European Metals Holdings Regulatory News (EMH)

For immediate release

30 October 2020

EUROPEAN METALS HOLDINGS LIMITED

QUARTERLY ACTIVITIES REPORT - SEPTEMBER 2020

European Metals Holdings Limited (ASX & AIM: EMH, FSE: E861.F) ("European Metals" or "the Company") is pleased to provide an update on its activities during the three-month period ending 30 September 2020 which highlights the continued progress in the development of the globally significant Cinovec Lithium/Tin Project ("the Project" or "Cinovec") in Czech Republic.

APPOINTMENT OF EUROPEAN INVESTOR RELATIONS ADVISOR, PROPOSED CZECH LISTING AND INTERIM FUNDING

On 14 July 2020, the Company announced the following:

· Appointment of European Investor Relations Advisor

The Company appointed DGWA, the German Institute for Asset and Equity Allocation and Valuation ("Deutsche Gesellschaft für Wertpapieranalyse GmbH", "DGWA"), one of the leading mining and resource focused European investment banking boutiques, as its Investor and Corporate Relations advisor in Europe.

DGWA will collaborate with European Metals to help gain investor awareness and drive investment opportunities from the European financial markets and will provide investor relations services to help European Metals position itself in the German-speaking financial markets. DGWA will also introduce European Metals to its extensive network within the European corporate and federal community to assist the Company in exploring offtake-agreements and potential grants and subsidies.

· Proposed Czech Listing

The Company is in discussions with the Prague Stock Exchange regarding the proposed listing of the Company's securities. Given the high profile that the Cinovec Project has within the Czech Republic, the Company would like to provide the opportunity for Czechs to invest directly via their domestic exchange. It is anticipated that the proposed listing will be completed in the current quarter.

· Interim Funding

EMH arranged an interim funding facility to assist in financing the new initiatives listed above and for ongoing operations. The facility has been provided by an Australian based sophisticated investor, 6466 Investments Pty Ltd, and allows for a drawdown of up to AUD 1 million in tranches as required over 12 months.

Two drawdowns were completed during the quarter and a further one subsequently. There is one drawdown remaining under the facility.

PARTNERSHIP AGREEMENT WITH EUROPEAN UNION BODY

On 28 July 2020, the Company announced that a support and financing agreement with KIC InnoEnergy SE ("EIT InnoEnergy"), the principal facilitator and organiser of the European Battery Alliance, had been entered into by Geomet s.r.o. in respect of the Cinovec Lithium Project in the Czech Republic ("Cinovec" or the "Project").

The purpose of the agreement is to support the construction financing and ultimate commercialisation of Cinovec, the largest hard rock lithium deposit in Europe, by EIT InnoEnergy providing assistance to EMH to support the:

· Sourcing of construction finance;

· Securing of grant funding; and

· Assisting in offtake introductions and negotiations.

EIT InnoEnergy leads the European Battery Alliance which was initiated by the European Commission to create a competitive and sustainable battery cell manufacturing value chain in Europe. Based on Cinovec's economics, long mine life and proximity to the key manufacturing centers in Europe leading the EV revolution, the Project is well positioned to work with EIT InnoEnergy and other European organisations to ensure timely development to assist in meeting the expected significant increase in the demand for raw materials.

MEASURED RESOURCE DRILLING COMMENCED

On 10 August 2020, the Company announced the commencement of the measured resource drilling programme, following the Company receiving permission from the statutory authorities in the Czech Republic for this year's planned diamond drilling campaign.

Highlights included:

· A total of nineteen resource drill holes will be completed for a total of 5,550 m

· A further two hydro-geological drill holes and four geotechnical drill holes are planned once resource drilling has been completed.

· The programme will provide approximately 10t of drill core for further metallurgical testing and to generate samples.

APPOINTMENT OF LEADING GLOBAL ENGINEER

On 23 September 2020, EMH announced the appointment of SMS group Process Technologies GmbH ("SMS group") as the lead engineer for the minerals processing and lithium battery-grade chemicals production at the Cinovec Project.

Under the Agreement, SMS group will provide a complete Front-End Engineering Design ("FEED") study as the major component of the ongoing Definitive Feasibility Study ("DFS") work at Cinovec.

The FEED commenced immediately and is expected to deliver the EPC contract, as the final component part of the Cinovec DFS, by the end of 4Q 2021.

CORPORATE 

Quarterly cashflow report

In accordance with the ASX Listing Rules, the Company will also today lodge its cashflow report for the quarter ended 30 September 2020. Included in those cashflows are Cinovec associated costs of $469k in respect of the Company's investment in the Cinovec Lithium Exploration Project in the Czech Republic ("the Project").

On 27 March 2020, the Company signed a final agreement with CEZ Group regarding its investment in the Project. This has reduced the Company's holding in Geomet s.r.o. (the Project Company) to 49% and the Company will cease to consolidate Geomet's results within the Company's consolidated accounts. Geomet has been accounted for as investment in an associate in the 30 June 2020 Annual Report.

The Company was also appointed to provide services of managing the Project development and the exploration expenditure incurred in respect of the Project will be reimbursed directly from Geomet.

Payments to Related Parties

As outlined in the attached Appendix 5B (section 6.1), during the quarter approximately $100k in payments were made to related parties and their associates for director salaries, consultancy fees, superannuation and other related costs. A portion of these expenses are to be reimbursed directly from Geomet.

Performance Shares

As at 30 September 2020 the issued performance shares including the terms and conditions were as follows:

TENEMENT SCHEDULE

BACKGROUND INFORMATION ON CINOVEC

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Geomet s.r.o. is owned 49% by European Metals and 51% by CEZ a.s. through its wholly owned subsidiary, SDAS. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 372.4Mt at 0.45% Li2O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt at 0.39% Li2O and 0.04% Sn containing a combined 7.22 million tonnes Lithium Carbonate Equivalent and 263kt of tin reported 28 November 2017 (Further Increase in Indicated Resource at Cinovec South). An initial Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported 4 July 2017 (Cinovec Maiden Ore Reserve - Further Information) has been declared to cover the first 20 years mining at an output of 22,500tpa of lithium carbonate reported 11 July 2018 (Cinovec Production Modelled to Increase to 22,500tpa of Lithium Carbonate).

The quantity of these resources directly attributable to the Company is equivalent to the 49% shareholding the Company has in Geomet s.r.o.

This makes Cinovec the largest hard rock 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.

In June 2019 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD1.108B and an IRR of 28.8% and confirmed that the Cinovec Project is a potential low operating cost, producer of battery grade lithium hydroxide or battery grade lithium carbonate as markets demand. It confirmed the deposit is amenable to bulk underground mining. Metallurgical test-work has produced both battery grade lithium hydroxide and battery grade lithium carbonate in addition to high-grade tin concentrate at excellent recoveries. Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active 22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has strong community support.

The economic viability of Cinovec has been enhanced by the recent strong increase in demand for lithium globally, and within Europe specifically.

There are no other material changes to the original information and all the material assumptions continue to apply to the forecasts.

BACKGROUND INFORMATION ON CEZ

Headquartered in the Czech Republic, CEZ a.s. is an established, integrated energy group with operations in a number of Central and Southeastern European countries and Turkey. CEZ's core business is the generation, distribution, trade in, and sales of electricity and heat, trade in and sales of natural gas, and coal extraction. CEZ Group has 33,000 employees and annual revenue of approximately EUR 7.24 billion.

The largest shareholder of its parent company, CEZ a.s., is the Czech Republic with a stake of approximately 70%. The shares of CEZ a.s. are traded on the Prague and Warsaw stock exchanges and included in the PX and WIG-CEE exchange indices. CEZ's market capitalization is approximately EUR 10.08 billion.

As one of the leading Central European power companies, CEZ intends to develop several projects in areas of energy storage and battery manufacturing in the Czech Republic and in Central Europe.

CEZ is also a market leader for E-mobility in the region and has installed and operates a network of EV charging stations throughout Czech Republic. The automotive industry in Czech is a significant contributor to GDP and the number of EV's in the country is expected to grow significantly in coming years.

CONTACT

For further information on this update or the Company generally, please visit our website at www.europeanmet.com or see full contact details at the end of this release.

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.

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.

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 authorised for the release of this announcement on behalf of the Company was Keith Coughlan, Executive Chairman.