Capital Move Sparks Investor Scrutiny at European Lithium

European Lithium has unveiled plans for a substantial capital initiative that could see up to 270 million Zero Exercise Price Options (ZEPOs) issued, with November 28, 2025 set as the effective date. This financing strategy aims to reinforce the company's financial position and accelerate development of its core projects.

The capital raise is directly tied to advancing the Tanbreez rare earths project in Greenland. A recent transaction where European Lithium sold 3.03 million shares in Critical Metals Corp to a U.S. investor generated approximately $50 million, with these proceeds specifically earmarked for expansion efforts in Greenland.

This positioning allows the company to compete in the critical metals sector, essential components for battery technology, electronics, and defense systems. The geographically strategic deposits located throughout Europe and Greenland are becoming central to the company's growth trajectory.

Should investors sell immediately? Or is it worth buying European Lithium?

Conflicting Signals or Calculated Strategy?

While moving forward with the capital increase, management has simultaneously indicated they believe the company's shares are undervalued. This past October, European Lithium announced a buyback program targeting up to 135 million ordinary shares, representing roughly 10% of its share capital.

Company leadership previously justified the repurchase plan by stating the stock price failed to reflect the true worth of corporate assets, particularly its stake in Critical Metals Corp. The subsequent decision to pursue additional capital through ZEPOs presents investors with an apparent contradiction.

The persistent gap between European Lithium's market valuation and the worth of its CRML investment remains the critical factor. The simultaneous pursuit of share repurchases and new security issuance creates a strategic dilemma that market participants are monitoring closely.