fell by around 25% to $12.51 per share within the first hour of trading on Wednesday.
  • The company says the Wolfsberg project is the first permitted lithium mine in Europe, and auto giant BMW will buy the lithium via an offtake agreement.
  • Critical Metals is a SPAC union of Sizzle Acquisition Corp and mining explorer European Lithium, which also trades on Australia's ASX market.
  • Critical Metals' debut on the Nasdaq will help position it for fundraising, and it plans to raise $450 million to build out the mine, said Executive Chairman Tony Sage, an Australian entrepreneur with a long history of investing in and developing mineral resource projects.

Big picture: Beyond the SPAC risk and lithium's icy market, Critical Metals has two things that investors might eventually warm to: the BMW deal and the advancement of the mine.

  • Electric vehicles are taking off more rapidly in Europe, with EVs projected to make up 42% of new passenger vehicle sales in Europe by 2026, according to figures from BNEF.
  • Sage, who rang the opening bell on Wednesday, says: "The proof's in the pudding on Wednesday to see how the market in the U.S. reacts to a lithium project in Europe."
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