European Metals Holdings Regulatory News (EMH)

For immediate release

17 June 2019

EUROPEAN METALS HOLDINGS LIMITED

PFS UPDATE CONFIRMS POTENTIAL OF LOW-COST LITHIUM HYDROXIDE PRODUCTION

European Metals Holdings Limited ("European Metals" or "the Company") is pleased to announce the results from the successful update of the process flowsheet previously developed to enable the production of lithium hydroxide (LiOH.H2O). This work has been completed in conjunction with test-work confirming the production of battery grade lithium hydroxide from Cinovec ore.

These results significantly enhance the forecast economics of the Cinovec Project.

HIGHLIGHTS (all $ figures in this release are US Dollars and increases refer to the 2017 PFS Lithium Carbonate study):

· Net estimated overall cost of production post credits: $3,435 / tonne LiOH.H2O

· Project Net Present Value ("NPV") increases 105% to: $1.108B (post tax, 8%) 

· Internal Rate of Return ("IRR") increased 37% to 28.8% (post tax)

· Total Capital Cost: $482.6M

· Annual production of Battery Grade Lithium Hydroxide: 25,267 tonnes

· Studies are based on only 9.3% of reported Indicated Mineral Resource and a mine life of 21 years processing an average of 1.68 Mtpa ore

· The process used to produce lithium hydroxide allows for the staging of lithium carbonate and then lithium hydroxide production to minimize capital and startup risk and enables the production of either battery grade lithium hydroxide or carbonate as markets demand

European Metals Managing Director Keith Coughlan said, "I am very pleased to report to shareholders on the completion of this update to our 2017 Preliminary Feasibility Study for the Cinovec project which adds significantly to the already robust forecast economics for the project. Since demonstrating that battery grade lithium hydroxide can be produced from zinnwaldite mineralisation we have worked with Hatch to update the flowsheet and engineering required to adapt our lithium carbonate producing flowsheet to one that converts battery grade lithium carbonate into lithium hydroxide. We have now confirmed the ability with our resource, which is the largest lithium resource in Europe, to produce either or both products in line with market requirements once in production. Cinovec is strategically located in central Europe in close proximity to the continent's vehicle manufacturers. With increasing demand for Electric Vehicles and the expected demands of grid storage capacity, the project is very well placed to supply the European lithium market for many decades."

The Cinovec Project remains a potential low operating cost, hard rock lithium producer, due to a number of key advantages:

· By-product credits from the recovery of tin, tungsten, potash and sodium sulphate;

· The ore is amenable to single-stage crushing and single-stage coarse SAG milling, reducing capital and operating costs and complexity;

· Paramagnetic properties of zinnwaldite allow the use of low cost wet magnetic processing to produce a lithium concentrate for further processing at relatively high recoveries;

· Relatively low temperature roasting at atmospheric pressure utilizing conventional technologies, reagent recycling and the use of waste gypsum; and

· Low cost access to extensive existing infrastructure and grid power.

Neil Meadows has, following completion of the updated PFS, stood down with immediate effect as non-Board Chief Operating Officer to pursue another opportunity. The Board thanks Neil for his contribution and wishes him well in his new endeavours.

Cinovec Project Background

The Cinovec Project is located in the Krusne Hory Mountains which straddle the border between the Czech Republic and the Saxony State of Germany. The project is within a historic mining region, with artisanal mining dating back to the 1300s.

In the 1940s a large underground mining operation was established primarily to produce tungsten for the war effort. Mining and processing activities continued under the Czechoslovakian Government with the mine continuing to expand and producing tin as well as tungsten. Due to the fall of communism and lower tin prices, the mine was closed in 1993. In 2011, the old processing plant was removed and the site rehabilitated.

In 2014, European Metals commenced a drilling campaign to validate the comprehensive data generated by the earlier exploration activities. The Company's on-going drilling programme had completed 26 diamond holes for a total of 9,477m drilled by 2017, successfully validating earlier drilling results, adding lithium grade data and providing metallurgical test-work samples.

In 2015, European Metals completed a Scoping Study for the Cinovec Project ("2015 Scoping Study"). The 2015 Scoping Study highlighted that the size, grade and location of the deposit made it a very attractive development opportunity and recommended that the project proceed through to a Preliminary Feasibility Study.

A trade-off study was completed in November 2016 comparing the operating and capital costs of the conventional sodium-sulphate roast and the L-Max process. It was concluded that conventional roasting technology would deliver high lithium recoveries with a lower operating cost, lower technical risk, less impurity removal, and be less dependent on potassium by-product credits. The Company then selected the sodium-sulphate roasting option as the preferred method of lithium extraction for the PFS.

The PFS released in April 2017 highlighted that Cinovec could be a low-cost producer of lithium carbonate via conventional roasting technology used at atmospheric pressure. The PFS estimated average production of 20,800 tpa of lithium carbonate at a cost of $3,843/t. The PFS showed a NPV of $540M (post tax 8%) and a capital cost of $393M.

Cinovec Mineral Resource Estimate

The Cinovec Project hosts a JORC 2012-compliant global Resource of 695.9 Mt in the Indicated and Inferred categories as shown in Table 1 below (see announcement dated 28th November 2017).

Table 1: JORC 2012 Cinovec Mineral Resource Estimate (28 November 2017)

Notes:

1. Mineral Resources are not reserves until they have demonstrated economic viability based on a feasibility study or pre-feasibility study.

2. The Mineral Resources that underpin both the PFS results reported in 2017 and this PFS update are reported inclusive of any reserves and are prepared by Widenbar in accordance with the guidelines of the JORC Code (2012).

3. The effective date of the Mineral Resource is November 2017.

4. All figures are rounded to reflect the relative accuracy of the estimate.

5. The operator of the project is Geomet s.r.o., a wholly-owned subsidiary of EMH. Gross and Net Attributable resources are the same.

6. Any apparent inconsistencies are due to rounding errors

7. LCE is Lithium Carbonate Equivalent and is equivalent to Li2CO3.

8. There has been no change to this Mineral Resource statement since publication.

The PFS results reported 19 April 2017 were based on mining 34.5 Mt of material, 100% of which lies within the Indicated Mineral Resource category. There are no changes to the resources which underpin this update to the PFS. The tonnage used in the PFS represents only 5.0% of the total Mineral Resource and 9.3% of the Indicated Mineral Resource.

Cinovec PFS Update Scope

The updated PFS has been prepared by the Company based on technical reports undertaken by independent consultants who are specialists in the required areas of work. These included:

· Resource Estimation - Widenbar and Associates Pty Ltd;

· Mining - Bara Consulting Ltd;

· Front-End Comminution and Beneficiation ("FECAB") - Ausenco Limited; and

· Lithium Carbonate and Hydroxide Plants ("LPP") - Hatch Associates Pty Ltd.

The updated PFS is based upon a mine life of 21 years processing on average 1.68 Mtpa of ore, producing 25,267 tpa of battery grade lithium hydroxide.

The sections of the PFS reported on 19 April 2017 that have not been altered are as follows:

· Mining activities;

· Crushing, milling and slurrying of the ore for transport via pipeline to the processing site;

· Beneficiation circuit;

· Tin and tungsten recovery circuits; and

· Provision of utilities such as electrical power, natural gas, rail and raw water to either the mining or processing sites.

The sections of the PFS reported 19 April 2017 that have been reviewed or altered as a result of the test-work programme described above are as follows:

· The design for the roasting and leaching circuits has been upgraded;

· The fluoride and calcium removal circuit designs have been upgraded as a result of recent test-work results when battery grade lithium hydroxide was produced as reported 8 April 2019; and

· Lithium hydroxide precipitation and product handling facilities have been included.

Mining

The mine design and scheduling was completed by Bara Consulting of Johannesburg (Bara).

Geotechnical Data Gathering and Rock Characterisation

A site visit was carried out by Bara in October 2016, during which a quality assurance - quality control (QAQC) was undertaken on borehole logging data generated by European Metals. Bara also undertook geotechnical logging of core on site and selected rock samples for laboratory testing.

The data collected was transformed into rock mass quality by using classifications such as Rock mass rating (RMR89), Geological Strength Index (GSI) and Q-index (Q and Q'). Laboratory testing of core samples included uniaxial compressive strength with elastic moduli (UCM), triaxial compressive strength (TCS), indirect tensile strength (UTB) and base friction angle (direct shear) tests (BFA).

The output information from the geotechnical characterisation phase was used to derive the underground mine design criteria. The derived mine design criteria for Cinovec are summarised in Table 2:

Table 2: Geotechnical Criteria

Support Strategy

Primary support design guidelines proposed by Barton et al., (1974) which are based on rock mass classification parameters were used for the derivation of systematic support strategy of excavations for Cinovec. Table 3 below presents the derived tendon support spacings and sizes based on Barton's empirical formulae. Other support units offering areal coverage like wire mesh and shotcrete are to be used in areas where poor ground conditions persist.

Table 3: Support Requirements

Mining Method

The geometry of the payable ore is largely flat or shallow dipping and massive enough to mechanise using long-hole open stope mining.

An evaluation was completed to establish the achievable extraction ratios with and without backfill, based on the geotechnical design criteria including pillar sizes and stope spans (see above). The preferred option was to mine with pillars support only, negating the requirement for a backfill plant.

The payable ore will be split into blocks approximately 90 m long in the strike direction and 25 m high. The bottom of each block will be accessed in the central position by an access crosscut and the block will be developed from the centre to the strike limit by drifting. The stope will then be mined on retreat from the block limit, retreating to the access cross-cut position. The stopes will be a maximum of 13 m wide with rib pillars between stopes of 4 to 7 m wide depending on stope height.

Access to the stopes will be by footwall drives developed in the footwall at 25 m vertical intervals. All stope access crosscuts will be developed out of the footwall drives.

The mine will be accessed by a twin decline system.  A conveyor will be installed from the underground primary crusher on 590m Elevation to surface in the conveyor decline. The second decline will be used as a service decline for mineworkers, material and as an intake airway.

The modifying factors used to generate the mining inventory used in the study from the Indicated Mineral resource are:

· Un-planned dilution 3%;

· Un-planned ore loss 3%; and

· Exclusion zones: any ore within 70 m vertical distance from surface was excluded from the mine plan. In the northern areas where mining occurs below the village the crown pillar exclusion was increased to 150 m.

Underground Infrastructure

Underground infrastructure design takes into consideration the life of mine plan to support the underground mining production and development activities. Underground infrastructure comprises:

· Mine service water systems;

· Mine dewatering systems, including clean and dirty water pump stations;

· Mine electrical reticulation;

· Control systems and instrumentation;

· Trackless workshops;

· Refueling bays; and

· Underground crushers, tips, and conveyors.

Surface Infrastructure

Surface infrastructure supports the mine plan with consideration of the labour and mechanised equipment requirements of the operation in addition to the movement of rock, mneworkers and materials. The infrastructure is divided into two distinct areas, with the area at the portal servicing the initial development requirements and the second servicing the production phase.

A schematic of the proposed underground infrastructure and mine schedule is shown in Figure 1. The proposed mining grades and tonnages are shown in Figure 2. Table 4 lists the mining physicals data.

(Please refer to the announcement on the European Metals website for the graphic of Figure 1: Mine Design and Schedule - www.europeanmet.com)

(Please refer to the announcement on the European Metals website for the graphic of Figure 2: Life of Mine Grade and Tonnages - www.europeanmet.com)

Table 4: Mining Physicals

Processing

European Metal's approach for operation of the project as a whole is to provide a constant feed rate of 360,000 tonnes per year of mica concentrate to the LPP. The Comminution and Beneficiation plants will therefore vary operating hours to accommodate fluctuations in the mine feed grade, to produce the required level of mica production. The intended mining and processing profile is shown in Figure 3.

(Please refer to the announcement on the European Metals website for the graphic of Figure 3: Mining and Processing Throughput  - www.europeanmet.com)

Processing Test-work

Front End Comminution and Beneficiation Test-work

This phase of test-work concerned the beneficiation of primary crushed ROM ore, by primary comminution followed by concentration of zinnwaldite by wet magnetic separation to produce a mica- concentrate, which is further treated by the downstream lithium carbonate plant.

Liberation: Across all lithologies the lithium bearing mica, zinnwaldite, is effectively liberated from the gangue material with a top-end particle size of less than 300 µm. Initial liberation analysis was supported by Heavy-Liquid Separation (HLS) of minerals from each of the various lithologies. This was followed by detailed liberation, mineralogical and petrographic analysis using QEMSCAN of SAG milled composites with a P80 passing 212 µm. These results confirmed those from the HLS tests.

Lithium Concentration: Initial studies investigated both froth flotation and magnetic separation for concentration of zinnwaldite. Magnetic separation was proven to be far superior (91% lithium metallurgical recovery versus 78%) and was selected as the method to be optimized for the PFS.

To ascertain the performance of the chosen method and to allow finalization of the circuit, two composites where produced to reflect a high-grade and low-grade lithium ROM feed. A pseudo-locked- cycle flow sheet was implemented to test the effects of variability of grade and the effects of improving lithium recovery via scavenging.

The results showed that an additional Wet High Intensity Magnetic Separation (WHIMS) stage could be used to upgrade the para-magnetic material to produce a scavenger magnetic fraction, which is sent back to the start of the circuit. The test-work has resulted in an estimated lithium recovery of 91% to the concentrate using a 3-stage magnetic separation flow sheet comprising a rougher, cleaner, and scavenger stage. The cleaner magnetic concentrate was reground and passed over a shaking table to recover liberated tin. The gravity concentrate and the scavenger concentrate are returned to the beginning of the circuit.

A locked-cycle gravity test-work program was conducted to simulate the gravity recovery circuit component of the FECAB plant. A pre- concentrate grade of 8 % Sn was produced with an Sn recovery of 80 -90 % to the magnetic fraction. A dressing circuit was approximated for the test-work by using a Mozley Super-Paner centrifugal separator.

SAGability test-work was conducted at ALS on the three primary lithologies. Cinovec's ore was determined to be amenable to single stage SAG milling, which forms part of the FECAB comminution design. Wardle Armstrong conducted a Starkey SAGability test along with standard bond ball and bond rod work indices.

Updated Roasting & Lithium Hydroxide Process Test-work

Test-work has been conducted over several months leading to this PFS update primarily at Dorfner Anzaplan, Germany on lithium hydroxide production process development as well as earlier roasting confirmation test-work. This test-work was reported on 28 March 2018, 11 July 2018, 4 September 2018 and 8 April 2019.

The results from the early roasting test-work yielded up to 95% lithium extraction and was ultimately replicated in three separate laboratories. The changed reagent mix in the roasting process involved the substitution of waste gypsum from European power stations as the primary source of sulphate for the roasting reactions, the addition of limestone at an approximate ratio of 1:10 (limestone to concentrate) as well as the recirculation of excess sodium sulphate to the roast feed mix. This reagent mix not only produced an increase in lithium recovery but also substituted cost effective reagents for the more expensive addition of hydrated lime and purchased sodium sulphate contemplated in the 2017 PFS. This data coupled with engineering updates described later in this report was used to update the 2017 PFS financial model.

The remainder of the test-work completed in recent months was focussed on developing process flowsheet alternatives that would enable production of battery grade lithium hydroxide. The following results were outlined on 8 April 2019.

A series of tests were completed in recent months by Dorfner Anzaplan in Germany looking initially at the direct production of lithium hydroxide from leach liquors and subsequently testing a more traditional route of converting lithium carbonate into lithium hydroxide.

While both process routes were successful in producing battery grade lithium hydroxide, assessment of the relevant process risks indicated that the more robust flowsheet involved the production of battery grade lithium carbonate followed by conversion to battery grade lithium hydroxide.

The composition of the material produced compared with a typical industry specification is detailed in the Table 5.

Table 5: EMH lithium hydroxide comparison to typical specification

The engineering assessment was conducted using a 4.3 kg sample of lithium concentrate taken from a stock of historic ore samples taken from various sites in the Cinovec deposit. The sample was subjected to roasting after mixing with sodium sulphate, gypsum and limestone to a prescribed ratio, water leached, various steps of purification undertaken finally rendering a battery grade lithium hydroxide laboratory scale sample upon completion.

The result of the test-work was the production of a sample of battery grade lithium hydroxide. The work concentrated on the grade of product produced and not recovery rates. The total amount of product produced was below 10 grammes. Further information regarding the sampling techniques and data is set out in the tables annexed to this announcement.

Finally, it was reported on 19 April 2017 that at that time ongoing test-work was focused on fluoride and silica removal. This work was successfully completed to "proof of concept stage" during the production of battery grade lithium hydroxide in 2018 whereby a portion of the fluoride dissolved at the leaching stage was removed when lime was introduced at the initial purification step after the water leach and then activated alumina was utilised to reduce the remaining fluoride concentration prior to lithium carbonate production to acceptable levels which then flowed through to the lithium hydroxide product.

Recovery results

Based on detailed analysis of the test-work results, specific recovery algorithms were developed and entered directly into each block in the block model used for mine scheduling. The average metallurgical recoveries used in the project financial model are summarised below:

· Lithium recovery to concentrate 90%

· Lithium recovery in carbonate plant 91%

· Overall lithium recovery - 82%

· Tin recovery 65%

Comminution Plant

The purpose of the Comminution Plant (Figure 4) is to reduce the size of the ROM ore to a particle size distribution (PSD) that optimises lithium recovery, whilst allowing efficient pumping to the Beneficiation Plant.

Primary crushed ore is delivered to the Coarse Ore Stockpile. The ore is milled to 250 µm in a single stage SAG mill.

The Comminution Plant is run water neutral to remove the need for make-up water or disposal at the mine-site location. This is achieved by returning water from the Beneficiation Plant via a pipeline. Thus, the comminution plant has the advantage of operating at zero water discharge.

(Please refer to the announcement on the European Metals website for the graphic of Figure 4: Comminution Plant Layout - www.europeanmet.com)

The layout of the Comminution Plant maximises the use of the flat land available upon the top of the ridge, shortening the overall footprint. Room has been allowed for future pebble crushing in the SAG mill recirculating load, to allow for retrofitting if conditions warrant.

Beneficiation Plant

The Beneficiation Plant has two functions:

(i) First, to magnetically separate the paramagnetic zinnwaldite to produce a lithium rich magnetic stream (mica-concentrate) to feed the downstream lithium carbonate plant; and

(ii) Second, to then treat the non-magnetics by-product stream with gravity, flotation, magnetic and electrostatic separation to produce tin and tungsten product. Filtered tailings are produced for storage in the TSF.

The layout of the Beneficiation Plant is shown in Figure 5.

Magnetic Circuit

Milled product from the Comminution Plant received via the overland pipeline is stored in the magnetic circuit feed tank. The tank is agitated and acts as a buffer between the Beneficiation Plant and the overland pipeline. The pipeline slurry density is 56% to 58% solids, whilst the discharge density required by the Low Intensity Magnetic Separation ('LIMS') is 40% solids. The LIMS magnets reject ferromagnetic species from the slurry prior to the multi-stage Wet High Intensity Magnetic Separation (WHIMS) process.

The WHIMS circuit features a rougher, cleaner, scavenger arrangement. The scavenger removes the non-magnetic material from the rougher and cleaner units and returns the magnetic fraction back to the start of the circuit to improve mica recoveries.

The cleaner magnetic fraction is reground in closed circuit with a spiral to reduce the PSD to required LPP feed size. Any tin which is liberated in the process is recovered from the mica-concentrate by the spirals.

(Please refer to the announcement on the European Metals website for the graphic of Figure 5: Beneficiation Plant Layout - www.europeanmet.com)

Non-magnetics Gravity Circuit

The Non-Magnetics Gravity Circuit treats the by-product stream from the Magnetic Separation Circuit's concentrating the tin and tungsten minerals for feeding to the Tin Dressing Circuit, where the final by-product streams are produced. The circuit also has the ability to receive tin and tungsten gravity concentrate as slurry from the Lithium Carbonate Plant.

The circuit incorporates three stages of classification with:

· The coarse fraction is treated by two stages of spirals and two stages of wet tables and also incorporates a regrind mill which is used to achieve the required liberation size of the tin and tungsten minerals;

· The medium sized fraction is treated by two stages of spirals and two stages of wet tables;

· The finer fraction is treated with a flotation and high gravity concentrator; and

· The finest fraction, slimes, is rejected to final tails.

The concentrate produced from the gravity circuit is sent for dressing whilst the tails are dewatered via a thickener and filter.

The dressing circuit upgrades the concentrates through sulphide flotation. Electrostatic precipitation is then used to separate wolframite and cassiterite from the scheelite. Dry magnetics separate the wolframite from the cassiterite to give the final saleable tungsten and tin concentrates.

FECAB Tailings Test-work

Rheology and geochemical work was conducted on various tailings streams. The tests concluded:

· Samples had a definite, but very low level of radioactivity. No U or Th were detected in the SPLP leach; and

· Samples were devoid of sulphides and have no potential to generate acid-mine drainage as confirmed through both the ABA and NAG test. However, the neutralisation potential of samples was also very low and samples also had a very low total carbon content.

Lithium Hydroxide Process Facilities Design

The flowsheet that has been developed for the production of battery grade lithium hydroxide on the back of the results from the test-work described previously is shown in Figure 6. The significant points in the design include:

· The roasting operation will be completed in a rotary kiln;

· The roaster receives a slurry of mica concentrate from the FECAB plant via pipeline;

· The concentrate slurry is dewatered and stored in a covered stockpile to create a buffer between the FECAB and the lithium production facility:

· The concentrate is mixed with limestone, waste gypsum and recycled sodium sulphate before roasting to convert the lithium into a lithium potassium sulphate in the hot calcine which is initially cooled in a rotary cooler, discharged into a small ball mill to ensure that larger particles in the calcine are sufficiently reduced in size and then leached to achieve the dissolution of the contained lithium sulphate values;

· The leached slurry is filtered on one of two belt filters to separate the pregnant leach solution from the residue;

· The leach solution undergoes impurity removal steps to remove calcium, magnesium, fluoride and silica by precipitation and adsorption. Sodium sulphate is then recovered from the leach solution (as Glauber's Salt) by cooling. The Glauber's salt is melted and then crystallised as anhydrous sodium sulphate for recycling back to the roaster feed and/or sale as a by-product;

· Crude lithium carbonate is then precipitated from the purified leach solution through alum precipitation which produces a rubidium rich residue, evaporation, fluoride removal through interaction with activated alumina and addition of sodium carbonate;

· The crude lithium carbonate is then re-dissolved through the addition of carbon dioxide to form lithium bicarbonate. The lithium bicarbonate solution is subsequently filtered and purified through an ion exchange process before pure lithium carbonate is re- crystallised by heating the solution causing the lithium bicarbonate to decompose;

· Potassium sulphate is produced as a by-product from the production of lithium carbonate through initially the recovery of glaserite from the crude lithium carbonate filtrate and subsequent formation of potassium sulphate which is dried and packaged for sale and the remaining sodium sulphate containing solution is recycled back into the process; and

· The flowsheet described in this report then takes the battery grade lithium carbonate through further processing steps to produce battery grade lithium hydroxide. Lithium hydroxide solution is formed initially through conversion with hydrated lime slurry followed by a final purification step involving ion exchange, then lithium hydroxide crystallisation, solids recovery, drying and packaging for sale.

(Please refer to the announcement on the European Metals website for the graphic of Figure 6: Cinovec Lithium Hydroxide Conversion Process Schematic - www.europeanmet.com)

Tailings

All the processing tailings produced by the beneficiation and lithium carbonate plants are to be pressed into filter cakes to allow dry stack impoundment a close distance from the processing plants. Tailings consists of approximately 1.5 Mtpa of FECAB material and 0.5 Mtpa of LPP material (mostly leach residue).

Although dry stacking is the more expensive compared to traditional wet deposition, it was chosen due to the following advantages:

· The higher safety factors associated with the design versus conventional storage facilities. The region has historic high levels of rainfall thus dry stacking reduces the amount of water to treat by reducing the TSF footprint;

· Progressive rehabilitation is possible, spreading the cost of closure over a longer time when compared to conventional storage facilities; and

· Filtered tailings allow better recovery of lithium by recovering more liquor.

Filtered tailings will be filtered and dumped onto a pad. Wheel loaders and articulated trucks or rail will transport the tailings to a TSF for impoundment.

An initial TSF cell was designed to accommodate the first two years of combined tailings, with the associated capital cost included in the capital estimate. The TSF was lined and featured water collection and diesel powered decant pumps for returning any run off water to the processing plant. This is no longer envisaged to be required and could result in costs savings in the feasibility study.

Environmental

The Project is governed by Act No.100/2001 Coll., on Environment Impact Assessment (hereinafter referred to as the "EIA Act"). The competent authority is the Ministry of the Environment (Environment Impact Assessment Department). An integrated permit is issued upon completion of the EIA process.

The EIA documentation is required to be structured as follows:

· details concerning the notifier;

· details concerning the development project;

· details concerning the status of the environment in the region concerned;

· comprehensive characteristics and assessment of the project impacts on public health and the environment;

· a comparison of project versions (if any);

· a conclusion; and

· a commonly understood summary and annexes (opinion of the Building Authority, opinion of the Nature Protection Authority, expert studies and assessments).

The following expert studies and assessments must be compiled during the EIA Documentation preparation stage:

· noise impact study;

· air quality impact study;

· biological survey;

· human health impact study;

· transport impact study;

· landscape impact study; and

· water quality and hydrology impact study.

In this case, with respect to the location of the project at the border with Germany, an "international assessment" provision applies (Section 13 of the EIA Act).

The Company has commenced the EIA process with a baseline study, prepared by GET s.r.o an independent Czech based environmental consultancy, which has identified the environmental areas to be assessed and determined preliminary outcomes.

The underground mine and surface portal is located on the border of or immediately adjacent to an environmentally sensitive area. From that perspective, the EIA will focus particularly on project impacts on European protected areas Natura 2000 (protected birds) and mine water discharge into surface streams. The Company has re-positioned key infrastructure to minimise impacts to both the environment and the community and has placed crushing facilities underground to minimise noise as well as enclosing the mill to further reduce noise and visual impacts. Considering the long-term mining history in the region and at the deposit itself, the project will not significantly impact the environment.

Lithium Hydroxide Production Capital Costs Estimate

Hatch Associates Pty Ltd ("Hatch") completed a PFS study in 2017 for the sodium sulphate roast process treating lithium concentrate to produce lithium carbonate. In 2018, Hatch was engaged by EMH to modify the 2017 PFS to convert lithium carbonate to lithium hydroxide product and incorporate an updated roast design. This work was further supported in 2019 by additional test work conducted at Dorfner Anzaplan. Hatch have now completed the update to their 2017 PFS report to include capital and operating cost estimates for the production of lithium hydroxide.

In the 2017 PFS, the estimated capital cost of the Cinovec Project for the production of 20,800 tpa lithium carbonate was $393 M based on Q1 CY2017 pricing. The accuracy of that estimate was considered at the time to be +/-25%. The capital cost estimate included all costs for design and construction of the plant and infrastructure on the site for the mine, FECAB and LPP. Allowances were made for connection to off-site services such as gas, electricity and water, construction of a tailings storage facility, project contingency and owners costs including project management team, project approvals, establishment of the operating team and commissioning.

For the updated 2019 PFS, a summary of the current project capital cost estimate for an average production rate of 25,267 tpa lithium hydroxide is presented in Table 6. The only section containing new cost estimates is that for the lithium production facility (LPF). The capital cost estimate summarised in Table 6 has been derived from modifications to the capital cost estimate produced during the study. The need for the significant modifications that were made, which for example resulted in the prediction that all equipment in the leaching and roasting sections could be reduced in size by approximately 10%, were determined after the completion of the PFS update. As a result, the Syscad plant simulation model was revised to allow for confirmation that the envisaged changes were significant and to gain insight into the quantum of plant scale change that would result. As such the cost estimate from the original study has been factored using industry norms to reflect the 10% reduction in size of the roasting, leaching and some reagent facilities resulting in an accuracy of +/- 30% for this portion of the plant. The total estimated capital cost to construct a facility for the production of 25,267 tpa lithium hydroxide is estimated to be $482.6 M.

The capital cost estimate is based by Hatch upon the engineering designs produced during the PFS update based on process modelling and mass flow calculations, mechanical equipment lists, costs for major items of equipment and factored project commodities.

Table 6: Overall Project Development Capital Cost

Lithium Hydroxide Production Operating Costs Update

Operating costs have not been updated in the areas of mining, FECAB plant operation, tin and tungsten recovery or corporate office costs and other overheads as there has been limited inflation in the intervening period . The only operating costs that have been re-estimated by Hatch have been those specifically for the production of lithium hydroxide from the flowsheet shown in Figure 6. The costs are based on an average production rate modelled in EMH's Syscad plant simulation model of 25,267 tpa lithium hydroxide (LiOH.H2O) which is equivalent to 22,259 tpa of lithium carbonate. The average operating cost for the Cinovec Project detailed in Table 7 is $3,435 per tonne of lithium hydroxide after by- product credits.

 Table 7: Average Project Operating Cost

Overhead corporate office costs are excluded. The maintenance costs used in the operating cost modelling includes requirements for sustaining capex. The cost of tailings impoundment is included in the above numbers.

Lithium Hydroxide Production Financial Summary

The updated Hatch capital and operating cost estimates for the production of lithium hydroxide have been utilised by the Company to re-estimate the project economics derived from the production of lithium hydroxide rather than carbonate from the Cinovec Project.  The key project metrics are provided in Table 8 but can be summarised as the project yielding a post-tax NPV (discounted at 8%) of $1,108 M and a post-tax Internal Rate of Return of 28.8%.

Commodity prices used for the update of the 2017 PFS are unchanged (other than Lithium hydroxide which was not included in the 2017 PFS) as follows:

· Lithium hydroxide: $12,000/t;

· Lithium carbonate: $10,000/t

· Tin: $22,500/t;

· Tungsten: $330/MTU; and

· Potassium sulphate: $520/t.

Lithium is the key driver of the Project. In arriving at forecast pricing for both battery grade lithium carbonate and battery grade lithium hydroxide the Company has considered the outlook presented by a number of key industry groups.

According to JP Morgan in their May 2019 assessment, battery grade lithium carbonate prices will fluctuate between $ 11,500 and $ 13,500 over the forecast period. Battery grade lithium hydroxide is forecast to fluctuate between $ 12,000 and $ 14,000 for the same period.

Benchmark Mineral Intelligence ("Benchmark"), a leading battery metals advisory expects similar future pricing and consider the use of the Company's pricing forecasts to be reasonable.

Benchmark have recently published an update to its supply and demand forecasts which gives a clear indication of the growing need for lithium.

(Please refer to the announcement on the European Metals website for the graphic of Figure 7: Benchmark Li Supply/Demand Chart - 2019 - www.europeanmet.com)

Tax is calculated at 19% and a 10-year tax free window has been applied as provided for by Czech investment legislation for projects of this scope.

A sensitivity analysis shows lithium pricing has the most impact on the project.

(Please refer to the announcement on the European Metals website for the graphic of Figure 8: Sensitivity Analysis - www.europeanmet.com)

Alternative Carbonate Production Strategy

As was reported on 11 July 2018 significant economic improvements were expected to be realised from the use of more cost-effective reagents in the roasting operation and taking account of the increased recoveries seen from the improved roasting reagent mix now instituted as part of the project.

To assess the Alternative Carbonate Production Strategy as part of this 2019 PFS update, the original 2017 project financial model was modified while still producing lithium carbonate to predict the financial impact from those changes with all other variables remaining the same as stated for the 2017 PFS. A summary of the findings from this work is detailed in Table 9.

Table 9: Financial Comparison Lithium Carbonate Flowsheet Only

Table 9 confirms the economics are robust and the degree of optionality is strong in terms of supplying either battery grade lithium carbonate or lithium hydroxide into a rapidly developing market. As is normal for this type of study, the PFS has been prepared to an overall level of accuracy of approximately ±25% for capital and operating costs.

Notes Specific to ASX and AIM Announcements

The following announcements were lodged with the ASX and published via RNS in the UK, and further details (including supporting JORC Reporting Tables) for each of the sections noted in this announcement can be found in the following releases:

· 19 April 2017 - PFS study confirms Cinovec as potentially low-cost lithium carbonate producer

· 28 March 2018 - Lithium Recoveries Improved to 95%;

· 11 July 2018 - Cinovec Production Modelled to Increase to 22,500 TPA LCE - 11 July 2018;

· 4 September 2018 - Cinovec Project Update - Significant Achievements - 4 September 2018;

· 8 April 2019 - Cinovec project update - Battery grade lithium hydroxide produced; and

· 8 April 2019 - Battery Grade Lithium Hydroxide Produced - Clarification - 8 April 2019.

Note that these announcements are not the only announcements released to the ASX or published via RNS in the UK but are specific to exploration reporting on the Cinovec Project. The Company confirms that it is not aware of any new information or data that materially affects the published information in respect of the Project.

Project Financing

The Company does not currently have the financial capacity to internally fund 100% of the development of the Cinovec project. External funding in the form of some mix of debt, JV interest and/or equity will be required. In parallel with ongoing work programs pertaining to realising value from the Cinovec resource, the Company is continuing to evaluate its financing strategy with the objective of minimising dilution for existing shareholders. Shareholders should be aware that further equity funding may be required for the future funding for development of the Cinovec project, and if so, their ownership of the Company or the Company's economic interest in the Cinovec project may be diluted.

The Company has engaged advisors and has had preliminary discussions with financiers, to understand the debt carrying parameters of the project. Release of the PFS update now provides a platform for the Company to advance discussions with potential finance providers and/or JV partners. On the basis of the robust market outlook for lithium products and preliminary work already undertaken in relation to financing, the Company considers that there is a reasonable basis that the development of the Cinovec project can be successfully funded.

BACKGROUND INFORMATION ON CINOVEC

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

European Metals, through its wholly owned subsidiary, Geomet s.r.o., controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 372.4Mt @ 0.45% Li2O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt @ 0.39% Li2O and 0.04% Sn containing a combined 7.18 million tonnes Lithium Carbonate Equivalent and 278kt of tin reported 28 November 2017 (Further Increase in Indicated Resource at Cinovec South). An initial Probable Ore Reserve of 34.5Mt @ 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 reported 11 July 2018 (Cinovec Production Modelled to Increase to 22,500tpa of Lithium Carbonate).

This makes Cinovec the largest lithium deposit in Europe, the fourth 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.

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.

CONTACT

For further information on this update or the Company generally, please visit our website at www. http://europeanmet.com or contact:

Mr. Keith CoughlanManaging Director

COMPETENT PERSON

Information in this release that relates to exploration results is based on information compiled by Dr Pavel Reichl. Dr Reichl is a Certified Professional Geologist (certified by the American Institute of Professional Geologists), a member of the American Institute of Professional Geologists, a Fellow of the Society of Economic Geologists and is a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a Qualified Person for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009. Dr Reichl consents to the inclusion in the release of the matters based on his information in the form and context in which it appears. Dr Reichl holds CDIs in European Metals.

The information in this release that relates to Mineral Resources and Exploration Targets has been compiled by Mr Lynn Widenbar. Mr Widenbar, who is a Member of the Australasian Institute of Mining and Metallurgy, 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 consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.

CAUTION REGARDING FORWARD LOOKING STATEMENTS

Information included in this release constitutes forward-looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

Statements regarding plans with respect to the Company's mineral properties may contain forward‐ looking statements in relation to future matters that can only be made where the Company has a reasonable basis for making those statements.

This announcement has been prepared in compliance with the JORC Code 2012 Edition and the current ASX Listing Rules.

The Company believes that it has a reasonable basis for making the forward‐looking statements in this announcement, including with respect to any mining of mineralised material, modifying factors and production targets and financial forecasts. The following information is specifically provided in support of this belief:

The PFS was completed by independent specialist firms with oversight provided by the Company's Owner's Team under the direction of Andrew Smith (B.Eng., B.Com from University of Sydney). The PFS update was completed under the direction of Neil Meadows (M.App.Sc. (Metallurgy) South Aust. Inst. Tech.).

As is normal for this type of study, the PFS has been prepared to an overall level of accuracy of approximately ±25% for capital and operating costs.

Production targets and financial forecasts disclosed in this announcement are based exclusively on Indicated Resource categories as defined under the JORC Code 2012.

European Metals will both commence infill drilling and will re-access the old exploration drives as part of its next programme to convert Indicated Resources into the Measured category. Given the vast quantity of data associated with the previous mine combined with the size, continuity of mineralisation, geometry of the deposit, the Company and its Resource Consultants Widenbar and Associates are confident of achieving this further mineral resource classification conversion.

The PFS metallurgical test-work programme was developed and supervised by industry leaders in Western Australia and Germany and was performed by specialist laboratories in the areas of expertise that included Dorfner Anzaplan, Nagrom and ALS.

Mr 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 LPP.

The independent consultants prepared the process design criteria and flowsheet based on metallurgical test work and typical industry design parameters.

The mine planning and scheduling for the 1.7Mtpa Base Case were undertaken by independent mining firm Bara Consultants, consisting of Mr Andrew Pooley and Mr Clive Brown (both mining professionals with a combined 50 years of mine planning and operations experience and both fellows of the SAIMM) utilising the Deswik CAD suite of mining software for UG mine planning.

Mining operating costs were based on estimates derived from equipment and mechanical quotes, first principle manpower build-ups and an extensive industry database.

Processing operating costs were estimated based on the mechanical equipment list developed for the PFS design, metallurgical test-work and the process design criteria, typical local labour rates, quoted energy costs and typical consumables supply costs. The information in this announcement that relates to Process Plant capital and operating cost estimates is based on reports compiled by the independent consultants.

Capital estimates are based on preliminary engineering designs produced by the independent consultants. Each consultant provided a capital estimate for their respective scope of works. Based on process modelling and mass flow calculations, detailed mechanical equipment lists were compiled, with quotes for all items costing over $100 k. The mechanical equipment list was then used as a base for factoring other project commodities. Material take-offs from the 3D modelling were then used as an integrity check.

Mining related geotechnical engineering was undertaken by independent mining firm Bara Consulting and included extensive geotechnical logging and laboratory testing.

The Project will potentially be the first large-scale hard rock mine to be developed in the Czech Republic in many decades. As such, stakeholder engagement with the Government of Czech, both locally and regionally and in particular with the Ministry of Industry has been on going. We therefore anticipate that given the potential size, scale and significance of the Project to the Czech Republic and the potential downstream use of the lithium product and assuming any development complies with all relevant mining and environmental legislation, all necessary approval processes will be able to be secured for the Project.

The Company has engaged a specialist environmental consulting firm in Czech, GET s.r.o Ltd, to advise it on all aspects of the ESIA process. This includes all environmental baseline studies.

The Company believes that the amount and detail of work and studies carried out for this study in many areas exceeds what would normally be expected at a PFS level.

The Company's Board and management have had a very successful track record of developing and financing mineral resource development globally. The Company is confident there is a good possibility that it will continue to increase the mineral resources at the Project through exploration. The Company is confident that this exploration combined with the use of only 5% of the Resource base in the PFS, will extend the mine life greatly from that which is currently modelled.

The Project's positive technical and economic fundamentals provide a platform for the Company to advance discussions with traditional debt and equity financiers and forward sales arrangements. The size and location of the deposit in the middle of large end users associated with European electric vehicles that is driving lithium demand will make the project a strategic asset as evidenced by the large interest shown in the Project by end users and large lithium specialist companies to-date.  An improvement in market conditions since work commenced and a perceived high growth outlook for the global lithium market enhance the Company's view of the fundability of the Project. Based on this, the Board is confident the Company will be able to finance the Project through a combination of debt and equity, or forward sales. In addition, the Company's aim will be to avoid dilution to existing shareholders, to the greatest extent possible.

The Study is based on the assumption that all metal produced will be sold via long term contracts to end users. It is assumed the lithium carbonate will be sold electric vehicle end users in both Czech and surrounding countries and that tin and tungsten concentrates will be sold to Asian smelters for further processing.

Board and Management has been responsible for the study, financing and/or development of several large and diverse mining and exploration projects globally. These include the development of the Ngezi Platinum Mine, Zimbabwe (Zimplats); Cominco Phosphate (Republic of Congo), Leeuwkop Project, South Africa (Afplats), Ncondezi Coal (Mozambique) and Talga Resources projects in Sweden. Based on this experience the board believes that a traditional debt:equity ratio of 70:30 is potentially achievable for the Project based on the PFS results.

For the reasons outlined above, the Board believes that there is a "reasonable basis" to assume that future funding will be available and securable.

All material assumptions on which the forecast financial information is based have been included in the announcement.

Key Risks

Key risks identified during the study include:

· Adverse movements in lithium pricing;

· Adverse movements in key operating cost inputs;

· Timely project approvals by the authorities;

· Conversion of existing Resources to Reserves;

· Results of future feasibility studies are uncertain; and

· Project funding.

LITHIUM CLASSIFICATION AND CONVERSION FACTORS

Lithium grades are normally presented in percentages or parts per million (ppm). Grades of deposits are also expressed as lithium compounds in percentages, for example as a percent lithium oxide (Li2O) content or percent lithium carbonate (Li2CO3) content.

Lithium carbonate equivalent ("LCE") is the industry standard terminology for, and is equivalent to, Li2CO3. Use of LCE is to provide data comparable with industry reports and is the total equivalent amount of lithium carbonate, assuming the lithium content in the deposit is converted to lithium carbonate, using the conversion rates in the table included below to get an equivalent Li2CO3 value in percent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li2CO3 from the deposit.

Lithium resources and reserves are usually presented in tonnes of LCE or Li.

The standard conversion factors are set out in the table below:

Table: Conversion Factors for Lithium Compounds and Minerals

WEBSITE

A copy of this announcement is available from the Company's website at www.europeanmet.com.

TECHNICAL GLOSSARY

The following is a summary of technical terms:

ADDITIONAL GEOLOGICAL TERMS

ENQUIRIES:

The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of EU Regulation 596/2014, prior to its release. The person who arranged for the release of this announcement on behalf of the Company was Keith Coughlan, Managing Director.

JORC Code, 2012 Edition - Table 1

Section 1 Sampling Techniques and Data

Section 2 Reporting of Exploration Results

(Criteria listed in section 1 also apply to this section.)

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)