European Metals Holdings Regulatory News (EMH)

European Metals Holdings Limited

Keith Coughlan, Executive Chairman

Julia Beckett, Company Secretary

Tel: +61 (0) 419 996 333

Email: keith@europeanmet.com

Tel: +61 (0) 6141 3500

Email: julia@europeanmet.com

Beaumont Cornish (Nomad & Broker)

Michael Cornish

Roland Cornish

Tel: +44 (0) 20 7628 3396

Directors

Mr Keith Coughlan

Mr Richard Pavlik

Mr Kiran Morzaria

Company Secretary

Ms Julia Beckett

Executive Chairman

Executive Director

Non-Executive Director

Registered Office in Australia

Suite 12, Level 1

11 Ventnor Avenue

WEST PERTH WA 6005

Telephone 08 6245 2050

Facsimile 08 6245 2055

Email www.europeanmet.com

Nominated Advisor & Broker

Beaumont Cornish Limited

Building 3

566 Chiswick High Road

LONDON W4 FYA

UNITED KINGDOM

Registered Office in Czech Republic

Jaselska 193/10, Veveri602 00 BrnoCzech RepublicTel: +420 732 671 666

Registered Address and Place of Incorporation - BVI

Rawlinson & Hunter

Woodbourne Hall

PO Box 3162

Road Town

Tortola VG1 110

British Virgin Islands

Share Register - Australia

Computershare Investor Services Limited

Level 11

172 St Georges Terrace

Perth WA 6000

Telephone 1300 850 505 (within Australia)

Telephone +61 3 9415 4000 (outside Australia)

Facsimile 1800 783 447 (within Australia)

Facsimile +61 3 9473 2555 (outside Australia)

UK Depository

Computershare Investor Services plc

The Pavilions

Bridgewater Road

BRISTOL BS99 6ZZ

UNITED KINGDOM

Auditor

Stantons International Audit and Consulting Pty Ltd

Level 2, 1 Walker Avenue

West Perth WA 6005

Telephone +61 8 9481 3188

Facsimile +61 8 9321 1204

Reporting Accountants (UK)

Chapman Davis LLP

2 Chapel Court

LONDON SE1 1HH

UNITED KINGDOM

Securities Exchange Listing - Australia

ASX Limited

Level 40, Central Park

152-158 St Georges Terrace

PERTH WA 6000

ASX Code: EMH

Securities Exchange Listing - United Kingdom

London Stock Exchange plc

10 Paternoster Square

LONDON EC4M 7LS

UNITED KINGDOM

AIM Code: EMH

Mr Keith Coughlan

Executive Chairman

Previously Managing Director

Appointed 30 June 2020

Appointed 6 September 2013

Mr David Reeves

Non-Executive Chairman

Appointed 6 March 2014; Resigned 30 June 2020

Mr Richard Pavlik

Executive Director

Appointed 27 June 2017

Mr Kiran Morzaria

Non-Executive Director

Appointed 10 December 2015

Keith Coughlan

Executive Chairman - Appointed 30 June 2020

Previously Managing Director (CEO) - Appointed 6 September 2013 to 30 June 2020

Qualifications

BA

Experience

Mr Coughlan has almost 30 years' experience in stockbroking and funds management. He has been largely involved in the funding and promoting of resource companies listed on ASX, AIM and TSX. He has advised various companies on the identification and acquisition of resource projects and was previously employed by one of Australia's then largest funds management organizations.

Interest in CDIs and Options

Mr Coughlan has 850,000 CDIs direct interest and 8,500,000 indirect interest held by Inswinger Holdings Pty Ltd, an entity of which Mr Coughlan is a director and a shareholder.

Special Responsibilities

Member of Audit and Risk Committee

Member of Nomination Committee

Directorships held in other listed entities

Non-Executive Chairman of Doriemus plc

Non-Executive Director of Calidus Resources Limited

Non-Executive Director of Southern Hemisphere Mining Limited

David Reeves

Non-Executive Chairman - Appointed 6 March 2014; Resigned on 30 June 2020

Qualifications

Mining Engineer

Experience

Mr Reeves is a qualified mining engineer with 30 years' experience globally. Mr Reeves holds a First Class Honours Degree in Mining Engineering from the University of New South Wales, a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia and a First Class Mine Managers Certificate of Competency.

Interest in CDIs and Options*

Mr Reeves has 300,000 CDIs direct interest and 4,045,840 CDI indirect interest held by Eleanor Jean Reeves , Mr Reeves' spouse.

325,587 Class A Performance Shares

1,000,000 options, 16.6 cents, expire 17 August 2020

Special Responsibilities

Member of all the Committees (Resigned on 30 June 2020)

Directorships held in other listed entities

Managing Director of Calidus Resources Limited (ASX)

Director of Keras Resources Plc (AIM)

* Shareholdings as at 30 June 2020, date of resignation

Richard Pavlik

Executive Director - Appointed 27 June 2017

Qualifications

Masters Degree in Mining Engineer

Experience

Mr Pavlik is the Chief Advisor to the CEO of Geomet s.r.o, and is a highly experienced Czech mining executive. Mr Pavlik holds a Masters Degree in Mining Engineer from the Technical University of Ostrava in Czech Republic. He is the former Chief Project Manager and Advisor to the Chief Executive Officer at OKD. OKD has been a major coal producer in the Czech Republic. He has almost 30 years of relevant industry experience in the Czech Republic. Mr Pavlik also has experience as a Project Analyst at Normandy Capital in Sydney as part of a postgraduate program from Swinburne University. Mr Pavlik has held previous senior positions within OKD and New World Resources as Chief Engineer, and as Head of Surveying and Geology. He has also served as the Head of the Supervisory Board of NWR Karbonia, a Polish subsidiary of New World Resources (UK) Limited. He has an intimate knowledge of mining in the Czech Republic.

Interest in CDIs and Options

300,000 CDIs

Special Responsibilities

 Member of Audit and Risk Committee

Member of Nomination Committee

Directorships held in other listed entities

Nil

Kiran Morzaria

Non-Executive Director - Appointed 10 December 2015

Qualifications

Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School

Experience

Mr Morzaria has extensive experience in the mineral resource industry working in both operational and management roles. He spent the first four years of his career in exploration, mining and civil engineering before obtaining his MBA. Mr Morzaria has served as a director of a number of public companies in both an executive and non-executive capacity. 

Interest in CDIs and Options

Mr Morzaria has 200,000 direct interest in CDIs. Mr Morzaria is a director and chief executive of Cadence Minerals Plc which owns 23,259,751 CDIs. Mr Morzaria has no control on the acquisition or sale of the shares held by Cadence Minerals plc.

Special Responsibilities

Member of Audit and Risk Committee

Member of Nomination Committee

Directorships held in other listed entities

Chief Executive Officer and Director of Cadence Minerals plc and Director of UK Oil & Gas plc. Mr Morzaria was previously a Director of Bacanora Minerals plc.

Directors' Meetings

Name

Number attended

Number eligible to attend

David Reeves

6

6

Keith Coughlan

6

6

Richard Pavlik

6

6

Kiran Morzaria

6

6

Expiry date

Exercise Price

Number under option

15 June 2022

25.0 cents

200,000

1 January 2021

35.0 cents

200,000

1 June 2021

40.18 cents

100,000

1 December 2021

31.11 cents

100,000

22 November 2021

31.5 cents

116,875

31 December 2022

25.0 cents

15,000,000

Issue date

Expiry date

Number on issue

A Class

18 Dec 2018

18 Dec 2021

3,000,000

Number on issue

Issue date

1,650,000

14 Dec 2017

100,000

6 Jun 2018

2020

Group Key Management Personnel

Short-term benefits

Post-

employment

benefits

Long-term benefits

Equity-settled share-based payments

Total

% of remuneration as share based payments

Salary, fees and leave

Profit share and bonuses

Non-monetary

Other

Super-annuation

Long Service Leave

Equity

Options3

Directors

$

$

$

$

$

$

$

$

$

David Reeves(i)

36,000

-

-

-

-

-

-

-

36,000

-

Keith Coughlan(ii)

240,000

-

-

4,822

22,800

26,663

-

-

294,285

-

Kiran Morzaria

24,000

-

-

-

-

-

-

-

24,000

-

Richard Pavlik(iii)

140,691

-

-

-

-

-

-

29,802

170,493

17.4%

440,691

-

-

4,822

22,800

26,663

-

29,802

524,778

-

2019

Group Key Management Personnel

Short-term benefits

Post-

employment

benefits

Long-term benefits

Equity-settled share-based payments

Total

% of remuneration as share based payments

Salary, fees and leave

Profit share and bonuses

Non-monetary

Other 1

Super-annuation

Other

Equity 2

Options 3

Directors

$

$

$

$

$

$

$

$

$

David Reeves

36,000

-

-

-

-

-

86,824

-

122,824

71%

Keith Coughlan

240,000

-

-

34,571

26,084

-

-

-

300,655

-

Kiran Morzaria

24,000

-

-

-

-

-

-

-

24,000

-

Richard Pavlik

165,878

-

-

-

-

-

-

59,117

224,995

26%

Key Management Personnel

James Carter(i)

18,231

-

-

-

1,610

-

-

-

19,841

-

Neil Meadows(ii)

183,333

-

-

3,810

17,779

-

260,148

-

465,070

56%

667,442

-

-

38,381

45,473

-

346,972

59,117

1,157,385

30 June 2020

Loan CDIs Grant Details

Exercised

Lapsed/Cancelled

Balance at End of Year

Grant Date

No.

Value

No.

Value

No.

Value

No.

No.

Value

$

$

$

Vested

Not Vested

$

Group KMP

David Reeves*

30 Nov 2017

300,000

209,028

-

-

-

-

300,000

-

209,028

Keith Coughlan

30 Nov 2017

850,000

592,245

-

-

-

-

850,000

-

592,245

Richard Pavlik

30 Nov 2017

300,000

209,028

-

-

-

-

300,000

-

209,028

Kiran Morzaria

30 Nov 2017

200,000

139,352

-

-

-

-

200,000

-

139,352

1,650,000

1,149,653

-

-

-

-

1,650,000

-

1,149,653

30 June 2019

Loan CDIs Grant Details

Exercised

Lapsed

Balance at End of Year

Grant Date

No.

Value

No.

Value

No.

Value

No

No.

Value

$

$

$

Vested

Not Vested

$

Group KMP

David Reeves

30 Nov 2017

300,000

209,028

-

-

-

-

300,000

-

209,028

Keith Coughlan

30 Nov 2017

850,000

592,245

-

-

-

-

850,000

-

592,245

Richard Pavlik

30 Nov 2017

300,000

209,028

-

-

-

-

300,000

-

209,028

Kiran Morzaria

30 Nov 2017

200,000

139,352

-

-

-

-

200,000

-

139,352

James Carter(i, iii)

6 June 2018

400,000

106,550

-

-

-

-

-

400,000

106,550

Neil Meadows(ii, iv)

6 June 2018

1,000,000

266,376

-

-

-

-

1,000,000

-

266,376

3,050,000

1,522,579

-

-

-

-

2,650,000

400,000

1,522,579

30 June 2020

Options Grant Details

Exercised

Lapsed

Balance at End of Year

Grant Date

No.

Value 1

No.

Value

No.

Value

No.

Value

$

$

$

$

Group KMP

David Reeves

-

-

-

-

-

-

-

-

-

Keith Coughlan

-

-

-

-

-

-

-

-

-

Richard Pavlik

3 January 2017

400,000

177,352

-

-

(400,000)

177,352

-

-

Kiran Morzaria

-

-

-

-

-

-

-

-

-

400,000

177,352

-

-

(400,000)

177,352

-

-

David Reeves*

1,000,000

-

-

-

1,000,000

1,000,000

-

Keith Coughlan

2,000,000

-

-

-

2,000,000

2,000,000

-

Kiran Morzaria

-

-

-

-

-

-

-

Richard Pavlik

400,000

-

-

(400,000)

-

-

-

Total

3,400,000

-

-

(400,000)

3,000,000

3,000,000

-

David Reeves

1,000,000

-

-

-

1,000,000

1,000,000

-

Keith Coughlan

2,000,000

-

-

-

2,000,000

2,000,000

-

Kiran Morzaria

-

-

-

-

-

-

-

Richard Pavlik

400,000

-

-

-

400,000

-

400,000

James Carter(i)

-

-

-

-

-

-

-

Neil Meadows(ii)

-

-

-

-

-

-

-

Total

3,400,000

-

-

-

3,400,000

3,000,000

400,000

2020

Name

Balance at Start of year

Granted as remuneration during the year

Issued on exercise of options

Other Changes during the year

Balance at end of year

David Reeves(i)

300,000

-

-

-

300,000

Indirect1

3,720,244

-

-

325,5964

4,045,840

Keith Coughlan

850,000

-

-

-

850,000

Indirect2

8,500,000

-

-

-

8,500,000

Kiran Morzaria

200,000

-

-

-

200,000

Indirect3

27,896,470

-

-

(4,636,719)

23,259,751

Richard Pavlik

300,000

-

-

-

300,000

Total

41,766,714

-

-

(4,311,123)

37,455,591

2019

Name

Balance at Start of year

Granted as remuneration during the year

Issued on exercise of options

Other Changes during the year

Balance at end of year

David Reeves

300,000

-

-

-

300,000

Indirect1

3,720,244

-

-

-

3,720,244

Keith Coughlan

850,000

-

-

-

850,000

Indirect2

8,500,000

-

-

-

8,500,000

Kiran Morzaria

200,000

-

-

-

200,000

Indirect3

27,846,470

-

-

50,000

27,896,470

Richard Pavlik

300,000

-

-

-

300,000

James Carter(i)

400,000

-

-

-

400,000

Neil Meadows(ii)

1,000,000

-

-

-

1,000,000

Total

43,116,714

-

-

50,000

43,166,714

30 June 2020

Grant Details

Exercised

Lapsed/cancelled

Balance at End of Year

Grant Date

No.

Value

No.

Value

No.

Value

No.

Value

$

$

$

Unvested

$

Group KMP

David Reeves(i)

A Class

18 Dec 2018

542,651

86,824

(217,064)

34,730

-

-

325,587

52,094

David Reeves(i)

B Class

24 Nov 2016

542,651

289,932

(108,532)

57,987

(434,119)

231,945

-

-

Keith Coughlan

-

-

-

-

-

-

-

-

-

Richard Pavlik

-

-

-

-

-

-

-

-

-

Kiran Morzaria

-

-

-

-

-

-

-

-

-

1,085,302

376,756

(325,596)

92,717

(434,119)

231,945

325,587

52,094

30 June 2019

Grant Details

Exercised

Lapsed/cancelled

Balance at End of Year

Grant Date

No.

Value

No.

Value

No.

Value

No.

Value

$

$

$

Unvested

$

Group KMP

David Reeves

A Class

18 Dec 2018

542,651

86,824

-

-

-

-

542,651

86,824

David Reeves

B Class

24 Nov 2016

542,651

289,932

-

-

-

-

542,651

289,932

Keith Coughlan

-

-

-

-

-

-

-

-

-

Richard Pavlik

-

-

-

-

-

-

-

-

-

Kiran Morzaria

-

-

-

-

-

-

-

-

-

James Carter(i)

B Class

24 Nov 2016

514,650

274,971

-

-

-

-

514,650

274,971

Neil Meadows(ii)

-

-

-

-

-

-

-

-

-

1,599,952

651,727

-

-

-

-

1,599,952

651,727

Entity

Nature of transactions

Key Management Personnel

Total Transactions

Payable Balance

2020

$

2019

$

2020

$

2019

$

Wilgus Investments Pty Ltd/Wild West Enterprises Pty Ltd

Rental

David Reeves

15,600

40,200

-

-

Note

30 June 2020

30 June 2019

$

$

Revenue

6

183,835

1,461

Other income

47,244

355,744

Professional fees

(2,043,727)

(1,153,379)

Audit fees

7

(54,450)

(40,000)

Directors' fees

(60,000)

(60,000)

Share based payments

17

(2,439,192)

(1,179,090)

Advertising and Promotion

(175,052)

(94,879)

Employees' benefits

(294,342)

(473,902)

Travel and accommodation

(98,576)

(166,090)

Office and rent expense

(15,600)

(40,200)

Insurance expense

(25,552)

(9,953)

Share registry expense

(139,514)

(97,211)

Depreciation expense

(1,344)

(1,344)

Equity accounting on investment in Geomet s.r.o

13

490,051

-

Foreign exchange gain/(loss)

45,018

27,096

Other expenses

(27,528)

(33,604)

Loss before income tax

(4,608,729)

(2,965,351)

Income tax expense

3

-

-

Loss from continuing operations

(4,608,729)

(2,965,351)

Gain/(loss) from discontinued operations - De-consolidation of Geomet s.r.o

20

7,422,536

(287,464)

Income/(Loss) for the year attributable to the members of the Company

2,813,807

(3,252,815)

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

- exchange differences on translating foreign operations

(1,522,451)

443,780

Other comprehensive income/(loss) for the year, net of tax

(1,522,451)

443,780

Total comprehensive income/(loss) for the year attributable to members of the Company

1,291,356

(2,809,035)

Earnings per share for income/(loss) from continuing operations

Basic earnings per CDI (cents)

8

(3.05)

(2.05)

Diluted earnings per CDI (cents)

8

(3.05)

(2.05)

Earnings per share for loss from discontinued operations

Basic earnings per CDI (cents)

8

4.92

(0.20)

Diluted earnings per CDI (cents)

8

4.92

(0.20)

CURRENT ASSETS

Cash and cash equivalents

9

58,951

426,178

Other receivables

10

17,252

92,180

Other assets

5,110

23,587

TOTAL CURRENT ASSETS

81,313

541,945

NON-CURRENT ASSETS

Property, plant and equipment

11

869

385,158

Exploration and evaluation expenditure

12

-

11,684,072

Investments accounted for using equity method

13

18,966,531

-

TOTAL NON-CURRENT ASSETS

18,967,400

12,069,230

TOTAL ASSETS

19,048,713

12,611,175

CURRENT LIABILITIES

Trade and other payables

14a

924,592

128,977

Provisions - employee entitlements

14b

54,618

23,133

TOTAL CURRENT LIABILITIES

979,210

152,110

TOTAL LIABILITIES

979,210

152,110

NET ASSETS

18,069,503

12,459,065

EQUITY

Issued capital

15

23,954,204

22,074,314

Reserves

16

7,715,587

6,798,846

Accumulated losses

(13,600,288)

(16,414,095)

TOTAL EQUITY

18,069,503

12,459,065

Issued Capital

Share Based Payment Reserve

Foreign Currency Translation Reserve

Accumulated

Losses

Total

$

$

$

$

$

Balance at 1 July 2018

20,413,074

4,303,819

843,485

(13,161,280)

12,399,098

Loss attributable to members of the Company

-

-

-

(3,252,815)

(3,252,815)

Other comprehensive income

-

-

443,780

-

443,780

Total comprehensive loss for the year

-

-

443,780

(3,252,815)

(2,809,035)

Transactions with owners, recognized directly in equity

CDIs issued during the year, net of costs

1,661,240

28,672

-

-

1,689,912

Equity based payments

-

1,179,090

-

-

1,179,090

Balance at 30 June 2019

22,074,314

5,511,581

1,287,265

(16,414,095)

12,459,065

Balance at 1 July 2019

22,074,314

5,511,581

1,287,265

(16,414,095)

12,459,065

Income attributable to members of the Company

-

-

-

2,813,807

2,813,807

Other comprehensive income/(loss)

-

-

(1,522,451)

-

(1,522,451)

Total comprehensive (loss)/income for the year

-

-

(1,522,451)

2,813,807

1,291,356

Transactions with owners, recognized directly in equity

CDIs issued during the year, net of costs

1,879,890

-

-

-

1,879,890

Equity based payments

-

2,439,192

-

-

2,439,192

Balance at 30 June 2020

23,954,204

7,950,773

(235,186)

(13,600,288)

18,069,503

CASH FLOWS FROM OPERATING ACTIVITIES

Revenue received

275,736

-

Government grant

39,370

-

Payments to suppliers and employees

(2,177,875)

(2,714,709)

Interest received

11

1,461

R&D Rebate

-

355,745

Net cash (used in) operating activities

17

(1,862,758)

(2,357,503)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for exploration and evaluation expenditure

(331,372)

(1,165,022)

Net cash (used in) investing activities

(331,372)

(1,165,022)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of CDIs

2,024,905

1,817,303

Capital raising costs paid

(145,015)

(127,391)

Net cash from financing activities

1,879,890

1,689,912

Net (decrease)/increase in cash and cash equivalents

(314,240)

(1,832,613)

Cash and cash equivalents at the beginning of the financial year

426,178

2,223,109

Exchange differences in foreign currency held

(52,987)

35,682

Cash and cash equivalents at the end of financial year

58,951

426,178

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of preparation

These consolidated financial statements and notes represent those of European Metals Holdings Limited ("the Company") and Controlled Entities (the "Consolidated Group" or "Group").

The financial statements are general purpose financial statements, which have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Boards (AASB) and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

The accounting policies detailed below have been adopted in the preparation of the financial report. Except for cash flow information, the financial statements have been prepared on an accrual basis and are based on historical cost, modified, where applicable, by the measurement at fair values of selected non-current assets, financial assets and financial liabilities.

The Group is a listed public company, incorporated in the British Virgin Islands and registered in Australia.

(i)

Accounting policies

The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after 1 January 2019 but determined that their application to the financial statements is either not relevant or not material.

(a) New and Revised Accounting Standards Adopted by the Group

The Group has considered the implications of new or amended Accounting Standards which have become applicable for the current financial reporting year and the group had to change its accounting policies as a result of adopting the following standard:

AASB 16: Leases

The Group as lessee

At inception of a contract, the Group assesses if the contract contains a lease or is a lease. If there is a lease present, a right-of-use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating expense on a straight-line basis over the term of the lease.

Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing rate.

Lease payments included in the measurement of the lease liability are as follows:

• fixed lease payments less any lease incentives;

• variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

• the amount expected to be payable by the lessee under residual value guarantees;

• the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;

• lease payments under extension options, if the lessee is reasonably certain to exercise the options; and

• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest.

Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.

Based on director's assessment, the adoption of AASB 16 did not have any material impact on the Group as its existing lease contract is short-term in nature.

(b) New and revised Accounting Standards for Application in Future Periods

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the company.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting period and on foreseeable future transactions.

(ii)

Statement of Compliance

The financial report was authorised for issue on 30 September 2020.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in the financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards as issued by the IASB.

(iii)

Going Concern

The directors have prepared the 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 30 June 2020, the consolidated entity comprising the Company and its subsidiaries has incurred a profit for the year amounting to $2,813,807 (2019: loss $3,252,815). The Consolidated entity has a net working capital deficit of $897,897 (2019: $389,835), current liabilities of $979,210 (2019: $152,110) and cash and cash equivalents of $58,951 (2019: $426,178). Since 30 June 2020, the Company has raised a further of $635,000 through exercised options as disclosed in Note 26.

The directors consider these funds, combined with the loan arrangement entered into with 6466 Investments Pty Ltd which allows for a drawdown of up to A$1million in tranches as required over 12 months, and the additional funds from any capital raising to be sufficient for planned expenditure on the project for the ensuing 12 months as well as for corporate and administrative overhead costs. The first drawdown was completed on 17 July 2020.

The ability of the Group to continue as a going concern and meet its planned exploration, administration and other commitments is dependent upon the Group raising further working capital. In the event that the Group is not successful in raising further equity, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the Group's current and non-current assets may be significantly less than book values.

(iv)

Critical accounting estimates and judgements

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

 Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees and consultants by reference to the estimated fair value of the equity instruments at the date at which they are granted. These are expensed over the estimated vesting periods.

 (iv)

Critical accounting estimates and judgements

Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.

Recognition of deferred tax assets

Deferred tax assets relating to temporary differences and unused tax losses have not been recognised as the Directors are of the opinion that it is not probable that future taxable profit will be available against which the benefits of the deferred tax assets can be utilised.

(b)

Income Tax

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(c)

Impairment of assets

At the end of each reporting period the Group assesses whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount in which case the impairment loss is treated as a revaluation decrease.

An assessment is also made at each reporting period as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(d)

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities in the Statement of Financial Position.

(e)

Revenue

Interest

Interest income is recognised using the effective interest method.

Services Revenue

Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Effective 28 April 2020, the Group started providing services of managing the Cinovec project development.

(f)

Goods and Services Tax (GST)

Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.

Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(g)

Trade and other receivables

Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. Trade receivables are generally due for settlement within 30 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group.

The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance.

The amount of the impairment loss is recognised in the profit and loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the profit and loss.

(h)

Government Grants

An unconditional government grant is recognised in profit or loss as other income when the grant becomes receivable. Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same period in which the expenses are recognised.

Research and development tax incentives are recognised in the statement of profit or loss when received or when the amount to be received can be reliably estimated.

(i)

Employee Benefits

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Provision is made for the liability due to employee benefits arising from services rendered by employees to the reporting date. Employee benefits expected to be settled within one year together with benefits arising out of wages and salaries, sick leave and annual leave which will be settled after one year, have been measured at their nominal amount. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Contributions made to defined employee superannuation funds are charged as expenses when incurred.

 (j)

Exploration and Evaluation Assets

Exploration and evaluation costs, including costs of acquiring licenses, are capitalised as exploration and evaluation assets on an area of interest basis. Costs of acquiring licences which are pending the approval of the relevant regulatory authorities as at the date of reporting are capitalised as exploration and evaluation cost if in the opinion of the Directors it is virtually certain the Group will be granted the licences.

Exploration and evaluation assets are only recognised if the rights of tenure to the area of interest are current and either:

(a) The expenditures are expected to be recouped through successful development and exploitation of the area of interest, or

(b) Activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are assessed for impairment when:

(i) Sufficient data exists to determine technical feasibility and commercial viability, and

(ii) Facts and circumstances suggest that the carrying amount exceeds the recoverable amount (see impairment accounting policy in Note 1(c). For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which exploration activity relates. The cash generating unit shall not be larger than the area of interest.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from intangible assets to mining property and development assets within property, plant and equipment.

(k)

Financial Instruments

 Recognition, initial measurement and derecognition

 Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument. Financial instruments (except for trade receivables) are measured initially at fair value adjusted by transaction costs, except for those carried at 'fair value through profit or loss', in which case transaction costs are expensed to profit or loss. Where available, quoted prices in an active market are used to determine the fair value. In other circumstances, valuation techniques are adopted. Subsequent measurement of financial assets and financial liabilities are described below.

 Trade receivables are initially measured at the transaction price if the receivables do not contain a significant financing component in accordance with AASB 15.

 Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expired.

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet with the following conditions (and are not designated as FVPL);

· they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

· the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Financial assets at fair value through other comprehensive income

The Group measures debt instruments at fair value through OCI if both of the following conditions are met:

· the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding; and

· the financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling the financial asset.

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI.

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading.

Financial assets at fair value through profit or loss (FVPL)

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.

All interest-related charges and, if applicable, gains and losses arising on changes in fair value are recognised in profit or loss.

(l)

Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months.

(m)

Earnings Per CDI

Basic earnings per CDI

Basic earnings per CDI is determined by dividing the profit or loss attributable to ordinary shareholders of the Company, by the weighted average number of CDIs outstanding during the period, adjusted for bonus elements in CDIs issued during the period.

Diluted earnings per CDI

Diluted earnings per CDI adjusts the figure used in the determination of basic earnings per CDI to take into account the after income tax effect of interest and other financial costs associated with dilutive potential CDIs and the weighted average number of CDIs assumed to have been issued for no consideration in relation to dilutive potential CDIs, which comprise convertible notes and CDI options granted.

(n)

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in as expenses in the period in which they are incurred.

(o)

Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.

(p)

Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. Operating segments' results are reviewed by the Group's Managing Director to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

 (q)

CDI based payments

The grant date fair value of CDI-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do not meet the related service and non-market performance conditions at the vesting date. For CDI-based payment awards with non-vesting conditions, the grant date fair value of the CDI-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Loan CDIs are treated similar to options and value is an estimate calculated using an appropriate mathematical formula based on Black-Scholes option pricing model. The choice of models and the resultant Loan CDI value require assumptions to be made in relation to the likelihood and timing of the vesting of the Loan CDIs and the value and volatility of the price of the underlying shares.

(r)

Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each of the Group's entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in Profit or Loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in Profit or Loss.

Group companies

The financial results and position of foreign operations whose functional currency is different from the Group's presentation currency are translated as follows:

- Assets and liabilities are translated at year end exchange rates prevailing at the end of the reporting period;

- Income and expenses are translated at average exchange rates for the period; and

- Retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations recognised in the other comprehensive income and included in the foreign currency translation reserve in the Statement of Financial Position. These differences are reclassified into Profit or Loss in the period in which the operation is disposed.

(s)

Issued capital

CDIs are classified as equity. Incremental costs directly attributable to the issue of new CDIs or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new CDIs or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration.

(t)

Principles of Consolidation

The consolidated financial statements incorporate all of the assets, liabilities and results of the parent European Metals Holdings Limited and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 22.

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.

Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as "non-controlling interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income.

(u)

Investments in associates

Associates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment.

When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

NOTE 2:  DETERMINATION OF FAIR VALUES

A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

CDI-based payment transactions

The fair value of the employee CDI options and the share appreciation right is measured using the Black-Scholes formula. Measurement inputs include CDI price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

30 June 2020

30 June 2019

(a) Income tax expense

$

$

Current tax

-

-

Deferred tax

-

-

-

-

Deferred income tax expense included in income tax expense comprises:

(Increase) in deferred tax assets

-

-

Increase in deferred tax liabilities*

-

-

-

-

* Any capital gain on disposal of shares in Geomet held by EMH UK is tax-exempt under the current UK legislation (Schedule 7AC of the Taxation of Chargeable Gains Act 1992). For this reason, no deferred tax liability has been recognised as at 30 June 2020.

 (b) Reconciliation of income tax expense to prima facie tax payable

Net profit/(loss) before tax

2,813,807

(3,252,815)

Prima facie tax on operating loss at 27.5% (2019: 30%)

773,797

(975,845)

Add / (Less): Non-deductible items

(Non-assessable income)/non-deductible expenses

(1,035,056)

439,967

Current year tax loss not recognised

261,259

535,878

Income tax attributable to operating profit/loss

-

-

The applicable weighted average effective tax rates are as follows:

Nil%

Nil%

Balance of franking account at year end

Nil

Nil

a.

b. Deferred tax assets

Tax losses

1,080,484

1,234,662

Other assets

(1,406)

-

Unrealised foreign exchange gain

(12,380)

-

Accruals

53,784

12,750

Capital raising costs

155

30,574

Provisions

40,296

13,123

Unrecognised deferred tax asset

1,160,933

1,291,109

Set-off deferred tax liabilities

-

(1,068)

Net deferred tax assets

1,160,933

1,290,041

Deferred tax liabilities

Exploration expenditure

-

-

Property, plant and equipment

-

(1,068)

-

(1,068)

Set-off deferred tax assets

-

1,068

Net deferred tax liabilities

-

-

Tax losses

Unused tax losses for which no deferred tax asset has been recognised

3,929,089

4,115,539

2020

$

2019

$

Short-term benefits

445,513

667,442

Post-employment benefits

22,800

45,473

Long service leave

26,663

-

Equity settled

29,802

406,089

Other payments

-

38,381

524,778

1,157,385

Entity

Nature of transactions

Key Management Personnel