REG - European Metals Hldg - Half-year Report
16/03/2023 07:00
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RNS Number : 1969T European Metals Holdings Limited 16 March 2023
For immediate release
16 March 2023
EUROPEAN METALS HOLDINGS LIMITED
Unaudited Interim Financial Report for the six months ended 31 December 2022
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 unaudited financial report for the half-year ended 31
December 2022.
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
David Koch, Company Secretary Tel: +61 (0) 418 925 212
Email: david@europeanmet.com
WH Ireland Ltd (Nomad & Joint Broker)
James Joyce/ Darshan Patel Tel: +44 (0) 20 7220 1666
(Corporate Finance)
Harry Ansell (Broking)
Panmure Gordon (UK) Limited (Joint Broker) Tel: +44 (0) 20 7886 2500
John Prior
Hugh Rich
James Sinclair Ford
Harriette Johnson
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 2022.
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 Palmer Bloomfield, Jr Non-Executive Director Appointed 3 January 2021
Results of Operations
The consolidated loss for the half year ended 31 December 2022 amounted to
$3,786,950 (2021: $1,949,974 loss).
Review of Operations
For the reporting period the Company continued to manage the advancement of
the Cinovec Lithium/Tin Project in Czech Republic. The macro conditions
relative to the Project have been very strong for the period. Despite some
recent falls, the lithium price remains at very high levels relative to
historic prices, and at a level where the financial parameters of the Project
are exceptionally strong. In addition to pricing, the global focus on long
term security of strategic metals has increased dramatically and the Company
expects this factor to play an increasingly important role in moving the
Project towards production.
The reporting period was highlighted by the announcement of very significant
developments in the optimisation of the flowsheet for the processing plant.
The Company announced that it had finalised a considerably simplified Lithium
Chemical Plant ("LCP") flowsheet with the initial six locked cycle test
("LCTs") providing 99.99% pure Lithium Carbonate. The LCTs were completed at
ALS Global in Perth and demonstrated overall lithium recoveries of 88-93%,
(refer to the Company's ASX release dated 31 October 2022) (Simplified
Extraction Process delivers exceptionally clean battery grade lithium products
with improved economics).
The simplified flowsheet precipitates lithium phosphate directly from the
polished PLS and then goes on to clean the lithium phosphate to enable
precipitation of a much cleaner crude lithium carbonate. The final
purification step of bicarbonation and re-precipitation is the same as in the
earlier flowsheet, but the end-product is of even higher quality due to the
input crude lithium carbonate being much cleaner. The simplification of the
central section of the LCP flowsheet reduces the number of basic chemical
engineering unit processes (after the initial roast/water leach) from 15 to 7.
The revised process also results in the elimination of all energy-intensive
cooling processes.
The Company has been advised by its principal hydrometallurgical adviser,
Lithium Consultants Australasia (LCA), that the changes to the LCP noted above
are expected to reduce both Capex and Opex in the LCP by 10-20%. The Capex
reduction is based upon the fact that the simplified flowsheet requires the
use of only two crystallisers vs the four crystallisers and 1 evaporator in
the original flowsheet. The similar reduction on Opex is achieved through
reduced power use resulting from not having to operate the additional
equipment. The Company expects that lower reagent use, and the elimination of
all process cooling steps will change the environmental footprint of the
project positively, reducing the chemicals and energy required in the LCP
process.
The recently completed testwork for the re-engineered LCP flowsheet produced
the following crude and battery-grade lithium carbonate products, compared
with the published global standard specification, YS/T 582-2013 with the
Li(2)CO(3) results highlighted in yellow:
Li(2)CO(3) Na K Mg Ca Mn Fe Ni Cu Zn Al Si Pb SO(4)(2)- Cl
% ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm
YS/T ≥99.5 250 10 80 50 3 10 10 3 3 10 30 3 800 30
582-2013
Crude LC 99.4 368 3 5 357 0 8 3.4 0.2 1.2 5.1 26 0 4860 <10
Battery-Grade LC 99.99 3 0.8 0.9 2 0.7 6.3 3.4 0.2 1.3 2.8 2.1 0.07 95 <10
As can be seen from the table, the crude lithium carbonate first precipitated
(i.e., with no purification or re-precipitation steps) meets the battery-grade
specification for 11 of the 14 impurity thresholds.
The battery-grade lithium carbonate recrystallised after a single
bicarbonation step shows an exceptionally clean battery-grade material.
A provisional patent application covering the simplified flowsheet has been
lodged by the Company on behalf of Geomet s.r.o. to protect what the Company
believes to be a very valuable and simple process to produce battery grade
lithium carbonate or hydroxide from any lithiferous ore.
The Company has also significantly strengthened the team developing the
Cinovec Project, both internally and externally. In November we announced that
Marc Rowley, an experienced Lithium Project delivery specialist, had joined
the team. Marc managed the delivery of the DFS for the Goulamina Project, in
Mali, West Africa for Leo Lithium (recently spun out from Firefinch Limited)
which was completed in October 2020 and subsequently updated in December 2021.
A final investment decision was made based on the update and the project is
now under construction. Prior to his work at Leo Lithium and Firefinch, Marc
worked for Altura Mining Limited where he was responsible for the management
and delivery of the Pre‐Feasibility Study (PFS) and DFS and the engineering,
procurement, construction and commissioning for the Pilgangoora Lithium mine
in the Pilbara region of Western Australia. It is becoming increasingly
difficult to find experienced lithium professionals, and Marc will
significantly enhance the Company's expertise in relation to delivery of the
DFS for the Lithium Chemical Plant at the Cinovec Project.
Externally, we appointed Panmure Gordon as a Joint Broker. Panmure Gordon are
a UK based investment bank providing a full range of services including
Capital Raising, Corporate Advisory, Corporate Broking, Investor Relations,
Research, Sales and Execution with distribution to the UK, Europe and the US.
In October we announced the engagement of Luthardt Investment, a German
Strategic Energy Investment Adviser. Luthardt is a Berlin-based consultancy
specializing in energy production and government relations support to large
infrastructure projects internationally. Luthardt is led by Sven Luthardt,
who has broad business experience supporting companies in Europe and the
Middle East, particularly in the field of Government relations.
Post reporting period, the Company also appointed DRA Global to the
development team. This is covered further below.
Otherwise, the period was marked by continued progress by the Company towards
finalisation of the Definitive Feasibility Study ("DFS") together with ongoing
discussions with prospective offtakers and Project Finance participants. From
a macro perspective, the price for lithium remains extremely strong with
Lithium Carbonate setting all time high prices in October and the expectation
of continuing strong demand within the European Union for lithium resulting
from the announcement of Gigafactory production capacities of approximately
120 GWh in 2022. By 2025, this is expected to quadruple to over 500 GWh,
and by 2030 potentially fourteenfold to up to 1.7 TWh.
There were also significant macro events within Europe for the period that are
likely to have a positive effect on the demand for lithium and the support of
the Cinovec Project. Amongst these was the announcement of the European
Critical Raw Materials Act by European Commission President Ursula von der
Leyen in September which is aimed at securing a sustainable EU supply of
critical raw materials for Europe and lessening European dependency on certain
other suppliers. The formal release of the Act is expected mid-March 2023.
Subsequent to the end of the reporting period, the Company made two very
significant announcements.
Firstly, the Company was pleased to announce that the Cinovec Project had been
declared a Strategic Project by the Just Transition Fund ('JTF') (refer to the
Company's ASX release dated 30 January 2023) (European Union's Just Transition
Fund approves Cinovec as a Strategic Project). Geomet s.r.o (the Cinovec
project company) will apply for JTF Grant funding for the maximum amount of
CZK 1.2B (approx. €49M).
Secondly, the Company was pleased to announce that DRA Global Limited ("DRA")
had been appointed to complete the Definitive Feasibility Study ("DFS") for
the Cinovec project in the Czech Republic.
With over 30 years' experience in the development and execution of projects,
DRA is a recognised leader in the delivery of lithium projects globally.
DRA has the necessary capacity, expertise and track record to deliver the
Cinovec DFS in a timely and efficient manner and will be working to build on
all of the optimisation work that the Cinovec team completed over the course
of 2022 with a view to completion of the DFS in Q4 2023.
DRA's appointment for this vital piece of project development work is
testament to both the Company's and its joint-venture partner CEZ s.a.
commitment to, and the tremendous prospectivity and value of, the Cinovec
Project. The Cinovec Project's in-house team will work closely with DRA to
develop and finalise the DFS.
CORPORATE AND ADMINISTRATION
On 9 January 2023, the Company completed the cancellation of 10,000,000
unlisted options (exercise price $0.25 expiring 31 December 2022) and the
issue of 6,343,007 shares/CDIs in lieu of these options in accordance with the
terms and conditions of the consultant options held by European Energy and
Infrastructure Group Limited. The CDIs have been issued for nil consideration
per the terms and conditions of the options.
On 31 January 2023, 1,200,000 warrants with an exercise price of $1.10
expired.
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 2022.
Geomet Tenement Schedule
Permit Code Deposit Interest at 1 July 2022 Acquired / Disposed Interest at 31 December 2022
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
2022 has been received and can be found on page 10 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
16 March 2023
BACKGROUND INFORMATION ON CINOVEC
PROJECT OVERVIEW
Cinovec Lithium/Tin Project
Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech
State over the Cinovec Lithium/Tin 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. 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% Li2O
and 0.08% Sn, Indicated Mineral Resource of 360.2Mt at 0.44% Li2O and 0.05% Sn
and an Inferred Mineral Resource of 294.7Mt at 0.39% Li2O and 0.05% Sn
containing a combined 7.39 million tonnes Lithium Carbonate Equivalent and
335.1kt of tin (refer to the Company's ASX release dated 13 October 2021)
(Resource Upgrade at Cinovec Lithium Project).
An initial Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn 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 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, the fifth
largest non-brine deposit in the world and a globally significant tin
resource.
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 Update, conducted
by specialist independent consultants which, based upon the production of
29,386tpa of lithium hydroxide, indicates a post-tax NPV of USD1.938B and a
post-tax IRR of 36.3% and confirmed that the Cinovec Project is 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 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 in addition to high-grade tin concentrate at excellent
recoveries. Cinovec is centrally located for European end-users and is well
serviced by infrastructure, with a sealed road adjacent to the deposit, rail
lines located 5 km north and 8 km south of the deposit, and an active 22 kV
transmission line running to the historic mine. As the deposit lies in an
active mining region, it has strong community support.
The economic viability of Cinovec has been enhanced by the recent strong
increase in demand for lithium globally, and within Europe specifically.
There are no other material changes to the original information and all the
material assumptions continue to apply to the forecasts.
BACKGROUND INFORMATION ON CEZ
Headquartered in the Czech Republic, CEZ a.s. is an established, integrated
energy group with operations in a number of Central and South-eastern European
countries and Turkey. 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. CEZ Group is one of the ten largest energy companies
in Europe, has more than 28,000 employees and annual revenue of approximately
EUR 11.39 billion.
The largest shareholder of its parent company, CEZ a.s., is the Czech Republic
with a stake of approximately 70%. The shares of CEZ a.s. 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 20.5 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.
CONTACT
For further information on this update or the Company generally, please visit
our website at www.europeanmet.com (http://www.europeanmet.com) or see full
contact details at the end of this release.
COMPETENT PERSON
Information in this release relating to the FECAB metallurgical testwork is
based on technical data compiled or supervised by Mr Walter Mädel, a
full-time consultant to Geomet s.r.o the Cinovec project 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.
16 March 2023
Board of Directors
European Metals Holdings Limited Level 3, 35 Outram Street
West Perth WA 6005
Dear Sirs
RE: EUROPEAN METALS HOLDINGS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of European
Metals Holdings Limited.
As Audit Director for the review of the financial statements of European
Metals Holdings Limited for the half- year ended 31 December 2022, I declare
that to the best of my knowledge and belief, there have been no contraventions
of:
(i) the auditor independence requirements of the Corporations
Act 2001in relation to the review; and
(ii) any applicable code of professional conduct in relation
to the review.
Yours faithfully
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
Martin Michalik Director
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER 2022
Note 31 Dec 22 31 Dec 21
$ $
Research and Development rebate - 56,187
Interest income 146,607 379
Other income 4 564,821 569,858
Share based payment expense 8 (1,915,154) (185,270)
Equity accounting on investment in Geomet s.r.o 5 (997,169) (744,108)
Employee benefits (525,615) (353,749)
Advertising and promotion (293,383) (195,460)
Accounting, legal and professional fees (161,573) (597,400)
Directors fees (112,493) (50,067)
Share registry and listing fees (86,571) (125,295)
Travel and accommodation (84,989) -
Insurance (40,056) (44,699)
Depreciation and amortisation expense (24,117) (16,431)
Audit fees (22,155) (18,910)
Finance costs (1,844) (1,671)
Foreign gain/(loss) 72,263 (8,466)
Other administration expenses (305,522) (234,872)
Loss before income tax (3,786,950) (1,949,974)
Income tax expense - -
Loss for the period (3,786,950) (1,949,974)
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 (1,091) (911)
- Equity accounting - share of the movement in foreign currency translation 5 (923,780) 195,403
reserve
Other comprehensive income/(loss) for the period, net of tax (924,871) 194,492
Total comprehensive loss for the period (4,711,821) (1,755,482)
Net Loss attributable to:
members of the parent entity (3,786,950) (1,949,974)
(3,786,950) (1,949,974)
Total Comprehensive loss attributable to:
members of the parent entity (4,711,821) (1,755,482)
(4,711,821) (1,755,482)
Basic and diluted loss per CDI/share 3 (2.04) (0.01)
The above statement should be read in conjunction with the accompanying
condensed notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Note 31 Dec 22 30 Jun 22
$ $
CURRENT ASSETS
Cash and cash equivalents 17,471,739 19,055,509
Trade and other receivables 334,637 782,518
Other assets 544,547 53,094
TOTAL CURRENT ASSETS 18,350,923 19,891,121
NON-CURRENT ASSETS
Other assets 47,392 47,392
Property, plant and equipment 2,473 -
Right-of-use asset 63,949 87,930
Investments accounted for using equity method 5 15,025,470 16,946,419
TOTAL NON-CURRENT ASSETS 15,139,284 17,081,741
TOTAL ASSETS 33,490,207 36,972,862
CURRENT LIABILITIES
Trade and other payables 193,477 939,822
Provisions - employee entitlements 229,857 147,048
Lease liability 47,503 45,707
TOTAL CURRENT LIABILITIES 470,837 1,132,577
NON-CURRENT LIABILITIES
Lease liability 16,527 40,775
TOTAL NON-CURRENT LIABILITIES 16,527 40,775
TOTAL LIABILITIES 487,364 1,173,352
NET ASSETS 33,002,843 35,799,510
EQUITY
Issued capital 6 47,881,352 47,881,352
Reserves 7 13,274,074 12,283,791
Accumulated losses (28,152,583) (24,365,633)
TOTAL EQUITY 33,002,843 35,799,510
The above statement should be read in conjunction with the accompanying
condensed notes.
CONSOLIDATED STATEMENT OF changes in equity
FOR THE HALF YEAR ENDED 31 DECEMBER 2022
Issued Capital Reserves Foreign Currency Translation Reserve Accumulated
Losses Total
$ $ $ $ $
Balance at 1 July 2021 34,087,930 9,220,602 (467,879) (17,562,738) 25,277,915
Loss attributable to members of the Company - - - (1,949,974) (1,949,974)
Other comprehensive loss - - 194,492 - 194,492
Total comprehensive income/(loss) for the period - - 194,492 (1,949,974) (1,755,482)
Transactions with owners, recognised directly in equity
Shares issued during the period, net of costs 99,960 - - - 99,960
Equity based payment - 83,986 - - 83,986
Balance at 31 December 2021 34,187,890 9,304,588 (273,387) (19,512,712) 23,706,379
Balance at 1 July 2022 47,881,352 11,904,132 379,659 (24,365,633) 35,799,510
Loss attributable to members of the Company - - - (3,786,950) (3,786,950)
Other comprehensive income - - (924,871) - (924,871)
Total comprehensive income/(loss) for the period - - (924,871) (3,786,950) (4,711,821)
Transactions with owners, recognised directly in equity
Equity based payment - 1,915,154 - - 1,915,154
Balance at 31 December 2022 47,881,352 13,819,286 (545,212) (28,152,583) 33,002,843
The above statement should be read in conjunction with the accompanying
condensed notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2022
31 Dec 2022 31 Dec 2021
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Other Income 551,472 551,472
Payments to suppliers and employees (2,045,776) (1,419,603)
Interest received 83,540 11,865
Grant received - 56,187
Payments for Cinovec associated costs (224,541) (227,271)
Net cash used in operating activities (1,635,305) (1,027,350)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment (2,610) -
Net cash used in investing activities (2,610) -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options - 99,960
Payment for lease liability (24,295) -
Net cash (used in)/from financing activities (24,295) 99,960
Net (decrease)/increase in cash and cash equivalents (1,662,210) (927,390)
Cash and cash equivalents at the beginning of the financial period 19,055,509 7,880,673
Foreign currency translation 78,440 (8,466)
Cash and cash equivalents at the end of financial period 17,471,740 6,944,817
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 2022
NOTE 1: BASIS OF PREPARATION
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.
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 2022 annual financial report for the financial year
ended 30 June 2022, 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.
This report was authorised on 16 March 2022.
Going concern
As per the interim financial statements, the consolidated financial statements
have been prepared on the going concern basis. At 31 December 2022, the
Group had cash and cash equivalents of $17,471,739 and incurred a loss after
income tax of $3,786,950.
The Directors have prepared a cash flow forecast, which indicates that the
Group 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. The Directors are also confident
the Group has the ability to raise further funds through capital raisings as
and when required to satisfy its operational expenditure commitments.
In determining the appropriateness of the basis of preparation, the Directors
have considered the impact of the COVID-19 pandemic on the position of the
Group at 31 December 2022 and its operations in future periods.
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 2022. All applicable new standards and interpretations effective since 1
January 2022 have been adopted. There was no significant impact on the Group.
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.
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 Venture. 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/share 31 Dec 2022 31 Dec 2021
Basic and diluted loss per CDI/share ($2.04) ($0.01)
Loss attributable to members of European Metals Holdings Limited (3,786,950) (1,949,974)
Weighted average number of CDIs/shares outstanding during the period 186,042,485 175,336,789
NOTE 4: OTHER INCOME 31 Dec 2022 31 Dec 2021
$ $
Service income - Geomet 551,472 551,472
Other Income 13,349 18,386
564,821 569,858
The Company provides services of managing the Cinovec project development.
NOTE 5: INVESTMENT IN ASSOCIATE 31 Dec 2022 30 June 2022
$ $
Opening 16,946,419 17,461,027
balance
Share of loss - associates (997,169) (1,367,744)
Share of the movement in foreign currency translation reserve - associates (923,780) 853,136
15,025,470 16,946,419
Effective 28 April 2020, Geomet was equity accounted for (i.e. 49% of share of
the profit or loss of the investee after that date) as Investment in Associate
by EMH.
NOTE 6: ISSUED CAPITAL
31 Dec 2022 30 June 2022
Number $ Number $
(a) Issued and paid up capital
CDIs/shares 186,042,485 47,881,352 186,042,485 47,881,352
Total issued capital 47,881,352 47,881,352
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 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
the right to an equal share in the distribution of the surplus assets of the
Company on its liquidation.
NOTE 7: RESERVES 31 Dec 2022 30 June 2022
$ $
Option and Warrant Reserve (a) 4,451,521 4,370,589
Performance Shares Reserve (b) 3,471,444 3,471,444
Performance Rights Reserve (c) 4,453,654 2,619,432
Loan CDIs Reserve (d) 1,442,667 1,442,667
Foreign Currency Translation Reserve (e) (545,212) 379,659
Total Reserves 13,274,074 12,283,791
(a) Option and Warrant Reserve 31 Dec 2022 30 June 2022
$ $
Balance at the beginning of the financial period 4,370,589 4,306,491
Equity based payment expense 80,932 64,098
Balance at the end of the financial 4,451,521 4,370,589
period
The following options and warrants existed as at 30 June 2022 and 31 December
2022:
Expiry Balance at 30 June 2022 Issued during the year Exercised during the year Expired Balance at 31 Dec 2022
date
Options @ 25cents 31 Dec 22 10,000,000 - (6,343,007) (3,656,993) -
Options @ 42cents 23 Oct 23 2,024,000 - - - 2,024,000
Options @ 45cents 23 Oct 23 600,000 - - - 600,000
Options @ 80cents 31 Dec 23(2) - 2,000,000 - - 2,000,000
Warrants @ $1.10 31 Jan 23 1,200,000 - - - 1,200,000
Total 13,824,000 2,000,000 (6,343,007) (3,656,993) 5,824,000
· 6,343,007 unlisted options were exercised during the period as
detailed in the table above. The share capital for the options exercised was
issued on 9 January 2023.
• 3,656,993 options exercisable at 0.25 cents on or before 31
December 2022 expired during the period.
(a) Option and Warrant Reserve (continued)
· 2,000,000 options exercisable at $0.80 on or before 31 December
2023 were granted to consultants on 28 October 2022. The share-based payment
expense of $80,932 was recognized in the statement of profit or loss and other
comprehensive in income for the period.
(b) Performance Shares Reserve
Date Number $
Balance at the beginning of the period (Class A) 1 July 2022 - 3,471,444
Balance at end of the period 31 Dec 2022 - 3,471,444
(c) Performance Rights Reserve
31 Dec 2022 30 June 2022
Number $ Number $
Balance at the beginning of the period 5,800,000 2,619,432 3,600,000 -
Performance rights granted to directors on 17 Dec 2020 - 623,014 - 1,896,130
Performance Rights granted to a consultant on 24 Nov 2021 - 24,223 100,000 107,440
Performance Rights granted to employee on 2 Mar 2022 - 515,803 1,200,000 344,803
Performance Rights granted to a consultant on 2 Mar 2022 - 389,646 900,000 271,059
Performance Rights granted to a consultant on 29 Aug 2022(1) 750,000 222,591 - -
Performance Rights granted to employee on 12 Dec 2022(2) 450,000 28,644 - -
Performance Rights granted to employee on 13 Dec 2022(2) 300,000 18,180 - -
Performance Rights granted to employee on 14 Dec 2022(2) 170,000 12,121 - -
Balance at the end of the period 7,470,000 4,453,654 5,800,000 2,619,432
(1)On 29 August 2022, the directors approved the grant of 750,000 Performance
Rights to a consultant for remuneration of consultant fees, expiring on 2
March 2025. The share-based expense of $222,591 was recognized in the
statement of profit or loss and other comprehensive income for the period.
Please refer note 8 for the terms and conditions of the Performance Rights.
(2) On 8 December 2022, the directors approved the grant of 920,000
Performance Rights to employees as part of their remuneration. Grant Date was
reached when the employees signed the offer letter agreements, and the
performance rights were therefore granted on 12 December 2022 (450,000
performance rights, expiring 2 March 2025), 13 December 2022 (300,000
performance rights, expiring 2 March 2025) and 14 December 2022 (170,000
performance rights, expiring 20 December 2025). Share-based expense of $58,945
was recognized in the statement of profit or loss and other comprehensive
income for the period. Please refer note 8 for the terms and conditions of the
Performance Rights.
(d) Loan CDIs Reserve
The CDIs reserve records the fair value of the Loan CDIs issued.
31 Dec 2022 30 June 2022
Number $ Number $
Balance at the beginning of the financial period 1,350,000 1,442,667 1,350,000 1,442,667
Balance at the end of the period 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 2022 30 June 2022
$ $
Balance at the beginning of the financial year 379,659 (467,879)
Transfer of foreign currency to profit or loss on deregistration of EQHSA - (16,709)
Movement during the period (924,871) 864,247
Balance at the end of the period (545,212) 379,659
NOTE 8: SHARE BASED PAYMENT EXPENSE
During the period, the Group incurred a share-based payment expense for a
total of $1,915,154 resulting from the transactions detailed below.
1. Share based payments granted during the period:
On 29 August 2022, 750,000 Performance Rights were granted to a consultant for
remuneration of consultant fees with the vesting terms as below, with the
performance rights split equally across the tranches:
1. Tranche 1 shall vest upon an announcement by the Company of an
offtake agreement for at least 25% of the product planned to be produced from
the Cinovec Project.
2. Tranche 2 shall vest upon the attainment of Project Finance for
the Cinovec Project.
3. Tranche 3 shall vest upon an announcement by the Company to the
ASX on a Decision to Mine in respect of the Cinovec Project.
The Performance Rights have a total fair value on grant date of $547,500. The
total fair value of the Performance Rights is expensed over the estimated
vesting periods. The share-based expense of $222,591 was recognized in the
statement of profit or loss and other comprehensive income for the period. As
at 31 Dec 2022, management has indicated that they expect the performance
rights for all tranches to vest fully as at 30 June 2023.
On 8 December 2022, the directors approved the grant of 920,000 Performance
Rights to employees as part of their remuneration. Grant Date was reached when
the employees signed the offer letter agreements, and the performance rights
were therefore granted on 12 December 2022 (450,000 performance rights), 13
December 2022 (300,000 performance rights) and 14 December 2022 (170,000
performance rights).
The vesting terms were as follows:
1. Tranche 1 (250,000 performance rights) shall vest upon the
completion of the Definitive Feasibility Study ("DFS") for the Cinovec Project
showing that the Project is Commercially viable at LiOH price of USD 17,000
per tonne.
2. Tranche 2 (250,000 performance rights) shall vest upon the
attainment of Project Finance for the Cinovec Project.
3. Tranche 3 (350,000 performance rights) shall vest upon an
announcement by the Company to the ASX on a Decision to Mine in respect of the
Cinovec Project.
4. Tranche 4 (70,000 performance rights) shall vest upon successful
completion of the pilot, being the production of battery grade LiC or LiOH in
accordance with standards YS/T 582-2013 and GB/T 26008-2020 or any other
applicable standard for battery grade LiC or battery grade LiOH.
5. Tranche 5 (100,000 performance rights) shall vest upon
satisfactory completion of the detailed designs of the plant in connection
with the project, such designs to be completed no later than 4 years from 4
October 2022.
The Performance Rights have a total fair value on grant date of $502,500. The
total fair value of the Performance Rights is expensed over the estimated
vesting periods. The share-based expense of $58,945 was recognized in the
statement of profit or loss and other comprehensive income for the period. As
at 31 Dec 2022, management has indicated that they expect the performance
rights for all tranches to vest fully as at 30 June 2023.
2. Share-based payment arrangement granted in prior years and
existing during the half-year ended 31 December 2022:
· 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 30 June 2023. The
share-based payment expense of $623,014 was recognized in the statement of
profit or loss and other comprehensive in 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 30 June 2023. The share-based
payment expense of $24,223 was recognized in the statement of profit or loss
and other comprehensive in 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 30 June 2023. The
share-based payment expense of $389,696 was recognized in the statement of
profit or loss and other comprehensive in 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 30 June 2023. . The
share-based payment expense of $515,807 was recognized in the statement of
profit or loss and other comprehensive in income for the period.
NOTE 9: 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 received $551,472 (2021: $551,472) from its
associate, Geomet s.r.o for providing services of managing the Cinovec project
development. In addition, the Company's associate Geomet s.r.o reimbursed
direct costs of the Company of $419,171 (2021: $229,160). The Company's
Directors also received remuneration from Geomet s.r.o in arm's length
transaction during the financial year.
Purchases from related parties are made on terms equivalent to those that
prevail in arm's length transactions. From July 2022 to October 2022, the
Company received accounting and bookkeeping services of $35,977.70 plus GST
from Everest Corporate, a company controlled by the spouse of Executive
Chairman, Keith Coughlan. Amount payable to Everest Corporate as at 31 Dec
2022 was $nil (2021: $12,528).
From October 2022, the Company received accounting and bookkeeping services of
$21,750 plus GST from Nexia, a company at which the spouse of Executive
Chairman, Keith Coughlan, acts as key management personnel. Amount payable to
Nexia as at 31 Dec 2022 was $7,975 (2021: $nil).
The Company received rental income of $13,349.18 plus GST from Everest
Corporate for subletting the office in West Perth, until October 2022.
On 24 November 2021, the Company granted 100,000 performance rights to Everest
Corporate, a company controlled by the spouse of Executive Chairman, Keith
Coughlan. The performance rights have a expiry date which is 3 years from the
date of issue.
There were no other transactions with related parties during the financial
year.
NOTE 10: CONTINGENT LIABILITIES AND COMMITMENTS
There has been no change in contingent liabilities and commitments since the
last annual reporting date.
NOTE 11: EVENTS SUBSEQUENT TO REPORTING DATE
On 9 January 2023, the Company completed the cancellation of 10,000,000
unlisted options (exercise price $0.25 expiring 31 December 2022) and the
issue of 6,343,007 shares/CDIs in lieu of these options in accordance with
the terms and conditions of the consultant options held by European Energy and
Infrastructure Group Limited. The CDIs have been issued for nil consideration
per the terms and conditions of the options.
On 31 January 2023, 1,200,000 warrants with an exercise price of $1.10
expired.
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 2022.
DIRECTORS' DECLARATION
The Directors of the Company declare that:
1. The financial statements and notes set out on pages 11 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 2022 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
16 March 2023
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, which comprises the consolidated statement of financial position as
at 31 December 2022, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the half-year ended on that date,
condensed notes comprising 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 European Metals Holdings Limited does not comply with the Corporations Act
2001 including:
(a) giving a true and fair view of European Metals Holdings Limited's
financial position as at 31 December 2022 and of its 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 our 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 has been given to the directors of the Group on 16 March 2023.
Responsibility of the Directors for the Financial Report
The directors of European Metals Holdings Limited 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 Company's financial position as at 31 December 2022
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.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(An Authorised Audit Company)
Martin
Michalik
Director
West Perth, Western Australia
16 March 2023
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