Europa Metals Regulatory News (EUZ)

29 October 2019

Europa Metals Ltd

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

Updated JORC Resource - Total Resource increased by 12% to 18Mt @ 7.4% ZnEq including first reported Indicated Resource of 2.7Mt @ 8.9% ZnEq, Toral Zn, Pb, Ag Project Spain

The Company is pleased to announce a first Indicated resource of 2.7 million tonnes ("Mt") @ 8.9% zinc equivalent ("ZnEq") and a 12% increase in total resource from the JORC (2012) Mineral Resource estimate update at the 100% owned Toral zinc, lead and silver project in Spain. The size and grade of the Indicated resource has exceeded management expectations following a comprehensive update of the resource model utilising a series of new data sets defined on the Toral project.

Highlights:

·; Updated independent JORC (2012) Indicated and Inferred mineral resource estimate obtained from Addison Mining Services Limited for the Toral lead-zinc-silver project, which incorporates data obtained from:

o 101 diamond (including wedges) and 4 reverse circulation ("RC") drill holes totalling 56,949.50 metres; and

o 19 underground channels for 18.75 metres,

which were utilised as the input database for geological modelling and resource estimation.

·; Indicated resource of approximately 2.7Mt @ 8.9% ZnEq (including lead ("Pb") credits) and 32g/t silver ("Ag"), at a 4% cut-off.

·; 12% increase in the total resource tonnes to approximately 18Mt (at 7.4% ZnEq with Pb credits and 24 g/t Ag), at a 4% cut-off.

o 30% increase in contained tonnes of zinc to approximately 830,000 tonnes

o 12% increase in contained tonnes of lead to approximately 570,000 tonnes

o 8% increase in contained ounces of silver to approximately 14 million ounces

·; Resource model substantially enhanced, incorporating fault mapping and the 2018 surface work, together with new data from the Company's 2018 and 2019 diamond and RC drilling campaigns.

·; The Indicated resource and new resource model will be reviewed alongside the metallurgical, geotechnical and hydrogeological works going forward as elements for inclusion in a Pre-Feasibility Study ("PFS") in order to build upon the initial scoping study economics (announced on 10 December 2018) which were based on the previous JORC (2012) resource, namely:

o US$33 million CAPEX for a proposed 450ktpa design capacity plant (including associated auxiliary costs) with a US$25 per tonne OPEX mining cost utilising mechanised cut and fill over a 15 year mine life at a 4% Eq (PbAg) cut off.

·; Europa Metals' team is currently analysing the updated model in order to identify new key targets both within and outside the defined resource.

·; Preliminary metallurgical testwork being undertaken by Wardell Armstrong LLP to test potential concentrate products and metals processing methods is on schedule for completion during Q4 2019.

Europa Metals, the European focused lead, zinc and silver developer, is pleased to announce the results of an updated independent mineral resource estimate prepared in accordance with JORC (2012) for its 100% owned Toral lead-zinc-silver project in northern Spain ("Toral" or the "Toral Project"), which has produced, at a 4% cut-off, a first JORC (2012) compliant Indicated resource estimate of approximately 2.7Mt at 8.9% ZnEq (including Pb credits) and a 12% increase in the total Toral resource to approximately 18Mt.

The Board views this resource update as being a significant step forwards for the overall project programme from the initial conceptual Scoping Study based on Europa Metals' work conducted at Toral in 2017-2018 and the previous Inferred-only resource estimate announced on 10 December 2018.

The upgraded resource estimate follows the processing of assays from the Company's 2018 and 2019 diamond drilling campaigns into a new resource model. It also reflects the findings from a 2018 surface mapping programme, analysis of faulting structures and increase in bulk density measurements, and incorporated data obtained from the 2018 and 2019 RC and diamond drilling campaigns, combined with the historic core re-logging.

The update has been prepared and reported in accordance with JORC (2012 revision) by Addison Mining Services Limited ("AMS").

Implications of the resource update and new resource model for the Toral Project

The size and grade of the Indicated resource exceeds management expectations and forms a significant cornerstone from which to progress towards a PFS, with further mine planning work to incorporate the Indicated resource, metallurgical testwork and new engineering components.

The update has also seen a significant reinterpretation of the resource and subsurface conditions at Toral. Elements such as the impact of fault structures on the known mineralisation are now being better understood. Consequently, new drilling targets within the updated resource area are now being generated with the aim of further increasing the confidence levels in the Toral resource estimate in a cost-effective manner going forwards. The progression in geological and structural understanding is also significant in terms of determining new areas of interest to the East and below the current resource for potential future expansion of the resource area.

Laurence Read, Executive Director of Europa Metals, commented:

"Today's resource update containing approximately 2.7Mt of Indicated Resource at 8.9% ZnEq (including Pb credits) and a 12% increase in the total resource to 18Mt at 7.4%, using a 4% cut-off, is, in our view, the most significant development for the Toral Project to date. The Indicated resource significantly exceeds our expectations and this update has enabled the team, working alongside AMS, to pull together the findings from a whole series of independent workstreams to form, not just a new resource estimate, but a new resource model that better demonstrates the subsurface conditions and controls at Toral.

"The project now has contained metal estimates of 830,000 tonnes of zinc, 570,000 tonnes of lead and 14 million ounces of silver, whilst maintaining highly robust mineable grade. The results will form a major part of a first mining plan for a PFS but will also, importantly, inform our approach to enhancing the current mineable area and selectively assessing new prospective areas for future resource upgrade and expansion. 

"The considerable work undertaken over the last 24 months at Toral, moving from a maiden JORC resource estimate through to a Scoping Study and today's resource upgrade, has been highly cost efficient and effective. We are enhancing our understanding of this valuable lead, zinc and silver project and building our confidence levels in terms of resource size and quality, in-situ metal and potential future product quality. Going forwards, I look forward to announcing further progress in due course with respect to our stakeholder engagement process for a development application, metallurgical testwork results and the next stage of resource drilling." 

Myles Campion, Technical Director of Europa Metals, further commented:

"The activities undertaken over the last 12-18 months, such as re-logging and mapping, have all been important pieces of work and have allowed the team to build up a knowledge database which has been effectively utilised to guide and influence the updated resource model.

"The increase in the overall tonnage is good to see as it demonstrates the ability to grow Toral. The bonus has been enhancing our knowledge gained from such workstreams culminating in a limited diamond drilling programme this year that has been highly cost effective. We are delighted to announce an increase in the confidence level for the resource over a portion of the high-grade area of Toral to the Indicated category.

"I look forward to the next stage of planning that progresses Toral towards a PFS."

Revised inputs from new drilling, historic re-logging work, mapping and analysis

Europa Metals has completed two drilling campaigns between September 2018 and August 2019. The first campaign consisted of four RC holes for 1,109m (2 infill and 2 step-out exploration holes) and the second consisted of six diamond holes and one wedge daughter hole for 3,857.3m ranging in depth from 299m to 761.3m. The diamond drill holes targeted the high-grade areas in the block model with a view to increasing the confidence and the resource category for that area.

The updated mineral resource estimate as of 25 October 2019 for the Toral deposit comprises, at a 4% cut-off:

·; An Indicated resource of approximately 2.7Mt @ 8.9% Zn Equivalent (including Pb credits), 5% Zn, 4.2% Pb and 32g/t Ag

o Including 130,000 tonnes of zinc, 110,000 tonnes of lead and 2.8 million ounces of silver

·; An Inferred resource of approximately 16Mt @ 7.2% Zn Equivalent (including Pb credits), 4.5% Zn, 2.9% Pb and 22g/t Ag

o Including 690,000 tonnes of zinc, 450,000 tonnes of lead and 11 million ounces of silver

·; Total resources of approximately 18Mt @ 7.4% Zn Equivalent (including Pb credits), 4.5% Zn, 3.1% Pb and 24g/t Ag

o Including 830,000 tonnes of zinc, 570,000 tonnes of lead and 14 million ounces of silver

Refer to Figure 1: Long section Toral block model and mineralisation wireframes, looking north: http://www.rns-pdf.londonstockexchange.com/rns/3930R_1-2019-10-28.pdf

This latest update compares favourably with the previously reported mineral resource estimate, announced on 10 December 2018 (which had an effective date of 29 October 2018), which contained the following tonnes and grade at a 4% cut-off:

• Inferred resources of approximately 16Mt @ 7.5% Zn Equivalent (including Pb and Ag credits), 3.9% zinc, 3.1% Pb and 24g/t silver*

• Approximately 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.

Since the compilation and publication of Europa Metals' first JORC (2012) resource estimate, the Company's geological team has been undertaking several important workstreams and internal projects over the course of the last 12-18 months in order to improve our geological understanding of the Toral deposit.

The 2018 re-logging exercise of previously drilled historic core stored at the national Lithoteca in Peñarroya has proven to be most beneficial in not only significantly increasing the quantity and quality of bulk density measurements, but also increasing the understanding of the geological environment, controls on mineralisation and providing basic structural data.

Another workstream completed over the course of late 2018/early 2019 was detailed surface geological mapping which has now been tied into the database to provide further data and guidance on structural influences within the confines of the Toral deposit.

The findings from such work have now been incorporated into the new resource, providing better delineated geological boundaries and for the first time defining a structural framework which has been integral in building the updated resource model (refer to Figures 2 and 3 via the link below).

Figure 2: Mineralisation wireframes, looking north.

Figure 3: Mineralisation wireframes with major fault surfaces.

http://www.rns-pdf.londonstockexchange.com/rns/3930R_1-2019-10-28.pdf

Updated JORC (2012) Inferred and Indicated Mineral Resource Estimate

Further to the recent RC and diamond drilling conducted between September 2018 and August 2019, the Company commissioned AMS to complete an updated mineral resource estimate in September 2019. The updated mineral resource estimate is based on all the available historical data from four drilling campaigns conducted on licence number 15.199 (namely, the 1972 - 1984 Peñarroya-Adaro campaign, the 2006 - 2008 Lundin Mining campaign and the Europa Metals 2016 - 2017 campaign and RC and diamond drilling conducted from September 2018 to August 2019), along with underground channel sampling results from the numerous adits.

The updated mineral resource estimate has been reported in accordance with the guidelines of the JORC (2012) code.

Block model

The Inferred and Indicated resource for the Pb-Zn-Ag mineralisation located on the Toral Project's licence area has been estimated at various cut-offs (as set out in Table 1 below). The Company reviewed the new block model along with its appointed geological consultants, AMS, and concluded that a 4% ZnEq (PbAg) cut-off was appropriate utilising estimated mining parameters typical for similar types of project and mineralogy, and an historical three-year trailing average for metals prices, which, although conservative, was deemed appropriate at this stage in the project's development. 

Zn Price Used: US$2,780/t US$c/lb1.263

Pb Price Used: US$2,200/t US$c/lb1.00

Ag Price Used: US$16.4/oz

The resource update has identified potentially economic mineralisation ranging from surface to approximately 1,100m below surface. The new block model currently extends for a strike length of 3,600m and is still open to the east and west along strike and also at depth where it has not yet been closed off.

Table 1: Summary of Inferred mineral resources for the Toral property reported at a 4.0% Zn equivalent cut-off grade (including Pb and Ag credits) and estimated grade and tonnages at the various cut-off grades. Figures are rounded to reflect the accuracy of the estimate and as such totals may not cast.

Notes:

1. No mineral reserve calculations have been undertaken. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

2. Numbers are rounded to reflect the fact that an Estimate of Resources is being reported as stipulated by JORC 2012. Rounding of numbers may result in differences in calculated totals and averages. All tonnes are metric tonnes.

3. 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 equivalents calculation (Zinc, Lead and Silver) have a reasonable potential to be recovered and sold.

4. Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits as well as lead and is the parameter used to define the cut-off grade used for reporting resources (Zn Eq (PbAg)% = Zn + Pb*0.935 + Ag*0.018).

5. Zn Eq is the calculated Zn equivalent using lead credits and does not include silver credits (Zn Eq = Zn + Pb*0.935).

6. The mineral resource estimate set out above for the zinc, lead and silver mineralisation in the Toral project area is based on a 3D geologic model and wireframe restricted block model that integrated the exploration work on the Toral project up to 30 September 2019. The block model used uniform cell size of 50x4x50m to best suit the orientation of the mineralisation and sample spacing. The block model was rotated by 20° in plan view to best match the trend of mineralisation. Sub cells were applied to better fit the wireframe solid models and preserve accurate volume as much as possible. Cells were interpolated at the parent block scale using an ordinary kriging.

7. Top cuts were applied to the composite assay grades for 20% Zn, 17% Pb and 125 g/t Ag, any value above the top cut value was reduced to that grade.

8. The Indicated and Inferred mineral resource category for the Toral lead-zinc-silver project set out in Table 1 (at cut-off grades >4% Zn Equivalent) comply with the resource definitions as described in the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC)

9. The tonnes and grades reported at a cut-off grade of 3% Zn equivalent are below the economic cut-off grade of 4% and as such should not be considered mineral resources, they are shown here for comparison purposes only.

Figure 4 showing AMS' resource block model for Toral as a 3D view looking north, by Zn equivalent grade: http://www.rns-pdf.londonstockexchange.com/rns/3930R_1-2019-10-28.pdf

Figure 5: showing AMS' resource block model for Toral as a 3D view looking north, by resource category: http://www.rns-pdf.londonstockexchange.com/rns/3930R_1-2019-10-28.pdf

Summary of updated resource estimate and reporting criteria

In accordance with the JORC Code (2012) reporting guidelines, a summary of the material information used to estimate the updated mineral resource is set out below.

Geology and geological interpretation

The Toral Project is a traditional polymetallic (lead-zinc-silver) deposit, which is hosted over 6km of strike length of the prospective Lower Cambrian Vegadeo Limestone formation, that is regionally mineralised along more than 40km of its extent. The deposit represents a carbonate hosted, structurally controlled deposit type, demonstrating fault-controlled contact, vein, carbonate replacement and breccia styles of mineralisation situated close to and along the boundary between footwall slates and hanging wall limestones and dolomites. Sub-ordinate lead-zinc-silver mineralisation also occurs wholly within the hanging wall limestones and dolomites, approaching the contact with the slates.

Historic drill hole re-logging undertaken in 2018 has provided improved geological, structure, alteration and weathering/oxidation information, which has been incorporated into the interpreted geological and mineralised models for the updated resource estimates. Surface mapping and remote data interpretation by Europa Metals has allowed the development of an interpreted fault model, also incorporated into the updated geological and mineralised models used in the updated mineral resource estimate.

Weathering

The weathering profile was observed throughout the drill holes and historic shallowly emplaced horizontal adits. In general, observations on weathering and oxidation at Toral suggests a poorly developed or truncated profile, with minimal oxidation not much developed below 30 metres from surface, with the majority of the country rock being unweathered or showing only fractured controlled weathering and oxidation in the form of Fe oxide joint tarnishing and fracture infill. Weathering and oxidation within the deeper main parts of the mineralised zone is interpreted as partial, being fracture controlled with less than 10% weatherable minerals weathered and/or oxidised. A weathering surface was interpreted at the moderately oxidised-partially weathered/fracture controlled weathered boundary to sub-divide the moderately oxidised 'transitional' zone material and -10% weathered 'fresh' material below. Due to the strong lithological and structure control, an observed trough is developed at the transitional-fresh boundary along the main structure, interpreted through the drill hole logging of weathering. The accuracy of the surface at this stage is suitable for application and use in the reporting of Inferred and Indicated resources.

Bulk density

The resource database contains 2,373 bulk density measurements, with a total of 177 within the mineralised wireframe.

The mean for the mineralised domain transitional zone is 2.75 g/cm3 and the mean for mineralised domain fresh material is 2.85 g/cm3. A broad linear relationship between Pb+Zn grade and bulk density was identified from scattergrams and the formula 2.75 + 0.02(Pb+Zn%) used to estimate block density within the block model.

Drilling techniques and hole spacing

The updated mineral resource estimate includes new information from six surface collared diamond holes and one wedge hole and 4 new RC holes drilled across two campaigns in 2018 and 2019.

A total of 101 diamond drill holes (including wedge) for 55,840.5m and 4 RC drill holes for 1,109 metres totalling 56,949.50 metres, and 19 underground channels for 18.75 metres were used as the input database for geological modelling and resource estimation.

Drill core diameter was PQ, HQ, NQ2, NQ and BQ depending upon depth. Tube type is unknown for the historic Peñarroya drilling, whilst the triple tube method was used for the historic Lundin Mining and Europa Metals' drilling campaigns.

The 2018 and 2019 diamond core has been orientated. No orientation has been performed on the historic drill core.

Drill and UG channel sample data spacing across the current resource area ranges from approximately 50-100m x 50-100m centres within the most densely tested area situated in the NW, stepping out to approximately 200m x 200m within the mid-section and 100-200m x 500m in the SE.

The distribution of drill holes and UG channel sampling, supported by surface and underground mapping, is sufficient to establish the degree of geological and grade continuity appropriate for a JORC (2012) Inferred and Indicated classification of resources.

Sampling and sub-sampling techniques

The four main phases of historic exploration drilling and sampling are:

·; 1972-1984 Peñarroya-Adaro: diamond drill core method was used to obtain samples for geological logging and sampling. Geological and analytical data is recorded on hardcopy. Selective sampling method was employed around areas of interest. Sampling intervals measure approximately 1m, half core sent for analysis, with half core retained for reference. Exact details on core processing, sampling techniques and analytical methods are unclear, however subsequent explorers, Lundin Mining, sent the majority of the Peñarroya core pulp reject samples to ALS Chemex for multi element re-analysis by ICP.

·; 2006-2008 Lundin Mining: diamond drill core method was used. Core logging completed on hardcopy. Selective sampling method was employed around areas of interest. Sampling intervals measure approximately 1m, half core sent for analysis, with half core retained for reference. Samples typically 1m half core, with samples prepared at the then Lundin Laboratory in Suecia, then shipped to ALS Chemex Vancouver for multi-element analysis by ICP. Half core samples reduced to -400 microns and 100g sub-sample taken for analysis. Multi-element re-analysis of available Peñarroya diamond drill hole pulp reject samples completed at ALS Chemex Vancouver using ICP.

·; 2016-2017 Europa Metals: diamond drill core and underground cut channel sampling methods used to obtain samples for geological logging and sampling. Geological and analytical data is recorded on hardcopy. Selective sampling method was employed around areas of interest. Sampling intervals measure approximately 1m, half core sent for analysis, with half core retained for reference. Samples sent to ALS Seville for preparation and multi-element analysis by ICP. Half core samples reduced to -400 microns and 100g sub-sample taken for analysis.

·; 2018-2019 Europa Metals: diamond drill core and RC chips used to obtain samples for geological logging and sampling. Geological and analytical data is recorded on paper and later digitised. Selective sampling method was employed around areas of interest. Sampling intervals measure approximately 1m, half core and RC riffle splits sent for analysis, weighing approximately 2-3kg, with half core and chip sub-samples retained for reference. Samples were sent to ALS Seville for preparation and multi-element analysis by ICP. Half core and RC samples were reduced to -400 microns and 100g sub-sample taken for analysis.

Diamond recovery

A total of 11,484 core recovery measurements exist in the database for the drilling with average recovery of 81%. The average recovery for the Company's diamond drilling is 95%. Core recovery is measured over run lengths.

Cut-off grades

The Inferred and Indicated resource for the Pb-Zn-Ag mineralisation located on the Toral property, licence number 15.199, has been estimated at various cut-offs. For the Toral deposit resource, the economic cut-off was determined by calculation of block revenue factors based on Zn equivalent calculations derived from an historical three-year trailing average for Zn, Pb and Ag prices. Indicative mining and processing costs typical of the region and deposit type were applied along with typical mining recovery and dilution factors and metallurgical recovery factors identified by laboratory studies and production at comparable deposits and accepted by AMS.

For reporting in compliance with JORC (2012) an economic cut-off grade of 4% Zn equivalent (including Pb and Ag credits) was selected considering the aforementioned factors and allowing for some increase in commodity prices to define resources with a reasonable prospect of eventual economic extraction now or in the near future. Resources are reported as follows:

The updated mineral resource estimate as of 25 October 2019 for the Toral lead-zinc-silver deposit comprises:

·; An Indicated resource of approximately 2.7Mt @ 8.9% Zn Equivalent (including Pb credits), 5% Zn, 4.2% Pb and 32g/t Ag

o Including 130,000 tonnes of zinc, 110,000 tonnes of lead and 2.8 million ounces of silver

·; An Inferred resource of approximately 16Mt @ 7.2% Zn Equivalent (including Pb credits), 4.5% Zn, 2.9% Pb and 22g/t Ag

o Including 690,000 tonnes of zinc, 450,000 tonnes of lead and 11 million ounces of silver

·; Total resources of approximately 18Mt @ 7.4% Zn Equivalent (including Pb credits), 4.5% Zn, 3.1% Pb and 24g/t Ag

o Including 830,000 tonnes of zinc, 570,000 tonnes of lead and 14 million ounces of silver

Estimation methodology

AMS verified new primary analytical data via cross reference against original lab certificates. The database for use as input for mineral resource modelling and estimation has also been validated and verified by AMS. Micromine 3D geological modelling and estimation software was used for import, validation and QC verification assessment, 3D solid modelling, geostatistics and block model grade estimation and block model reporting. Data checks include checks for overlapping and missing intervals, drillhole trace errors, missing survey data, lithology and collars.

As with previous resource estimates completed by AMS (in 2017 and 2018) wireframe solid models were created for each domain based on a mineralisation threshold of approximately 0.2% for Zn and Pb (approximately 0.4% Zn+Pb). Analysis of Zn and Pb grades in cross section and in scatter plots showed a strong relationship and no requirement to model Zn and Pb separately was identified. Ag showed a strong correlation with Pb and was estimated within the Zn/Pb mineralised domain.

The updated wireframes were generated using Micromine's implicit vein modelling functionality and incorporated major fault boundaries to better honour offsets in the structure and preserve thicknesses between intercepts. Interpretation of the mineralised domains was guided by geological interpretation of the deposit incorporating structural and lithological boundaries and surface expression in topographical data and outcrop mapping.

To the north west the mineralised models are truncated by the licence boundary and are extended approximately 10m past the south easterly most drill hole which was mineralised but contained sub-economic grades (3m at 2.4% ZnEq). The structure remains open to the south east. Down dip the model was extrapolated approximately 50-200m below the deepest sample in the north west and central zones, and approximately 400m below the deepest sample in the SE zone with consideration of depths tested along strike to the NW. Extents of extrapolation are considered appropriate for the level of information, deposit type, strike and depth extents tested, observed and geostatistical grade continuity and the assigned resource classification.

A uniform cell block model of 50mE, 4mN, 50mZ was restricted to the wireframes using block factors. The block model was rotated by 20° in plan view to best match the trend of mineralisation. The uniform model and 2m sample composites for the mineralised domain were then flattened to a constant vertical plane striking 110° to account for fault offsets, improve variography and grade mapping. Thickness was preserved in the flattening process and no lateral stretching was applied.

Block model interpolation and extrapolation for Zn, Pb and Ag was completed using directional variograms for each element in the flattened space at the uniform block scale. Ordinary kriging was used, and a multiple pass kriging neighbourhood used at increasing radii to prevent smearing of high grades. The block model was then sub blocked to the mineralised wireframes in real space to best honour thickness and volume.

Top cuts were applied to the composite assay grades for 20% Zn, 17% Pb and 125 g/t Ag, any value above the top cut value was reduced to that grade.

Figures 6 and 7 showing grade tonnage curves, tonnage based on Zn equivalent with Pb and Ag credits, are available at: http://www.rns-pdf.londonstockexchange.com/rns/3930R_1-2019-10-28.pdf

Classification criteria

The portion of the Toral deposit defined by drilling, underground development and channel sampling, has been classified as an Inferred and Indicated Mineral Resource in accordance with the JORC Code (2012) guidelines based on a combination of drill spacing, geological confidence, grade continuity, previous mining and the quality control standards achieved.

Mining and metallurgical methods and parameters

Based on the orientations, thickness and depths to which the ore body has been modelled, as well as the estimated grade, underground mining is the intended mining methodology.

Comparison with previous Mineral Resource estimate

The updated mineral resource estimate compares favourably with the previously reported Inferred-only mineral resource estimate, announced on 10 December 2018, which provided the following tonnes and grade:

Notes:

1. No mineral reserve calculations were undertaken. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

2. Numbers are rounded to reflect the fact that an Estimate of Resources is being reported as stipulated by JORC 2012. Rounding of numbers may result in differences in calculated totals and averages. All tonnes are metric tonnes.

3. 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. 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 equivalents calculation (Zinc, Lead and Silver) have a reasonable potential to be recovered and sold.

4. Zn Eq (PbAg)% is the calculated Zn equivalent incorporating silver credits as well as lead and is the parameter used to define the cut-off grade used for reporting resources (Zn Eq (PbAg)% = Zn + Pb*0.96 + Ag*0.022).

5. Zn Eq (Pb)% is the calculated Zn equivalent using lead credits and does not include silver credits. It is displayed here for comparison purposes (Zn Eq (Pb)% = Zn + Pb*0.96).

6. The mineral resource estimate set out above for the zinc, lead and silver mineralization in the Toral project area is based on a 3D geologic model and wireframe restricted block model that integrated the exploration work on the Toral project up to 20 September 2018. The block model used uniform cell size of 50x2x50 m to best suit the orientation of the mineralisation and sample spacing. The block model was rotated by 20° in plan view to best match the trend of mineralization. Sub cells were applied to better fit the wireframe solid models and preserve accurate volume as much as possible. Cells were interpolated at the parent block scale using an ordinary kriged interpolation technique with a single search ellipsoid orientated to the interpreted strike, dip and pitch of mineralization.

7. No top cutting was applied to Zn or Pb grades due to the upper detection limit of the data being 30%. High-grade outlier values for Ag were capped ('top-cut") at 200 ppm (g/t) based on the data distribution and statistics.

8. The Inferred mineral resource category for the Toral lead-zinc-silver project set out in the above table (at cut-off grades >4% Zn Equivalent) comply with the resource definitions as described in Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC)

9. The tonnes and grades reported at a cut-off grade of 3% Zn equivalent are below the economic cut-off grade of 4% and as such should not be considered mineral resources, they are shown here for comparison purposes only.

10. The tonnages and grades reported at a cut-off grade of 3% Zn equivalent are below the economic cut-off grade of 4% and as such should not be considered mineral resources, they are shown here for comparison purposes only.

The updated resource estimate announced herein is positive both in terms of defining resources of increased confidence and resource classification, as well as in terms of additional tonnages.

·; An Indicated resource of approximately 2.7Mt @ 8.9% Zn Equivalent (including Pb credits) and 32g/t Ag

·; 12% increase in total resources tonnes to approximately 18Mt (at 7.4% Zn equivalent with Pb credits and 24 g/t Ag)

·; 30% increase in contained tonnes of zinc to approximately 830,000

·; 12% increase in contained tonnes of lead to approximately 570,000

·; 8% increase in contained ounces of silver to approximately 14 million ounces

The positive differences between the previous and current model are attributed to a combination of the following factors:

·; Increased data density through recent drill campaigns;

·; Use of controlled Implicit Modelling method for mineralised solid model generation;

·; Incorporation of new interpreted structural models in mineralised model generation;

·; Increased number of bulk density determinations which has enabled the use of variable bulk density; and

·; Updated geostatistics and flattening of the structure for grade interpolation and improved grade mapping.

Metallurgy and engineering works

·; As a separate workstream, Europa Metals is progressing the requisite engineering studies to advance the information needed to develop a PFS:

·; A hydrogeological conceptual study is currently being drafted by external company CRS-Ingeniería. The conceptual study results are expected during Q4 2019;

·; Geotechnical works have been initiated with a review of the data by an external company and samples being selected for test work; and

·; Metallurgical testwork by Wardell Armstrong LLP is progressing in line with management's expectations. Results from floatation and concentrate test work are expected during Q4 2019.

Competent Person's statement

The updated Toral resource estimate was prepared by Mr J.N. Hogg, MSc. MAIG Principal Geologist for AMS, an independent Competent Person within the meaning of the JORC (2012) code and Competent Person under the AIM guidance note for mining and oil & gas companies. The updated resource estimate was completed by Mr R. J. Siddle, MSc, MAIG Senior Resource Geologist for AMS and a Competent Person. Mr Hogg has reviewed and verified the technical information that forms the basis of, and has been used in the preparation of, the updated mineral resource estimate and this announcement, including all analytical data, diamond drill hole logs, QA/QC data, density measurements, and sampling, diamond and RC drilling and analytical techniques. Mr Hogg consents to the inclusion in this announcement of the matters based on the information, in the form and context in which it appears. Mr Hogg has also reviewed and approved the technical information in his capacity as a Qualified Person under the AIM Rules for Companies.

Additionally, Mr Hogg confirms that AMS is not aware of any information or data that materially affects the information contained within the Company's previous announcements referred to herein.

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)20 3657 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:

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.

Glossary of technical terms: