Europa Metals Ltd
Lead, Zinc and Silver, Spain
Annual Report
For the year ended 30 June
2020
A.C.N. 097 532 137
Contents
01 Chairman’s Statement
02 Chief Executive Officer’s operational and financial review
05 Toral project summary
06 Corporate information
07 Directors’ report
25 Corporate governance statement
30 Consolidated statement of profit or loss and
other comprehensive income
31 Consolidated statement of financial position
32 Consolidated statement of cash flows
33 Consolidated statement of changes in equity
34 Notes to the consolidated financial statements
54 Directors’ declaration
55 Independent auditor’s report
58 Auditor’s independence declaration
59 Additional JSE information
Europa Metals is a lead-zinc exploration company focused exclusively on European projects. We believe Europe, and in particular Spain, is an unrealised region for modern mine development and that the opportunity to create new mines within a best practice social and environmental framework, near first class infrastructure, is significant.Currently, the Company is progressing its Toral Lead, Zinc and Silver project towards the mine development phase. In summary:• 1st world jurisdiction, Province of León, established mining region• Ready access to provincial expertise and world class underground experience• Excellent road, rail & power infrastructure, all are located near to Toral• Grants often available from Spain and the EU for development• Toral located in one of the world’s best regions for base metals exploration and miningEuropa Metals is quoted/listed on AIM and AltX of the JSE under the ticker code EUZ and is an Australian registered Company. Chairman’s Statement
Looking forward to building upon the
accomplishments of this year with further
success at Toral through drilling, metallurgy
and advancing our economic optionality
Dear Fellow Shareholders,
Throughout the last financial year, we have continued to
advance Europa Metals Ltd’s (“Europa”, “Europa Metals”
or the “Company”) wholly owned Toral lead, zinc and silver
project located in the province of Castilla y León, north west
Spain (the “Toral Project” or “Toral”).
Our efficient and cost effective approach to exploration
and development has included the successful prosecution
of several drilling campaigns designed to extract maximum
value and information from each drill hole. This approach
has also seen Europa Metals successfully complete several
phases of exciting metallurgical test work and oversee an
increasing level of confidence in the pre-existing mineral
resource estimate via the commissioning of regular
independent updates.
In the first half of the financial year, the Company completed
an oversubscribed fundraising of £1 million (gross), thereby
enabling us to fund further development work which was
efficiently targeted towards both increasing our levels of
confidence in the resource from the inferred to indicated
category and to securing a further metallurgical sample to
facilitate ongoing work to better define potential future
processing routes.
During the financial year, we announced our first indicated
resource at Toral, which we achieved with the first drilling
campaign of 2019. This area of higher tenor mineralisation
on the deposit was further substantiated later in 2019 with
the successful drilling of hole TOD-025, intersecting 7.70m @
17.3% ZnEq(PbAg) from 483.6m to 491.3m, including 4.3m
@ 25.6% ZnEq(PbAg) from 486.3m to 490.6m. This also
delivered a 40% increase in the indicated inventory defining
3.8Mt @ 8.3% ZnEq (including Pb credits), which is a very
good result serving to demonstrate the efficiency of Europa’s
project team’s drill targeting.
The metallurgical test work commissioned and conducted on
material from Toral during and subsequent to the reporting
period involved two key objectives, firstly the accumulation
of further mineralisation representivity across the deposit
and, secondly, the initiation of X-ray transmission (“XRT”) ore
sorting test work. The results obtained proved to be excellent
on both fronts, with the high grade intersection from hole
TOD-025 performing very well through flotation to prove
up a globally significant lead concentrate of 79.2%. The XRT
programme delivered very exciting results illustrating the
Annual Report 2020
Europa Metals Ltd
capacity to upgrade low grade ore by a factor of 2 – 4x, which
could prove transformational in how we approach potential
future mining operations at Toral.
The achievement of such milestones is important to the
future development of the Company as more financing
options become available to us on the back of increasing
confidence levels in the deposit. Further drilling should
enable Europa to grow the size of the current indicated
resource estimate which will feed into updated economic
parameters for the Toral Project. In addition, the successful
metallurgical test work has provided an understanding of
potential future concentrate products and, with the retention
of third-party marketers, such as Conrad Partners from Hong
Kong, we will be able to engage in preliminary marketing
discussions with potential third party concentrate buyers.
As Europa progresses through the next 12 month period, with
its planned activities having been financed by the recent post
year end fundraising of £2 million (gross), further drilling and
metallurgical work will feed into an updated production flow
sheet, and assist the project team in identifying efficiencies
versus the initial 2018 Scoping Study’s findings. We are also
advancing the key components of a pre-feasibility study
(“PFS”) with work commencing on hydrogeology, waste
management and geotechnical analysis, while continuing with
environmental baseline studies and community engagement.
The first half of 2020 saw Europa acclimatise to the new and
challenging global environment stemming from the COVID-19
pandemic. We implemented appropriate procedures at an
early stage in the onset of the pandemic in order to mitigate
its effects on the group’s workplaces and activities and will
continue to monitor events as they unfold.
I would like to take this opportunity to thank all of our
shareholders, advisers and other stakeholders for their
continued support and interest in our activities and look to
reporting further progress in due course.
Myles Campion
Executive Chairman
6 October 2020
01
Chief Executive Officer’s operational
and financial review
A year of increasing confidence in Toral and
determining the saleablibity of potential lead, zinc
and silver products to the global metals market
I would firstly like to express our appreciation for the
entire Europa team’s hard work and dedication during
and post the reporting period in what has been a highly
challenging environment due to the Coronavirus global
health emergency. The safety of our workforce is at the
forefront of everything we do and the operational team’s
response to ensure that all best practice instructions
and guidance has been fully adopted and adhered
to, with respect to COVID-19, is a testament to their
professionalism.
Notwithstanding the significant challenges posed by, and
the Board’s actions to mitigate the impact of, COVID-19,
the financial year to 30 June 2020 and subsequent period
has seen significant progress for Europa Metals at all
levels. Going into the financial year, Europa Metal’s core
strategy was to develop the surety of an economically
robust mining model, for a flagship project situated in
the EU, that can be developed within the boundaries of
the defined JORC 2012 resource. Potential expansion of
the existing resource to extend the planned future mine
life is a clear option that can be pursued at a future date,
subject to the relevant permissions, on the basis of high
levels of certainty around a mine development plan or
even during future production itself.
Whilst the Toral Project is open towards its eastern
boundary and at the approximate 1,000 metre depth
mark, over the course of the last fifteen months we
have focused our resources on increasing continuity
and our understanding of the existing block model and
in recovering sufficient mineralised samples to conduct
our first programme of metallurgical testing, which was
undertaken by Wardell Armstrong International (“WAI”).
As Europa Metal’s team has pursued the group’s stated
strategy, we have continuously reviewed each area of
work following our own analysis of the lead, zinc and
silver marketplace and feedback from third party groups.
Europa regularly engages with a range of industry
groups within the metals sector and shares appropriate
project information on a number of levels ranging from
publicly available reported results to granting access to
a comprehensive data room following execution of a
suitable non-disclosure agreement. Such engagement
is ongoing as we continue to update and enhance our
knowledge of Toral and de-risk additional elements of the
project with each new work programme.
In summary, as of September 2020, I am delighted to
report that we have experienced no Coronavirus cases
amongst our personnel and have implemented a full
community relations programme including submission
of initial documentation in respect of the requisite
stakeholder consultation process that will eventually form
part of our mining licence application. Operationally, we
have achieved a significant amount in a very efficient
manner, including; defining, and then increasing,
Toral’s initial indicated resource, completion of three
distinct phases of metallurgical analysis (including the
implementation of an ore sorting process) which has
seen excellent grade and recovery results for all metals,
reporting of the highest grade lead, zinc and silver
intersections obtained by Europa to date and the signing
of a concentrate marketing agreement with Conrad
Partners. The results from such activities will be utilised
in the completion of an economic update, currently
underway, on the project that will bring together all of
the findings from the key workflows completed since
the 2018 Scoping Study. We have also recently secured
further funds to progress the key components of a PFS,
with work already underway on the ground ahead of
the anticipated grant of a new, three year, investigation
permit for Toral by the Junta of Castillia y León. The
application for such permit was compiled and submitted
in close consultation with the Junta itself and, over
the last three years, Europa has fully complied with its
statutory obligations and commitments with respect
to all work conducted on the project. The application
was made for a new investigation permit as Europa’s
team believes that significant enhancements can still be
made to a prospective mining application to the same
authorities, to demonstrate and support the long-term
economic potential of a future mining operation at the
Toral Project.
Corporately, in mid July 2020, Europa’s shareholders
passed the requisite resolutions to enable the
Company to, inter alia, make certain amendment’s to
02
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Chief Executive Officer’s operational
and financial review
continued
it’s Constitution to bring the Company into greater
alignment with more UK market standard corporate
governance practices, recognising that AIM is now the
primary exchange for the Company’s shares following
its delisting from the ASX in March 2019. The Company
also implemented a share consolidation as part of the
proposals at the meeting on the basis of a 500:1 ratio
in order to reduce the number of shares in issue to a
more appropriate level versus the Company’s peer group
and thereby improve investor perception and volatility
in the Company’s share price. As a matter of course,
the Company continues to regularly identify, review
and evaluate other projects and opportunities that
could potentially add value to the group, but no such
opportunities are currently being actioned/pursued.
Group Highlights
Coronavirus
–
During March 2020, the Company responded to
all instructions and best practice guidance from
the relevant authorities with regards to ensuring
the safety of its work force in Spain, the UK and
Australia by implementing a series of operational
procedures and monitoring initiatives. Europa Metals
puts the safety of its workforce ahead of all other
considerations and continues to operate strictly
within the parameters of social distancing.
Operational – Toral Pb, Zn & Ag Project, Spain
–
Diamond drilling campaign completed in September
2019 targeting approximately 750 metres of
previously unassayed areas of the deposit. Key results
were:
•
•
Structural demonstration that the lead, zinc and
silver mineralisation currently comprises at least
two, and possibly three, plunging high-grade
shoots with higher grade mineralisation usually
identified at 400 metres from surface with
the majority of the currently defined resource
estimate present in distinct areas down to 1,000
metres from surface (where the deposit remains
open at depth).
Mineralised samples from both the parent and
the daughter holes were collated and processed
by WAI with the first series of results, obtained
in December 2019, analysing the metallurgical
characteristics of Toral and ascertaining potential
concentrate types for future production and sale.
–
–
A formal stakeholder engagement process for the
Toral Project was initiated during August 2019
with an initial document being submitted to all key
administration stakeholders in connection with the
planned eventual securing of an exploitation licence
for the project following a development decision.
Further to a series of local consultation sessions, the
Company responded to local stakeholder feedback
and, in November 2019, launched a dedicated
information sharing website for the Toral Project
available at: europametals.es and proyectotoral.com.
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Europa Metals Ltd
–
–
An updated JORC (2012) compliant resource estimate
was completed in October 2019 which included the
first indicated category of resource for Toral.
A further drilling campaign commenced in November
2019 resulting in the highest grade intersection
recovered by the Company to date: 7.70m @ 17.3%
ZnEq (PbAg) from 483.6m to 491.3m, including 4.3m
@ 25.6% ZnEq (PbAg) from 486.3m to 490.6m from
drill hole TOD-025. Further samples were obtained
for additional metallurgical testwork by WAI.
–
An initial hydrogeological study was concluded in
February 2020 resulting in positive assessment of the
sub-surface hydrogeological conditions, namely:
•
•
Toral Project hosted in limestones but does not
have developed levels of drainage created from
the dissolution of sedimentary material (likely
seal against the surrounding water table).
245.55l/s flow across the proposed mineable
project area falls well within acceptable levels
for economic mine development; further
work, including a borehole test, will need to be
undertaken to enable a PFS.
•
The results of this desktop study are being tested
with a hydrogeological prorgamme at Toral.
An application for a new, three-year, investigation
permit in respect of the Toral Project was submitted
to the Junta of Castilla y León in June 2020. The
Investigation Permit renewal application was prepared
in close consultation with the relevant bodies of the
Junta, whose involvement in the submission process
served to reinforce the Company’s decision to apply.
The Company currently anticipates that a decision
in respect of the grant of a new Investigation Permit
will occur prior to the scheduled expiry of the existing
permit (being November 2020).
Corporate
–
A fundraising of £1,000,000 gross was completed, at an
issue price of 0.025 pence per share, on 30 September
2019. In addition, one warrant exercisable for a period of
2 years at a subscription price of 0.0375 pence per share
03
Chief Executive Officer’s operational
and financial review
continued
was issued to all participants in the fundraising for every
two new ordinary shares subscribed. The funds were
deployed towards additional drilling of the Toral Project,
mining engineering and processing work and general
working capital purposes.
–
–
–
A General Meeting was convened for mid July 2020 to
seek and obtain shareholder approval for a series of
resolutions, including the implementation of a share
consolidation, in order to support the Company’s
ongoing cost reduction strategy and more closely align
Europa Metals’ corporate governance framework and
Constitution with those of other AIM quoted companies
following due consultation with certain shareholders and
advisers.
Post Period (1 July 2020 – present)
–
–
–
All resolutions successfully passed by shareholders
at the abovementioned General Meeting leading to
the implementation of a 500:1 consolidation of the
Company’s ordinary shares, certain amendments to
the Company’s Constitution to enhance shareholder
protections, and support for an incentive plan for
directors and employees further to ongoing cost
reduction measures in light of the Coronavirus health
emergency.
In early August 2020, Colin Bird stepped down from
the Board as Non-Executive Chairman, with Myles
Campion assuming the role of Executive Chairman and
myself being confirmed as CEO.
Following a period of assessment of the Toral Project, a
product marketing agreement was signed with Conrad
Partners, Hong Kong, for them to work with the Company
to source commercial terms for the potential future supply
and sale of concentrate products from Toral.
Updated JORC (2012) mineral resource estimate
including a 40% increase in the Indicated Resource.
In mid August 2020, post the share consolidation,
successful fundraising of £2,000,000 gross completed
at an issue price of 12.75 pence per share to facilitate
certain key PFS workstreams, including:
•
•
•
Hydrogeological studies to further ascertain sub
surface water conditions;
Additional drilling targeting further increases
in the confidence level of the overall mineable
resource for Toral; and
Further metallurgical, geotechnical, waste
management and environmental work
components.
–
In late August 2020, third phase metallurgical testwork
completed by WAI incorporating an ore sorting
analysis. The results are now being utilised, along with
all other key work completed since the 2018 Scoping
Study, as part of a comprehensive, independent,
economic update for the Toral Project to establish and
set updated economic parameters for the PFS.
–
PFS work underway with further operational updates
anticipated in Q4 2020.
Laurence Read
CEO
6 October 2020
04
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Toral Project Summary
(as at October 2020)
Toral Pb, Zn & Ag Project, Spain
Indicated resource
•3.8 Mt @ 8.3% Zn Equivalent (including Pb credits) and 30 g/t Ag
$
•Approximately 180,000 contained tonnes Zinc, 150,000
contained tonnes Lead and 3.7 million ounces of silver
Scoping Study* economics
•US$110 million NPV (announced 2018)
Global resource (JORC) (Inferred/Indicated)
•17Mt @ 6.9% Zn Equivalent (including Pb credits), 4.1% Zn, 2.9%
Pb and 24 g/t Ag
•Approximately 720,000 tonnes of Zinc, 510,000 tonnes of Lead
and 14 million ounces of Silver
Technical
•Successful ini‰al hydrogeological report
•Advancing geotechnical approach
Metallurgy/Economic recovery
•83.9% Pb recovery to a 79.2% Pb concentrate
•87.1% Ag recovery to 512ppm Ag within Pb concentrate; and
•87.7% Zn recovery to a 60.0% Zn concentrate.
IRR
•24.4%
Capex
•US$110m
OPEX
•US$25/t OPEX Steady state
•US$26/t MCAF
Mine profile
•Underground MCAF 15 year Mine plan 4% cut off
Located in Northern Spain
•Junta of Cas‰lla y Leon 3 year Inves‰ga‰on Permit granted in
2017, Applica‰on submi›ed for new 3 y IP Q2 2020
Toral 2018 Scoping Study (Independent economic update underway – Q4 2020,
conducted by Bara Consulting)
Indicated resource
•3.8 Mt @ 8.3% Zn Equivalent (including Pb credits) and 30 g/t Ag
$
•Approximately 180,000 contained tonnes Zinc, 150,000
contained tonnes Lead and 3.7 million ounces of silver
Scoping Study* economics
•US$110 million NPV (announced 2018)
Global resource (JORC) (Inferred/Indicated)
•17Mt @ 6.9% Zn Equivalent (including Pb credits), 4.1% Zn, 2.9%
Pb and 24 g/t Ag
•Approximately 720,000 tonnes of Zinc, 510,000 tonnes of Lead
and 14 million ounces of Silver
Technical
•Successful ini‰al hydrogeological report
•Advancing geotechnical approach
Metallurgy/Economic recovery
•83.9% Pb recovery to a 79.2% Pb concentrate
•87.1% Ag recovery to 512ppm Ag within Pb concentrate; and
•87.7% Zn recovery to a 60.0% Zn concentrate.
IRR
•24.4%
Capex
•US$110m
OPEX
•US$25/t OPEX Steady state
•US$26/t MCAF
Mine profile
•Underground MCAF 15 year Mine plan 4% cut off
Located in Northern Spain
•Junta of Cas‰lla y Leon 3 year Inves‰ga‰on Permit granted in
2017, Applica‰on submi›ed for new 3 y IP Q2 2020
Annual Report 2020
Europa Metals Ltd
05
Corporate Information
Directors:
Myles Campion
Laurence Read
Evan Kirby
Daniel Smith
Colin Bird (resigned 4 August 2020)
Company Secretary:
Daniel Smith
Auditor:
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008 AUSTRALIA
Telephone:
Facsimile:
(+61 8) 6382 4600
(+61 8) 6382 4601
Banker:
National Australia Bank
Perth Central Business Banking Centre
UB13.03, 100 St Georges Terrace
Perth WA 6000 AUSTRALIA
Telephone: 13 22 65
UK Lawyer:
Joelson JD LLP
30 Portland Place
London W1B 1LZ, United Kingdom
Telephone: +44 20 7580 5721
Share Registry:
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000 AUSTRALIA
Telephone:
Facsimile:
(+61 8) 9323 2000
(+61 8) 9323 2033
Registered and Principal Office:
c/- Minerva Corporate Pty Limited
Level 8, 99 St Georges Terrace
Perth WA 6000 AUSTRALIA
Telephone:
Facsimile:
Website:
Email:
(+61 8) 9486 4036
(+61 8) 9486 4799
www.europametals.com
info@europametals.com
Stock Exchange Listings:
Europa Metals Ltd’s ordinary shares are quoted on the
AIM market of the London Stock Exchange plc (AIM:EUZ)
and also listed on AltX (AltX:EUZ).
06
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
The Directors of Europa Metals Ltd (“Europa” or “the Company”) (the “Directors”) present their report for the financial
year ended 30 June 2020.
Directors
The names and details of the Directors in office during the financial year and at the date of this report are set out below:
Each Director was in office for the entire reporting period unless otherwise stated.
Dr Evan Kirby (Age 69), BSc (Hons) Metallurgy, PhD Metallurgy, Non-Executive Director
Experience and expertise
Dr Kirby is a metallurgist with over 32 years of international experience in the mining
sector. He has held senior management positions with Impala Platinum, Rand Mines
and Rustenburg Platinum Mines and worked as a director and technical consultant for
a number of mining companies.
Other current directorships Director of Bezant Resources plc (AIM: BZT)
Director of Jubilee Metals Group plc (AIM: JLP)
Former directorships over
the past 3 years
Director of New Energy Minerals (ASX: NXE) and Director of Nyota Minerals Limited
(ASX & AIM: NYO)
Special responsibilities
Non-Executive Director
Chairman of the Remuneration Committee
Chairman of the Nominations Committee
Member of the Audit and Risk Management Committees
Member of the Technical Committee (Informal)
Interests in shares
and options (post-
consolidation)1
Ordinary Shares in Europa Metals Ltd
Options held in Europa Metals Ltd
25,858
245,000
Mr Laurence Read (Age 43), BA (Hons), Executive Director & Chief Executive Officer
Experience and expertise
Mr Read brings over 20 years’ of experience to the Board working with quoted and
private companies within the natural resources sector. During his career he has
worked with companies in most key natural resources regions operating across a wide
range of commodities, often working on behalf of professional investment groups.
Within the publicly quoted company arena Mr Read has significant experience working
within the regulatory frameworks of the UK exchanges, TSX, JSE, ASX, Oslo and Hong Kong.
Other current directorships None
Former directorships over
the past 3 years
Chief Executive Officer of Bezant Resources plc (AIM: BZT)
Director of Capital Metals Ltd
Director of Tomco Energy plc (AIM: TOM)
Director of Ixis Resources Limited
Director of Mowbrai Ltd
Director of Anglo Tanzania Gold Limited
Special responsibilities
Interests in shares
and options (post-
consolidation)1
Chief Executive Officer
Member of the Audit Committee
Member of Nominations Committee
Ordinary Shares in Europa Metals Ltd
Options held in Europa Metals Ltd
Annual Report 2020
Europa Metals Ltd
47,826
925,000
07
Directors’ Report
continued
Myles Campion (Age 51), BSc Geology (Hons), MSc Mineral Exploration, Executive Chairman/Technical Director
Experience and expertise
Mr Campion served as a Fund Manager of Oceanic Asset Management Pty Ltd,
Australian Natural Resources OEIC and Global Connections Funds plc – Junior
Resources Fund. Mr Campion has 24 years’ experience in the natural resources sector,
including as a Resource analyst, Fund Manager, equities research and project and debt
financing. He has over 10 years experience as a field geologist that includes success
at the Emily Ann Nickel Sulphide Mine. He was based in London for five years working
at Barclays Capital in their natural resources team and as a Senior Resource Analyst at
WH Ireland. He also served as Fund Manager of CF Global Resources Fund.
He held the role of Project Geologist at LionOre responsible for the exploration,
discovery and BFS completion of the Emily Ann Nickel Sulphide Mine. Mr Campion’s
financial experience ranges from Australian and UK equities research through to project
and debt financing in London, covering the entire spectrum of mining companies with
an extensive knowledge of the global resources market covering the three main bourses,
the Toronto Stock Exchange, AIM and the ASX. He holds a Graduate Diploma of Business
(Finance) and is an Associate of the Royal School of Mines. Mr Campion earned an M.Sc.
in Minerals Exploration from the Royal School of Mines in London and B.Sc. Honours in
Geology from University of Wales College Cardiff.
Other current directorships Director of Katoro Gold Plc (AIM: KAT)
Director of Virico Limited
Director of Torrum Limited
Director of Energy Minerals Investments Limited
Former directorships over
the past 3 years
None
Special responsibilities
Interests in shares
and options (post-
consolidation)1
Executive Chairman/Technical director
Member of the Remuneration Committee
Chairman of the Technical Committee (Informal)
Ordinary Shares in Europa Metals Ltd
Options held in Europa Metals Ltd
170,362*
991,666
* – Mr Campion also has an indirect interest in a further 666,666 ordinary shares and 333,333 options via his directorship/shareholding of Energy
Minerals.
08
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
Daniel Smith (Age 36), BA (International Relations), FGIA , GradDip ACG, Non-Executive Director, Company Secretary
Experience and expertise
Mr Smith is a member of the Australian Institute of Company Directors, a Fellow of
the Governance Institute of Australia and has over 11 years’ primary and secondary
capital markets expertise. As a director of Minerva Corporate, he has advised on, and
been involved in, a significant number of IPOs, RTOs and capital raisings on both the
ASX and NSX. His key focus is on corporate governance and compliance, commercial
due diligence and transaction structuring, as well as ongoing investor and stakeholder
engagement. Mr Smith is currently a director and company secretary of ASX-listed
Lachlan Star Limited and Hipo Resources Limited, non-executive director of Artemis
Resources Limited and White Cliff Minerals Limited, and is Company Secretary for
Taruga Minerals Limited and Vonex Limited. He holds a BA in International Relations
from Curtin University, Western Australia.
Other current directorships Director of Lachlan Star Limited (ASX:LSA)
Director of Hipo Resources Limited (ASX:HIP)
Director of Artemis Resources Limited (ASX:ARV)
Director of White Cliff Minerals Limited (ASX:WCN)
Director of Alien Metals Ltd (AIM:UFO)
Former directorships over
the past 3 years
Director of Taruga Minerals Limited (ASX:TAR)
Director of PLC Financial Solutions Limited (ASX:PLC)
Special responsibilities
Interests in shares
and options (post-
consolidation)1
Company Secretary
Member of Remuneration Committee
Member of the Nominations Committee
Chairman of Audit and Risk Committee
Ordinary Shares in Europa Metals Ltd
Options held in Europa Metals Ltd
1 Share consolidation completed on 16 July 2020 on a 500:1 basis.
–
100,000
Annual Report 2020
Europa Metals Ltd
09
Directors’ Report
continued
Corporate
Capital Raisings
On 30 September 2019, the Company announced that it
had completed an oversubscribed fundraising of £1,000,000
(before expenses), comprising the issue of, in aggregate,
4,000,000,000 (pre-consolidation) new ordinary shares
at an issue price of 0.025 pence per share. In addition,
one warrant exercisable for a period of 2 years from
admission of the fundraising shares to trading on AIM at a
subscription price of 0.0375 pence per share were issued to
all participants in the fundraising for every two new ordinary
shares subscribed. Accordingly, 2,000,000,000 warrants
were issued pursuant to the fundraising. In addition, Turner
Pope and Brandon Hill, the Company’s then joint brokers,
were issued 204,000,000 warrants and 36,000,000 warrants
respectively to subscribe for new ordinary shares at 0.025
pence per share, exercisable for a period of three years from
admission.
On 20 December 2019, the Company announced that
Turner Pope had assumed the role of sole broker to the
Company with immediate effect.
pre-existing warrants to subscribe for 166,666,666 new
ordinary shares at a price of 0.025 pence per share. In
aggregate, the exercise of such warrants amounted to a
cash subscription of approximately £41,667.
Shareholder Meetings
At the Annual General Meeting of the Company held
on 28 November 2019, shareholders approved the re-
election of Mr Campion and Mr Smith as directors.
Post the financial year end, on 15 July 2020, the Company
held a General Meeting whereby all resolutions,
including those in respect of a 500:1 consolidation of
the Company’s share capital and the issue of Director
incentive options, were approved by shareholders by way
of a poll.
Consolidation
Post the financial year end and further to the receipt of
the requisite shareholder approval, on 16 July 2020 the
consolidation of the Company’s ordinary shares on a
500:1 basis was effected.
Post financial year end, on 19 August 2020, the Company
announced that it had raised £2,000,000 (before expenses)
via the issue of, in aggregate, 15,686,274 (post-consolidation)
new ordinary shares at an issue price of 12.75 pence per
share to certain existing and new investors.
Dividends
No dividend has been paid or declared since the start of
the financial year and the Directors do not recommend
the payment of a dividend in respect of the financial year
(2019: Nil).
Options/Warrants
On 4 September 2019, the Company announced that it had
received notices of exercise in respect of certain pre-existing
warrants to subscribe for 212,000,000 new ordinary shares
at a price of 0.015 pence per share and 133,333,334 new
ordinary shares at a price of 0.025 pence per share. In
aggregate, the exercise of such warrants amounted to a cash
subscription of approximately £65,133.
On 13 September 2019, the Company announced that
it had received notices of exercise in respect of certain
pre-existing warrants to subscribe for 166,666,667 new
ordinary shares at a price of 0.025 pence per share. In
aggregate, the exercise of such warrants amounted to a
cash subscription of approximately £41,667.
On 10 October 2019, the Company announced that it
had received notices of exercise in respect of certain
pre-existing warrants to subscribe for 66,666,667 new
ordinary shares at a price of 0.025 pence per share. In
aggregate, the exercise of such warrants amounted to a
cash subscription of approximately £16,667.
On 24 October 2019, the Company announced that it
had received notices of exercise in respect of certain
Principal activities
The principal activity of the entities within the consolidated
entity during the financial year was that of exploration for
minerals.
Review of operations and activities
Lead-Zinc-Silver Exploration Project, Spain
Following the completion of the Scoping Study announced
by the Company in December 2018, workstreams have
focused on additional resource drilling, geotechnical drilling,
metallurgical testwork and environmental baseline studies.
On 25 September 2019, the Company announced assay
results for drill holes TOD-021, TOD-022, TOD-023 and
TOD-023D, in respect of its drill campaign initiated in
May 2019. The drilling programme provided valuable
information for initial metallurgical test work analysis,
in order to determine potential processing routes and
likely concentrate products for potential future sale,
and for infilling gaps in historical drilling within the
inferred resource area at Toral. Results from the drilling
10
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
programme were provided to Addison Mining Services Limited (“AMS”) in order to obtain an independent update to
the project’s existing JORC (2012) resource estimate.
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% ZnEq (PbAg) 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
Image 2 below 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 inferred resource block model
Annual Report 2020
Europa Metals Ltd
11
Directors’ Report
continued
Updated Resource Estimate
Post the financial year end on 14 August 2020, the
Company announced an updated mineral resource
estimate (‘MRE’) at Toral. The updated MRE led to a 40%
increase in the indicated resource to 3.8 million tonnes
(“Mt”) @ 8.3% zinc equivalent (“ZnEq”) (including Pb
credits) and 30g/t Ag. Accordingly, the updated MRE led
to a:
• 40% increase in indicated resource tonnes;
• 38% increase in indicated contained tonnes of zinc to
approximately 180,000 tonnes;
• 36% increase in indicated contained tonnes of lead to
approximately 150,000 tonnes; and
• 32% increase in indicated contained ounces of silver to
approximately 3.7 million ounces.
The MRE incorporated data obtained from:
– 113 diamond (including wedges) and 4 reverse
circulation (RC) drill holes totalling 60,915.65
metres; and
– 19 underground channels for 18.75 metres,
The MRE, effective as of 12 August 2020 comprises:
• An indicated resource of approximately 3.8Mt @ 8.3%
Zn Equivalent (including Pb credits), 4.7% Zn, 3.9% Pb
and 30g/t Ag, including:
• A total resource of approximately 17Mt @ 6.9% Zn
Equivalent (including Pb credits), 4.1% Zn, 2.9% Pb and
24 g/t Ag, including:
– 720,000 tonnes of zinc, 510,000 tonnes of lead and
14 million ounces of silver.
The Company’s Board believes the results of this update
compare favourably with the previously reported MRE,
announced on 29 October 2019, comprising the following
tonnages and grade:
• An indicated resource of approximately 2.7Mt @ 8.9%
Zn Equivalent (including Pb credits), 5% Zn, 4.2% Pb
and 32 g/t Ag, 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
22 g/t Ag, including:
– 690,000 tonnes of zinc, 450,000 tonnes of lead and
11 million ounces of silver.
• A total resource of approximately 18Mt @ 7.4% Zn
Equivalent (including Pb credits), 4.5% Zn, 3.1% Pb and
24 g/t Ag, including:
– 830,000 tonnes of zinc, 570,000 tonnes of lead and
14 million ounces of silver.
– 180,000 tonnes of zinc, 150,000 tonnes of lead and
*
3.7 million ounces of silver.
• An inferred resource of approximately 14Mt @ 6.5% Zn
Equivalent (including Pb credits), 4% Zn, 2.7% Pb and
23 g/t Ag, including:
– 540,000 tonnes of zinc, 360,000 tonnes of lead and
10 million ounces of silver.
Zn Eq % is the calculated Zn equivalent incorporating lead credits;
(Zn Eq (Pb)% = Zn + Pb*0.926). Zn Eq (PbAg)% is the calculated
Zn equivalent incorporating silver credits as well as lead; (Zn Eq
(PbAg)% = Zn + Pb*0.926 + Ag*0.019). 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$2,680/t, Pb price of US$2,100/t
and Ag price of US$16.2/oz.
12
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
Image 3: showing AMS’ resource block model for Toral as a 3D view looking north, by resource category
2019/2020 Work Programme
On 22 January 2020, the Company announced an
operational and strategic update in respect of its wholly
owned Toral Project stating that following a strategic
review of the project’s operations and existing data,
the Board intended to focus the Company’s activities
on engineering and processing optimisation during the
course of H1 2020, with drilling activities halted following
the completion of hole TOD-025.
On 31 January 2020, the Company announced that the
drilling of hole TOD-025 had been duly completed with a
wedge, hole TOD-025D, also being drilled off the parent
hole to conclude the latest drilling campaign. Core
samples obtained from both holes TOD-025 and TOD-
025D, and the previously drilled hole TOD-024, were then
being sent for independent assay.
On 14 February 2020, the Company announced the
completion of a geotechnical study on the Toral Poject
based on the geotechnical logging of the core drilled
previously. The geotechnical study recommended that
the already selected cut and fill mining method would be
the best option to pursue.
On 28 February 2020, the Company announced
the results from a recently completed conceptual
hydrogeological study and an update on the water
monitoring programme in respect of the Toral Project.
Eight piezometers for monitoring water conditions in and
around the Toral Project area had been installed as part
of a planned quarterly monitoring programme.
The piezometers programme follows the
recommendations of the conceptual hydrogeological
study commissioned by Europa Metals on the Toral
Project and is considered a first phase of an ongoing
programme. The study assessed the following
parameters:
• Permeability on the area where the project will be
developed;
• Piezometric network for future monitoring;
• Inflow expected during mining works; and
• Flow direction and time.
Annual Report 2020
Europa Metals Ltd
13
Directors’ Report
continued
On 11 March 2020, the Company announced assay results
for the abovementioned drill holes TOD-024 and TOD-
025. Key results from the drilling included:
• Thick, high-grade zone confirmed outside of the
current Indicated resource area in hole TOD-025:
– 7.70m @ 17.3% ZnEq(PbAg) from 483.6m to 491.3m,
including 4.3m @ 25.6% ZnEq(PbAg) from 486.3m to
490.6m;
– Highest grade intersection returned by Europa
Metals to date from its drilling campaigns at Toral;
• Mineralisation confirmed above current indicated
resource area in hole TOD-024:
– 1.7m @ 5.1% ZnEq(PbAg) from 280.8m to 282.5m;
• Copper results identified in hole TOD-024:
– 0.9m @ 1.5% Cu from 278.9m to 279.8m.
Core obtained from holes TOD-024 and TOD-025 had
been sampled and sent to ALS Laboratories in Spain, with
initial results confirming the visual mineralisation as high-
grade, with certain samples having to be re-assayed due
to the Pb content being above the detection limit at the
laboratory. The assay results contained the highest-grade
intersection obtained by the Company to date from its
drilling campaign on the Toral Project and extended the
current known high-grade area of the deposit as well as
establishing consistency with the results of historic third
party drilling campaigns in the 1980s.
Metallurgical programme
Following completion of the abovementioned drill
programme, metallurgical testwork commenced by WAI in
late September 2019 on the full core wedge (hole TOD-023D)
and ¼ core from hole TOD-023 comprising a 61.6kg sample.
The preliminary results were reported on 18 December 2019.
On 16 April 2020, the Company announced that, following
completion of the second phase of metallurgical testwork, it
had received an updated independent metallurgical report
from WAI, in respect of material from the Toral Project. The
metallurgical results contained within the report arose from a
testing programme that culminated in a second locked cycle
test. Such testwork achieved the following recoveries:
• 83.7% Pb recovery to a 60.0% Pb concentrate;
• 87.1% Ag recovery to 1,350ppm Ag within Pb
concentrate; and
• 77.0% Zn recovery to a 59.1% Zn concentrate.
These results showed that the amount of lead recovered
had remained broadly unchanged versus the lead
recoveries obtained from the first locked cycle test.
However, there had been a 2.5% increase in the Pb
concentrate grade and zinc recovery had increased by
6.3% with a 3.3% increase in Zn concentrate grade.
The Board considers that such grades, assuming that Toral is
developed into a future producing mine, should result in both
concentrates being readily marketable, with the high grade of
silver in the lead concentrate also likely to result in attractive
payment terms from potential future off-takers.
Following these results, Europa Metals commenced an
analysis of ore sorting as a specific optimisation route,
which has presented itself as a viable possibility from
WAI’s findings. Accordingly, mineralisation in the upper
portion of the ore body was then tested using XRT
(X-Ray Transmission) ore sorting techniques to assess
its amenability to pre-concentration and to determine
the viability of XRT within the process route by utilising
existing samples from distinct lithological areas already
sampled from holes TOD-024 and TOD-025.
The Company also, simultaneously with the above mentioned
ore sorting analysis, undertook a further metallurgical test
on mineralisation sampled from the high-grade intersection
encountered in hole TOD-025, providing further context to
the variability work required to advance the project towards
a PFS by spatially assessing the mineralisation across the
possible mining area identified within the scoping study (as
announced by the Company in December 2018). The results
of this Phase III metallurgical test work were announced post
the financial year end, on 28 August 2020.
Stakeholder engagement
On 9 August 2019, the Company announced that it had
submitted an initial document (the “ID”) for formal review
by all key administration stakeholders, including the
department of the environment, Castilla y León region,
Northwest Spain, and private stakeholders consulted by
such administration, in connection with the process for
obtaining an exploitation license at the Toral Project.
The ID contained a conceptual plan for the Toral Project
based on the findings of the Scoping Study, announced
by the Company on 10 December 2018. The Company’s
local engagement activities with principal stakeholders
will enable the evaluation, in particular, of the
technical infrastructure aspects of the project’s future
development and seek to secure greater social support.
14
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
Feedback from such requisite review will be utilised
to structure the environmental parameters for a full
exploitation license for Toral and, consequently, enable
a first impression by the Junta de Castilla y León on the
appropriateness of the Toral Project being developed into
a future mining operation.
Investigation Permit Renewal
On 8 June 2020, the Company announced that it had
submitted an application to the Junta of Castilla y León
for a new three year investigation permit (“Investigation
Permit”) in respect of the Toral Project.
The Company was granted an initial Investigation Permit
for Toral in 2017, which is due to expire in November
2020 following conclusion of the customary three year
period. An Investigation Permit provides a company with
the right to pursue exploration activities at a project.
As such, since 2017, under the existing Investigation
Permit, the Company has commissioned and conducted
a significant amount of work on the Toral Project,
including, inter alia, a maiden JORC inferred resource
and first indicated resource estimate, a detailed scoping
study, hydrogeological analysis, geotechnical studies,
environmental monitoring, social engagement and initial
metallurgical test work.
Europa Metals continues to be engaged on a number of
work streams at Toral, which the Directors expect to add
further value to the project. The Company has identified a
series of further tasks that it intends to undertake before
refining and submitting a final development application.
The Investigation Permit renewal application was
prepared in close consultation with the relevant bodies
of the Junta of Castilla y León, whose involvement in the
submission process served to reinforce the Company’s
decision to apply. The Company currently anticipates that
a decision in respect of the grant of a new Investigation
Permit will occur prior to the scheduled expiry of the
existing permit.
Coronavirus (COVID-19) impact on operations
The Board is actively monitoring the impact of COVID-19
on the group’s operations on an ongoing basis.
The Company’s response to the global coronavirus
(COVID-19) health event has been to safeguard all key
personnel at all sites and limit all travel, including to work
at its sites, following the advice and guidance issued by all
relevant health authorities. For the time being, site visits
from overseas have been suspended and operations have
been amended to primarily reflect the uncertain health
security issues, but also to take into account the current
status of international equity and commodity markets.
With a significant amount of core samples and data
having already been retrieved, the Company took steps to
conserve its existing capital and continue with a series of
key, desktop or laboratory based workstreams.
The Company has reacted to the coronavirus health
emergency by carefully following guidance issued by
the Spanish and UK governments and has halted all
non-essential travel and instructed the majority of
its workforce to remain working remotely at home.
Nevertheless, metallurgical and flow sheet optimisation
work can continue from the samples already retrieved.
There does not currently appear to be any material
impact on the Company at present or any significant
uncertainties with respect to events or conditions
which may impact the company unfavourably as at
the reporting date or subsequently as a result of the
Coronavirus (COVID-19) pandemic.
The Company is currently well funded having raised
£2 million (before expenses) in August 2020 and is well
positioned in the short to medium term.
Financial Position
In carrying out its operations during the reporting period,
the Group has incurred a loss after income tax for the
period from 1 July 2019 to 30 June 2020 of $2,362,660
(2019: loss of $2,392,170). The Group had net assets
of $2,499,370 (2019: $2,707,503) as set out in the
Consolidated Statement of Financial Position.
Significant changes in the Group’s state
of affairs
There have been no significant changes in the state of
affairs of the consolidated entity to the date of this report
that have not otherwise been disclosed elsewhere in the
Annual Report.
Significant events after the reporting date
There are subsequent events to report, as follows:
On 15 July 2020, the Company announced the results of
it’s General Meeting, whereby all resolutions were duly
passed by way of a poll conducted in accordance with
section 251AA of the Corporations Act 2001.
Annual Report 2020
Europa Metals Ltd
15
Directors’ Report
continued
On 16 July 2020, the Company’s ordinary shares were
consolidated on a 500:1 basis following approval of resolution
1 at the Company’s General Meeting held on 15 July 2020.
Likely developments and expected results
The Group will continue to carry out its business plans,
including:
On 24 July 2020, the Company announced that following
approval of resolutions 5 to 9 at the Company’s General
Meeting held on 15 July 2020, the Company had granted,
in aggregate, 1,980,000 options to the Company’s
Executive and Non-Executive Directors (the “Incentive
Options”). The Incentive Options are exercisable at
varying premiums to 6.03 pence, being the 30-day VWAP
up to and including 23 July 2020.
On 5 August 2020, the Company announced that Mr
Colin Bird had resigned as a director of the board. On the
same day, Mr Myles Campion was appointed Executive
Chairman and Mr Laurence Read was appointed as Chief
Executive Officer.
On 14 August 2020, the Company released the results of
an updated Mineral Resource Estimate at Toral, which led
to an approximate 40% increase in the indicated resource
to 3.8Mt at 8.3% Zn Equivalent (including Pb credits) and
30g/t Ag.
On 19 August 2020, the Company announced that it had
raised £2,000,000 (before expenses) via the issue of, in
aggregate, 15,686,274 new ordinary shares at an issue price of
12.75 pence per share to certain existing and new investors.
The net proceeds from the fundraising are primarily being
utilised towards completion of certain key components of a
PFS to be undertaken at Toral.
On 28 August 2020, the Company announced the results
of the Phase III metallurgical testwork and ore sorting
undertaken at Toral. The positive Phase III metallurgical
results and ore sorting analysis is to be utilised, alongside
all key work conducted since the 2018 Scoping Study, to
update the Toral Project’s estimated economics through an
independent study being conducted by Bara Consulting.
The full impact of the COVID-19 outbreak continues
to evolve at the date of this report. The Company
is therefore uncertain as to the full impact that the
pandemic will have on its financial condition, liquidity,
and future results of operations during the remainder of
2020 and into 2021.
No other matters or circumstances have arisen since
the end of the year, other than as noted above, that
may significantly affect the operations of the Company,
the results of these operations, or the state of affairs in
future financial years.
• Conclusion of an independent economic study to
determine the impact of the significant work undertaken
in the period since the 2018 Scoping Study was
announced.
• Securing the grant of a new three year Investigation
Permit for the Toral Project that is currently progressing
through the regional application procedure.
• Completion of certain of the key elements of a Pre
Feasability Study for the Toral Project:
– Hydrogeological drilling and monitoring report to
confirm the findings of the 2020 Independent analysis
that water levels at Toral are within acceptable
boundaries for future development.
– Combined resource and metallurgical drilling
campaigns to improve surety in the resource and
processing design/concentrate characteristics.
– Further community, geotechnical, waste management
and environmental work to continue to be progressed.
• Development of third party engagement through
concentrate marketing partners and directly by the Board
to establish value accretive pathways forward for the Toral
Project.
• Continuing to persue and evaluate potential transactional
opportunities for the Toral Project or the Company itself in
order to seek to increase shareholder value.
• Seeking to secure EU backed grants for project
progression.
There can be no guarantee either that further exploration
of the Group’s existing project will result in exploration
or development success or that any potential additional
strategic acquisitions considered by the Directors to be
likely to add value to the Group will become available to
the Group.
Environmental regulation and performance
The Group’s activities are subject to Spanish legislation
relating to the protection of the environment. The Group
is subject to significant environmental legal regulations in
respect to its exploration and evaluation activities. The
Group is in compliance with the NGER Act 2007.
There have been no known breaches of these regulations
and principles.
16
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
Competent Person’s Statement
The 2018 Scoping Study and JORC (2012) resource
estimate for Toral therein was prepared by Mr J.N.
Hogg, MSc. MAIG Principal Geologist for Addison Mining
Services Limited (“AMS”), Mr J. Bennett BSc (Hons). ARSM,
FIMMM CEng Associate Principal Mining Engineer for
AMS, Dr N. Holloway, CEng, FIMMM Associate Processing
Engineer for AMS, and Dr S. Struthers CEnv, FIMMM,
Associate Environmental Consultant for AMS together
being independent Competent Persons within the
meaning of the JORC (2012) code and qualified persons
under the AIM Note for Mining and Oil & Gas Companies.
The Scoping Study was aided by Mr R. J. Siddle, MSc,
MAIG Senior Resource Geologist for AMS, under the
guidance of the competent persons.
Mr Hogg, Mr Bennett, Mr Holloway and Ms Struthers
have reviewed and verified the technical information that
forms the basis of, and has been used in the preparation
of, the Scoping Study and these accounts, including all
analytical data, assumed and acquired technical and
economic inputs, diamond drill hole logs, QA/QC data,
density measurements, and sampling, diamond drilling
and analytical techniques, and consent to the inclusion in
these accounts of the matters based on the information,
in the form and context in which it appears. Mr Hogg,
Mr Bennett, Mr Holloway and Ms Struthers have also
reviewed and approved the technical information in their
capacities as qualified persons under the AIM Rules for
Companies.
Indemnification and Insurance of Directors
and officers
The Group has entered into deeds of access and
indemnity with the officers of the Group, indemnifying
them against liability incurred, including costs and
expenses in defending any legal proceedings. The
indemnity applies to a liability for costs and expenses
incurred by the Director or officer acting in their capacity
as a director or officer.
Except in the case of a liability for legal costs and
expenses, it does not extend to a liability that is:
(a)
owed to the Group or a related body corporate of the
Group;
(b) for a pecuniary penalty order under section 1317G
or a compensation order under section 1317H or
section 1317HA of the Corporations Act 2001; or
(c)
owed to someone other than the Group or a related
body corporate of the Company where the liability
did not arise out of conduct in good faith.
Similarly, the indemnity does not extend to liability for
legal costs and expenses:
(a)
in defending proceedings in which the officer is found
to have a liability described in paragraph (a), (b) or (c)
above;
(b) in proceedings successfully brought by the Australian
Securities and Investments Commission or a
liquidator; or
(c)
in connection with proceedings for relief under the
Corporations Act 2001 in which the court denies the
relief.
During or since the financial year end, the Company has
paid premiums in respect of a contract insuring all the
Directors and officers. The terms of the contract prohibit
the disclosure of the details of the insurance contract and
premiums paid.
Indemnification of auditors
To the extent permitted by law, the Company has agreed
to indemnify its auditors, BDO Audit (WA) Pty Ltd, as
part of the terms of its audit engagement agreement
against claims by third parties arising from the audit (for
an unspecified amount). No payment has been made to
indemnify BDO Audit (WA) Pty Ltd during or since the
financial year end.
Annual Report 2020
Europa Metals Ltd
17
Directors’ Report
continued
Non-audit services
The Group may decide to employ the auditor on assignments additional to its statutory audit duties where the auditor’s
expertise and experience with the Group are important.
Details of the amounts paid or payable to the Group’s auditors, BDO International for non-audit services provided
during the financial year are set out below.
Remuneration of the auditor, BDO International for Group
and subsidiary statutory reporting:
– other assurance related services
– tax compliance services
– corporate finance (valuation of options)
2020
$
2019
$
—
7,460
3,200
10,660
—
17,340
—
17,340
Directors’ meetings
Meetings of directors held and their attendance during the financial year were as follows:
Director
Evan Kirby
Laurence Read
Myles Campion
Colin Bird
Daniel Smith
Board Meetings
Remuneration Committee
Eligible
Attended
Eligible
Attended
7
7
7
7
7
7
7
7
7
7
1
—
—
1
1
1
—
—
1
1
Remuneration Report (audited)
This Remuneration Report outlines the Director and executive remuneration arrangements of the Company and the
consolidated entity in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the
purpose of this report, Key Management Personnel (KMP) of the consolidated entity are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Company and the
Group, directly or indirectly, and includes Directors of the Company.
The information provided in this remuneration report has been audited as required by section 308(3C) of the
Corporations Act 2001.
The Remuneration Report is presented under the following sections:
Individual KMP disclosures
Remuneration at a glance
Board of Directors (the “Board”) oversight of remuneration
Non-executive director remuneration arrangements
Executive remuneration arrangements
Directors and KMP contractual arrangements
Equity instruments disclosures
Loans to KMP and their related parties
Transactions with KMP and their related parties
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Voting of Shareholders at last year’s annual general meeting.
18
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
1. Individual key management personnel disclosures
(i)
Directors:
Name
Evan Kirby
Laurence Read
Myles Campion
Colin Bird
Daniel Smith
Role
Non-Executive Director
Non-Executive Director
Chief Executive Officer
Executive Technical Director
Executive Chairman
Non-Executive Chairman
Non-Executive Director
Company Secretary
(ii) Executives:
Name
Role
Laurence Read
Chief Executive Officer
Myles Campion
Executive Chairman
Appointed
31 March 2016
25 January 2017
4 August 2020
17 October 2017
4 August 2020
11 January 2018
16 January 2018
16 January 2018
Appointed
4 August 2020
4 August 2020
Resigned
—
—
—
4 August 2020
—
2. Remuneration at a glance
The performance of the Group depends upon the quality
of its directors and executives. To prosper, the Group
must attract, motivate and retain highly skilled directors
and executives.
To this end, the Company embodies the following
principles in its remuneration framework:
• Provide competitive rewards to attract high calibre
executives;
• Link executive rewards to shareholder value; and
• Provide significant portions of executive remuneration
“at risk” through participation in incentive plans
Shares and options issued under incentive plans provide
an incentive to stay with the Group. At this stage, shares
and options issued do not have performance criteria
attached. This policy is considered to be appropriate
for the Group, having regard to the current state of its
development.
The Company has established a directors’ and executives’
salary sacrifice plan, pursuant to which individuals may
elect for a nominated fixed period to sacrifice all or an
agreed percentage of their salary or fees to be applied
in the subscription for on-market purchase of shares in
the Company. As such shares may not be purchased or
subscribed for during periods that are close periods or
when individuals are in possession of inside information,
the entitlement to subscribe for shares is determined
by calculating the number of shares using the market
price for the month concerned. The plan was established
to allow for the subsequent settlement of salary or
fees from 1 April 2012. Directors and executives have
previously elected to participate in the plan with effect
from that date. During the period to 30 June 2020 no
Directors or executives participated (2019: Nil) in the
salary sacrifice plan. Shares listed under the plan are not
subject to performance conditions. Shareholder approval
for the plan and for the issue of shares under the plan
was obtained on 8 August 2012.
The Company also recognised that, at this stage in its
development, it is most economical to have only a few
employees and to draw, as appropriate, upon a pool of
consultants selected by the Directors on the basis of their
known management, geoscientific, engineering and other
professional and technical expertise and experience. The
Company will nevertheless seek to apply the principles
described above to its Directors and executives, whether
they are employees of or consultants to the Company.
Annual Report 2020
Europa Metals Ltd
19
Directors’ Report
continued
3. Board oversight of remuneration
Remuneration Committee Responsibilities
A Remuneration Committee was established on
14 January 2010 and reconstituted on 15 October 2010
and again on 9 March 2015.
The Committee assesses the appropriateness of the
nature and amount of remuneration of Directors and
senior executives on a periodic basis by reference to
relevant employment market conditions, with the overall
objective of ensuring maximum stakeholder benefit from
the retention of a high quality Board and executive team.
Remuneration Structure
In accordance with best practice corporate governance,
the structure of non-executive and executive director
remuneration is separate and distinct.
4. Non-Executive Director remuneration
arrangements
Objective
The Board seeks to set aggregate remuneration at a level
which provides the Company with the ability to attract
and retain directors of the highest calibre, whilst incurring
a cost which is acceptable to shareholders.
Structure
The Company’s Constitution specifies that the aggregate
remuneration of Non-Executive Directors must be
determined from time to time by shareholders of the
Company in a general meeting. An amount not exceeding
the amount determined is then divided between
the Non-Executive Directors as agreed. The current
aggregate limit of remuneration for non-executive
directors is $250,000 as approved at the 2010 Annual
General Meeting of Shareholders.
The amount of aggregate remuneration sought to be
approved by shareholders and the manner in which it is
apportioned amongst Non-Executive Directors is reviewed
annually. The Board may consider advice from external
consultants, as well as the fees paid to Non-Executive
Directors of comparable companies, when undertaking
the annual review process. No remuneration or external
consultants were used during the financial year.
Each Non-Executive Director receives a fee for being a
Director of the Company. No additional fee is paid for
participating in Board Committees.
Non-Executive Directors may participate in the Company’s
share and option plans as described in this report.
Mr Evan Kirby is on a contract dated 31 March 2016,
which provides for a fixed fee of $2,750 per month. Mr
Daniel Smith (through Minerva Corporate Pty Ltd) is on a
contract dated 15 January 2018 which provides for a fixed
fee of $2,000 per month.
5. Executive remuneration arrangements
Objective
The Group aims to reward executives with a level and mix
of remuneration commensurate with their position and
responsibilities within the Group and so as to:
• reward executives for Group, business team and
individual performance;
• align the interests of executives with those of
shareholders; and
• ensure total remuneration is competitive by market
standards.
Structure
• At this time, the cash component of remuneration
paid to executive Directors, the Company Secretary
and other senior managers is not dependent upon the
satisfaction of performance conditions.
• It is current policy that some executives be engaged
by way of consultancy agreements with the Company,
under which they receive a contract rate based
upon the number of hours of service supplied to the
Company. There is provision for yearly review and
adjustment based on consumer price indices. Such
remuneration is hence not dependent upon the
achievement of specific performance conditions. This
policy is considered to be appropriate for the Company,
having regard to the current state of its development.
• The Executive Directors may also participate in the
Company’s share and option plans as described in this
report, including the salary sacrifice share plan. Refer
to page 23 for details of options previously granted.
20
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
Performance table
The following table details the net profit/(loss) of the Company from continuing operations after income tax, together
with the basic earnings/(loss) per share for the last five financial years:
2020
$
2019
$
2018
$
2017
$
2016
$
Net (loss) from continuing operations
after income tax
Basic (loss) per share in cents
Share Price in cents
(2,362,660)
(2,392,170)
(1,883,446)
(11,286,803)
(1,573,533)
(0.02)
0.11
(0.03)
0.21
(0.06)
0.20
(0.91)
0.10
(0.22)
0.40
6. Executive contractual arrangements
Laurence Read – Chief Executive Officer
Salary
Term
Termination
£75,000 per annum
Ongoing
6 months notice period by either party
Myles Campion – Executive Chairman/Technical Director
Salary
Term
Termination
£100,000 per annum
Ongoing
6 months notice period by either party
Annual Report 2020
Europa Metals Ltd
21
Directors’ Report
continued
Remuneration of key management personnel of the Company and the Consolidated Entity
Table 1: Remuneration for the years ended 30 June 2019 and 30 June 2020
Short-term
benefits
Post-
employment
Long-term
benefits
Share-based
payments
Total
Performance
related
Options
Salary
& fees
$
Cash
bonus
$
Super-
annuation
$
Cash
Incentives
$
Long
Service
Leave
$
Options
$
Shares
$
$
%
%
Non-executive
directors
Evan Kirby
2020
32,615
2019
30,000
Colin Bird
2020
65,649
2019
64,891
Daniel Smith
2020
23,200
2019
24,000
Subtotal
Non-executive
directors
Subtotal
Non-executive
directors
Executive
directors
2020 124,464
2019 118,891
Laurence Read 2020 134,277
2019 135,549
Myles Campion 2020 182,966
2019 180,484
Subtotal
executive
directors
Subtotal
executive
directors
Total KMP
Total KMP
2020 317,243
2019 316,033
2020 438,707
2019 434,924
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 32,615
— 30,000
— 65,649
— 64,891
— 23,200
— 24,000
— 121,464
— 118,891
— 134,277
— 135,549
— 182,966
— 180,484
— 317,243
— 316,033
— 438,707
— 434,924
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Refer to page 19 for all appointment dates.
22
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Directors’ Report
continued
7. Equity instrument disclosures
Table 2: Share holdings
2020
Directors
Evan Kirby
Laurence Read
Myles Campion
Colin Bird
Daniel Smith
Shares (pre-consolidation)
Balance
1 July 2019
Rights
Exercised
On Exercise
of Options
Net Change
Other
Balance
30 June 2020
12,929,158
23,913,043
85,181,159
313,833,191*
—
435,856,551
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12,929,158
23,913,043
85,181,159
313,833,191*
—
435,856,551
* – includes 130,499,858 shares in which he has an indirect interest via his directorship of African Pioneer plc.
Table 4: Option holdings
2020
Directors
Evan Kirby
Balance
1 July
2019
22,500,000
Laurence Read 112,500,000
Myles Campion 145,833,334
Colin Bird
171,666,666
Daniel Smith
10,000,000
462,500,000
Options (pre-consolidation)
Granted
Received as
Remuneration
Options
Expired
Net
Change
Other
Balance
30 June
2020
Vested &
Exercisable
30 June
2020
Vested & Not
Exercisable
30 June
2020
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 22,500,000 22,500,000
— 112,500,000 112,500,000
— 145,833,334 145,833,334
— 171,666,666 171,666,666
— 10,000,000 10,000,000
— 462,500,000 462,500,000
—
—
—
—
—
—
Executive Share Incentive Plan (ESIP)
Under the plan, eligible employees are offered shares
in the Company at prices determined by the Board.
The Board has the ultimate discretion to impose
special conditions on the shares issued under the ESIP
and can grant a loan to a participant for the purposes
of subscribing for plan shares. Shares issued under
loan facilities are held on trust for the benefit of
the participant and will only be transferred into the
participant’s name once the loan has been fully repaid.
ESIP participants receive all the rights associated with the
ordinary shares.
Loans granted to participants are limited recourse and
interest free unless otherwise determined by the Board.
The loans are to be repaid via the application of any
dividends received from the shares and/or the sale of
the plan shares. Where the loan is repaid by the sale of
shares, any remaining surplus on sale is remitted to the
participant while any shortfall is borne by the Group.
During the 2019 and 2020 reporting period no new shares
were issued under the ESIP.
If, at any time during the exercise period an employee
ceases to be an employee, all options held by that
employee vest immediately and will lapse one month
after their employment end date. As such, there is not
considered to be any service conditions attaching to the
grant of shares under the ESIP, and the full expense is
recognised at the grant date.
Annual Report 2020
Europa Metals Ltd
23
Directors’ Report
continued
Fair value of award granted
Shares granted under the ESIP are accounted for as “in-
substance” options due to the limited recourse nature
of the loan between the employees and the Company to
finance the purchase of ordinary shares. The fair value at
grant date for the various tranches of rights issued under
the ESIP is determined using a binomial model.
8. Loans to Key Management Personnel
and their Related Parties
There were no loans to Directors or other key
management personnel at any time during the year
ended 30 June 2020 (2019: Nil).
9. Transactions with Key Management Personnel and their Related Parties
The following transactions were undertaken between the Company, executive officers and director-related entities
during 2020 and 2019.
Rental fees were paid to Lion Mining Finance, a company of which Colin Bird is a
director. Fees were paid at arms length and on commercial terms.
Company secretarial and accounting fees were paid to Minerva Corporate Pty Ltd,
a company of which Daniel Smith is a director. Fees were paid at arms length and
on commercial terms.
Mr L Read, an executive director of the Company, was until recently also a director
of Mowbrai Ltd. During the year, Mowbrai Ltd received fees for consulting services.
These fees are based on normal commercial terms and conditions.
Mr M Campion, an executive director of the Company, is also a director of Virico
Limited. During the year, Virico Limited received fees for consulting services. These
fees are based on normal commercial terms and conditions.
2020
$
2019
$
27,370
24,551
84,000
89,000
134,277
135,549
182,966
428,613
180,484
429,584
10. Voting of Shareholders at last year’s
annual general meeting (AGM)
Europa Metals Ltd received 99.80% votes in favour of
its remuneration report for its 2019 financial year. The
Company did not receive any specific feedback at the
AGM or through the year on its remuneration practices.
Auditor’s independence declaration
A copy of the auditor’s independence declaration as
required under section 307C of the Corporations Act
2001 is set out on page 58 and forms part of this report.
This report is made in accordance with a resolution of the
Directors.
End of audited Remuneration Report
Daniel Smith
Non-Executive Director
Perth
24
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Coporate Governance Statement
STATEMENT REGARDING COMPLIANCE
WITH THE QCA CORPORATE GOVERNANCE
CODE
Chairman’s Corporate Governance Statement
The Board of the Company, which is responsible for
the direction and oversight of its activities, believes
that a sound corporate governance policy, involving a
transparent set of procedures and practices, is essential
to the Company’s success both in the medium and long
term. As announced on 12 June 2020, the Company
has therefore adopted the Quoted Companies Alliance
Corporate Governance Code (the “QCA Code”) as its
benchmark for governance matters. The application of
such principles enables key decisions to be made by the
Board as a whole, and for the Company to function in a
manner that takes into account all stakeholders in the
Company, including employees, suppliers and business
partners.
My role as Executive Chairman effectively combines the
roles of chairman and an executive director although,
in practise, much of the day-to-day running of the
Company’s operations is delegated to key executives
who are not directors of the Company. Whilst this does
not satisfy the QCA guidance that the “chair must have
adequate separation from the day-to-day business to
be able to make independent decisions”, this reflects
the size, nature and early stage of development of the
Company and its business and the continued combination
of the two roles will be regularly reviewed as the business
develops further.
The Board currently comprises an Executive Chairman,
one other executive director and two non-executive
directors. It is the main decision-making body of the
Company, being responsible for: a) the overall direction
and strategy of the Company; b) monitoring performance;
c) understanding risk; and d) reviewing controls. It is
collectively responsible for the success of the Company.
The Board is satisfied that it has a suitable balance
between independence and knowledge of the business
to allow it to discharge its duties and responsibilities
effectively.
Due to the relatively small size and scale of the Company
and its Board, the Directors do not consider it appropriate
to appoint a Senior Independent Director. However, the
Company operates Audit, Remuneration and Nominations
Committees.
Daniel Smith, a non-executive director of the Company, is
also employed as its Company Secretary and assists with
the preparation of its accounts. The Board considers that
this does not impair his judgement as an independent
director of the Company.
The Company does not currently undertake a formal
annual evaluation of the performance of the Board or
individual Directors but will consider doing so at an
appropriate stage in its development in accordance with
general market practice.
The Board maintains a regular dialogue with Strand
Hanson Limited, its nominated adviser, and obtains legal,
financial and other professional advice as required to
ensure compliance with the AIM Rules for Companies and
other governance requirements.
We continue to review our approach to governance and
how the views of stakeholders are represented in our
oversight of the business.
The Company’s corporate governance policies and
procedures will continue to be reviewed regularly and
may change further as its business develops and in
response to any additional regulatory or other relevant
guidance.
Myles Campion
Executive Chairman
6 October 2020
Annual Report 2020
Europa Metals Ltd
25
Coporate Governance Statement
continued
Adoption of the QCA Corporate Governance Code
As a company quoted on AIM, Europa Metals is required
to comply with a recognised corporate governance code.
At this stage of its development and with its primary
market quotation being in the UK, the Board believes it
appropriate for Europa Metals to adopt the QCA Code,
which is specifically designed for growing companies.
This statement summarises how Europa Metals currently
complies or otherwise with each of the ten core principles
of the QCA Code. Europa Metals will report further on its
compliance with the QCA Code on an annual basis.
Principle 1: Establish a strategy and business model
which promote long-term value for shareholders
Europa Metals has a clearly articulated strategy and
business plan as a European focused exploration and
development company, with its wholly owned Toral lead-
zinc-silver project in northern Spain (the “Toral Project”).
Our business model is centred on the continued
advancement of the Company’s Toral Project located
in the province of Castilla y León, north west Spain. We
are pursuing our efficient and cost effective approach to
exploration and development including the prosecution
of several drilling campaigns designed to extract
maximum value and information from each drill hole. This
approach has seen Europa Metals successfully complete
a number of workstreams that will ultimately feed into a
Pre-Feasibility Study.
Principle 2: Seek to understand and meet shareholder
needs and expectations
The Board considers that good communication with
shareholders, based on the mutual understanding of
objectives, is important. In addition to the information
included in the Company’s annual and interim reports
and required public announcements, there is regular
dialogue between the Board and senior management and
shareholders including regular presentations to investors,
including one-to-one meetings with major shareholders
in addition to specific meetings with shareholders relating
to major transactions.
An up to date information flow is also maintained on
the Company’s website (www.europametals.com) which
contains all press announcements and financial reports
as well as operational information on the Company’s
activities.
The Board also encourages shareholders to attend the
Annual General Meeting, at which members of the Board
are available to answer questions and present a summary
of each year’s activity and the corporate outlook for the
Company.
Principle 3: Take into account wider stakeholder and
social responsibilities and their implications for long-
term success
The Board believes that long-term success relies upon
good relations with a range of different stakeholder
groups, both internal and external. Most importantly,
however, we act with utmost respect for people,
communities and the environment.
As part of our business model, we identify the
relationships on which the Company relies, including
suppliers, customers, partners and other stakeholders,
and seek to maintain and improve these relationships in
a number of ways. We regularly seek to obtain, and take
action on, feedback from our employees, our suppliers
and other parties with whom we transact, as to how we
can best maintain and improve our dealings with each
other. We have also embarked on a formal stakeholder
engagement process with respect to the planned
eventual securing of an exploitation licence for the Toral
Project.
Principle 4: Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
Financial controls
The Board is responsible for reviewing and approving
overall Company strategy, approving budgets and
plans, and for determining the financial structure of the
Company including treasury, tax and dividend policy.
Budgeting and planning is undertaken by management in
conjunction with the Executive Chairman.
Non-financial controls
The Board recognises that maintaining sound controls and
discipline is critical to managing the downside risks to the
Company’s plans. The Board has ultimate responsibility for
the Company’s system of internal control and for reviewing
its effectiveness. However, any such system of internal
control can provide only reasonable, but not absolute,
assurance against material misstatement or loss.
26
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Coporate Governance Statement
continued
The Board considers that the internal controls in place
are appropriate for the size, complexity and risk profile of
the Company. The principal elements of the Company’s
internal control system include:
• Close management of the day-to-day activities of the
Company by the Executive Directors;
• A forecast budget is utilised to track actual
performance on a regular basis, including detailed
periodic reporting of performance against budget; and
• Central control over key areas such as capital
expenditure authorisation and banking facilities.
The Company continues to review its system of internal
control to ensure compliance with best practice, while
also having regard to its size and the resources available.
Other areas subject to regular ongoing review as the
Company grows, include regulatory compliance, business
integrity, health and safety, risk management, business
continuity and corporate social responsibility (including
ethical trading, supplier standards, environmental
concerns and employment diversity).
Risk management policies
As part of its Corporate Governance Plan, the Company
has a number of policies that directly or indirectly serve
to reduce and/or manage risk. These include, but are not
limited to:
• Corporate Code of Conduct
• Share Dealing Code / Trading Policy
• Shareholder Communications Strategy
• Audit and Risk Committee Charter
• Risk Management Processes
• Anti-Bribery Policy
• Whistleblower Policy
Roles and responsibilities
The risk management and other policies listed above
describe the roles and responsibilities for managing risk.
This includes, as appropriate, details of responsibilities
allocated to the Board.
The Board is responsible for reviewing and approving
changes to the risk management policies and for
satisfying itself that the Company has a sound system of
risk management and internal control that is operating
effectively.
Risk management and other policies will be reviewed
annually.
Principle 5: Maintain the board as a well-functioning,
balanced team led by the chair
The Board currently comprises an Executive Chairman,
one executive director/CEO and two non-executive
directors. All directors retire by rotation with at least one
third submitting themselves for re-election each year at
the Company’s Annual General Meeting.
Executive directors of the Company are required to work
such hours as are required to fulfil their obligations to
the Company and have service contracts with a 6-month
notice period. They are not precluded from having other
outside business commitments.
Non-executive directors have letters of appointment with
a 1-month notice period and are required to be available
to attend Board meetings and to deal with both regular
and ad hoc matters. Their letters of appointment provide
no indicative time commitment, but they are required to
devote sufficient time as may reasonably be necessary for
the proper performance of their duties.
The Board considers that both of the non-executive
directors, are independent in character and judgement.
The Board is satisfied that it has a suitable balance
between independence and knowledge of the business
to allow it to discharge its duties and responsibilities
effectively.
During the financial year ended 30 June 2020 the number
of Board meetings held and those attended by each
Director were as follows:
Director
Myles Campion
Laurence Read
Evan Kirby
Daniel Smith
No. of Board
meetings eligible to
attend
No. of Board
meetings attended
7
7
7
7
7
7
7
7
In addition to the formal meetings of Directors above,
the Board has held regular and frequent discussions
throughout the year and passed circular resolutions on all
material matters.
Annual Report 2020
Europa Metals Ltd
27
Coporate Governance Statement
continued
Principle 6: Ensure that between them the directors
have the necessary up-to-date experience, skills and
capabilities
Experience and capabilities
The Board is satisfied that, between its Directors, it has
an effective balance of skills and experience including
technical and commercial mining industry knowledge
and expertise and experience in sales, operations,
performance improvement, finance, commercial law
and capital markets. Each Board member brings a mix of
different capabilities which blend well into a successful
and effective team.
Board members maintain their skillsets through practice
in day-to-day roles enhanced with continuing professional
development and specific training where required.
Biographies for each Board member are published on the
Company’s website and in the Directors’ Report.
Internal Advisory Responsibilities
Due to the relatively small size and scale of the Company
and its Board, the Directors do not consider it appropriate
to appoint a Senior Independent Director.
All Directors have access to the advice and services
provided by the Company Secretary whose appointment
and removal is a matter reserved for the Board. Daniel
Smith, a non-executive director of the Company, fulfils
the role of Company Secretary by, amongst other things,
carrying out the following functions:
• preparing board packs, agendas and minutes and
facilitating the flow of Board information between
senior executives and non-executive Directors;
• implementing Board policies and procedures;
• liaising with the Company’s nominated adviser and
other professional advisers;
• advising the Board, on corporate governance matters,
the application of the Company’s Constitution, and
other applicable laws; and
• inducting new Directors.
The Board maintains a regular dialogue with Strand
Hanson Limited, its nominated adviser, and obtains legal,
financial and other professional advice as required to
ensure compliance with the AIM Rules for Companies and
other governance requirements.
Principle 7: Evaluate board performance based on
clear and relevant objectives, seeking continuous
improvement
The Company does not currently undertake a formal
annual evaluation of the performance of the Board or
individual Directors but will consider doing so at an
appropriate stage in its development in accordance with
general market practice.
Given its relatively small size, the Company has no formal
succession planning process in place. Recommendations
for Board-level and other senior appointments are put to
the Board for approval by the Executive Chairman.
Principle 8: Promote a corporate culture that is based
on ethical values and behaviours
The Board believes that a healthy corporate culture
both protects and generates value for the Company. We
therefore seek to operate within a corporate culture
that is based on sound ethical values and behaviours.
We do this using certain rule based procedures (such
as our formal Corporate Code of Conduct) and, more
importantly, by the behavioural example of individual
Board members and senior managers. These values,
which we seek to instil throughout the Company, include
integrity, respect, honesty and transparency. As a small
company, these characteristics are far more visible to
staff than might otherwise be the case. We also hold
internal meetings at which Directors and staff discuss
matters, both formally and informally.
The Company operates a well-defined organisational
structure through which we seek to determine that
these ethical values and behaviours are recognised and
respected, in addition to which every employee is aware
of our established whistleblowing procedures.
Principle 9: Maintain governance structures and
processes that are fit for purpose and support good
decision-making by the board
The Board
The Board is responsible for the long-term performance
of the Company. There is a formal schedule of matters
specifically reserved for the Board, in addition to the
formal matters required to be considered by the Board
under the Corporations Act. This list includes matters
relating to: a) appointing executive directors and
determining their remuneration; b) determining strategy
and policy; c) reviewing and ratifying risk management
and compliance systems and controls; d) approving
28
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Coporate Governance Statement
continued
major capital expenditure, acquisitions and disposals;
e) approving and monitoring budgets and the integrity
of financial reporting; f) approving interim and annual
financial reports; g) approving significant changes to
the organisational structure; h) approving any issues of
shares or other securities; i) ensuring high standards of
corporate governance and regulatory compliance; j) the
appointment of the Company’s auditors.
The Executive Chairman’s role involves both the
leadership of the Board (including responsibility for the
establishment of sound corporate governance principles
and practices) and leading the Company’s executive
management team in the execution of its strategy. He
also plays a pivotal role in developing and reviewing the
strategy in consultation with the Board.
Notwithstanding the QCA Code’s recommendation
that the role of Chairman and an Executive Director are
not combined, Europa’s use of an Executive Chairman
reflects the size, nature and early stage of development
of its business. The Board anticipates that the continued
combination of the two roles will be regularly reviewed as
the business develops further.
The Executive Directors are responsible for implementing
and delivering the strategy and operational decisions
agreed by the Board, making operational and financial
decisions required in day-to-day operations, providing
executive leadership to managers, championing
the Company’s core values and promoting talent
management.
The Independent Non-Executive Directors contribute
independent thinking and judgement through the
application of their external experience and knowledge
and are tasked with scrutinising the performance of
management, providing constructive challenge to the
executive directors and ensuring that the Company is
operating within the governance and risk framework
approved by the Board.
Board Committees
The Company’s Board Charter requires it to establish
Audit, Remuneration and Nominations Committees to
assist the Board in fulfilling its duties once the Board has
determined that it is of a sufficient size and structure.
The Company has established and operates an
Audit Committee, a Remuneration Committee and
a Nominations Committee. The Company has also
established an (informal) technical committee.
Evolution of the Corporate Governance Framework
During 2020, a number of changes have been introduced
to the Company’s corporate governance procedures
which will serve to improve ongoing compliance with the
QCA Code as far as practicable and appropriate.
The Company’s corporate governance policies and
procedures will continue to be reviewed regularly and
may change further as its business develops and in
response to any additional regulatory and other relevant
guidance.
Principle 10: Communicate how the company is
governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders
The Company communicates with shareholders through
its annual report and accounts, half yearly results and
other updates, its annual general meeting and one-to-
one meetings with certain existing and potential new
shareholders.
The Company’s website contains, inter alia, the outcomes
of shareholder votes cast at such Annual General Meeting
and historic annual accounts, half-year reports and AGM
notices.
In formally adopting the QCA Code as its corporate
governance framework, the Board has reviewed all
aspects of compliance and has taken action to improve
disclosures in its annual report and accounts and on its
website.
This corporate governance statement is dated 6 October
2020 and has been approved by the Board.
Website disclosures
In accordance with AIM Rule 26, the Company is required
to maintain on its website details of the QCA Code,
how the Company complies with the QCA Code and
an explanation of any deviations from such code. This
information is required to be reviewed annually and going
forward it is intended that it will be reviewed at the same
time as the Company’s Annual Report is prepared.
Further information about the Company’s charters,
policies and procedures may be found at the Company’s
website at www.europametals.com, under the section
titled Corporate Governance.
Annual Report 2020
Europa Metals Ltd
29
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Revenue
Other income
Administration expenses
Occupancy expenses
Exploration expenditure
Foreign exchange gain/(loss)
Loss before taxation
Income tax benefit/(expense)
Loss after income tax for the year from continuing operations
Net loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net exchange gain on translation of foreign operation
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Net loss for the year attributable to:
Equity holders of the Parent
Total comprehensive loss for the year attributable to:
Equity holders of the Parent
Loss per share
Basic loss for the year attributable to ordinary
equity holders of the Parent
Diluted loss for the year attributable to ordinary
equity holders of the Parent
Note
3(a)
3(b)
3(c)
5
7
7
2020
$
3
—
2019
$
42
7,212
(1,000,227)
(2,824)
(974,577)
(32,489)
(1,375,442)
(1,390,379)
15,830
(1,979)
(2,362,660)
(2,392,170)
—
(2,362,660)
(2,362,660)
—
(2,392,170)
(2,392,170)
171,072
171,072
62,293
62,293
(2,191,588)
(2,329,877)
(2,191,588)
(2,191,588)
(2,329,877)
(2,329,877)
(2,191,588)
(2,191,588)
(2,329,877)
(2,329,877)
Cents per share
Cents per share
(0.02)
(0.02)
(0.03)
(0.03)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes
30
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Consolidated Statement of Financial Position
As at 30 June 2020
Assets
Current assets
Cash and short term deposits
Trade and other receivables
Total current assets
Non-current assets
Plant and equipment
Other receivables
Right of use assets
Capitalised exploration expenditure
Total non-current assets
Total assets
Liabilities and equity
Current liabilities
Trade and other payables
Lease liability
Total current liabilities
Non-current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Reserves
Total equity
Note
2020
$
2019
$
8
9
9
10
11
700,642
210,866
911,508
24,073
193,096
39,035
1,577,953
1,834,157
2,745,665
207,462
22,328
229,790
16,505
16,505
246,295
2,499,370
1,052,411
291,201
1,343,612
31,657
—
—
1,423,943
1,455,600
2,799,212
91,709
—
91,709
—
—
91,709
2,707,503
12
15
14
42,489,962
40,572,924
(43,121,940)
(40,759,280)
3,131,348
2,499,370
2,893,859
2,707,503
This Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
Annual Report 2020
Europa Metals Ltd
31
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
Cash flows used in operating activities
Interest received
Exploration and evaluation expenditure
Payments to suppliers and employees
Net cash flows used in operating activities
Cash flows used in investing activities
Payments for plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Lease principal repayments
Proceeds from issue of shares
Transaction costs on issue of shares
Net cash flows from financing activities
Note
19
2020
$
3
2019
$
42
(1,507,897)
(828,272)
(2,336,166)
(1,387,317)
(1,337,373)
(2,724,648)
(5,953)
(5,953)
(49,096)
2,212,254
(183,506)
1,979,652
(362,468)
10,699
1,052,411
700,642
—
—
—
2,684,170
(184,832)
2,499,338
(225,310)
5,394
1,272,327
1,052,411
Net (decrease)/increase in cash and cash equivalents held
Net foreign exchange difference
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
8
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
32
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Attributable to the equity holders of the Parent
Issued
capital
$
Accumulated
losses
$
38,079,499 (38,367,110)
— (2,392,170)
—
—
— (2,392,170)
2,493,425
—
—
—
Employee
share
incentive
reserve
$
491,577
—
Option
reserve
$
Foreign
exchange
reserve
$
Total
equity
$
2,028,253
—
252,152
2,484,371
— (2,392,170)
—
—
—
—
—
—
62,293
62,293
62,293
(2,329,877)
—
59,584
— 2,493,425
—
59,584
At 1 July 2018
Loss for the year
Other Comprehensive Income
(net of tax)
Total comprehensive loss
(net of tax)
Transactions with owners in
their capacity as owners:
Shares issued during the year
net of transaction costs
Options issued to Brokers
At 1 July 2019
Loss for the year
40,572,924 (40,759,280)
— (2,362,660)
491,577
—
2,087,837
—
314,445
2,707,503
— (2,362,660)
40,572,924 (40,759,280)
491,577
2,087,837
314,445
2,707,503
Other Comprehensive Income
(net of tax)
Total comprehensive loss
(net of tax)
Transactions with owners in
their capacity as owners:
Shares issued during the year
net of transaction costs
Options issued to Brokers
—
—
— (2,362,660)
1,917,038
—
—
—
—
—
—
—
—
—
171,072
171,072
171,072
(2,191,588)
—
66,417
— 1,917,038
—
66,417
At 30 June 2020
42,489,962 (43,121,940)
491,577
2,154,254
485,517
2,499,370
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Annual Report 2020
Europa Metals Ltd
33
Notes to the consolidated financial statements
For the year ended 30 June 2020
Note 1: Corporate information
The consolidated financial statements of Europa Metals
Ltd and its subsidiaries (collectively, the “Group”) for
the year ended 30 June 2020 were authorised for issue
in accordance with a resolution of the directors on
6 October 2020.
Europa Metals Ltd, the parent, is a for profit company
limited by shares incorporated in Australia whose shares
are publicly traded on the London Stock Exchange (AIM)
and the AltX of the Johannesberg Stock Exchange.
The Group incurred an operating loss after income tax
of $2,362,660 for the year ended 30 June 2020 (2019:
$2,392,170). In addition, the Group had net current assets
of $681,718 (2019: $1,251,903), and shareholders’ equity
of $2,499,370(2019: $2,707,503) as at 30 June 2020.
There does not currently appear to be any material
impact on the Company or any significant uncertainties
with respect to events or conditions which may impact
the Company unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19)
pandemic.
Domicile:
Australia
Registered
Office:
c/o Minerva Corporate Pty. Ltd, Level 8,
99 St Georges Terrace, Perth, WA, 6000.
The Company is currently well funded having recently
raised £2 million (before expenses) and is well positioned
in the short to medium term.
Note 2: Summary of significant accounting
policies
(a) Basis of preparation
The Financial Report is a general purpose financial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian
Accounting Standards and Interpretations and complies
with other requirements of Australian law.
The accounting policies detailed below have been
consistently applied to all of the years presented unless
otherwise stated. The financial statements are for the
consolidated entity consisting of Europa Metals Ltd and
its subsidiaries.
The Financial Report has also been prepared on a
historical cost basis.
All amounts are presented in Australian dollars, unless
otherwise stated.
(b) Statement of compliance
The Financial Report complies with Australian Accounting
Standards, as issued by the Australian Accounting
Standards Board, and complies with International
Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board.
(c) Going concern
The Annual Report has been prepared on a going
concern basis and this basis is predicated on a number of
initiatives being undertaken by the Group with respect to
ongoing cost reductions and funding as set out below.
The Group’s forecast cash flow requirements for the 15
months ending 30 September 2021 reflect cash outflows
from operating and investing activities, which take into
account a combination of committed and uncommitted
but currently planned expenditure. The ability of the
Group to continue as a going concern is dependent on
raising additional funds to meet the Group’s ongoing
working capital requirements when required.
These conditions indicate a material uncertainty which
may cast significant doubt as to whether the Group will
be able to meet its debts as and when they fall due and
thus continue as a going concern.
This Annual Report has been compiled on a going concern
basis. In arriving at this position the Directors are satisfied
that the Group will have access to sufficient cash as and
when required to enable it to fund administrative and
other committed expenditure. The Directors are satisfied
that they will be able to raise additional funds either
through implementation of strategic joint ventures or
via a form of debt and/or equity raising. In addition, the
Directors have embarked on a strategy to reduce costs.
Should the Group not be able to continue as a going
concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course
of business and at amounts that differ from those stated
in the financial statements.
The financial statements do not include any adjustments
relating to the recoverability and classification of
recorded asset amounts, nor to the amounts or
classification of liabilities that might be necessary should
the Group not be able to continue as a going concern.
34
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
(d) Adoption of new and revised standards
Europa Metals Ltd and its subsidiaries (‘the Group’) has
adopted all new and amended Australian Standards
and Interpretations mandatory for reporting periods
beginning on or after 1 July 2019, including:
AASB 16 Leases
The Group leases office space for its corporate offices.
Impact of application of AASB 16 Leases (“AASB 16”)
AASB 16 provides a model for the identification
and treatment of lease arrangements in the
financial statements. AASB 16 superseded the lease
guidance including AASB 117 Leases and the related
Interpretations, when it became effective for the Group
for the accounting period beginning 1 July 2019.
The Group has chosen the modified retrospective
application of AASB 16. Consequently, the Group has not
restated the comparative information.
Impact of the new definition of a lease
The Group has made use of the practical expedient
available on transition to AASB 16 not to reassess
whether a contract is or contains a lease. Accordingly,
the definition of a lease in accordance with AASB 117 and
Interpretation 4 will continue to apply to those leases
entered into or modified before 1 July 2019.
The change in the definition of a lease mainly relates to
the concept of control. AASB 16 distinguishes between
leases and service contracts on the basis of whether the
use of an identified asset is controlled by the customer.
Control is considered to exist if the customer has:
• The right to obtain substantially all of the economic
benefits from the use of an identified asset; and
• The right to direct the use of that asset.
The Group has applied the definition of a lease and related
guidance set out in AASB 16 to all lease contracts entered
into or modified on or after 1 July 2019. The Directors have
determined that the new definition in AASB 16 will not
change significantly the scope of contracts that meet the
definition of a lease for the Group.
Operating leases
AASB 16 has changed how the Group accounts for leases
previously classified as operating leases under AASB 117,
which were off-statement of financial position.
On initial application of AASB 16, for all leases (except as
noted below), the Group has:
(a)
Recognised Right-of-Use assets (“ROU Assets”) and
lease liabilities in the consolidated statement of
financial position, initially measured at the present
value of the future lease payments;
(b) Recognised depreciation of ROU Assets and interest
on lease liabilities in the consolidated statement of
profit or loss; and
(c)
Separated the total amount of cash paid into
a principal portion (presented within financing
activities) and interest (presented within operating
activities) in the consolidated cash flow statement.
Under AASB 16 lease incentives (e.g. rent-free period) are
recognised as part of the measurement of the ROU Assets
and lease liabilities. Previously lease incentives resulted in
the recognition of a lease liability incentive amortised as a
reduction of rental expenses on a straight-line basis.
Under AASB 16, ROU Assets will be tested for impairment
in accordance with AASB 136 Impairment of Assets.
This replaces the previous requirement to recognise a
provision for onerous lease contracts.
For short-term leases (lease term of 12 months or
less) and leases of low-value assets the Group opted
to recognise a lease expense on a straight-line basis as
permitted by AASB 16.
The Group recognised ROU Assets with a net book value
of $82,590 and corresponding lease liabilities of $82,590
at 1 July 2019. After accounting for depreciation and lease
principal payments during the year the balances as at
30 June 2020 were ROU Assets with a net book value of
$39,035 and lease liabilities of $38,833.
Annual Report 2020
Europa Metals Ltd
35
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting policies continued
The impact on the consolidated statement of profit or loss (increase/(decrease)) for the period is:
Expense
Tenancy and operating
Depreciation expense
Finance costs
Net impact on loss for the period
$
Notes
51,241
(43,556)
(7,484)
201
Rent expense on previously recognised operating lease
Depreciation of lease asset recognised under AASB 16
Interest on lease recognised under AASB 16
Under AASB 117, lease payments from operating leases
were included in cash flows from operating activities.
Under AASB 16 lease repayments are included in cash
flows from financing activities. The impact on cash flows
for the period from adopting AASB 16 is to increase cash
flows from operating activities by $49,096 and to reduce
cash flows from financing activities by $49,096.
There is no impact on other comprehensive income and
the basic and diluted EPS.
Determination of whether variable payments are in-
substance fixed
For lease agreements subject to lease payments with
fixed increases, the Group factored in the fixed increases
into the calculation of the lease liability. The Group has no
lease agreements subject to lease payments based on a
variable index.
Determination of the appropriate rate to discount the
lease payments
The Group estimated the incremental borrowing rate
applicable to its lease as the rate of interest that a lessee
would have to pay to borrow over a similar term and with
similar security the funds necessary to obtain an asset of
a similar value to the ROU Asset. The estimate was based
on a risk adjusted rate and considered the materiality
of the impacts of applying a range of interest rates. The
incremental borrowing rate applied is 12.5%.
The following is a reconciliation of total operating lease
commitments at 30 June 2019 to the lease liabilities
recognised at 1 July 2019:
Operating lease commitments disclosed
at 30 June 2019
Less: discount applied using incremental
borrowing rate
Lease liability recognised at 1 July 2019
Right-of-Use asset (value determined solely
with reference to the lease liability value)
$
94,460
(11,870)
82,590
82,590
The recognised ROU Asset relates to office premises.
Summary of new accounting policies
Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e. the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost of right-of-
use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the
recognised right-of-use assets are depreciated on a straight-line
basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease
payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised
by the Group and payments of penalties for terminating
a lease, if the lease term reflects the Group exercising the
option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as an expense
in the period on which the event or condition that triggers
the payment occurs. In calculating the present value of
lease payments, the Group uses the incremental borrowing
rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount
of lease liabilities is remeasured if there is a modification, a
change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase
the underlying asset.
36
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e. those leases that have a lease term of 12
months or less from the commencement date and do not
contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leases of office
equipment that are considered of low value (i.e. below
$5,000). Lease payments on short-term leases and leases
of low-value assets are recognised as an expense on a
straight-line basis over the lease term.
(e) Accounting standards issued but not yet effective
The Directors have also reviewed all new Standards and
Interpretations that have been issued but are not yet
effective for the year ended 30 June 2020. As a result of
this review, the Directors have determined that there is
no material impact of the new and revised Standards and
Interpretations on the Group and, therefore, no change is
necessary to Group accounting policies.
(f) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group and its subsidiaries as at 30 June
2020. Control is achieved when the Group is exposed, or
has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an
investee if and only if the Group has:
• Power over the investee (i.e. existing rights that give
it the current ability to direct the relevant activities of
the investee);
• Exposure, or rights, to variable returns from its
involvement with the investee; and
• The ability to use its power over the investee to affect
its returns.
When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all
relevant facts and circumstances in assessing whether it
has power over an investee, including:
• The contractual arrangement with the other vote
holders of the investee;
• Rights arising from other contractual arrangements;
and
• The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the statement of profit
or loss and other comprehensive income from the date
the Group gains control until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other
comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the
non-controlling interests, even if this results in the
non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies. All
intra-group assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members
of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without
a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it:
• De-recognises the assets (including goodwill) and
liabilities of the subsidiary;
• De-recognises the carrying amount of any non-
controlling interests;
• De-recognises the cumulative translation differences
recorded in equity;
• Recognises the fair value of the consideration received;
• Recognises the fair value of any investment retained;
• Recognises any surplus or deficit in profit or loss; and
• Reclassifies the parent’s share of components
previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required
if the Group had directly disposed of the related assets
or liabilities.
• Exchange differences arising on translation of foreign
operations are transferred directly to the group’s foreign
currency translation reserve in the statement of financial
position. These differences are recognised in profit or
loss in the period in which the operation is disposed.
Annual Report 2020
Europa Metals Ltd
37
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
(g) Critical accounting estimates and judgements
The application of accounting policies requires the use of
judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent
from other sources. The estimates and associated
assumptions are based on historical experience and
other factors that are considered to be relevant. Actual
results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing
basis. Revisions are recognised in the period in which the
estimate is revised if it affects only that period or in the
period of the revision and future periods if the revision
affects both current and future periods.
Share-based payment transactions
Where the fair value of the goods or services provided by
employees or consultants cannot be reliably determined
the Group measures the cost of equity-settled
transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The
fair value is determined by an external valuer using the
Black Scholes model, using the assumptions detailed in
Note 16.
Coronavirus (Covid-19) pandemic
Judgement has been exercised in considering the impacts
that the Coronavirus (COVID-19) pandemic has had, or
may have, on the Company based on known information.
This consideration extends to the nature of the products
and services offered, customers, supply chain, staffing
and geographic regions in which the Company operates.
Other than as addressed in specific notes, there does not
currently appear to be either any significant impact upon
the financial statements or any significant uncertainties
with respect to events or conditions which may impact
the Company unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19)
pandemic.
(h) Foreign currency translation
Both the functional and presentation currency of the
Company and its Australian controlled entity is Australian
dollars (A$). Each entity in the Group determines its own
functional currency and items included in the financial
statements of each entity are measured using that
functional currency.
The functional currency of the foreign operations is Euro
(EUR), and United States dollars (USD).
Transactions in foreign currencies are initially recorded
in the functional currency by applying the exchange
rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies
are retranslated at the rate of exchange ruling at the
reporting date.
All exchange differences in the parent Company’s financial
statements are taken to profit or loss unless they relate to
the translation of subsidiary related loans and borrowings
which are considered part of the net investment value taken
directly to equity until the disposal of the net investment, at
which time they are recognised in profit or loss.
As at the reporting date the assets and liabilities of
foreign subsidiaries are translated into the presentation
currency of the Company at the rate of exchange ruling at
the reporting date and their statements of profit or loss
and other comprehensive income are translated at the
weighted average exchange rate for the year.
The exchange differences arising on the translation are
taken directly to a separate component of equity.
On disposal of a foreign entity, the deferred cumulative
amount recognised in equity relating to that particular
foreign operation is recognised in profit or loss.
(i) Exploration and evaluation expenditure
Exploration and evaluation costs
Exploration and evaluation costs are written off in the
year they are incurred apart from acquisition costs which
are carried forward where right of tenure of the area of
interest is current. The future recoverability of exploration
and evaluation expenditure is dependent on a number of
factors, including whether the Group decides to exploit
the related lease itself, or, if not, whether it successfully
recovers the related exploration and evaluation assets
through sale.
Factors that could impact the future recoverability include
the level of reserves and resources, future technological
changes, which could impact the cost of mining, future
legal changes (including changes to environmental
restoration obligations) and changes to commodity prices.
38
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the
future, profits and net assets will be reduced in the period
in which this determination is made.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax credits and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences, and
the carry-forward of unused tax assets and unused tax
losses can be utilised except:
(j) Income tax
Current tax assets and liabilities for the current period
and prior periods are measured at amounts expected
to be recovered from or paid to the taxation authorities
based on the current period’s taxable income. The tax
rates and tax laws used for computations are enacted or
substantively enacted by the reporting date.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for
financial reporting purposes.
Current tax assets and liabilities for the current period
and prior periods are measured at amounts expected
to be recovered from or paid to the taxation authorities
based on the current period’s taxable income. The tax
rates and tax laws used for computations are enacted or
substantively enacted by the reporting date.
• where the deferred income tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss; and
• where the deductible temporary difference is associated
with investments in subsidiaries, associates or interests
in joint ventures, in which case a deferred tax asset is
only recognised to the extent that it is probable that
the temporary difference will reverse in the foreseeable
future and taxable profit will be available against which
the temporary difference can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for
financial reporting purposes.
Unrecognised deferred income tax assets are reassessed
at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred income tax liabilities are recognised for all
taxable temporary differences except:
• where the deferred income tax liability arises from the
initial recognition of goodwill of an asset or liability
in a transaction that is not a business combination
and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• where the taxable temporary difference is associated
with investments in subsidiaries, associates or interests
in joint ventures, and the timing of the reversal of
the temporary difference can be controlled and it is
probable that the temporary difference will not reverse
in the foreseeable future.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date
Income taxes relating to items recognised directly in
equity are recognised in equity and not in the statement
of profit or loss and other comprehensive income.
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Annual Report 2020
Europa Metals Ltd
39
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
(k) Goods & Services Tax/Value Added
Tax Revenues, expenses and assets are recognised net of
the applicable amount of GST/VAT except:
• where the GST/VAT incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST/VAT is recognised as
part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
• receivables and payables are stated with the amount
of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable
to, the taxation authority is included as part of receivables
or payables in the statement of financial position.
Cash flows are included in the Statement of Cash Flows on
a gross basis and the GST/VAT component of cash flows
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority,
are classified as operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST/VAT recoverable from, or payable to, the
taxation authority.
(l) Cash and cash equivalents
Cash and cash equivalents in the statement of financial
position comprise cash at bank and on hand and short-
term deposits with an original maturity of three months
or less.
For the purposes of the Statement of Cash Flows, cash
and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.
(m) Trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected
credit losses. Trade receivables are generally due for
settlement within 30 days.
The consolidated entity has applied the simplified
approach to measuring expected credit losses, which
uses a lifetime expected loss allowance. To measure
the expected credit losses, trade receivables have been
grouped based on days overdue.
Other receivables are recognised at amortised cost, less
any allowance for expected credit losses.
(n) Revenue recognition
Interest Income
Interest income is recognised as the interest accrues
(using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through
the expected life of the financial instrument) to the net
carrying amount of the financial asset.
(o) Contributed equity
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
The Company’s own shares, which are re-acquired
for later use in the employee share based payment
arrangements, are deducted from equity.
(p) Trade and other payables
Trade payables and other payables are carried at
amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of
the purchase of these goods and services.
(q) Loss per share
Basic loss per share is calculated as net loss attributable to
members of the Company adjusted to exclude any costs
of servicing equity (other than dividends) divided by the
weighted average number of ordinary shares, adjusted for
any bonus element.
Diluted loss per share is calculated as net loss attributable
to members of the Company adjusted for:
• costs of servicing equity (other than dividends);
• the after tax effect of dividends and interest associated
with dilutive potential ordinary shares that have been
recognised as expenses; and
• other non-discretionary changes in revenues or
expenses during the period that would result from
the dilution of potential ordinary shares divided by
the weighted average number of ordinary shares and
dilutive potential ordinary shares, adjusted for any
bonus element.
40
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 2: Summary of significant accounting
policies continued
(r) Other Financial Assets
Other financial assets are initially measured at fair value.
Transaction costs are included as part of the initial
measurement, except for financial assets at fair value
through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending
on their classification. Classification is determined based
on both the business model within which such assets are
held and the contractual cash flow characteristics of the
financial asset.
(s) Share-based payment transactions
The Company provides benefits to its employees and
consultants (including key management personnel
(“KMP”) in the form of share-based payments, whereby
employees render services in exchange for shares or
rights over shares (equity-settled transactions).
Equity settled transactions
The cost of equity-settled transactions with employees
is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The
fair value is determined by using the Black Scholes model,
further details of which are given in Note 16.
In valuing equity-settled transactions, no account is taken
of any vesting conditions, other than conditions linked to
the price of the shares of the Company if applicable.
Note 3: Revenue and expenses
Revenue and expenses from continuing operations
The cost of equity-settled transactions is recognised,
together with a corresponding increase in equity on the
date the equity right is granted. The statement of profit or
loss and other comprehensive income charge or credit for
a period represents the movement in cumulative expense
recognised as at the beginning and end of that period.
If the terms of an equity-settled transaction are modified,
as a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised for
any modification that increases the total fair value of the
share based arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it
had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled
award and designated as a replacement award on the date
that it is granted, the cancelled and new award are treated
as if they were a modification of the original award, as
described in the previous paragraph.
The dilutive effect, if any, of outstanding options is
reflected as additional share dilution in the computation
of diluted loss per share (see note 7).
(t) Comparatives figures
When required by Accounting Standards, comparative
figures have been restated to conform to changes in
presentation for the current financial year.
(a) Revenue
Interest received
(b) Other Income
Other Income
Annual Report 2020
Europa Metals Ltd
2020
$
3
3
—
—
2019
$
42
42
7,212
7,212
41
Notes to the consolidated financial statements
continued
Note 3: Revenue and expenses continued
Revenue and expenses from continuing operations
(c) Profit or loss
Other expenses include the following:
Depreciation
Consulting services
Employment related
– Directors’ fees
Corporate
Travel
Other
2020
$
2019
$
75,000
186,736
436,073
172,278
7,857
122,283
1,000,227
12,252
153,237
434,924
237,009
46,500
90,655
974,577
Note 4: Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors.
Europa Metals Ltd operates in the mineral exploration industry in Spain.
Given the nature of the Group, its size and current operations, management does not treat any part of the Group as
a separate operating segment. Internal financial information used by the Group’s decision makers is presented on a
“whole of entity” manner without dissemination to any separately identifiable segments.
The Group’s management operates the business as a whole without any special responsibilities for any separately
identifiable segments of the business.
Accordingly the financial information reported elsewhere in this financial report is representative of the nature and
financial effects of the business activities in which it engages and the economic environments in which it operates.
Note 5: Income tax expense
Reconciliation of income tax expense to the pre-tax net loss
Loss before income tax
Income tax calculated at 30% (2019: 30%) on loss before income tax
Add tax effect of: non-deductible expenses
Difference in tax rate of subsidiaries operating in other jurisdictions
Unused tax losses and temporary differences not brought to account
Income tax (profit)/expense
2020
$
2019
$
(2,362,660)
(708,798)
501,232
61,143
146,423
—
(2,392,170)
(717,651)
230,897
(69,250)
556,004
—
42
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 5: Income tax expense continued
Analysis of deferred tax balances
Deferred tax liabilities
Assessable temporary differences
Prepayments
Other
Deferred tax liabilities offset by deferred tax assets
Net deferred tax liabilities
Deferred tax assets
Share issue expenses
Payables and provisions
Other
Unused tax losses
Total unrecognised deferred tax assets
Deferred tax assets
Deferred tax assets offset by deferred tax liabilities
Net deferred tax assets
2020
$
2019
$
(5,422)
(5,169)
10,591
—
2,660
19,611
—
5,399,972
5,422,243
(4,745)
4,745
—
—
11,175
4,600
5,313,714
5,329,489
(5,411,652)
(5,324,744)
10,591
(10,591)
—
4,745
(4,745)
—
Unused tax losses set out above have not been recognised due to the uncertainty of future taxable profit streams.
Note 6: Auditors’ remuneration
Remuneration of the auditor of the Company for:
– auditing or reviewing the financial statements
BDO Audit (WA) Pty Ltd
– other assurance related services
BDO Corporate Finance (WA) Pty Ltd (valuation of options)
BDO (WA) Pty Ltd – Taxation services
2020
$
2019
$
41,382
41,382
3,200
7,460
52,042
28,025
28,025
—
28,025
Annual Report 2020
Europa Metals Ltd
43
Notes to the consolidated financial statements
continued
Note 7: Loss per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Loss used in calculating basic loss per share
Adjustments to basic loss used to calculate dilutive loss per share
Loss used in calculating dilutive loss per share
Weighted average number of ordinary shares used in the
calculation of basic loss per share
Weighted average number of ordinary shares used in the
calculation of diluted loss per share
2020
$
(0.02)
(0.02)
2019
$
(0.03)
(0.03)
(2,362,660)
(2,392,170)
—
—
(2,362,660)
(2,392,170)
Number
Number
15,401,910,945
7,125,884,907
15,401,910,945
7,125,884,907
5,694,083,234 share options outstanding as at 30 June 2020 (30 June 2019: 4,199,416,595) have not been included in
the calculation of dilutive loss per share as these are anti-dilutive.
Note 8: Cash and cash equivalents
Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of
financial position as follows:
Cash at bank
See note 20 for the risk exposure analysis for cash and cash equivalents.
Note 9: Trade and other receivables
Current
Sundry debtors
GST/VAT
Prepayments
Non-current
GST/VAT(1)
2020
$
2019
$
700,642
1,052,411
2020
$
2019
$
4,418
185,274
21,174
210,866
77,541
196,492
17,168
291,201
193,096
—
(1) VAT is considered recoverable but is not expected to be received within 12 months.
Non-trade debtors are non-interest bearing and are generally on 30-90 days credit terms. The carrying amounts of
these receivables represent fair value and are not considered to be impaired.
44
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 10: Capitalised exploration expenditure
At 1 July
Foreign exchange movement
At 30 June
Note 11: Trade and other payables
Current
Trade payables and other payables
2020
$
1,423,943
154,010
1,577,953
2019
$
1,344,013
79,930
1,423,943
2020
$
207,462
207,462
2019
$
91,709
91,709
Trade and other payables are non-interest bearing and are normally settled on 30-day terms.
Note 12: Contributed Equity
(a) Share Capital
Ordinary Shares
Ordinary shares fully paid
Employee share incentive plan shares
2020
No. of
shares
2019
No. of
shares
2020
$
2019
$
16,719,909,651 11,976,876,317
(2,300,000)
(2,300,000)
42,755,264
40,838,226
(265,302)
(265,302)
16,717,609,651 11,974,576,317
42,489,962
40,572,924
Capital management
When managing capital (which is defined as the Company’s total equity), management’s objective is to ensure the
entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other
stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available
to the entity. As the equity market is constantly changing management may issue new shares to provide for future
exploration and development activity. The Company is not subject to any externally imposed capital requirements.
During the year ended 30 June 2020, nil (2019: nil) shares were issued back to the market from the Employee Incentive
Share Plan.
Annual Report 2020
Europa Metals Ltd
45
Notes to the consolidated financial statements
continued
Note 12: Contributed Equity continued
(b) Movements in ordinary share capital
Date
30 June 2018
10 August 2018
29 March 2019
30 June 2019
27 August 2019
28 August 2019
Details
Closing Balance
Placing shares
Placing shares
Costs associated with share issues
Exercise of warrants
Exercise of warrants
04 September 2019
Exercise of warrants
06 September 2019
Exercise of warrants
09 October 2019
Exercise of warrants
11 October 2019
17 October 2019
Placing shares
Exercise of warrants
5 November 2019
Placing shares
30 June 2020
Closing Balance
Cost associated with share issues
Number of shares
$
4,849,757,667
38,344,801
727,118,650
6,400,000,000
—
987,490
1,750,351
(244,416)
11,976,876,317
40,838,226
212,000,000
133,333,334
83,333,334
83,333,333
66,666,667
57,737
60,779
37,382
37,453
30,242
3,400,000,000
1,582,223
166,666,666
600,000,000
—
78,530
282,615
(249,923)
16,722,209,651
42,755,264
Less:
30 June 2020
Employee share plan shares on issue
(2,300,000)
(265,302)
16,719,909,651
42,489,962
If, at any time during the exercise period, an employee ceases to be an employee, all share options held by that
employee will lapse one month after their employment end date. Therefore, employee shares above are only
recognised in issued capital when issued to the employees concerned.
(c) Movements in employee share plan shares issued with limited recourse employee loans
Date
Details
30 June 2019
Opening balance
Cancelled during 2019
Issued during 2019
Closing balance
Opening balance
Cancelled during 2020
Issued during 2020
30 June 2020
Closing balance
No employee share plan shares were issued in 2020 (2019: Nil).
Number of shares
$
2,300,000
(265,302)
—
—
—
—
2,300,000
2,300,000
(265,302)
(265,302)
—
—
—
—
2,300,000
(265,302)
This account is used to record the value of shares issued under the Executive Share Incentive Plan (ESIP). The ESIP is
accounted for as an “in-substance” option plan due to the limited recourse nature of the loan between employees and the
Company to finance the purchase of ordinary shares. The total fair value of the “in substance” options issued under the
plan is recognised as a share-based payment expense over the vesting period, with a corresponding increase in equity.
46
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 13: Options
The following table illustrates the movements in share options during the period:
Outstanding at 1 July 2019
Issued during the period
Cancelled/exercised during the period
Outstanding at 30 June 2020
Exercisable at 30 June 2020
30 June 2020
Number
30 June 2019
Number
4,199,416,595
855,365,729
2,240,000,000
3,550,000,000
(745,333,361)
(205,949,134)
5,694,083,234
4,199,416,595
5,694,083,234
4,199,416,595
The table in note 16 summarises the model inputs (post consolidation) for options granted during the year ended
30 June 2020.
Note 14: Reserves
At 30 June 2018
Options issued to Brokers(1)
Currency translation differences
At 30 June 2019
Options issued to Brokers(1)
Currency translation differences
At 30 June 2020
Employee
share incentive
reserve
$
491,577
—
—
491,577
—
—
Options
reserve
$
2,028,253
59,584
—
2,087,837
66,417
—
491,577
2,154,254
Foreign
exchange
reserve
$
252,152
—
62,293
314,445
—
171,072
485,517
Total
$
2,771,982
59,584
62,293
2,893,859
66,417
171,072
3,131,348
(1)
The value of the service could not be reliably determined and therefore, the options were valued using the Black Scholes Model.
Nature and purpose of reserves
Employee share incentive reserve
This reserve is used to record the value of equity benefits provided to employees, consultants and directors as part of
their remuneration under the Executive Share Incentive Plan.
Options reserve
This reserve is used to record the value of options issued, other than share-based payments to directors, employees
and consultants as part of their remuneration.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
Equity reserve
The equity reserve is used to record the acquisition of the non-controlling interest by the Group and to record
differences between the carrying value of non-controlling interests and the consideration paid/received, where there
has been a transaction involving non-controlling interests that do not result in a loss of control.
The reserve is attributable to the equity of the parent.
Annual Report 2020
Europa Metals Ltd
47
Notes to the consolidated financial statements
continued
Note 15: Accumulated losses
Accumulated losses at the beginning of the financial year
Net loss for the year
Accumulated losses at the end of the financial year
2020
$
2019
$
(40,759,280)
(38,367,110)
(2,362,660)
(2,392,170)
(43,121,940)
(40,759,280)
Note 16: Share based payments
Expenses arising from share-based payment transactions
Total costs arising from share-based payment transactions recognised during the year were as follows:
Options issued to Brokers as part of capital raising (included in Equity)
2020
$
66,417
66,417
2019
$
59,584
59,584
Fair value of options granted
The value of the above services was unable to be reliably measured so the fair value of the options issued was used.
The fair value at the grant date of options issued is determined using the Black Scholes model that takes into account
the exercise price, the term of the option, the impact of dilution, the non-tradable nature of the option, the share price
at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest
rate for the term of the option.
1.
The table below summarises the model inputs (pre-consolidation) for options granted prior to the year ended
30 June 2020:
Options granted for no consideration
Exercise price (GBP)
Issue date
Expiry date
Underlying security spot price at grant date (GBP)
Expected price volatility of the Company’s shares
Expected dividend yield
Expected life (years)
Risk-free interest rate
Black Scholes model valuation per option (AUD cents per share)
Total fair value
2020
240,000,000
0.00025
30 September 2019
30 September 2022
0.00025
100%
0%
3
2.0%
0.027673
$66,417
2019
350,000,000
0.00015
22 May 2018
22 May 2023
0.00015
100%
0%
2
2.0%
0.000170
$59,584
48
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 17: Commitments and contingencies
There are no material contingent liabilities or assets of the Group at the reporting date.
Note 18: Related party transactions
Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share based payments
Termination benefits
2020
$
438,707
—
—
—
2019
$
434,924
—
—
—
438,707
434,924
Transactions between related parties are on normal commercial terms and conditions and no more favourable than
those available to other parties unless otherwise stated.
Subsidiaries
The consolidated financial statements include the financial statements of Europa Metals Ltd and the subsidiaries listed
in the following table.
Name
Ferrum Metals Pty Ltd
Country of Incorporation
Australia
Europa Metals Iberica S.L. (Formally GoldQuest Iberica S.L.)
Spain
% Beneficial Equity Interest
2020
100
100
2019
100
100
Europa Metals Ltd is the ultimate Australian parent entity and the ultimate parent of the Group. Transactions between
Europa Metals Ltd and its controlled entities during the year consisted of loan advances by Europa Metals Ltd. All
intergroup transactions and balances are eliminated on consolidation.
Trade payables
Minerva Corporate Pty Ltd(i)
Mowbrai Ltd(ii)
Virico Limited(iii)
Income
from Related
Parties
$
Expenditure
to Related
Parties
$
Amounts Owed by
Related Parties at
year end
$
Amounts Owed to
Related Parties at
year end
$
—
—
—
—
—
—
84,000
89,000
134,277
135,549
182,966
180,484
—
—
—
—
—
—
9,525
9,000
8,523
8,534
6,819
—
2020
2019
2020
2019
2020
2019
(i) Mr D Smith, a non-executive director and company secretary for the Company, is also a director of Minerva Corporate Pty Ltd. During the
year, Minerva Corporate Pty Ltd received the above fees for company secretarial and accounting services. These fees are based on normal
commercial terms and conditions. Mr D Smith was appointed on 16 January 2018.
(ii) Mr L Read, an executive director of the Company, was until recently also a director of Mowbrai Ltd. During the year, Mowbrai Ltd received the
above fees for consulting services. These fees are based on normal commercial terms and conditions.
(iii) Mr M Campion, an executive director of the Company, is also a director of Virico Limited. During the year, Virico Limited received the above
fees for consulting services. These fees are based on normal commercial terms and conditions.
Annual Report 2020
Europa Metals Ltd
49
Notes to the consolidated financial statements
continued
Note 18: Related party transactions continued
The following transactions were undertaken between the Company, executive officers and director-related entities
during 2020 and 2019.
Rental fees were paid to Lion Mining Finance, a company of
which Colin Bird is a director
Company secretarial and accounting fees were paid to Minerva
Corporate Pty Ltd, a company of which Daniel Smith is a director
Mr L Read, an executive director of the Company, was until recently also a
director of Mowbrai Ltd. During the year, Mowbrai Ltd received the above fees
for consulting services. These fees are based on normal commercial terms and
conditions.
Mr M Campion, an executive director of the Company, is also a director of Virico
Limited. During the year, Virico Limited received the above fees for consulting
services. These fees are based on normal commercial terms and conditions.
Note 19: Cash flow information
Reconciliation of cash flow from operations with loss from
ordinary activities after income tax
Loss from ordinary activities after income tax
Depreciation
Interest on unwinding of lease
Net foreign exchange differences
Changes in assets and liabilities
(Increase)/decrease in receivables
(Decrease)/increase in payables and provisions
Cash flows used in operations
2020
$
27,370
84,000
2019
$
24,551
89,000
134,277
135,549
182,966
428,613
180,484
429,584
2020
$
2019
$
(2,362,660)
(2,392,170)
75,000
7,485
(15,830)
12,252
(1,750)
(205,013)
164,852
(213,691)
(129,289)
(2,336,166)
(2,724,648)
Note 20: Financial risk management objectives and policies
The Group’s principal financial instruments comprise cash and short term deposits.
The main purpose of the financial instruments is to finance the Group’s operations. The Company also has other
financial instruments such as receivables and payables which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk
and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below:
50
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 20: Financial risk management objectives and policies continued
(a) Interest Rate Risk
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of
changes in market interest rates, and the effective weighted average interest rate for each class of financial assets and
financial liabilities, is set out in the following table. The effect on profit and equity after tax if interest rates at that date
had been 10% higher or lower with all other variables held constant would result in an immaterial difference.
The Group has not entered into any hedging activities to manage interest rate risk. In regard to its interest rate risk, the
Group continuously analyses its exposure. Within this analysis, consideration is given to potential renewals of existing
positions, alternative investments and the mix of fixed and variable interest rates.
2020
Financial Assets
Cash
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Lease liabilities
Total Financial Liabilities
2019
Financial Assets
Cash
Total Financial Assets
Financial Liabilities
Trade and other payables
Total Financial Liabilities
Weighted
Average
Effective
Interest Rate
%
Floating
Interest
Rate
$
Fixed
Interest
Rate
$
Non
Interest
Bearing
$
Total
$
0.05%
12.5%
0.05%
741
—
741
—
—
—
736
736
—
—
—
—
699,901
403,962
700,642
403,962
— 1,103,863
1,104,604
—
—
—
207,465
38,833
246,298
207,465
38,833
246,298
— 1,051,675
1,052,411
— 1,051,675
1,052,411
—
—
91,709
91,709
91,709
91,709
(b) Liquidity Risk
The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities required to meet
the current exploration and administration commitments, through the continuous monitoring of actual cash flows.
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long term funding and
liquidity management requirements. All material liabilities are expected to be settled within 12 months.
(c) Credit Risk
Credit risk arises in the event that a counterparty will not meet its obligations under a financial instrument leading to
financial losses. The Company is exposed to credit risk from its operating activities and financing activities including
deposits with banks and investments with insurance companies. The credit risk control procedure adopted by the
Company is to assess the credit quality of the institution with whom funds are deposited or invested, taking into
account its financial position and past experiences.
Annual Report 2020
Europa Metals Ltd
51
Notes to the consolidated financial statements
continued
Note 20: Financial risk management objectives and policies continued
(c) Credit Risk continued
The maximum exposure to credit risk on financial assets of the Company which have been recognised in the statement
of financial position is generally limited to the carrying amount.
Cash is maintained with Westpac, Banco Popular and Unicaja Banco of Spain and the Standard Bank of South Africa,
with ratings from Standard & Poors of AA or above (long term).
(d) Foreign Exchange Risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date is as follows:
Great British Pounds (GBP)
South African Rand (ZAR)
Euro (EUR)
Liabilities
Assets
2020
$
(107,257)
(3,557)
(43,085)
2019
$
—
(1,767)
(41,447)
2020
$
686,414
9
3,933
2019
$
908,511
3,099
135,418
Foreign currency sensitivity analysis
The Group is exposed to Great British Pound (GBP), and Euro (EUR) currency fluctuations.
A sensitivity analysis has not been disclosed as the impact of any reasonable fluctuation in exchange rates is not
considered to be material to the Group.
(e) Fair value
The fair values of cash, trade and other receivables and trade and other payables approximate their carrying values, as
a result of their short maturity or because they carry floating rates.
Note 21: Parent Entity Information
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated Losses
Reserves
Total shareholders’ equity
Loss of the parent entity
2020
$
1,481,961
2,663,748
164,379
164,379
2019
$
1,575,573
2,757,765
50,262
50,262
46,802,885
44,885,847
(47,388,489)
(45,196,901)
3,084,972
2,499,368
3,018,556
2,707,502
(2,191,588)
(2,717,672)
There have been no guarantees entered into by the parent entity in relation to any debts of its subsidiaries.
The parent entity has no contingent liabilities as at 30 June 2020 (2019: Nil).
52
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Notes to the consolidated financial statements
continued
Note 22: Significant events after the reporting date
There are subsequent events to report, as follows:
On 15 July 2020, the Company announced the results of its General Meeting, whereby all resolutions were duly passed
by way of a poll conducted in accordance with section 251AA of the Corporations Act 2001.
On 16 July 2020, the Company’s securities were consolidated on a 500:1 basis further to the approval of resolution 1 at
the Company’s General Meeting held on 15 July 2020.
On 24 July 2020, the Company announced that further to the approval of resolutions 5 to 9 at the Company’s General
Meeting held on 15 July 2020, the Company had granted, in aggregate, 1,980,000 options to the Company’s Executive
and Non-Executive Directors (the “Incentive Options”). The Incentive Options are exercisable at varying premiums to 6.03
pence, being the 30-day VWAP up to and including 23 July 2020.
On 5 August 2020, the Company announced that Mr Colin Bird had resigned as a director of the Board. On the same day,
Mr Myles Campion was appointed Executive Chairman and Laurence Read was appointed as Chief Executive Officer.
On 14 August 2020, the Company released the results of an updated Mineral Resource Estimate at Toral, which led to a
~40% increase in the indicated resource to 3.8Mt at 8.3% Zn Equivalent (including Pb credits) and 30g/t Ag.
On 19 August 2020, the Company announced that it had raised £2,000,000 (before expenses) via the issue of, in
aggregate, 15,686,274 new ordinary shares at an issue price of 12.75 pence per share to certain existing and new
investors. The net proceeds from the fundraising are primarily being utilised towards completion of certain key
components of a PFS in respect of Toral.
On 28 August 2020, the Company announced the results of the Phase III metallurgical testwork and ore sorting
undertaken at Toral. The positive Phase III metallurgical results and ore sorting analysis is to be utilised, alongside
all key work conducted since the 2018 Scoping Study, to update the Toral Project’s estimated economics via an
independent study being conducted by Bara Consulting.
Annual Report 2020
Europa Metals Ltd
53
Directors’ Declaration
In the opinion of the directors of Europa Metals Ltd:
(c)
(a)
the financial statements and notes set out
on pages 30 to 53 are in accordance with the
Corporations Act 2001, including:
(i)
giving a true and fair view of the financial
position of the Group as at 30 June 2020 and of
its performance, as represented by the results
of its operations and its cash flows, for the year
ended on that date; and
(ii)
complying with Accounting Standards in
Australia and the Corporations Regulations 2001,
professional requirements and other mandatory
requirements;
(b) the financial statements and notes also comply
with International Financial Reporting Standards as
disclosed in Note 2 (b); and
subject to the matters discussed in Note 2(c), there
are reasonable grounds to believe that the Group will
be able to pay its debts as and when they become
due and payable.
This declaration has been made after receiving the
declarations required to be made to the directors in
accordance with section 295A of the Corporations Act
2001 for the year ending 30 June 2020.
This declaration is made in accordance with a resolution
of the directors.
D Smith
Non-Executive Director
Perth
6 October 2020
54
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Independent auditor’s report
To the members of Europa Metals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Europa Metals Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit
or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant
accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for
the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We
are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to
the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going
concern and therefore the group may be unable to realise its assets and discharge its liabilities in the normal course of
business. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition
to the matter described in the Material uncertainty related to going concern section, we have determined the matters
described below to be the key audit matters to be communicated in our report.
Annual Report 2020
Europa Metals Ltd
55
Independent auditor’s report
continued
Recoverability of Capitalised Exploration Expenditure
Key audit matter
As disclosed in Note 10 to the financial report, the
carrying value of capitalised exploration and evaluation
expenditure represents a significant asset of the Group.
In accordance with relevant accounting standards, the
recoverability of exploration and evaluation expenditure
required significant judgement by management
in determining whether there are any facts or
circumstances that exist to suggest the carrying amount
of this asset may exceed its recoverable amount. As a
result, this is considered a key audit matter.
How the matter was addressed in our audit
Our procedures included, but were not limited to:
•
•
•
•
Obtaining a schedule of the areas of interest held
by the Group and assessing whether the rights to
tenure of those areas of interest remained current at
balance date;
Considering the status of the ongoing exploration
programmes in the respective areas of interest
by holding discussions with management, and
reviewing the Group’s exploration budgets, AIM
announcements and directors’ minutes;
Considering whether any such areas of interest had
reached a stage where a reasonable assessment of
economically recoverable reserves existed; and
Assessing the adequacy of the related disclosure in
Note 10 to the financial report.
Other information
The directors are responsible for the other information. The other information comprises the information in the
Group’s annual report for the year ended 30 June 2020, but does not include the financial report and the auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
56
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
Independent auditor’s report
continued
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in paragraphs pages 21 to 27 of the directors’ report for the year
ended 30 June 2020.
In our opinion, the Remuneration Report of Europa Metals Limited, for the year ended 30 June 2020, complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Phillip Murdoch
Director
Perth, 6 October 2020
Annual Report 2020
Europa Metals Ltd
57
Auditor’s independence declaration
DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF EUROPA METALS LIMITED
As lead auditor of Europa Metals Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge
and belief, there have been:
1.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Europa Metals Limited and the entities it controlled during the period.
Phillip Murdoch
Director
BDO Audit (WA) Pty Ltd
Perth, 6 October 2020
58
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
JSE Limited Requirements
Headline earnings reconciliation
2020
$
2019
$
Loss attributable to ordinary equity holders of the parent entity
(2,362,660)
(2,392,170)
Add back IAS 16 loss on the disposal of plant and equipment
Less profit on sale of available for sale investments
Total tax effects of adjustments
Headline loss
Basic loss per share
Weighted average shares in issue
Basic loss per share (cents)
Headline loss
Weighted average shares in issue
Headline loss per share (cents)
—
—
—
—
—
—
(2,362,660)
(2,392,170)
(2,362,660)
(2,392,170)
15,401,910,945
7,125,884,907
(0.02)
(0.03)
(2,362,660)
(2,392,170)
15,401,910,945
7,125,884,907
(0.02)
(0.03)
Annual Report 2020
Europa Metals Ltd
59
For your notes
60
Europa Metals Ltd
Annual Report 2020
EUROPAEUROPAMETAMETALSLS
www.europametals.com
Registered and Principal Office:
c/- Minerva Corporate Pty Limited
Level 8, 99 St Georges Terrace
Perth WA 6000 AUSTRALIA