REG - European Metals Hldg - Half-year Report
15/03/2024 08:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240315:nRSO0294Ha&default-theme=true
RNS Number : 0294H European Metals Holdings Limited 15 March 2024
For immediate release
15 March 2024
EUROPEAN METALS HOLDINGS LIMITED
Interim Financial Report for the six months ended 31 December 2023
The Directors of European Metals Holdings Limited (ASX & AIM: EMH, OTCQX:
EMHXY, ERPNF and EMHLF) ("European Metals" or the "Company") are pleased to
release its interim financial report for the half-year ended 31 December 2023.
A copy of the European Metals Half Year Report is also available from the
Company's website at www.europeanmet.com (http://www.europeanmet.com) .
ENQUIRIES:
European Metals Holdings Limited Tel: +61 (0) 419 996 333
Keith Coughlan, Executive Chairman Email: keith@europeanmet.com
Kiran Morzaria, Non-Executive Director Tel: +44 (0) 20 7440 0647
Henko Vos, Company Secretary Tel: +61 (0) 8 9463 2427
Email: cosec@europeanmet.com
WH Ireland Ltd (Nomad & Broker)
James Joyce/ Darshan Patel Tel: +44 (0) 20 7220 1666
(Corporate Finance)
Harry Ansell (Broking)
Blytheweigh (Financial PR) Tel: +44 (0) 20 7138 3222
Tim Blythe
Megan Ray
Chapter 1 Advisors (Financial PR - Aus)
David Tasker Tel: +61 (0) 433 112 936
The information contained within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulation (EU) No.
596/2014 ("MAR") as it forms part of UK domestic law by virtue of the European
Union (Withdrawal) Act 2018 and is disclosed in accordance with the Company's
obligations under Article 17 of MAR. The person who authorised for the release
of this announcement on behalf of the Company was Keith Coughlan, Executive
Chairman.
DIRECTORS' REPORT
Your directors submit the financial report of the consolidated group for the
half year ended 31 December 2023.
Directors
The names of the directors who held office during or since the end of the half
year:
Mr Keith Coughlan Executive Chairman Appointed 30 June 2020
Previously Managing Director Appointed 6 September 2013
Mr Richard Pavlik Executive Director Appointed 27 June 2017
Mr Kiran Morzaria Non-Executive Director Appointed 10 December 2015
Ambassador Lincoln Bloomfield, Jr Non-Executive Director Appointed 3 January 2021
Principal activities
The Group is primarily involved in the exploration activities of the Cinovec
lithium project in the Czech Republic.
Results of Operations
The consolidated loss for the half year ended 31 December 2023 amounted to
$1,130,439 (2022: $3,786,950 loss).
Significant changes in the state of affairs
There have not been any significant changes in the state of affairs of the
Group during the financial year other than as disclosed in the Review of
Operations Sections of this report.
Review of Operations
Strategic investment from European Bank for Reconstruction and Development
("EBRD")
In July 2023, the Company announced a strategic investment of €6 million by
EBRD to support the development of the Cinovec Project. The investment was
implemented by way of a private placement of 12,315,213 shares in the capital
of the Company at a price of £0.423 per share (being AUD$0.803 per share).
As part of the due diligence process, EBRD engaged an independent,
international mining consultancy to undertake a technical review of the
Cinovec Project. EBRD also performed a review of the project in respect to
compliance with EBRD's Environmental and Social Policy. Refer to ASX/AIM
Announcement dated 21 July 2023.
ERBD's investment and expertise will be beneficial to the Company as the
Cinovec Project moves through permitting, project financing, and completing
its Definitive Feasibility Study ("DFS"). The Company's relationship with EBRD
is expected to be highly strategic as the European Union charts a path towards
greater lithium supply security and sustainability. Support for the Cinovec
Project aligns with these EU goals. In connection with the Placement, European
Metals and EBRD have an agreement whereby, subject to certain conditions, the
EBRD has been granted rights that allow participation in future financings to
maintain its pro rata equity interest in the Company. The agreements also
provide for the Cinovec Project to be developed according to EBRD's
Environmental and Social Policy. The proceeds from the Placement are being
used to assist in funding pre-development works and studies for the Cinovec
Project including environmental works and working capital expenditures for the
period up to the completion of the DFS.
A DFS is currently being undertaken on the Cinovec Project managed by DRA
Global Limited. Following detailed analysis, approval has been granted to a
formal request from Geomet and the Project study team of DRA Global (Lithium
Processing DFS) and Bara Consulting (Mining DFS) for a timetable extension to
complete capital and operating cost estimation and project implementation
scheduling. Both Geomet and the Company recognise the importance of ensuring
accurate and comprehensive engineering and cost data for the DFS, as it forms
the foundation of the study's findings and recommendations. In this regard,
the Company believes it is prudent to allow the necessary time to complete the
study to the highest standard to ensure the delivery of a robust, accurate DFS
that conveys the full economic and resource potential of the Project. The
Company does not expect that the extension of the study period will impact the
overall project timeline, with the permitting process already well underway.
(Refer to ASX / AIM Announcement dated 22 December 2023).
During the Period, the Company announced the results of the Lithium Chemical
Plant (LCP) pilot programme, confirming the robustness of the Cinovec LCP
process flowsheet and providing a strong foundation for the execution of the
Cinovec Project. The pilot programme undertaken at ALS Laboratories in Perth,
Western Australia, set out to confirm the LCP flowsheet (refer to ASX / AIM
announcement of 31 October 2022) and to produce sufficient marketing samples
for potential off-takers to test in their own laboratories. The pilot
programme has achieved these objectives without necessitating any further
development of the LCP process flowsheet and provided extensive data
throughout all of the LCP process steps. This data contributes to the
confirmation of design and engineering for both the ongoing Definitive
Feasibility Study (DFS) and the post-DFS execution of the Project. (Refer to
ASX / AIM announcement dated 9 November 2023)
Subsequent to the Period, the Company announced the granting of an extension
to all four Cinovec Exploration Licences ("the licences") (refer to ASX / AIM
announcement dated 29 January 2024). These licenses fully cover all three
granted Preliminary Mining Permits ("PMP's") comprising the Cinovec Project.
All four licences have been extended until 31 December 2026. The granting of
this extension follows a comprehensive evaluation by the relevant state
authorities of results achieved to date in exploring the deposit. Plans for
future exploration work, including further resource drilling, and compliance
with conditions set by the Czech Ministry of Environment were also assessed.
The extension was required as the granted PMP's, whilst conveying the sole and
exclusive rights to apply for a Final Mining Permit, do not allow for further
drilling until the final mining area is granted. As the Company plans to
conduct further metallurgical and measured resource drilling, an extension to
the exploration licenses due to expire in December 2023 was sought. The
Licence extensions apply to the Exploration Areas Cinovec, Cinovec II, Cinovec
III and Cinovec IV, which fully cover the East, South and NorthWest PMP's.
CORPORATE AND ADMINISTRATION
On 23 August 2023, the Company issued 12,315,213 shares on completion of the
placement to EBRD.
The Company issued 600,000 CDIs on exercise of unlisted options (AUD0.45; 23
October 2023) on 7 September 2023 (400,000) and 20 October 2023 (200,000),
raising $270,000.
The Company issued a further 2,024,000 CDIs on exercise of 2,024,000 unlisted
options (AUD0.42; 23 October 2023) on 25 October 2023, raising $850,080.
In November 2023, the Company moved its registered office in Australia to the
following address:
Ground Floor, 41 Colin Street, West Perth WA
6005
Following the AGM on 22 December 2023, the Company appointed BDO Audit Pty Ltd
as auditor.
Events subsequent to the reporting date
Subsequent to 31 December 2023, the Company Secretary, Shannon Robinson,
retired due to other work commitments and the Company appointed Henko Vos to
the position, effective 1 February 2024.
There were no other matters or circumstances arising since the end of the
reporting period that have significantly affected, or may significantly
affect, the operations of the Company and the results of those operations or
the state of the affairs of the Company in the financial period subsequent to
31 December 2023.
Geomet Tenement Schedule
Permit Code Deposit Interest at 1 July 2023 Acquired / Disposed Interest at 31 December 2023
Cinovec 100% N/A 100%
Exploration Area N/A
Cinovec II 100% N/A 100%
Cinovec III 100% N/A 100%
Cinovec IV 100% N/A 100%
Preliminary Mining Permit Cinovec II Cinovec East 100% N/A 100%
Cinovec III Cinovec South 100% N/A 100%
Cinovec IV Cinovec NorthWest 100% N/A 100%
Auditor's Independence Declaration
The auditor's independence declaration for the half year ended 31 December
2023 has been received and can be found on page 9 of the financial report.
This report of the Directors is signed in accordance with a resolution of the
Board of Directors.
Keith Coughlan
EXECUTIVE CHAIRMAN
15 March 2024
BACKGROUND INFORMATION ON CINOVEC
PROJECT OVERVIEW
Cinovec Lithium
Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech
State over the Cinovec Lithium Project. Geomet has been granted a preliminary
mining permit by the Ministry of Environment and the Ministry of Industry. The
company is owned 49% by EMH and 51% by CEZ a.s. (CEZ) through its wholly owned
subsidiary, SDAS. Cinovec hosts a globally significant hard rock lithium
deposit with a total Measured Mineral Resource of 53.3Mt at 0.48% Li(2)O,
Indicated Mineral Resource of 360.2Mt at 0.44% Li(2)O and an Inferred Mineral
Resource of 294.7Mt at 0.39% Li(2)O containing a combined 7.39 million tonnes
Lithium Carbonate Equivalent (refer to the Company's ASX/AIM release dated 13
October 2021) (Resource Upgrade at Cinovec Lithium Project).
An initial Probable Ore Reserve of 34.5Mt at 0.65% Li(2)O reported 4 July 2017
(Cinovec Maiden Ore Reserve - Further Information) has been declared to cover
the first 20 years mining at an output of 22,500tpa of lithium carbonate
(refer to the Company's ASX/AIM release dated 11 July 2018) (Cinovec
Production Modelled to Increase to 22,500tpa of Lithium Carbonate).
This makes Cinovec the largest hard rock lithium deposit in Europe and the
fifth largest non-brine deposit in the world.
The deposit has previously had over 400,000 tonnes of ore mined as a trial
sub-level open stope underground mining operation.
On 19 January 2022, EMH provided an update to the 2019 PFS, conducted by
specialist independent consultants, which indicated a post-tax NPV of
USD1.938B and a post-tax IRR of 36.3% and indicated the Cinovec Project as a
potential low operating cost producer of battery-grade lithium hydroxide or
battery grade lithium carbonate as markets demand. It confirmed the deposit is
amenable to bulk underground mining (refer to the Company's ASX/AIM release
dated 19 January 2022) (PFS Update delivers outstanding results).
Metallurgical test-work has produced both battery-grade lithium hydroxide and
battery-grade lithium carbonate at excellent recoveries. Cinovec is centrally
located for European end-users and is well serviced by infrastructure. The
deposit lies in an active mining region.
The economic viability of Cinovec has been enhanced by the new Critical Raw
Materials Act and continued increasing demand for lithium within Europe.
The Company is in the process of finalising its DFS which anticipated to be
completed in the near term, As part of the DFS process the Company will
update the financial and operating parameters of both the mine and the lithium
process plant.
BACKGROUND INFORMATION ON CEZ
Headquartered in the Czech Republic, CEZ . is one of the largest companies in
the Czech Republic and a leading energy group operating in Western and Central
Europe. CEZ's core business is the generation, distribution, trade in, and
sales of electricity and heat, trade in and sales of natural gas, and coal
extraction. The foundation of power generation at CEZ Group are emission-free
sources. The CEZ strategy named Clean Energy for Tomorrow is based on
ambitious decarbonisation, development of renewable sources and nuclear
energy. CEZ announced that it would move forward its climate neutrality
commitment by ten years to 2040.
The largest shareholder of its parent company, CEZ., is the Czech Republic
with a stake of approximately 70%. The shares of CEZ. are traded on the Prague
and Warsaw stock exchanges and included in the PX and WIG-CEE exchange
indices. CEZ's market capitalization is approximately EUR 20.3 billion.
As one of the leading Central European power companies, CEZ intends to develop
several projects in areas of energy storage and battery manufacturing in the
Czech Republic and in Central Europe.
CEZ is also a market leader for E-mobility in the region and has installed and
operates a network of EV charging stations throughout Czech Republic. The
automotive industry in the Czech Republic is a significant contributor to GDP,
and the number of EV's in the country is expected to grow significantly in the
coming years.
COMPETENT PERSON
Information in this announcement relating to the FECAB metallurgical testwork
is based on technical data compiled or supervised by Mr Walter Mädel, a
full-time employee of Geomet s.r.o, an associate of the Company. Mr Mädel is
a member of the Australasian Institute of Mining and Metallurgy (AUSIMM) and a
mineral processing professional with over 27 years of experience in
metallurgical process and project development, process design, project
implementation and operations. Of his experience, at least 5 years have been
specifically focused on hard rock pegmatite Lithium processing development. Mr
Mädel consents to the inclusion in the announcement of the matters based on
this information in the form and context in which it appears. Mr Mädel is a
participant in the long-term incentive plan of the Company.
Information in this release that relates to exploration results is based on
information compiled by Dr Vojtech Sesulka. Dr Sesulka is a Certified
Professional Geologist (certified by the European Federation of Geologists), a
member of the Czech Association of Economic Geologist, and a Competent Person
as defined in the JORC Code 2012 edition of the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr
Sesulka has provided his prior written consent to the inclusion in this report
of the matters based on his information in the form and context in which it
appears. Dr Sesulka is an independent consultant with more than 10 years
working for the EMH or Geomet companies. Dr Sesulka does not own any shares in
the Company and is not a participant in any short- or long-term incentive
plans of the Company.
Mr Grant Harman (B.Sc Chem Eng, B.Com) is an independent consultant with in
excess of 7 years of lithium chemicals experience. Mr Harman supervised and
reviewed the metallurgical test work and the process design criteria and flow
sheets in relation to the LCP. Mr Harman is a participant in the long-term
incentive plan of the Company.
The information in this release that relates to Mineral Resources and
Exploration Targets is based on, and fairly reflects, information and
supporting documentation prepared by Mr Lynn Widenbar. Mr Widenbar, who is a
Member of the Australasian Institute of Mining and Metallurgy and a Member of
the Australasian Institute of Geoscientists, is a full-time employee of
Widenbar and Associates and produced the estimate based on data and geological
information supplied by European Metals. Mr Widenbar has sufficient experience
that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity that he is undertaking to qualify as a
Competent Person as defined in the JORC Code 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Minerals Resources and Ore
Reserves. Mr Widenbar has provided his prior written consent to the inclusion
in this report of the matters based on his information in the form and context
that the information appears. Mr Widenbar does not own any shares in the
Company and is not a participant in any short- or long-term incentive plans of
the Company.
The Company confirms that it is not aware of any new information or data that
materially affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or Ore
Reserves, that all material assumptions and technical parameters underpinning
the estimates in the relevant market announcement continue to apply and have
not materially changed. The Company confirms that the form and context in
which the Competent Person's findings are presented have not been materially
modified from the original market announcement.
DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF European
Metals Holdings limited
As lead auditor for the review of European Metals Holdings Limited for the
half-year ended 31 December 2023, I declare that, to the best of my knowledge
and belief, there have been:
1. No contraventions of the auditor independence requirements of the
Corporations Act 2001 in relation to the review; and
2. No contraventions of any applicable code of professional conduct in
relation to the review.
This declaration is in respect of European Metals Holdings Limited and the
entity it controlled during the period.
Glyn O'Brien
Director
BDO Audit Pty Ltd
Perth, 15 March 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
Note 31 Dec 2023 31 Dec 2022
$ $
(Restated)*
Finance Income 325,083 146,607
Other income 4 985,160 564,821
Share based payments 854,327 (1,915,154)
Equity accounting on investment in Geomet s.r.o. 5 (1,074,246) (997,169)
Professional fees (599,584) (161,573)
Employees' benefits (883,117) (525,615)
Advertising and promotion (299,594) (293,383)
Travel and accommodation (67,780) (84,989)
Directors' fees (162,145) (112,493)
Share registry and listing expenses (72,350) (86,571)
Insurance expense (41,304) (40,056)
Audit fees (27,275) (22,155)
Depreciation and amortisation expense (29,000) (24,117)
Facility, advance fee and finance costs (3,359) (1,844)
Foreign exchange gain/(loss) 66,326 72,263
Other expenses (101,581) (305,522)
Loss before income tax (1,130,439) (3,786,950)
Income tax expense - -
Loss from operations (1,130,439) (3,786,950)
Loss for the period (1,130,439) (3,786,950)
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss - -
Items that may be reclassified subsequently to profit or loss:
- Exchange differences on translating foreign operations 12,163 (1,091)
- Exchange difference on translating investment in Geomet 5 (1,624,750) 959,954
Other comprehensive (loss)/income for the period, net of tax (1,612,587) 958,863
Total comprehensive (loss) for the period (2,743,026) (2,828,087)
Net Loss attributable to:
- Members of the parent entity (1,130,439) (3,786,950)
(1,130,439) (3,786,950)
Total Comprehensive loss attributable to:
- Members of the parent entity (2,743,026) (2,828,087)
(2,743,026) (2,828,087)
Loss per share for loss from continuing operations
Basic and diluted loss per CDI/share (cents) 3 (0.56) (2.04)
The above statement should be read in conjunction with the accompanying
condensed notes.
*The comparative information has been restated as a result of prior period
adjustments discussed in Note 1(f).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 Dec 2023 30 Jun 2023 1 July 2022
Note $ $ $
(Restated)* (Restated)*
CURRENT ASSETS
Cash and cash equivalents 5,668,926 8,892,951 19,055,509
Trade and other receivables 1,387,064 200,706 782,518
Other assets 196,790 34,697 53,094
TOTAL CURRENT ASSETS 7,252,780 9,128,354 19,891,121
NON-CURRENT ASSETS
Other assets - 48,154 47,392
Right-of-use asset 191,141 39,968 87,930
Investments accounted for using equity method 5 25,341,016 22,275,934 16,554,847
Advances to associate 9 8,419,507 8,418,872 -
Property, plant and equipment 6,006 2,899 -
TOTAL NON-CURRENT ASSETS 33,957,670 30,785,827 16,690,169
TOTAL ASSETS 41,210,450 39,914,181 36,581,290
CURRENT LIABILITIES
Trade and other payables 178,967 818,977 939,822
Payable to associate - 5,627,507 -
Provisions - employee entitlements 25,526 16,570 147,048
Lease liability 39,471 40,775 45,707
TOTAL CURRENT LIABILITIES 243,964 6,503,829 1,132,577
NON-CURRENT LIABILITIES
Provisions - employee entitlements 87,823 84,051 -
Lease liability 143,856 - 40,775
TOTAL NON-CURRENT LIABILITIES 231,679 84,051 40,775
TOTAL LIABILITIES 475,643 6,587,880 1,173,352
NET ASSETS 40,734,807 33,326,301 35,407,938
EQUITY
Issued capital 6 58,887,211 47,881,352 47,881,352
Reserves 7 14,252,211 16,719,125 12,872,321
Accumulated losses (32,404,615) (31,274,176) (25,345,735)
TOTAL EQUITY 40,734,807 33,326,301 35,407,938
The above statement should be read in conjunction with the accompanying
condensed notes.
*The comparative information has been restated as a result of prior period
adjustments disclosed in Note 1(f).
CONSOLIDATED STATEMENT OF changes in equity
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
Issued Capital Share Based Payment Reserve Foreign Currency Translation Reserve Accumulated Losses Total
$ $ $ $ $
Balance at 1 July 2022, as previously reported 47,881,352 11,904,132 379,659 (24,365,633) 35,799,510
Adjustment for correction of error - - 588,530 (980,102) (391,572)
Balance at 1 July 2022, as restated 47,881,352 11,904,132 968,189 (25,345,735) 35,407,938
Loss attributable to members of the Company - - - (3,786,950) (3,786,950)
Other comprehensive income/(loss) - - 958,863 - 958,863
Total comprehensive income/loss for the year - - 958,863 (3,786,950) (2,828,087)
Transactions with owners, recognised directly in equity
Share based payments - 1,915,154 - - 1,915,154
Balance at 31 December 2022 47,881,352 13,819,286 1,927,052 (29,132,685) 34,495,005
Balance at 1 July 2023, as previously reported 47,881,352 13,837,650 4,882,465 (30,294,074) 36,307,393
Adjustment for correction of error - - (2,000,990) (980,102) (2,981,092)
Balance at 1 July 2023, as restated 47,881,352 13,837,650 2,881,475 (31,274,176) 33,326,301
Loss attributable to members of the Company - - - (1,130,439) (1,130,439)
Other comprehensive income/(loss) - - (1,612,587) - (1,612,587)
Total comprehensive (loss) for the year - - (1,612,587) (1,130,439) (2,743,026)
Transactions with owners, recognised directly in equity
CDIs/shares issued during the year 9,889,116 - - - 9,889,116
Capital raising costs (3,337) - - - (3,337)
Exercise of options and warrants 1,120,080 1,120,080
Share based payments - (854,327) - - (854,327)
Balance at 31 December 2023 58,887,211 12,983,323 1,268,888 (32,404,615) 40,734,807
The above statement should be read in conjunction with the accompanying
condensed notes.
*The comparative information has been restated as a result of prior period
adjustments disclosed in Note 1(f).
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
31 Dec 2023 31 Dec 2022
Note $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Other income 126 551,472
Payments to suppliers and employees (2,863,612) (2,045,776)
Interest received 280,266 83,540
Payments for Cinovec associated costs (10,334) (224,541)
Net cash (used in) operating activities (2,593,554) (1,635,305)
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment (3,812) (2,610)
Payments for investments 5 (11,392,220) -
Net cash (used in) investing activities (11,396,032) (2,610)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs /shares 9,889,116 -
Capital raising costs paid (3,337) -
Proceeds from exercise of options and warrants 1,120,080 -
Payment for lease liability (38,973) (24,295)
Net cash (used in)/provided by financing activities 10,966,886 (24,295)
Net (decrease)/increase in cash and cash equivalents (3,022,699) (1,662,210)
Cash and cash equivalents at the beginning of the financial year 8,892,951 19,055,509
Exchange differences in foreign currency held (201,326) 78,440
Cash and cash equivalents at the end of financial year 5,668,926 17,471,739
The above statement should be read in conjunction with the accompanying
condensed notes.
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED 31 DECEMBER 2023
NOTE 1: BASIS OF PREPARATION
a. Statement of compliance
The half year financial report is a general purpose financial report prepared
in accordance with the Corporations Act 2001 and AASB 134 'Interim Financial
Reporting'. Compliance with AASB 134 ensures compliance with International
Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half
year report does not include notes of the type normally included in an annual
financial report and shall be read in conjunction with the most recent annual
financial report.
b. Basis of preparation
The consolidated financial statements have been prepared on the basis of
historical cost, except where applicable for the revaluation of certain
non-current assets and financial instruments. Cost is based on the fair values
of the consideration given in exchange for assets. All amounts are presented
in Australian dollars, unless otherwise noted.
The accounting policies and methods of computation adopted in the preparation
of the half year financial report are consistent with those adopted and
disclosed in the Group's 2023 annual financial report for the financial year
ended 30 June 2023, except for the impact of the Standards and Interpretations
described below. These accounting policies are consistent with Australian
Accounting Standards and with International Financial Reporting Standards.
c. Financial position
The Directors have prepared the consolidated financial statements on going
concern basis, which contemplates continuity of normal business activities and
the realisation of assets and extinguishment of liabilities in the ordinary
course of business.
At 31 December 2023, the Group comprising the Company and its subsidiaries has
incurred a loss for the year amounting to $1,130,439. The Group has a net
working capital surplus of $15,428,323 and cash and cash equivalents of
$5,668,926.
The Directors have prepared a cash flow forecast, which indicates that the
Company will have sufficient cash flows to meet all commitments and working
capital requirements for the 12-month period from the date of signing this
financial report.
Based on the cash flow forecasts, the Directors are satisfied that the going
concern basis of preparation is appropriate.
d. Changes in accounting policies, accounting standards and
interpretations
The accounting policies adopted in the preparation of the interim consolidated
financial statements are consistent with those followed in the preparation of
the Group's annual consolidated financial statements for the year ended 30
June 2023. All applicable new standards and interpretations effective since 1
January 2023 have been adopted. There was no significant impact on the Group.
e. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that may
have a financial impact on the entity and that are believed to be reasonable
under the circumstances. The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities are discussed below.
Share-based payments
The value attributed to share options, warrants, performance rights,
performance shares, loan CDIs and remuneration shares issued is an estimate
calculated using where applicable, a mathematical formula based on the
Black-Scholes option pricing model. The choice of models and the resultant
values require assumptions to be made in relation to the likelihood and timing
of the conversion of the options, warrants, performance rights, performance
shares, loan CDIs to shares and the value and volatility of the price of the
underlying shares. Details of share-based payments assumptions are detailed in
Note 8.
f. Restatement of comparatives
Correction of error
On 28 April 2020, the Company announced the investment of EUR29.1 million
(circa A$ 48.7 million) by CEZ a.s. ("CEZ") for a 51% equity interest in
Geomet, the Company's wholly owned Czech subsidiary at the time, and holder of
the Cinovec licenses, had been completed. The Company ceased to fully
consolidate Geomet's results within EMH's consolidated accounts effective from
this date and commenced equity accounting its investment in Geomet, as an
associate.
At 30 June 2020, the Company inadvertently recognised its portion of that
period's share of Geomet's loss as a profit, resulting in a misstatement of
the investment in associate's carrying value. In May 2023, the Company
agreed to a further investment of $5.6 million (EUR 3.43 million) to maintain
its 49% shareholding. The Company inadvertently neglected to provide for
this obligation as a payable at 30 June 2023, and accordingly also understated
its investment by this amount. The balance was subsequently settled on 7
July 2023. The noted errors have, in turn, had a resultant impact on the
exchange difference on translating the investment since its acquisition.
Extracts (being only those line items affected) are disclosed below.
31 Dec 2022 31 Dec 2022
$ $ $
Reported Adjustment Restated
Consolidated Statement of profit or loss and other comprehensive income
Loss for the period (3,786,950) - (3,786,950)
Other comprehensive income: -
- Exchange differences on translating foreign operations (1,091) - (1,091)
- Exchange difference on translating investment in Geomet (923,780) 1,883,734 959,954
Other comprehensive income/(loss) for the period, net of tax (924,871) 1,883,734 958,863
Total comprehensive loss for the period (4,711,821) 1,883,734 (2,828,087)
Consolidated statement of financial position at the end of the earliest
comparative period
30 Jun 2023 30 Jun 2023
$ $ $
As Reported Adjustment Restated
Investment in associate 19,629,519 2,646,415 22,275,934
Total assets 37,267,766 2,646,415 39,914,181
Payable to associate - 5,627,507 5,627,507
Total liabilities 960,373 5,627,507 6,587,880
Net assets 36,307,393 (2,981,092) 33,326,301
Accumulated losses (30,294,074) (980,102) (31,274,176)
Reserves 18,720,115 (2,000,990) 16,719,125
Total equity 36,307,393 (2,981,092) 33,326,301
Consolidated statement of financial position at the beginning of the earliest
comparative period
1 Jul 2022 1 Jul 2022
$ $ $
As Reported Adjustment Restated
Investment in associate 16,946,419 (391,572) 16,554,847
Total assets 36,972,862 (391,572) 36,581,290
Net assets 35,799,510 (391,572) 35,407,938
Accumulated losses (24,365,633) (980,102) (25,345,735)
Reserves 12,283,791 588,530 12,872,321
Total equity 35,799,510 (391,572) 35,407,938
The prior period adjustment did not have an impact on the consolidated
statement of cash flows.
The prior period adjustment did not have an impact on the basic or diluted
earnings/(loss) per share.
NOTE 2: OPERATING SEGMENTS
The accounting policies used by the Group in reporting segments are in
accordance with the measurement principles of Australian Accounting Standards.
The Group has identified its operating segments based on the internal reports
that are provided to the Board of Directors, according to AASB 8 Operating
Segments.
Effective 28 April 2020, the Group has a 49% interest in Geomet s.r.o. which
is accounted for in accordance with AASB 128 Investment in Associates and
Joint Ventures. Therefore, the Group has only one operating segment based on
geographical location. The Australian segment incorporates the services
provided to Geomet s.r.o. in relation to the Cinovec project development along
with head office and treasury function. Consequently, the financial
information for the sole operating segment is identical to the information
presented in these interim financial reports.
NOTE 3: LOSS PER CDI/shares Note 31 Dec 2023 31 Dec 2022
$ $
Basic and diluted loss per CDI/share (0.56) (2.04)
Loss attributable to members of European Metals Holdings Limited (1,130,439) (3,786,950)
Weighted average number of CDIs/shares outstanding during the period 202,148,850 186,042,485
NOTE 4: OTHER INCOME 31 Dec 2023 31 Dec 2022
$ $
Service income - Geomet 985,034 551,472
Other Income 126 13,349
985,160 564,821
NOTE 5: INVESTMENT IN ASSOCIATE 31 Dec 2023 30 Jun 2023
$ $
Restated
Opening balance 22,275,934 16,554,847
Increase in investment 5,764,078 5,627,507
Share of loss - associates 5 (1,074,246) (1,845,158)
Share of the movement in foreign currency translation reserve - associates (1,624,750) 1,938,738
Closing balance 25,341,016 22,275,934
NOTE 6: ISSUED CAPITAL 31 Dec 2023 30 Jun 2023
$ $
Total issued capital 58,887,211 47,881,352
CDIs//Shares Number 207,324,705 192,385,492
Movement in CDI/shares
Date Number $
Balance at the beginning 1 Jul 2023 186,042,485 47,881,352
Issue to consultant @ 0c 9 Jan 2023 6,343,007 -
Balance at the end 30 Jun 2023 192,385,492 47,881,352
Balance at the beginning 1 Jul 2023 192,385,492 47,881,352
Placement shares 23 Aug 2023 12,315,213 9,889,116
Exercise of options Various 2,624,000 1,120,080
Transaction costs - (3,337)
Balance at end 31 Dec 2023 207,324,705 58,887,211
CDIs/Shares entitle the holder to participate in dividends and the proceeds on
winding up of the Company in proportion to the number of shares held. On a
show of hands every holder of a CDI/share present at a meeting in person or by
proxy, is entitled to one vote, and in a poll each share is entitled to one
vote.
European Metals Holdings Limited is a company limited by shares incorporated
in the British Virgin Islands with an authorised share capital of 200,000,000
no par value shares of a single class. Pursuant to the prospectus dated 26
April 2012, the Company initially issued CDIs/shares in July 2012. The holder
of the CDIs/shares has beneficial ownership in the underlying shares instead
of legal title. Legal title and the underlying shares is held by Chess
Depository Nominees Pty Ltd.
Holders of CDIs/shares have the same entitlement benefits of holding the
underlying shares. Each Share in the Company confers upon the Shareholder:
1. the right to one vote at a meeting of the Shareholders of the
Company or on any Resolution of Shareholders;
2. the right to an equal share in any dividend paid by the
Company; and
3. the right to an equal share in the distribution of the surplus
assets of the Company on its liquidation.
NOTE 7: RESERVES 31 Dec 2023 30 Jun 2023
$ $
Option and Warrant Reserve 17(a) 4,788,589 4,788,589
Performance Shares Reserve 17 (b) 3,471,444 3,471,444
Performance Rights Reserve 17 (c) 3,280,623 4,134,950
Loan CDIs/shares Reserve 17 (d) 1,442,667 1,442,667
Foreign Currency Translation Reserve 17 (e) 1,268,888 2,881,475
Total Reserves 14,252,211 16,719,125
(a) Option and Warrant Reserve 31 Dec 2023 30 Jun 2023
$ $
Balance at the beginning 4,788,589 4,370,589
Share based payment expense - 418,000
Balance at the end 4,788,589 4,788,589
The following options and warrants existed as at 30 June 2023 and 31 December
2023:
Expiry date Balance at 30 Jun 2023 Issued during the year Exercised during the year Expired/ cancelled Balance at 31 Dec 2023
Options @ 42cents 23 Oct 2023(1) 2,024,000 - (2,024,000) - -
Options @ 45cents 23 Oct 2023(2) 600,000 - (600,000) - -
Options @ 80 cents 31 Dec 2025 2,000,000 - - - 2,000,000
Total 4,624,000 - (2,624,000) - 2,000,000
(1)2,024,000 unlisted options were exercised during the period as detailed in
the table above. The share capital for the options exercised was issued on 25
October 2023.
(2)600,000 unlisted options were exercised during the period as detailed in
the table above. The share capital for the options exercised was issued on 23
October 2023.
(b) Performance Shares Reserve
Date $
Balance at the beginning 1 Jul 2023 3,471,444
Balance at the end 31 Dec 2023 3,471,444
(c) Performance Rights Reserve
31 Dec 2023 30 Jun 2023
Number $ Number $
Balance at the beginning 7,470,000 4,134,950 5,800,000 2,619,432
Granted - - 1,670,000 1,515,518
Lapsed - - -
Movement (Note 8) - (854,327) - -
Balance at the end 7,470,000 3,280,623 7,470,000 4,134,950
(d) Loan CDIs/shares Reserve
31 Dec 2023 30 Jun 2023
Number Amount Expensed Number Amount Expensed
Balance at beginning 1,350,000 1,442,667 1,350,000 1,442,667
Loan CDIs/shares repaid during the period - - - -
Balance at end 1,350,000 1,442,667 1,350,000 1,442,667
(e) Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising
on translation of foreign controlled subsidiary and associate.
31 Dec 2023 30 Jun 2023
$ $
Restated
Balance at the beginning of the financial year 2,881,475 968,189
Movement during the period (1,612,587) 1,913,286
Balance at the end of the period 1,268,888 2,881,475
NOTE 8: SHARE BASED PAYMENT EXPENSE
During the period, the Group incurred a share-based payment income for a total
of $854,327 resulting from the transactions detailed below.
1. Share-based payment arrangement granted in prior years and
existing during the half-year ended 31 December 2023:
· On 17 December 2020, 3,600,000 Performance Rights were issued to
Directors. The Performance Rights were valued at $3,132,000 at grant date and
are being expensed over the vesting period ending 31 December 2023. For the
period ended 31 December 2023, management assessed the probability of
achieving the financial hurdles to be over 50% for its Class A and B options
and below 50% for its Class C options, as a result of which, a reversal of
share-based payment expense of $547,575 was recognised in the consolidated
statement of profit or loss and other comprehensive income for the period.
· On 24 November 2021, 100,000 Performance Rights were issued to a
consultant. The Performance Rights were valued at $76,750 at grant date and
are being expensed over the vesting period ending 31 December 2023. For the
period ended 31 December 2023, the share-based payment expense of $17,189 was
recognised in the consolidated statement of profit or loss and other
comprehensive income for the period.
· On 22 February 2022, 900,000 Performance Rights were issued to a
consultant. The Performance Rights were valued at $1,044,000 at grant date and
are being expensed over the vesting period ending 31 December 2023. For the
period ended 31 December 2023, management assessed the probability of
achieving the financial hurdles to be over 50% for its Class A and C options
and below 50% for its Class B options, as a result of which, a reversal of
share-based payment expense of $101,694 was recognised in the consolidated
statement of profit or loss and other comprehensive income for the period.
· On 27 February 2022, 1,200,000 Performance Rights were issued to
a consultant. The Performance Rights were valued at $1,368,000 at grant date
and are being expensed over the vesting period ending 31 December 2023. For
the period ended 31 December 2023, management assessed the probability of
achieving the financial hurdles to be over 50% for its Class A and C options
and below 50% for its Class B options, as a result of which, a reversal of
share-based payment expense of $131,391 was recognised in the consolidated
statement of profit or loss and other comprehensive income for the period.
· On 29 August 2022, 750,000 Performance Rights were issued to an
employee. The Performance Rights were valued at $547,500 at grant date and are
being expensed over the vesting period ending 31 December 2023. For the period
ended 31 December 2023, management assessed the probability of achieving the
hurdles to be over 50% for Tranches 1 and 2 and below 50% for Tranche 3, as a
result of which, a reversal of share-based payment expense of $17,188 was
recognised in the consolidated statement of profit or loss and other
comprehensive income for the period.
· On 12 December 2022, 450,000 Performance Rights were issued to an
employee. The Performance Rights were valued at $301,500 at grant date and are
being expensed over the vesting period noted below.
For the period ended 31 December 2023, management assessed the probability of
achieving the hurdles to be over 50% for Tranches 1 and 3 and below 50% for
Tranche 2, as a result of which, a reversal of share-based payment expense of
$60,119 was recognised in the consolidated statement of profit or loss and
other comprehensive income for the period.
· On 13 December 2022, 300,000 Performance Rights were issued to an
employee. The Performance Rights were valued at $201,000 at grant date and are
being expensed over the vesting period noted below. For the period ended 31
December 2023, management assessed the probability of achieving the hurdles to
be over 50% for Tranches 1 and 3 and below 50% for Tranche 2, as a result of
which, a reversal of share-based payment expense of $39,906 was recognised in
the consolidated statement of profit or loss and other comprehensive income
for the period.
· On 14 December 2022, 170,000 Performance Rights were issued to an
employee. The Performance Rights were valued at $117,300 at grant date and are
being expensed over the vesting period noted below. For the period ended 31
December 2023, management assessed the probability of achieving the hurdles to
be over 50% for Tranches 1 and 2, as a result of which, a share-based payment
expense of $26,357 was recognised in the consolidated statement of profit or
loss and other comprehensive income for the period.
NOTE 9: ADVANCES TO ASSOCIATE 31 Dec 2023 30 Jun 2023
$ $
Advances to associate 8,419,507 8,418,872
8,419,507 8,418,872
On 31 May 2023 an unsecured loan of $8.4 million (initial value of
CZK121,000,00) was advanced to Geomet s.r.o by the Company. The loan is due
for repayment on 31 December 2028 and carries a fixed interest rate at 8.8%
per annum.
NOTE 10: RELATED PARTY TRANSACTIONS
Transactions between related parties are at arms' length and on normal
commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
During the period, the Company earned revenue of $985,034 (2022: $551,472)
from its associate, Geomet s.r.o for providing services of managing the
Cinovec project development. A current receivable balance of $985,034 is noted
at reporting date.
The Company received company secretarial, accounting and bookkeeping services
of $104,688 plus GST from Nexia Perth, a company at which the spouse of
Executive Chairman, Keith Coughlan, acts as a key management personnel. The
amount payable to Nexia as at 31 December 2023 was $14,850 (June 2023:
$17,028).
The Company paid $542,123 as remuneration to directors and key management
personnel of the Company during the period.
There were no other transactions with related parties during the period.
NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTS
There has been no material changes in contingent liabilities and commitments
since the last annual reporting date.
NOTE 12: EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to 31 December 2023, the Company Secretary, Shannon Robinson,
retired due to other work commitments and the Company appointed Henko Vos to
the position, effective 1 February 2024.
There were no other matters or circumstances arising since the end of the
reporting period that have significantly affected, or may significantly
affect, the operations of the Company and the results of those operations or
the state of the affairs of the Company in the financial period subsequent to
31 December 2023.
DIRECTORS' DECLARATION
The Directors of the Company declare that:
1. The financial statements and notes set out on pages 9 to 21:
(a) comply with Accounting Standard AASB 134: Interim Financial Reporting
and the Corporations Act 2001, and
(b) give a true and fair view of the Consolidated entity's financial
position as at 31 December 2023 and of its performance for the half-year ended
on that date.
2. In the Directors' opinion, there are reasonable grounds to believe
that the Company will be able to pay its debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the Board of
Directors made pursuant to section 303(5) of the Corporations Act 2001 and is
signed for and on behalf of the Directors by:
Keith Coughlan
EXECUTIVE CHAIRMAN
15 March 2024
INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS
LIMITED
INDEPENDENT AUDITOR'S REVIEW REPORT
To the members of European Metals Holdings Limited
Report on the Half-Year Financial Report
Conclusion
We have reviewed the half-year financial report of European Metals Holdings
Limited (the Company) and its subsidiary (the Group), which comprises the
statement of financial position as at 31 December 2023, the statement of
profit or loss and other comprehensive income, statement of changes in equity
and statement of cash flows for the half-year ended on that date, a summary of
significant accounting policies and other explanatory information, and the
directors' declaration.
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the accompanying half-year financial report
of the Group does not comply with the Corporations Act 2001 including:
A. Giving a true and fair view of the Group's financial position as at 31
December 2023 and of its financial performance for the half-year ended on that
date; and
B. Complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial
Report Performed by the Independent Auditor of the Entity. Our
responsibilities are further described in the Auditor's Responsibilities for
the Review of the Financial Report section of our report. We are independent
of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board's APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that
are relevant to the audit of the annual financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act
2001 which has been given to the directors of the Group, would be the same
terms if given to the directors as at the time of this auditor's review
report.
Other matter
The financial report of European Metals Holdings Limited, for the year ended
30 June 2023 was audited by another auditor who expressed an unmodified
opinion on that report on 29 September 2023.
Responsibility of the directors for the financial report
The directors of the Group are responsible for the preparation of the
half-year financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the
preparation of the half-year financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error.
Auditor's responsibility for the review of the financial report
Our responsibility is to express a conclusion on the half-year financial
report based on our review. ASRE 2410 requires us to conclude whether we have
become aware of any matter that makes us believe that the half-year financial
report is not in accordance with the Corporations Act 2001 including giving a
true and fair view of the Group's financial position as at 31 December 2023
and its performance for the half-year ended on that date, and complying with
Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.
A review of a half-year financial report consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with Australian Auditing
Standards and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
BDO Audit Pty Ltd
Glyn O'Brien
Director
Perth, 15 March 2024
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR GRGDXSUBDGSURecent news on European Metals Holdings
See all newsREG - European Metals Hldg - New Plant Site to Improve Project Permitting&Econ
AnnouncementREG - European Metals Hldg - Appointment of Director
AnnouncementREG - European Metals Hldg - Successful Production of Lithium Hydroxide
AnnouncementREG - AIM European Metals Hldg - Schedule One - European Metals Holdings Limited
AnnouncementREG - European Metals Hldg - Issue of Equity
Announcement