European Lithium reported a A$930.6 million FY2026 profit, but the headline result was dominated by a A$1.276 billion accounting gain after losing control of Critical Metals Corp. The company now heads towards an October vote on a merger that would fold its cash, CRML stake and mineral assets into a single NASDAQ-listed group.
- A$930.6 million statutory profit versus a A$96.8 million loss
- A$1.276 billion gain from CRML deconsolidation
- A$296.3 million cash balance at 30 June 2026
- 45.5 million CRML shares valued at about A$503 million on 24 September
- CRML merger meetings expected on 22 October
Accounting Gain Drives FY2026 Profit
European Lithium Limited (ASX:EUR) turned a A$96.8 million loss into a A$930.6 million net profit in FY2026, though the result owes more to accounting than to operating earnings. The company recognised a A$1.276 billion gain after it lost control of Critical Metals Corp (NASDAQ:CRML) and deconsolidated the business on 11 October 2025.
The figures also contain a A$163.1 million impairment of the CRML investment and A$129.3 million in equity-accounted losses from CRML after deconsolidation. European Lithium generated only A$7.5 million in operating cash flow before investing and financing movements, while the company recorded a A$7.49 million net operating cash outflow for the year. No dividend was declared.
Cash Proceeds Leave EUR With a Large CRML Exposure
European Lithium ended June with A$296.3 million in cash, up from A$20.0 million a year earlier, following substantial sales of CRML shares. The company sold 18.38 million CRML shares during the year for gross proceeds of about US$239.6 million, or A$357.4 million, according to the annual report.
It still held 45,536,338 CRML shares at the report date, equivalent to a 31% interest. At CRML’s 30 June share price, the investment was valued at A$676.9 million in the accounts; by 24 September, the reported value had fallen to approximately A$503 million, based on CRML’s US$7.72 closing price. That makes the retained stake a substantial market-sensitive component of EUR’s balance sheet rather than a static store of value.
Merger Moves Towards October Securityholder Vote
The proposed all-scrip acquisition of EUR by CRML is now the central corporate event for FY2027. The amended transaction uses a floating exchange ratio tied to CRML’s 20-day NASDAQ VWAP, with a maximum of 0.045 CRML shares per EUR share when the scheme VWAP is at or below US$8, and a minimum of 0.025 when it is at or above US$16. The ratio adjusts linearly between those limits.
The Western Australian Supreme Court has directed EUR to convene shareholder and optionholder meetings, which are expected to take place on 22 October 2026. Completion remains conditional on securityholder approval, court and regulatory approvals, and other transaction conditions. The annual report says the directors expect the next financial year to focus on completing the transaction, but cannot reliably quantify its impact on future financial performance.
Tanbreez Drilling Continues While Wolfsberg Loses BMW Offtake
Through CRML, EUR remains exposed to the Tanbreez rare earths project in Greenland and the Wolfsberg lithium project in Austria. CRML’s 2026 Tanbreez program targets 10,000 metres of diamond drilling, with early work affected by weather and logistical challenges. Assay results had not been fully received or validated by the report date, while permitting, feasibility studies and infrastructure development remain in progress.
Tanbreez also has a non-binding US Export-Import Bank letter of interest for up to US$120 million, which expired in June with renewal being pursued, and a 15-year offtake agreement with REalloys covering 15% of annual rare earth concentrate production. Wolfsberg faces a less settled path: an Austrian court referred an environmental approval decision back for reassessment, and CRML and BMW agreed after year-end to terminate their long-term lithium hydroxide offtake agreement and return BMW’s advance payment.
Dilution and Ukraine Claims Add Further Uncertainty
European Lithium had 1.73 billion ordinary shares on issue as at 11 September, alongside 239.3 million listed options, 2.35 million unlisted options and 270 million performance rights. Directors and key management received A$7.36 million in total remuneration for FY2026, with 88% linked to performance, while the large pool of outstanding rights and options leaves future dilution as a material consideration.
The company is also pursuing the Dobra lithium project in Ukraine through legal proceedings after the government awarded the 2026 tender to another participant. The annual report expressly says the outcome is uncertain. EUR has separately agreed to acquire Velta, a Ukraine-based titanium business, but the transaction remains subject to conditions and the company had no direct equity interest in Velta at year-end. The October merger vote therefore arrives with a balance sheet reshaped by asset sales, a highly volatile CRML holding and several development outcomes still outside EUR’s control.
Bottom Line?
The October vote is the immediate catalyst, but the value delivered to EUR securityholders will depend on the CRML share price, the final exchange ratio and whether Tanbreez and Wolfsberg can advance beyond studies and approvals.
Questions in the middle?
- What exchange ratio will apply when the scheme VWAP is fixed before the October meetings?
- Can CRML convert Tanbreez’s drilling, permitting and non-binding financing interest into a fundable development plan?
- How will the merger, continuing option exercises and performance rights change EUR securityholders’ effective exposure to CRML?