European Lithium Launches Buyback as Merger Clock Ticks on A$24 Million Cash Gap

European Lithium starts share buyback as it faces A$24M liquidity shortfall before shareholder vote on Critical Metals merger, which includes Greenland rare earths and Austrian lithium assets.

European Lithium has set in motion a share buyback program just weeks before shareholders are due to vote on a blockbuster merger with Critical Metals Corp., a deal that could value the Australian-listed explorer at up to US$835 million. The company will repurchase up to 12 million of its own shares, representing roughly one-tenth of its issued capital.

The buyback comes at a delicate moment. Critical Metals and European Lithium have already completed mutual due diligence and extended their exclusivity period to finalise a binding Scheme Implementation Deed. Under the proposed structure, European Lithium shareholders would receive 0.035 new CRML shares for each EUR share they hold — an all-stock transaction worth around US$835 million based on exchange rates and closing prices from 22 April 2026.

But the deal faces a concrete obstacle. One of the conditions for completion requires European Lithium to hold net liquidity of at least A$330 million. The company's end-March balance sheet showed only A$306 million in cash — a shortfall of roughly A$24 million. To make matters worse, the current exclusivity agreement prohibits European Lithium from raising fresh debt or equity to close that gap while the exclusivity period remains in force.

The company's cash position, however, is what funds the buyback. With A$306 million on hand, management has room to execute the repurchase while the merger process unfolds. The buyback is expected to support the share price in the run-up to the shareholder vote.

At the heart of the transaction lies Tanbreez, a rare earths project in Greenland that ranks among the world's largest known deposits of heavy rare earth elements, including terbium and dysprosium — critical inputs for high-performance magnets used in electric vehicles and defence systems. European Lithium currently holds a 7.5% stake in Tanbreez, but the merger would see Critical Metals take full control, following approval from the Greenlandic government. The US Export-Import Bank has already signed a letter of intent for project financing of up to US$120 million.

On the European side, European Lithium brings the Wolfsberg lithium project in Carinthia, Austria — the first fully permitted lithium mining project in Europe, located roughly 270 kilometres from Vienna with direct road and rail links to the continent's battery and automotive supply chains.

A structural quirk of the deal involves the unwinding of a cross-shareholding. European Lithium currently owns around 34% of Critical Metals, a stake that would be cancelled as part of the transaction.

Shareholders are due to vote on the merger in the third quarter of 2026, with completion targeted for the second half of the year — subject to approvals from shareholders, courts, regulators, and the satisfaction of the liquidity condition. For now, the A$24 million cash gap remains the deal's most visible open variable, and European Lithium has not disclosed how it intends to bridge the shortfall without breaching the exclusivity clause.