Europa Metals Regulatory News (EUZ)

25 September 2019

Europa Metals Ltd

("Europa Metals", the "Company" or the "Group") (AIM, AltX: EUZ)

Assay Results & Preparation for Updated Mineral Resource Estimate and JORC (2012) Technical Report, Toral Zn, Pb & Ag Project, Spain

Highlights:

- Final assays received for drill holes TOD-021, TOD-022, TOD-023 and TOD-023D.

- Additional mineralisation identified in hanging wall zone (TOD-023D; distinct to the main metallurgical sample zone), with its potential influence on the resource estimate being assessed by Europa Metal's technical team.

- All results submitted to the Company's independent consultants, Addison Mining Services Limited ("AMS"), to enable AMS to update the mineral resource models and provide a JORC (2012) technical report (targeting completion in early Q4 2019).

- Copper traces identified within mineralisation at 640m downhole and is also being assessed.

- Metallurgical testing underway by Wardell Armstrong LLP (targeting completion in Q4 2019).

Europa Metals, the European focused lead, zinc and silver developer, announces, further to its announcement of 2 September 2019, that the final assays in respect of its latest drill campaign have now been received from ALS Laboratories. Accordingly, a combined package of assays from drill holes TOD-021, TOD-022, TOD-023 and TOD-23D has been sent to the Company's independent consultants, AMS, for input into an updated Mineral Resource Estimate and JORC (2012) technical report in relation to the project's previously reported JORC Inferred resource estimate of 16 million tonnes ("Mt") (7.5% Zn equivalent with 24 g/t Ag), for 640,000 contained tonnes of zinc, 510,000 contained tonnes of lead and 13 million ounces silver (please refer to the Company's announcement of 10 December 2018 for further information on the existing Mineral Resource Estimate).

Drill Campaign Objectives

The recently completed drilling campaign had two key objectives:

i) to fill in gaps within the historic drill spacing for the existing Inferred resource between the 400 - 1,000 metre horizon, thereby providing further data to inform a possible first Indicated resource, and, in turn, increasing confidence in the initial scoping study economics that were published earlier this year; and;

ii) to retrieve a sample for first metallurgical test work analysis in order to determine potential processing routes and likely concentrate products for potential future sale to third parties.

Drilling Results

The first hole drilled in 2019, TOD-021, deviated significantly away from the intended target location and returned no significant mineralised intercepts.

Hole TOD-022 was drilled to intercept a wide spaced area of >8% Zn Eq Inferred mineralisation (see Table 4). Hole TOD-023 was drilled towards a >8% Zn Eq Inferred high grade area, within the corridor of mineralisation already identified, in order to provide both further sampling density to increase the resource confidence, and a metallurgical sample for recovery testwork purposes.

Hole TOD-022 returned an intersection of 6.1m grading at 1.055% Zn Eq (PbAg). It is interpreted to represent the main contact zone in this location (see Table 4 below).

Hole TOD-023 intercepted a broad zone of mineralisation in the main contact zone of 13.07m@2.47% Zn Eq (PbAg) from 668.43m to 681.50m, presented in Table 3 below. Within this wide zone of mineralisation there were higher grade intersections of up to 2m, presented in Table 1 below. Zinc, lead and silver metal prices have been updated to 31 August 2019, based on the London Metal Exchange's 3 year trailing average values, for use in metal equivalent calculations as detailed below.

Mineralisation in the Hanging Wall

Encouragingly, holes TOD-023 and TOD-023D also identified a faulted breccia above the main mineralised vein in the hanging wall, where visible mineralisation was identified and sampled from the hanging wall position approximately 25m up hole from the main zone. The hanging wall zone shows a broad envelope of 10.5m@2.23% Zn Eq (PbAg) from 636.85m to 647.35m in hole TOD-023D (Table 3) within which sits a higher-grade interval of 4m@4.08% Zn Eq (PbAg) from 636.85m to 640.85m (Table 1). While it was not originally intended to assay material from hole TOD-023D, the identification of new zones of mineralisation within the hanging wall, above the metallurgical sample area, has enabled further resource assay work to occur.

This additional mineralisation discovered in the hanging wall is of significant width and will be reviewed within the context of the updated resource work currently underway. In addition, within this hanging wall zone, results show elevated copper levels with 0.28m@1.83% Cu returned at a depth of 640m downhole which is being assessed by Europa Metals' technical team in order to understand how it relates to the copper intercepted near surface in hole TOD-020 from the Company's 2018 diamond drilling campaign.

Approximate true widths of the reported significant intervals are presented in Tables 1, 3 and 4 below.

Drilling Summary

Both objectives of the latest drilling campaign were achieved via holes TOD-022 and TOD-023, where new significant intersections were identified, and the Company believes that the results of this limited but effective campaign will enable the independent JORC (2012) Inferred resources to be upgraded to the Indicated resource category.

Table 1: Significant intercepts at or above assumed mining cut-off grade (> 4% ZnEq, including intervals of internal waste up to 2m in thickness) from drilling completed by Europa Metals in 2019:

Notes:

·; Significant Zn Eq intercepts were generated using a 0.4% Zn Eq trigger value, minimum width of 2m, maximum consecutive waste interval of 2m, minimum average Zn Eq grade >4%.

·; Zn equivalent calculations were based on 3 year trailing average price statistics obtained from the London Metal Exchange and London Bullion Market Association giving an average Zn price of US$2,780/t, Pb price of US$2,200/t and Ag price of US$16.4/Oz. Recovery and selling factors were incorporated into the calculation of ZnEq values. It is the Company's opinion that all the elements included in the metal equivalents calculation (Zinc, Lead and Silver) have a reasonable potential to be recovered and sold. Zn Eq is the calculated Zn equivalent using lead credits and does not include silver credits (Zn Eq = Zn + Pb*0.904).

·; No top cutting was applied to Zn, Pb, Ag or Cu grades.

Key drilling data

Drilling parameters from the 2019 diamond drilling campaign are presented in Table 2 below.

Table 2: Drilling parameters for the 2019 drilling campaign:

Drill hole TOD-023 was drilled with an HQ drill bit, with half of the core being sent for independent analysis by ALS Laboratories. As announced on 15 August 2019, a 12m intersection of visible mineralisation was identified in the contact zone of the main mineralised vein at the Toral project.

In summary, the grade of the overall intersection was lower than anticipated in this area but additional mineralisation has been discovered in the hanging wall. Further geological examination of the main zone has identified a late stage calcite vein replacement of both sphalerite (Zn) and galena (Pb) at a small scale, which has reduced the influence of these smaller veins on the overall grade.

Table 3: Significant intercepts (> 2% ZnEq, including intervals of internal waste up to 2m in thickness) from drilling completed by Europa Metals in 2019:

Table 4: Significant intercepts (> 1% ZnEq, including intervals of internal waste up to 2m in thickness) from drilling completed by Europa Metals in 2019:

Notes:

·; Significant ZnEq intercepts were generated using a 0.4% ZnEq trigger value, minimum width of 2m, maximum consecutive waste interval of 2m and minimum average ZnEq grade of >2% in Table 3 and >1% in Table 4.

·; Zn equivalent calculations were based on 3 year trailing average price statistics obtained from the London Metal Exchange and London Bullion Market Association giving an average Zn price of US$2,780/t, Pb price of US$2,200/t and Ag price of US$16.4/Oz. Recovery and selling factors were incorporated into the calculation of Zn Eq values. It is the Company's opinion that all the elements included in the metal equivalent calculations (Zinc, Lead and Silver) have a reasonable potential to be recovered and sold. ZnEq is the calculated Zn equivalent using lead credits and does not include silver credits (ZnEq = Zn + Pb*0.904).

·; No top cutting was applied to Zn, Pb, Ag or Cu grades.

Planned Updated Resource Estimate

Further to the receipt of these final assays, work has commenced by AMS to provide an independent update to the existing JORC (2012) resource estimate at the Toral project. The Company anticipates that this work will take approximately 4 weeks. This planned update, along with a new geological model, will inform the Company's strategy for the next phase of exploration at the Toral project, in combination with the results of the metallurgical testwork, in order to move the project towards a potential mining licence application.

Image 1 below presents a grade contour section of one of the high-grade zones at the Toral project. Hole TOD-023 sits within a zone of >8% Zn Eq and supports the premise that the main corridor of mineralisation is continuous.

Image 1: Grade contour map of one of the high-grade zones at the Toral project: 

http://www.rns-pdf.londonstockexchange.com/rns/5373N_1-2019-9-24.pdf

Image 2 illustrates the location of Image 1 within the existing Toral Inferred resource block model (as reported on 10 December 2018).

Image 2: location of high-grade zone within the Toral project's resource block model: 

http://www.rns-pdf.londonstockexchange.com/rns/5373N_1-2019-9-24.pdf

Metallurgical programme

Testwork has commenced by Wardell Armstrong LLP on the full core wedge (hole TOD-023D) and ¼ core from TOD-023. Europa Metals has scheduled for this testwork to continue over the next 8 weeks, with the results feeding into the next phase of exploration work and studies and providing potential future product specifications for preliminary marketing discussions with third party concentrate buyers such as smelters and trading houses.

Commenting today, Myles Campion, Executive Director, said:

"Following receipt of the final assays, work has begun on an update to the JORC (2012) resource estimate for the Toral project, which we anticipate will take circa 4 weeks. Such update, along with a new geological model, will inform the next phase of work for Toral, in combination with Wardell Armstrong LLP's metallurgical testwork, in order to move the project towards a potential mining licence application."

Commenting today, Laurence Read, Executive Director, said:

"Assays have now been obtained from our first drilling campaign into the high-grade area at Toral. By filling in the gaps in the Inferred resource, we can increase confidence in the resource estimate and economic model for the mineralisation we are targeting within the high-grade zone. An Indicated resource and initial metallurgical testwork results for Toral should increase surety in the project as we start to progress towards the development phase. The results of our exploration activities will be communicated to all stakeholders within our local area in addition to the wider resource community and offtake groups."

Competent Person's Statement

The exploration results and activity reported in this announcement have been reviewed by Mr James Hogg MSc, BSc (Hons), MAIG who is a Member of the Australian Institute of Geoscientists. Mr Hogg has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to be deemed a qualified person under the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr Hogg consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.

For further information on the Company, please visit www.europametals.com or contact:

Europa Metals Ltd

Dan Smith, Non-Executive Director and Company Secretary (Australia)

T: +61 417 978 955

Laurence Read, Executive Director (UK)

T: +44 (0)20 3289 9923

Strand Hanson Limited (Nominated Adviser)

Rory Murphy/Matthew Chandler

T: +44 (0)20 7409 3494

Turner Pope Investments (TPI) Limited (Joint Broker)

Andy Thacker/Zoe Alexander

T: +44 (0)203 657 0050

Brandon Hill Capital (Joint Broker)

Jonathan Evans/Oliver Stansfield

T: +44 (0)20 3463 5000

Sasfin Capital Proprietary Limited (a member of the Sasfin group)

Sharon OwensT (direct): +27 11 809 7762

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

Notes to Editors:

The core objectives of the drilling campaign (initiated in May 2019) were as follows:

1. Drill into the higher-grade core of the Toral project, as defined within the existing Inferred JORC (2012) resource estimate;

2. Target high grade areas within the defined resource to further the Company's understanding of the project, with the aim of increasing confidence in the resource estimate to delineate a portion of the deposit into the Indicated resource category; and

3. Obtain a significant sample for metallurgical testwork by independent consultants to determine the potential Zn, Pb and Ag concentrate composition from Toral. This sample will provide additional data to assist process plant design and discussions with potential offtake parties.

Rig mobilisation

The rig and associated operating crew was supplied by Sondeos y Perforaciones Industriales de Bierzo SA and was overseen by the Company's on-site exploration team. The campaign was conducted using a single drilling rig with assays sent for independent analysis on a rolling basis.

Addison Mining Services Limited ("AMS") has been retained to carry out a revised independent resource update in accordance with JORC (2012) following completion of the campaign.

Wardell Armstrong LLP has been engaged to conduct the metallurgical testwork from a representative sample taken from the drilling.

Economic highlights from selected conceptual development scenario 

Estimated economic forecasts for Toral based on the current level of work (+/-30%) from the December 2018 Scoping Study comprise:

·; US$110 million net present value (NPV) using a discount rate of 8%;

·; 24.4% internal rate of return (IRR);

·; Estimated US$33 million CAPEX for a proposed 450ktpa design capacity plant, including associated auxiliary costs, with infrastructure being situated near portal entrance on the north side of the deposit;

·; Estimated total CAPEX of US$110 million; 

·; US$25 per tonne indicative OPEX processing cost at steady state conditions; 

·; US$36 per tonne indicative OPEX mining cost utilising mechanised cut and fill; and

·; 15-year production plan, with significant potential for extension.

Basis for announcing economics

The factors that lead the Company to believe that it has a reasonable basis for announcing a production target and forecast financial information are detailed in the Scoping Study and can be summarised as follows:

Three conceptual underground mining development and production scenarios were considered and developed throughout the Scoping Study, resulting in the identification of a preferred scenario, highlights from which are set out below:

·; decline ramp access to the north of the deposit, targeting mine production within the higher-grade core towards the centre of the planned mining blocks;

·; entry to mine via a principal decline reaching various levels;

·; series of internal mining inclined ramps constructed to access levels;

·; mechanised cut and fill (MCAF) mining method proposed;

·; 4x4 metre mine standard development size;

·; a ventilation raise would be drilled (raise-bored) to provide both adequate ambient conditions, underground and a second, emergency means of access/egress into the mine;

·; ore transported to a flotation process plant by conveyor or haul truck from the mine and crushed to a suitable product for milling;

·; milled ore floated by standard flotation technology to provide lead and zinc concentrate, with silver probably reporting to the lead concentrate for sale as a combined product; and

·; 4% Zn Eq cut-off used with potential for mine life extension.

JORC (2012) resource estimate

The Scoping Study was based on a previously announced JORC (2012) resource estimate comprising 16 million tonnes in the Inferred category @ 7.5% Zn equivalent (Pb, Ag), 3.9% zinc, 3.1% lead and 24g/t silver equating to 640,000 tonnes of zinc, 510,000 tonnes of lead and 13 million ounces of silver*.

*Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits as well as lead; (Zn Eq (PbAg)% = Zn + Pb*0.96 + Ag*0.022). Zn equivalent calculations were based on 3-year trailing average price statistics obtained from the London Metal Exchange and London Bullion Market Association giving an average Zn price of US$2,500/t, Pb price of US$2,100/t and Ag price of US$17/oz. Announced on 10 December 2018.