EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT
30 JUNE 2021
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
CORPORATE DIRECTORY
Directors
Mr Keith Coughlan
Mr Richard Pavlik
Mr Kiran Morzaria
Ambassador Lincoln Palmer Bloomfield, Jr
Company Secretary
Mr Dennis Wilkins
Registered Office in Australia
Level 3
35 Outram Street
West Perth WA 6005
Telephone 08 6245 2050
Facsimile 08 6245 2055
Email
www.europeanmet.com
Executive Chairman
Executive Director
Non-Executive Director
Non-Executive Director
Geomet s.r.o.
Ruská 287, Bystřice
417 01 Dubí
Czech Republic
Registered Address and Place of Incorporation –
BVI
Woodbourne Hall
PO Box 3162
Road Town
Tortola VG1 110
British Virgin Islands
Share Register - Australia
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
Perth WA 6000
Telephone 1300 850 505 (within Australia)
Telephone +61 3 9415 4000 (outside Australia)
Facsimile 1800 783 447 (within Australia)
Facsimile +61 3 9473 2555 (outside Australia)
Nominated Nomad & Joint Broker
WH Ireland Ltd
24 Martin Lane
London EC4R 0DR
United Kingdom
Joint Broker
Shard Capital Partners LLP
23rd Floor, 20 Fenchurch Street
London EC3M 3BY
United Kingdom
UK Depository
Computershare Investor Services plc
The Pavilions
Bridgewater Road
Bristol BS99 6ZZ
United Kingdom
Auditor
Stantons International Audit and Consulting Pty Ltd
Level 2, 1 Walker Avenue
West Perth WA 6005
Telephone +61 8 9481 3188
Facsimile +61 8 9321 1204
Reporting Accountants (UK)
Chapman Davis LLP
2 Chapel Court
London SE1 1HH
United Kingdom
Securities Exchange Listing - Australia
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX Code: EMH
Securities Exchange Listing – NASDAQ
Nasdaq Inc
151 W. 42nd Street
New York City
NY 10036 United States
NASDAQ Code: ERPNF
Securities Exchange Listing – United Kingdom
London Stock Exchange plc
10 Paternoster Square
London EC4M 7LS
United Kingdom
AIM Code: EMH
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
CONTENTS
Chairman’s Letter Report
Review of Operations
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report to the members of European Metals Holdings Limited
Additional Information
Tenement Schedule
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
Dear Shareholders
CHAIRMAN’S LETTER
Welcome to the 2021 Annual Report for European Metals Holdings Limited (“European Metals” or “the
Company”).
On behalf of the Board of Directors, I am pleased to report to you on what has been another busy and
productive year for your Company, set against a backdrop of significantly higher prices for both of our
key products, lithium and tin. Our strategy is to become a Czech based lithium and tin producer. The
progress we have made in the past year, along with the greatly improved macro conditions, bring us
significantly closer towards making that aim a reality.
This has been partially reflected in the price of the Company’s securities with the CDI’s listed on ASX
increasing from AUD 0.29 on 30 June 2020 to AUD 1.535 on 30 June 2021. The price of lithium performed
well for the year also and has made very significant gains since year end.
As the lithium market moves into deficit, we anticipate the continuation of strong prices in the foreseeable
future.
The Definitive Feasibility Study continues, albeit with some minor delays related primarily to Covid-19 and
the effect that has had on logistics globally. Whilst we have had no direct Covid-19 related issues at site,
moving samples and our people has been problematic at times. We don’t anticipate any escalation in
this.
Apart from these delays, we have made steady progress of the Cinovec Project with positive
developments in the areas of our locked cycle testwork, permitting advancement and Measured
Resource drilling programme. We have also advanced the Project’s ESG credentials significantly and
Cinovec is emerging as a project with not only very robust economic parameters, but one with a strong
ESG profile relative to its peers. We will continue developing this aspect of the project over the coming
year and expect to be able to present a positive Life Cycle Assessment (LCA) to the market shortly. The
LCA will demonstrate the Project’s anticipated life-time carbon emissions, which we expect to be
comparatively very attractive.
The Project has been significantly de-risked and at the time of this report is moving rapidly towards a final
investment decision.
In the previous year, we reported on the completion of an agreement with CEZ a.s., the Czech national
power utility, by which CEZ became a 51% shareholder of the Project Company, Geomet and injected
approximately EUR 29 million into the Project.
Early in the 2021 Financial Year the Company entered into a partnership agreement with EIT InnoEnergy,
a European Union body that is the principal facilitator and organiser of the European Battery Alliance
(EBA). The EBA was initiated by the European Commission to create a competitive and sustainable battery
cell manufacturing value chain in Europe.
The purpose of the partnership agreement with EIT InnoEnergy is to facilitate the accelerated construction
financing and ultimate commercialisation of Cinovec. This will be achieved through assistance in the
sourcing of construction finance, grant funding and offtake introductions and negotiations.
Following this, the Company reported on the appointment of SMS group as the lead engineer for the
minerals processing and lithium battery-grade chemicals production at the Project.
From a corporate perspective, we welcomed Ambassador Lincoln Bloomfield to the board in early
January. Lincoln brings a wealth of experience to the Company in the fields of governance, international
diplomacy, sustainability, resilience and renewable energy. Lincoln is based in the United States, home to
the largest capital markets in the world and markets that are becoming increasingly invested in green
energy companies. This, coupled with our recent US market listing via a NASDAQ ADS programme,
provides the Company with another potential funding option as we head towards final investment
decision next year.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
CHAIRMAN’S LETTER
On funding, the Company raised AUD 7.1 million in January and remains in a very sound financial position
relative to the project timeline. The cornerstone investor for this raising was Luxembourg-based Thematica
Future Mobility.
The very strong commitment within the European Union to build a sustainable European battery industry
and electric vehicle industry that we reported on last year has gathered greater momentum.
Consequently, the demand for lithium in the region has grown dramatically and this is likely to continue.
This, coupled with a growing global desire to develop local supply chains, has focused attention on
European based projects involved in the battery metals supply chain. Cinovec is set to benefit significantly
from these developments.
All things considered, I am very optimistic on the outlook for the Cinovec Project and for the future of your
Company.
Finally, I would like to take this opportunity to thank all staff, advisors, contractors and our shareholders
who have supported us over the past year. I look forward to updating you throughout the new financial
year as we continue to advance the Cinovec Project.
Keith Coughlan
EXECUTIVE CHAIRMAN
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
REVIEW OF OPERATIONS
PROJECT REVIEW
Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech State over the Cinovec
Lithium/Tin Project.
Geomet s.r.o. is owned 49% by European Metals and 51% by CEZ a.s. through its wholly owned subsidiary,
SDAS. CEZ is a significant energy group listed on various European Exchanges with the ticker CEZ.
Cinovec hosts a globally significant hard-rock lithium deposit with a total Indicated Mineral Resource of
372.4Mt at 0.45% Li2O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt at 0.39% Li2O and 0.04%
Sn containing a combined 7.22 million tonnes Lithium Carbonate Equivalent and 263kt of tin, as reported
to ASX on 28 November 2017 (Further Increase in Indicated Resource at Cinovec South). An initial
Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported on 4 July 2017 (Cinovec Maiden Ore
Reserve – Further Information) has been declared to cover the first 20 years’ mining at an output of
22,500tpa of battery-grade lithium carbonate reported on 11 July 2018 (Cinovec Production Modelled to
Increase to 22,500tpa of Lithium Carbonate).
This makes Cinovec the largest hard-rock lithium deposit in Europe, the fourth largest non-brine deposit in
the world and a globally significant tin resource. The deposit has previously had over 400,000 tonnes of
ore mined as a trial sub-level open-stope underground mining operation focussed on the recovery of tin
only. In June 2019 EMH completed an updated Preliminary Feasibility Study, conducted by specialist
independent consultants, which indicated a return post tax NPV of USD1.108B and a post-tax IRR of 28.8%.
The study confirmed that the Cinovec Project is a potential low operating cost producer of battery grade
lithium hydroxide or battery grade lithium carbonate as markets demand. It confirmed the deposit is
amenable to bulk underground mining. Metallurgical test-work has produced both battery grade lithium
hydroxide and battery grade lithium carbonate in addition to high-grade tin concentrate.
Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed
road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active
22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has
strong community support. The economic viability of Cinovec has been enhanced by the recent strong
increase in demand for lithium globally, and within Europe specifically.
PARTNERSHIP AGREEMENT WITH EUROPEAN UNION BODY
On 28 July 2020, the Company announced that a ”Value Added Services Agreement” with KIC
InnoEnergy SE (“EIT InnoEnergy”, part of the European Institute of Innovation and Technology), the
principal facilitator and organiser of the European Battery Alliance, had been entered into by Geomet in
respect of the Cinovec Lithium Project. The purpose of the financing agreement with EIT InnoEnergy is to
support the construction financing and ultimate commercialisation of Cinovec by EIT InnoEnergy
providing assistance to support the:
Sourcing of construction finance;
Securing of grant funding; and
Assisting in offtake introductions and negotiations.
APPOINTMENT OF LEADING GLOBAL ENGINEER
SMS group Process Technologies GmbH was appointed as the lead engineer for the minerals processing
and lithium battery-grade chemicals production at the Cinovec Project in September 2020. SMS group
will provide a complete Front-End Engineering Design (“FEED“) study as the major component of the
ongoing Definitive Feasibility Study (“DFS“) work at Cinovec.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
REVIEW OF OPERATIONS
APPOINTMENT OF LEADING GLOBAL ENGINEER (CONTINUED)
Headquartered in Dusseldorf, the German family-owned SMS group is one of the world’s leading
companies in plant construction and mechanical engineering for the technology metals and materials
sector. SMS group is also a world leader in electrical and automation systems including digital solutions for
self-learning processing plants to continuously optimise plant performance, product quality and energy
consumption. Under the Agreement, SMS will provide the following to the Cinovec Project:
• Full process integration from the point of delivery of ore to the underground crusher through to the
delivery of finished battery-grade lithium chemicals for battery and cathode manufacturers.
• The FEED will include all of the process steps – comminution, beneficiation, roasting, leaching and
purification.
• The FEED will encompass both the lithium process flowsheet and the tin/tungsten recovery circuit
delivering metal concentrates to refineries.
• The FEED is intended to deliver a binding fixed price lump sum turnkey EPC contract with associated
process guarantee and product specification guarantees for battery-grade lithium chemicals. The
combination of these will greatly assist to underwrite project financing from leading European and
global financial institutions lending into this new energy EV-led industrial revolution.
ESG – ENVIRONMENTAL, SOCIAL AND GOVERNANCE
ESG and impact investing have become key criteria for both investors and fund managers, leading a
new path to how companies are being assessed. The acceleration has been driven by heightened social,
governmental and consumer attention on the broader impact of corporations, as well as by the investors
and executives who acknowledge that a strong ESG proposition is a key indicator of a company’s long-
term success. ESG reporting offers a tool and roadmap for investors and society to hold companies to
account, to make sure that the issues such as climate change, social justice, equality, diversity and
environmental protection are reflected and appropriately addressed by the company in focus.
European Metals has focused very strongly on the Project’s ESG criteria and during the year adopted a
set of ESG metrics and disclosures following the recommendations released by the World Economic Forum
(“WEF”) in Geneva, Switzerland which are acknowledged as the gold standard for ESG reporting. The key
points of this initiative are –
• Establishment of an ESG Committee at Board level, to be chaired by Ambassador Lincoln Bloomfield
who has considerable private sector experience centred on sustainability, resilience and renewable
energy.
• Engagement of Socialsuite ESG technology platform - a global leader in ESG impact management
systems and sustainability reporting.
• Initiation of ESG reporting, monitoring and improvement for European Metals utilising Socialsuite.
• EMH’s ESG transparency commitment will include an independent lithium production Life Cycle
Assessment (“LCA”) which will includes a full carbon footprint assessment.
LITHIUM LIFE CYCLE ASSESSMENT SPECIALIST ENGAGED
In line with the stated ESG adoption, the Project engaged UK-based and globally recognised sustainability
and life cycle assessment consultancy, Minviro, to provide an ISO compliant life cycle assessment (“LCA”)
of the Cinovec project.
This assessment will cover both battery-grade lithium carbonate and battery grade lithium hydroxide and
will be benchmarked against global lithium peers. Minviro has been actively engaged to identify
decarbonisation optimisation in the developing feasibility study for Cinovec.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
REVIEW OF OPERATIONS
LITHIUM LIFE CYCLE ASSESSMENT SPECIALIST ENGAGED (CONTINUED)
The Company strongly believes that the Cinovec LCAs will demonstrate strong carbon footprint
credentials with lower energy use, less intensive reagent application and net carbon credits from mine
and process by-products. Minviro has provided the assessment to Geomet and it is currently undergoing
external independent QA/QC before publication.
DRILLING
Throughout the year the Company reported a number of times on the ongoing drilling programme at the
Project. The programme began in the third quarter of 2020 and continued on and off for the duration of
the year. There were some delays in the programme brought about by unfavourable weather and also
impacts of Covid -19 as mentioned earlier.
The aims of the drilling programme are to convert a sufficient portion of the existing Indicated Mineral
Resource to the Measured Resource category and subsequently to a Mineral Reserve, to cover the first
two years of the scheduled mining plan and obtaining a sufficient amount of ore samples for the next
phase of metallurgical testing. The majority of the material will be utilised in the pilot scale testing for the
FEED Study. The drilling programme was planned to define blocks of resource for the first 5 years of mining
within the Cinovec-South area. The holes have been terminated in ore consistent with the aim of targeting
the first 5 years of resource blocks for the mine.
The Company reported interim drilling results either in line with, or better than expectations.
Given the relative ease of beneficiation of the Cinovec deposit through wet magnetic separation, the
Company decided that it was important to report the drill results and the “in lab” beneficiation results,
with historic results of wet magnetic separation achieving a >80% pure lithium mica concentrate grading
2.85% Li2O with a lithium recovery of 92%.
CORPORATE
The Company completed a significant capital raising of AUD 7.1 million in February 2021, the proceeds of
which will be used to advance the Company’s strategy including progressing the development of the
Project, progressing discussions with CEZ and discussions with potential off take and strategic partners. The
capital raising was cornerstoned by the Luxembourg based green energy fund, Thematica Future
Mobility.
NOMAD CHANGE
In January of this year, the Company advised it had appointed WH Ireland plc as its Nominated Adviser
on AIM. WH Ireland will continue to act as joint broker to the Company, along with Shard Capital.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
REVIEW OF OPERATIONS
BOARD CHANGE
Also in January, Ambassador Lincoln Bloomfield joined the board of the Company as a Non-executive
Director. Ambassador Bloomfield who is based in Washington, DC, brings governance and regulatory
experience, years of international diplomacy and security expertise to the Board, along with a North
American presence while his private sector experience is centered on sustainability, resilience and
renewable energy.
Ambassador Bloomfield’s prior work in developing the US Government’s first international policy on Cyber
Security, and his related work on Critical Infrastructure Protection will help EMH and downstream partners
operate securely for many years. His deep experience in managing bilateral relationships with both the
State Department and the Department of Defense will help EMH sustain effective relationships, both
governmental and non-governmental. He will support EMH in its key relationships with the European
Community, European Battery Alliance, European Raw Metals Alliance, and others seeking to create a
highly secure, uniform and resilient framework for batteries and critical raw materials supply.
Ambassador Bloomfield is a valuable addition as EMH is focused on ESG-related aspects of the critical
raw materials and battery supply chain, as part of its commitment to support the European Commission’s
new Batteries Regulation, a significant, far-reaching legislative development. Ambassador Bloomfield’s
appointment confirms EMH’s commitment to meet the new Batteries Regulation’s three main objectives:
strengthening the functioning of the EU internal market by ensuring a level playing field through a
common set of rules; promoting a circular economy; and reducing environmental and social impact
throughout all stages of the battery life cycle. Given the complexity of the new Batteries Regulation, EMH
is reassured to know that he will be contributing to its efforts to achieve compliance throughout the
organization. Ambassador Bloomfield holds several roles in the private sector promoting sustainability.
Having served for eight years until 2017 as Chairman of the non-partisan Stimson Center, he is now Stimson
Chairman Emeritus. He is a Director and National Executive Committee Member of the U.S. Water
Partnership, a public-private non-profit entity co-chaired by Madeleine Albright and Colin Powell. He is a
Director of the Detroit-based non-profit energy NGO The Last Kilometer, and Vice Chairman of Mana
Pacific, a Honolulu-based enterprise seeking to provide locally-managed and affordable renewable
energy microgrids throughout the Pacific islands. He provides expert policy and consulting services to
three Washington DC entities including the law firm Akin Gump. As President of Palmer Coates LLC, Lincoln
maintains commercial relationships with startup entities developing innovative energy and transportation
technologies, including as Advisor and investor in Seatrec, Inc. and President of an early-stage
technology startup, called D3E, offering next-generation “optimal” flight control technology to enable
robustness and autonomy in future drone aircraft.
COVID-19 UPDATE
On 24 April 2020, the Company provided the market with an update regarding the operations and Covid-
19. It was reported that all management and staff of both EMH and Geomet were unaffected by COVID-
19 and the restrictions on travel at the time and meetings were not expected to have any impact for the
foreseeable future; all staff were able and continued to work remotely. To-date, the Cinovec Project has
drilled in excess of 13,800m of diamond drilling under the management of EMH. Extensive sample
quantities are available from the resulting drill core as well as material recovered from historic adit drives
into the ore body. Significant quantities of ore sample are held at our laboratory partners in Germany and
at the project office in the Czech Republic. European Metals and Geomet have confirmed with our
laboratory and engineering partners in Germany and Australia that staff and laboratories involved in the
DFS and FEED programmes over the next 3 months are ready and open for work on an immediate basis.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
Your Directors present their report, together with the financial statements of the Group, being European
Metals Holdings Limited (“EMH” or the “Company”) and its controlled entities (“Group”), for the year ended
30 June 2021.
Directors
The following persons were Directors of the Company and were in office for the entire year, and up to the
date of this report, unless otherwise stated:
Mr Keith Coughlan
Mr Richard Pavlik
Mr Kiran Morzaria
Ambassador Lincoln Palmer
Bloomfield, Jr
Principal Activities
Executive Chairman
Previously Managing Director
Appointed 30 June 2020
Appointed 6 September 2013
Executive Director
Appointed 27 June 2017
Non-Executive Director
Appointed 10 December 2015
Non-Executive Director
Appointed 3 January 2021
The Group is primarily involved in the development of the Cinovec lithium and tin project in the Czech
Republic.
Review of Operations
The 2021 Financial Year has been one of significant growth and development for the Group. For further
information refer to the Project Review section of this report.
Results of Operations
The consolidated loss after tax for year ended 30 June 2021 was $3,962,450 (2020 profit after tax: $2,813,807).
(The 2020 profit was due to the gain on the deconsolidation of Geomet).
Financial Position
The net assets of the Group have increased by $7,208,412 to $25,277,915 at 30 June 2021 (2020: $18,069,503).
Significant Changes in the State of Affairs
There have not been any significant changes in the state of affairs of the Group during the financial year
other than as disclosed in the Review of Operations section of this report.
Dividends Paid or Recommended
No dividends were declared or paid during the year and the Directors do not recommend the payment of
a dividend for the period.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
Information on Directors
Keith Coughlan
Executive Chairman – Appointed 30 June 2020
Qualifications
Experience
Previously Managing Director (CEO) – Appointed 6 September 2013 to 30
June 2020
BA
Mr Coughlan has had almost 30 years’ experience in stockbroking and
funds management. He has been largely involved in the funding and
promoting of resource companies listed on ASX, AIM and TSX. He has
advised various companies on the identification and acquisition of resource
projects and was previously employed by one of Australia’s then largest
funds management organizations.
Interest
Options
in CDIs and
Mr Coughlan has 850,000 CDIs direct interest and 8,500,000 CDIs indirect
interest held by Inswinger Holdings Pty Ltd, an entity of which Mr Coughlan
is a director and a shareholder.
Performance Rights
On 17 December 2020, the shareholders approved the grant of 2,400,000
Performance Rights to Mr Coughlan (or his nominee). These Performance
Rights have yet to be issued at the date of this Report.
Special Responsibilities
Member of Nomination Committee
Member of Environment, Social and Governance Committee
Directorships held in other
listed entities
Non-Executive Chairman of Doriemus plc
Non-Executive Director of Calidus Resources Limited
Non-Executive Director of Southern Hemisphere Mining Limited (resigned on
8 February 2021)
Richard Pavlik
Qualifications
Experience
Executive Director – Appointed 27 June 2017
Masters Degree in Mining Engineer
Mr Pavlik is the Chief Advisor to the CEO of Geomet s.r.o, and is a highly
experienced Czech mining executive. Mr Pavlik holds a Masters Degree in
Mining Engineer from the Technical University of Ostrava in Czech Republic.
He is the former Chief Project Manager and Advisor to the Chief Executive
Officer at OKD. OKD has been a major coal producer in the Czech
Republic. He has almost 30 years of relevant industry experience in the
Czech Republic. Mr Pavlik also has experience as a Project Analyst at
Normandy Capital in Sydney as part of a postgraduate program from
Swinburne University. Mr Pavlik has held previous senior positions within OKD
and New World Resources as Chief Engineer, and as Head of Surveying and
Geology. He has also served as the Head of the Supervisory Board of NWR
Karbonia, a Polish subsidiary of New World Resources (UK) Limited. He has
an intimate knowledge of mining in the Czech Republic.
Interest
Options
in CDIs and
Mr Pavlik has 300,000 CDIs direct interest
Performance Rights
On 17 December 2020, the shareholders approved the grant of 1,200,000
Performance Rights to Mr Pavlik (or his nominee). These Performance Rights
have yet to be issued at the date of this Report.
Special Responsibilities
Member of Environment, Social and Governance Committee
Member of Nomination Committee
Directorships held in other
listed entities
Nil
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
Information on Directors (continued)
Kiran Morzaria
Non-Executive Director – Appointed 10 December 2015
Qualifications
Experience
Interest
Options
in CDIs and
Bachelor of Engineering (Industrial Geology) from the Camborne School
of Mines and an MBA (Finance) from CASS Business School
Mr Morzaria has extensive experience in the mineral resource industry
working in both operational and management roles. He spent the first four
years of his career in exploration, mining and civil engineering before
obtaining his MBA. Mr Morzaria has served as a director of a number of
public companies in both an executive and non-executive capacity.
Mr Morzaria has 200,000 CDIs direct interest. Mr Morzaria is a director and
chief executive of Cadence Minerals Plc which owns 17,663,864 CDIs. Mr
Morzaria has no control on the acquisition or sale of the shares held by
Cadence Minerals plc.
Special Responsibilities
Chair of Remuneration Committee
Chair of Nomination Committee
Member of Audit and Risk Committee
Member of Environment, Social and Governance Committee
Directorships held in other
listed entities
Chief Executive Officer and Director of Cadence Minerals plc and Director
of UK Oil & Gas plc. Mr Morzaria was previously a Director of Bacanora
Minerals plc.
Lincoln Palmer Bloomfield
Jr.
Non-Executive Director – Appointed 3 January 2021
Qualifications
Harvard College (cum laude, Government, 1974), Fletcher School of Law
and Diplomacy (M.A.L.D., 1980)
Experience
Ambassador Bloomfield
is based
in Washington, DC, and brings
governance and regulatory experience, years of international diplomacy
and security expertise to the EMH Board, along with a North American
presence while his private sector experience is centered on sustainability,
resilience and renewable energy.
Interest
Options
in CDIs and
Ambassador Bloomfield has 122,500 direct interest in CDIs.
Special Responsibilities
Chair of Environment, Social and Governance Committee
Chair of Audit and Risk Committee
Member of Remuneration Committee
Member of Nomination Committee
Directorships held in other
listed entities
Nil
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
Company Secretary
Mr Dennis Wilkins (appointed 2 November 2020)
Mr Wilkins is the founder and principal of DWCorporate Pty Ltd, a corporate advisory firm servicing the natural
resources industry. Since 1994 he has been a director of, and involved in the executive management of,
several publicly listed resource companies with operations in Australia, PNG, Scandinavia and Africa. He was
the Finance Director of Lynas Corporation Ltd during the period when the Mt Weld Rare Earths project was
acquired by the group. He was also founding director and advisor to Atlas Iron Limited at the time of Atlas’
initial public offering. Since July 2001 Mr Wilkins has been running DWCorporate Pty Ltd, where he provides
advice on the formation of, and capital raising for, emerging companies in the Australian resources sector.
He is currently a Non-executive Director of Key Petroleum Limited.
Ms Julia Beckett (resigned on 2 November 2020).
Director Meetings
The number of Directors’ meetings and meetings of Committees of Directors held during the year and the
number of meetings attended by each of the Directors of the Company during the year is:
Name
Keith Coughlan
Richard Pavlik
Kiran Morzaria
Lincoln Palmer Bloomfield, Jr
Directors’ Meetings
Number attended
Number eligible to attend
3
3
3
3
3
3
3
3
Indemnifying officers or auditor
During or since the end of the financial year the Company has given an indemnity or entered into an
agreement to indemnify, or paid or agreed to pay insurance premiums as follows:
i.
ii.
The Company has entered into agreements to indemnify all Directors and provide access to
documents, against any liability arising from a claim brought by a third party against the Company.
The agreement provides for the Company to pay all damages and costs which may be awarded
against the Directors.
The Company has paid premiums of $73,500 (2020: $30,000) to insure each of the Directors against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of Director of the Company, other than conduct involving
a willful breach of duty in relation to the Company. Under the terms and conditions of the insurance
contract, the nature of the liabilities insured against and the premium paid cannot be disclosed.
iii. No indemnity or insurance of auditors has been paid.
CDIs under option
During the year, the following unquoted options and warrants were issued to consultants:
Grant date/Issue date
Expiry date
Exercise Price
Number under option
15 June 2020/17 July 2020
15 June 2022
25 September 2020 / 23 October 2020
23 October 2023
8 October 2020 / 23 October 2020
23 October 2023
5 February 2021/5 March 2021
31 January 2023
25 cents
42 cents
45 cents
$1.10
250,0001
2,500,0002
1,000,000
1,200,000
The above options vest immediately.
1 On 17 September 2020, 50,000 of these options were exercised and the remaining 200,000 were exercised
on 21 December 2020. The options conversions raised $62,500.
2 On 10 May 2021, 238,000 of these options were exercised. The option conversions raised $99,960.
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EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
CDIs under option (continued)
Unissued CDIs of European Metals Holdings Limited under option and warrant at the date of this report is as
follows:
Expiry date
Exercise Price
Number under option
22 November 2021
20 pence
31 December 2022
23 October 2023
23 October 2023
31 January 2023
25 cents
42 cents
45 cents
$1.10
27,500
10,000,000
2,024,000
1,000,000
1,200,000
During the year ended 30 June 2021, the following ordinary shares were issued on the exercise of options
granted:
Grant date/Issue date
Exercise Price
Number of Shares Issued
Issued to:
- Key management personnel
17 August 2015
- Consultant
- Brokers
- Consultant
- Consultant
- Consultants
- Consultant
15 June 20/17 July 20
22 November 2018
12 July 2019
12 July 2019
6 December 2019
23 October 2020
16.6 cents
25 cents
20 pence
35 cents
40.18 cents
31.11 cents
42 cents
3,750,000
250,000
89,375
200,000
100,000
100,000
238,000
Since the end of the reporting year, the following options were exercised:
On 16 July 2021, the Company issued 238,000 CDIs upon the exercise of unquoted options at 42 cents. The
options conversions raised a total of $99,960.
No person entitled to exercise the option or warrant has or has any right by virtue of the option or warrant to
participate in any share issue of any other body corporate.
Performance Shares
Performance shares on issue at the date of this report is as follows:
Issue date
Expiry date
Number on issue
A Class
18 Dec 2018
18 Dec 2021
3,000,000
Performance Rights
On 17 December 2020, the shareholders approved the grant of 2,400,000 Performance Rights to Mr Keith
Coughlan and 1,200,000 Performance Rights to Mr Richard Pavlick. These Performance Rights have yet to be
issued at the date of this Report.
13
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
Environmental, Social and Governance
During the year the Company has adopted a set of Environmental, Social and Governance (“ESG”) metrics
and disclosures following the recommendations released by the World Economic Forum (“WEF”) in Geneva,
Switzerland which are acknowledged as the gold standard for ESG reporting.
The establishment of an ESG Committee at Board level is chaired by Ambassador Lincoln Bloomfield who has
considerable private sector experience centred on sustainability, resilience and renewable energy.
Ambassador Bloomfield has stated, “European Metals is making every effort to ensure that any finished
product containing our lithium will satisfy the public’s need for assurance that high ESG standards have been
upheld at every stage of our production process. We are committed to the well-being of our workforce,
minimizing environmental impact throughout our process, and being a good neighbour within the local
community”.
The Company engaged Socialsuite ESG technology platform - a global leader in ESG impact management
systems and sustainability reporting.
The Company has deployed Socialsuite’s ESG technology platform to set its initial ESG baseline in its first
quarterly ESG dashboard. With a tailored action plan, the Company will focus on delivering and reporting
ongoing progress toward disclosing and improving ESG metrics and indicators. Socialsuite’s ESG reporting
technology provides an easy way for investors and other stakeholders to assess the commitment and
progress of the Company on its journey to create “best in class” ESG credentials and outcomes.
The Company’s ESG transparency commitment is a precursor to an independent lithium production Life
Cycle Assessment2 (“LCA”) which includes a full Carbon Footprint assessment.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the
Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
Stantons International has not provided any non-audit services during the year.
Significant events after the reporting date
On 16 July 2021, the Company issued 238,000 CDIs upon the exercise of unquoted options at 42 cents. The
options conversions raised a total of $99,960.
Except for the matters noted above there have been no other significant events arising after the reporting
date.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2021 has been received and can be
found on page 222 of the financial report.
14
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for each Director of the Company, and key
management personnel (“KMP”). The Directors are pleased to present the remuneration report which sets
out the remuneration information for European Metals Holdings Limited’s Non-Executive Directors, Executive
Directors and other key management personnel.
A. Principles used to determine the nature and amount of remuneration
The remuneration policy of the Group has been designed to align Director and management objectives with
shareholder and business objectives by providing a fixed remuneration component, and offering specific
long-term incentives based on key performance areas affecting the Group financial results. The Board of the
Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain
the best management and Directors to run and manage the Group, as well as create goal congruence
between Directors, Executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for Board members and Senior
Executives of the Group is as follows:
The remuneration policy, setting the terms and conditions for the Executive Directors and other Senior
Executives, was developed by the Board. All Executives receive a base salary (which is based on factors
such as length of service and experience), superannuation, options and performance incentives. The Board
reviews Executive packages annually by reference to the Group’s performance, executive performance,
and comparable information from industry sectors and other listed companies in similar industries.
Executives are also entitled to participate in the employee share and option arrangements.
All remuneration paid to Directors and Executives is valued at the cost to the Group and expensed.
The Board policy is to remunerate Non-executive Directors at commercial market rates for comparable
companies for time, commitment, and responsibilities. The Board determines payments to the Non-executive
Directors and reviews their remuneration annually based on market practice, duties, and accountability.
Independent external advice is sought when required. The maximum aggregate amount of fees that can
be paid to Non-executive Directors is subject to approval by shareholders at the Annual General Meeting.
Fees for Non-Executive Directors are not linked to the performance of the Group. However, to align Directors’
interests with shareholder interests, the Directors are encouraged to hold CDIs in the Company.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’
investment objectives and Directors’ and Executives’ performance. Currently, this is facilitated through the
issue of options to the majority of Directors and Executives to encourage the alignment of personal and
shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. For
details of Directors’ and Executives’ interests in CDIs, options and performance shares at year end, refer to
the remuneration report.
B. Details of Remuneration
Details of the nature and amount of each element of the emoluments of each of the KMP of the Company
(the Directors) for the year ended 30 June 2021 are set out in the following tables:
The maximum amount of remuneration for Non-Executive Directors is $300,000 as approved by shareholders.
During the financial period, the Company did not engage any remuneration consultants.
15
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
2021
Group Key
Management
Personnel
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Equity-settled
share-based
payments
Total
% of
remuneration
as share
based
payments
Salary,
fees and
leave
Profit
share
and
bonuses
Non-
monetary
Other
Super-
annuation
Long
Service
Leave
Equity Options
$
$
$
$
$
$
$
$
$
279,000
99,490
- 27,407
27,345
17,825
Directors
Keith
Coughlan(i)
Kiran Morzaria
33,567
-
Richard Pavlik
Lincoln Palmer
Bloomfield, Jr (ii)
-
50,469
27,468
19,714
-
-
-
-
-
-
-
-
-
-
-
-
340,035 169,673
- 27,407
27,345
17,825
-
-
-
-
-
- 451,067
-
-
-
33,567
50,469
47,182
- 582,285
-
-
-
-
-
Notes:
(i) During the financial year, a total of $137,280 of Mr Coughlan’s remuneration was reimbursed by Geomet s.r.o.
(ii) Includes $4,689 accrual of June 2021 fee.
2020
Group Key
Management
Personnel
Short-term benefits
Post-
employment
benefits
Long-
term
benefits
Equity-settled
share-based
payments
Total
% of
remuneration
as share
based
payments
Salary,
fees and
leave
Profit
share
and
bonuses
Non-
monetary
Other
Super-
annuation
Long
Service
Leave
Equity Options(iv)
$
$
$
$
$
Directors
$
$
$
David Reeves(i)
36,000
Keith
Coughlan(ii)
240,000
Kiran Morzaria
24,000
Richard Pavlik(iii) 140,691
440,691
-
-
-
-
-
-
-
-
-
-
$
-
-
-
4,822
22,800
26,663
-
-
-
-
-
-
4,822
22,800
26,663
-
-
-
-
-
-
36,000
- 294,285
-
24,000
-
-
-
29,802 170,493
17.4%
29,802 524,778
-
Notes:
(i) Resigned 30 June 2020.
(ii) Effective 28 April 2020, a portion of Mr Coughlan’s remuneration has been reimbursed by Geomet s.r.o. The Company was
appointed to provide services of managing the Cinovec project development subsequent to finalization of final agreement
with CEZ Group. During the financial year, a total of $22,880 was reimbursed by Geomet s.r.o.
(iii) Represents remuneration from 1 July 2020 to 27 April 2020. Effective 28 April 2020, Mr Pavlik’s remuneration has been paid by
Geomet s.r.o directly.
(iv) The value of the options granted to key management personnel as part of their remuneration is calculated as at the grant
date using the Black and Scholes. The amount disclosed as part of remuneration for the financial year is the amount expensed
over the vesting period.
16
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
C. Service Agreements
It was formally agreed at a meeting of the directors that the following remuneration be established; there
are no formal notice periods, leave accruals or termination benefits payable on termination.
Mr Keith Coughlan, Executive Chairman, received a salary of $240,000 plus statutory superannuation
contribution from 1 July 2020 to 31 December 2020. His salary was increased to $318,000 per annum plus
statutory superannuation contribution from 1 January 2021.
D. Share-based compensation
During the financial year, nil CDIs were issued to KMP under the Employee Securities Incentive Plan (ESIP)
(2020: nil).
Loan CDIs on issue to KMP under the ESIP are as follows:
30 June 2021
Loan CDIs Grant Details
Exercised
Lapsed/Cancelled
Balance at
End of Year
Grant Date
No.
Value
No.
Value
No.
Value
No.
Value
$
$
$
Vested
$
Group KMP
Keith Coughlan
Richard Pavlik
Kiran Morzaria
30 Nov 2017
850,000
592,245
30 Nov 2017
300,000
209,028
30 Nov 2017
200,000
139,352
1,350,000
940,625
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
850,000
592,245
300,000
209,028
200,000
139,352
1,350,000
940,625
30 June 2020
Loan CDIs Grant Details
Exercised
Lapsed/Cancelled
Balance at
End of Year
Grant Date
No.
Value
No.
Value
No.
Value
No.
Value
$
$
$
Vested
$
Group KMP
David Reeves*
30 Nov 2017
300,000
209,028
Keith Coughlan
30 Nov 2017
850,000
592,245
Richard Pavlik
Kiran Morzaria
30 Nov 2017
300,000
209,028
30 Nov 2017
200,000
139,352
1,650,000 1,149,653
* Resigned on 30 June 2020
The terms of the loan CDIs are disclosed in Note 16.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
209,028
850,000
592,245
300,000
209,028
200,000
139,352
1,650,000 1,149,653
17
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
E. Options issued for the year ended 30 June 2021
No options were issued as part of the remuneration for the year ended 30 June 2021 (2020: nil).
F. Performance Rights granted for the year ended 30 June 2021
30 June 2021
Performance Rights Details
Exercised
Lapsed
Balance at
End of Year
Vested
Unvested
Grant Date
No.
Value1
No. Value No. Value
No.
Value1
No.
No.
$
$
$
$
Group KMP
Keith Coughlan 17 Dec 20
2,400,000 2,088,000
Richard Pavlik
17 Dec 20
1,200,000 1,044,000
3,600,000 3,132,000
-
-
-
-
-
-
-
-
-
- 2,400,000
2,088,000
- 1,200,000
1,044,000
- 3,600,000
3,132,000
-
-
-
2,400,000
1,200,000
3,600,000
Notes:
1. The value of performance rights granted to key management personnel is calculated as at the grant date based on
the share price at grant date. As at 30 June 2021, management has yet to indicate the number of these performance
rights expected to vest, hence has not expensed any of the value of these performance rights. Management shall
revise this estimate when subsequent information indicates that the number of performance rights expected to vest
differs from previous estimate.
G. Equity instruments issued on exercise of remuneration options
There were no equity instruments issued during the year to Directors or other KMP as a result of options
exercised that had previously been granted as compensation.
H. Loans to Directors and Key Management Personnel
There were no loans issued to Key Management Personnel during the financial year.
I. Company performance, shareholder wealth and Directors’ and Executives’ remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’
investment objectives and Directors’ and Executives’ performance. This will be facilitated through the issue
of options to the majority of Directors and Executives to encourage the alignment of personal and
shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. At
commencement of mine production, performance-based bonuses based on key performance indicators
are expected to be introduced.
18
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
J. Other information
Options held by Key Management Personnel
The number of options to acquire CDIs in the Company held during the 2021 and 2020 reporting period by
each of the Key Management Personnel of the Group including their related parties are set out below.
30 June 2021
Balance at
the start of
the year
Granted
during the
year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the year
Vested and
exercisable
Unvested
Keith Coughlan
2,000,000
Richard Pavlik
Kiran Morzaria
Lincoln Palmer
Bloomfield, Jr
-
-
-
Total
2,000,000
*Off market transfer
-
-
-
-
-
- (2,000,000)*
-
-
-
-
-
-
-
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30 June 2020
Balance at
the start of
the year
Granted
during the
year
Exercised
during the
year
David Reeves*
1,000,000
Keith Coughlan
2,000,000
Kiran Morzaria
-
Richard Pavlik
400,000
Total
*Resigned on 30 June 2020.
3,400,000
-
-
-
-
-
-
-
-
-
-
Other
changes
during the
year
-
-
-
(400,000)
Balance at
the end of
the year
Vested and
exercisable
1,000,000
1,000,000
2,000,000
2,000,000
-
-
-
(400,000)
3,000,000
3,000,000
Unvested
-
-
-
-
-
Chess Depositary Interests (‘CDIs’) held by Key Management Personnel
The number of ordinary CDIs held in the Company during the 2021 and 2020 reporting period held by each
of the Key Management Personnel of the Group; including their related parties are set out below. The CDIs
held directly have been obtained through the Employee Securities Incentive Plan.
2021
Name
Keith Coughlan
Indirect1
Richard Pavlik
Kiran Morzaria
Indirect2
Lincoln Palmer Bloomfield, Jr
Total
Balance at
Start of year
Granted as
remuneration
during the
year
Issued on
exercise
of options
Other
Changes
during the
year
Balance at
end of year
850,000
8,500,000
300,000
200,000
23,259,751
122,5003
33,232,251
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
850,000
8,500,000
300,000
200,000
(5,595,887)
17,663,864
-
122,500
(5,595,887)
27,636,364
Notes:
1. Mr Coughlan has 850,000 CDIs direct interest and 8,500,000 CDIs indirect interest held by Inswinger Holdings Pty Ltd, an
entity of which Mr Coughlan is a director and a shareholder.
2. Mr Morzaria is a director and chief executive of Cadence Minerals plc, an entity which owns 17,663,864 CDIs in
European Metals Holdings Limited. Mr Morzaria does not have direct control over the disposal of the shares either by
means of his directorship of Cadence Minerals plc or his shareholding in Cadence Minerals plc.
3. Represent balance held on appointment.
19
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
2020
Name
David Reeves(i)
Indirect1
Keith Coughlan
Indirect2
Kiran Morzaria
Indirect3
Richard Pavlik
Total
Balance at
Start of year
Granted as
remuneration
during the
year
Issued on
exercise
of options
Other
Changes
during the
year
Balance at
end of year
300,000
3,720,244
850,000
8,500,000
200,000
27,896,470
300,000
41,766,714
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,000
325,5964
4,045,840
-
-
-
850,000
8,500,000
200,000
(4,636,719)
23,259,751
-
300,000
(4,311,123)
37,455,591
Notes:
1. Mr Reeves has 300,000 CDIs direct interest and 4,045,840 CDIs indirect interest held by Eleanor Jean Reeves , Mr Reeves’ spouse.
2. Mr Coughlan has 850,000 CDIs direct interest and 8,500,000 CDIs indirect interest held by Inswinger Holdings Pty Ltd, an
entity of which Mr Coughlan is a director and a shareholder.
3. Mr Morzaria has 23,259,751 indirect interest held by Cadence Minerals Plc, an entity of which Mr Morzaria is a director
4.
and chief executive.
Issued on conversion of A Class Performance Shares and B Class Performance Shares.
(i) Resigned 30 June 2020. The balance at end of year represents balance at date of resignation.
Performance Shares held by Key Management Personnel
There were no Performance shares held by Key Management Personnel of the Group during the 2021
financial year.
30 June 2020
Grant Details
Exercised
Lapsed/cancelled
Balance at End of
Year
Class Grant Date
No.
Value
No.
Value
No.
Value
No.
Value
$
$
$
Unvested
$
Group KMP
David Reeves(i) A Class
18 Dec 18
542,651
86,824
(217,064) 34,730
-
-
325,587
52,094
David Reeves(i)
Keith Coughlan
Richard Pavlik
Kiran Morzaria
B Class
24 Nov 16
542,651 289,932
(108,532) 57,987
(434,119) 231,945
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,085,302 376,756
(325,596) 92,717
(434,119) 231,945
325,587
52,094
(i)
Resigned 30 June 2020. The balance at end of the year represents balance at the date of resignation.
20
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
Other transactions with Key Management Personnel
Purchases from related parties are made on terms equivalent to those that prevail in arm’s length
transactions. From January 2021, the Company received accounting and bookkeeping services of $56,256
plus GST from Everest Corporate, a company controlled by the spouse of Executive Chairman, Keith
Coughlan. Amount payable to Everest Corporate as at 30 June 2021 was $12,528.
From 1 May 2021, the Company received rental income of $24,515 plus GST for the period 1 May 2021 to 31
December 2021 from Everest Corporate for subletting the office in West Perth.
During the 2021 financial year, the Company paid $4,900 plus GST for office rental to Wild West Enterprises
Pty Ltd, an entity controlled by former director, David Reeves (2020: $15,600).
There were no other transactions with Key Management Personnel during the financial year.
End of Remuneration Report
Signed in accordance with a resolution of the Board of Directors.
Keith Coughlan
EXECUTIVE CHAIRMAN
Dated at Perth on 30 September 2021
21
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
30 September 2021
Board of Directors
European Metals Holdings Limited
Level 3, 35 Outram Street
WEST PERTH WA 6005
Dear Directors
RE: EUROPEAN METALS HOLDINGS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of European Metals Holdings Limited.
As Audit Director for the audit of the financial statements of European Metals Holdings
Limited for the year ended 30 June 2021, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours faithfully
STANTONS INTERNATIONAL AUDIT & CONSULTING PTY LTD
(An Authorised Audit Company)
Samir R Tirodkar
Director
Liability limited by a scheme approved under Professional Standards Legislation
22
Stantons Is a member of the Russell
Bedford International network of firms
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
Note
6
7
30 June
2021
$
30 June
2020
$
1,102,953
183,824
66,199
289,335
47,255
-
(1,565,631)
(2,043,727)
(43,526)
(80,748)
(54,450)
(60,000)
16,17
(987,490)
(2,439,192)
(405,276)
(175,052)
(559,026)
(294,342)
(7,248)
(64,619)
(98,576)
(25,552)
(239,475)
(139,514)
(8,876)
(61,155)
(7,460)
(1,344)
490,051
-
45,018
(127,240)
(43,128)
(3,962,450)
(4,608,729)
3
-
-
(3,962,450)
(4,608,729)
Revenue
Other income
R&D rebate
Professional fees
Audit fees
Directors’ fees
Share based payments
Advertising and promotion
Employees’ benefits
Travel and accommodation
Insurance expense
Share registry and listing expense
Depreciation and amortisation expense
Facility, advance fee and finance costs
Foreign exchange gain/(loss)
Other expenses
Loss before income tax
Income tax expense
Loss from continuing operations
Equity accounting on investment in Geomet s.r.o
12
(1,263,167)
Gain from discontinued operations – De-consolidation of Geomet s.r.o
20
-
7,422,536
(Loss)/Income for the year attributable to the members of the Company
(3,962,450)
2,813,807
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
– Exchange differences on translating foreign operations
– Equity accounting on investment in Geomet s.r.o
Other comprehensive loss for the year, net of tax
Total comprehensive (loss)/income for the year attributable to members
of the Company
9,644
(1,522,451)
(242,337)
-
(232,693)
(1,522,451)
(4,195,143)
1,291,356
Loss per share for loss from continuing operations
Basic loss per CDI (cents)
Diluted loss per CDI (cents)
Earnings per share for income from discontinued operations
Basic earnings per CDI (cents)
Diluted earnings per CDI (cents)
8
8
8
8
(2.39)
(2.39)
-
-
The above statement should be read in conjunction with the accompanying notes.
(3.05)
(3.05)
4.92
4.92
23
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021
CURRENT ASSETS
Cash and cash equivalents
GST and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other assets
Property, plant and equipment
Right-of-use asset
Investments accounted for using equity method
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions – employee entitlements
Lease liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2021
$
2020
$
9
10
10
11
12
13
14
11
11
7,880,673
53,046
337,196
8,270,915
47,392
-
136,122
58,951
17,252
5,110
81,313
-
869
-
17,461,027
18,966,531
17,644,541
18,967,400
25,915,456
19,048,713
439,798
924,592
99,850
6,038
54,618
-
545,686
979,210
91,855
91,855
637,541
-
979,210
979,210
25,277,915
18,069,503
15
16
34,087,930
23,954,204
8,752,723
7,715,587
(17,562,738)
(13,600,288)
25,277,915
18,069,503
The above statement should be read in conjunction with the accompanying notes.
24
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2021
Issued Capital
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
$
$
$
$
$
Balance at 1 July 2019
22,074,314
5,511,581
1,287,265
(16,414,095)
12,459,065
Income attributable to members
of the Company
Other comprehensive loss
Total comprehensive income for
the year
-
-
-
Transactions with owners,
recognized directly in equity
CDIs issued during the year, net of
costs
1,879,890
-
-
-
-
Equity based payments
-
2,439,192
-
2,813,807
2,813,807
(1,522,451)
-
(1,522,451)
(1,522,451)
2,813,807
1,291,356
-
-
-
-
1,879,890
2,439,192
Balance at 30 June 2020
23,954,204
7,950,773
(235,186)
(13,600,288)
18,069,503
Balance at 1 July 2020
23,954,204
7,950,773
(235,186)
(13,600,288)
18,069,503
Loss attributable to members of
the Company
Other comprehensive loss
Total comprehensive loss for the
year
-
-
-
Transactions with owners,
recognized directly in equity
CDIs issued during the year
9,100,000
-
-
-
-
Capital raising costs
(526,387)
355,000
Exercise of options and warrants
Repayment of Loan CDIs
Share based payments
958,733
271,380
330,000
-
-
914,829
-
(3,962,450)
(3,962,450)
(232,693)
-
(232,693)
(232,693)
(3,962,450)
(4,195,143)
-
-
-
-
-
-
-
-
-
-
9,100,000
(171,387)
958,733
271,380
1,244,829
Balance at 30 June 2021
34,087,930
9,220,602
(467,879)
(17,562,738)
25,277,915
The above statement should be read in conjunction with the accompanying notes.
25
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Revenue received
Government grant
Payments to suppliers and employees
Interest received
R&D Rebate
Payments for Cinovec associated costs
Note
30 June 2021
$
30 June 2020
$
1,011,041
55,118
275,736
39,370
(2,640,953)
(2,177,875)
1,340
289,335
(1,007,678)
11
-
-
Net cash (used in) operating activities
18
(2,291,797)
(1,862,758)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation expenditure
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs
Capital raising costs paid
Proceeds from exercise of options and warrants
Proceeds from repayment of loan CDIs
Payment for lease liability
Net cash from financing activities
-
-
(331,372)
(331,372)
9,100,000
(171,387)
958,733
271,380
(47,391)
2,024,905
(145,015)
-
-
-
10,111,335
1,879,890
Net increase/(decrease) in cash and cash equivalents
7,819,538
(314,240)
Cash and cash equivalents at the beginning of the financial
year
Exchange differences in foreign currency held
58,951
2,184
Cash and cash equivalents at the end of financial year
9
7,880,673
426,178
(52,987)
58,951
The above statement should be read in conjunction with the accompanying notes.
26
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
These consolidated financial statements and notes represent those of European Metals Holdings Limited
(“EMHL” or “the Company”) and its Controlled Entities (the “Consolidated Group” or “Group”).
The financial statements are general purpose financial statements, which have been prepared in
Interpretations, other
accordance with Australian Accounting Standards, Australian Accounting
authoritative pronouncements of the Australian Accounting Standards Boards (AASB) and the Corporations
Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting
Standards.
The accounting policies detailed below have been adopted in the preparation of the financial report.
Except for cash flow information, the financial statements have been prepared on an accrual basis and
are based on historical cost, modified, where applicable, by the measurement at fair values of selected
non-current assets, financial assets and financial liabilities.
The Company is a listed public company, incorporated in the British Virgin Islands and registered in Australia.
(i)
Accounting policies
The Group has considered the implications of new and amended Accounting Standards which have
become applicable for the current financial reporting year.
New and Revised Accounting Standards Adopted by the Group
Initial adoption of AASB 2020-04: COVID-19-Related Rent Concessions
– COVID-19 Related Rent
AASB 2020-4: Amendments
Concessions amends AASB 16 by providing a practical expedient that permits lessees to assess whether rent
concessions that occur as a direct consequence of the COVID-19 pandemic and, if certain conditions are
met, account for those rent concessions as if they were not lease modifications.
to Australian Accounting
Standards
Initial adoption of AASB 2018-6: Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-6 amends and narrows the definition of a business specified in AASB 3: Business
Combinations, simplifying the determination of whether a transaction should be accounted for as a
business combination or an asset acquisition. Entities may also perform a calculation and elect to treat
certain acquisitions as acquisitions of assets.
Initial adoption of AASB 2018-7: Amendments to Australian Accounting Standards – Definition of Material
This amendment principally amends AASB 101 and AASB 108 by refining the definition of material by
improving the wording and aligning the definition across the standards issued by the AASB.
Initial adoption of AASB 2019-3: Amendments to Australian Accounting Standards – Interest Rate Benchmark
This amendment amends specific hedge accounting requirements to provide relief from the potential
effects of the uncertainty caused by interest rate benchmark reform.
Initial adoption of AASB 2019-1: Amendments to Australian Accounting Standards – References to the
Conceptual Framework
This amendment amends Australian Accounting Standards, Interpretations and other pronouncements to
reflect the issuance of Conceptual Framework for Financial Reporting by the AASB.
The standards listed above did not have any impact on the amounts recognised in prior periods and are
not expected to significantly affect the current or future periods.
27
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation (continued)
(i) Accounting policies (continued)
New and revised Accounting Standards for Application in Future Periods
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted. The adoption of these Accounting Standards and Interpretations did not have
any significant impact on the financial performance or position of the Group.
There are no other standards that are not yet effective and that would be expected to have a material
impact on the entity in the current or future reporting period and on foreseeable future transactions.
(ii) Statement of Compliance
The financial report was authorised for issue on 30 September 2021.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in
the financial statements containing relevant and reliable information about transactions, events and
conditions. Compliance with Australian Accounting Standards ensures that the financial statements and
notes also comply with International Financial Reporting Standards as issued by the IASB.
(iii) Financial Position
The Directors have prepared the financial statements on going concern basis, which contemplates
continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the
ordinary course of business.
At 30 June 2021, the Group comprising the Company and its subsidiaries has incurred a loss for the year
amounting to $3,962,450 (2020: income of $2,813,807). The Group has a net working capital surplus of
$7,725,229 (2020: deficit of $897,897) and cash and cash equivalents of $7,880,673 (2020: $58,951).
The Directors have prepared a cash flow forecast, which indicates that the Company will have sufficient
cash flows to meet all commitments and working capital requirements for the 12-month period from the
date of signing this financial report.
Based on the cash flow forecasts, the Directors are satisfied that the going concern basis of preparation is
appropriate. In determining the appropriateness of the basis of preparation, the Directors have considered
the impact of the COVID-19 pandemic on the position of the Company at 30 June 2021 and its operations
in future periods.
(iv) 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
The Group measures the cost of equity-settled transactions with employees and consultants by reference
to the estimated fair value of the equity instruments at the date at which they are granted. These are
expensed over the estimated vesting periods. Judgement has been exercised on the probability and timing
of achieving milestones related to performance rights granted to Directors.
28
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a) Basis of preparation (continued)
(iv)
Critical accounting estimates and judgements (continued)
Estimation of the Group’s borrowing rate
The lease payments used to determine the lease liability and rignt-of-use of asset at 1 July 2020 under
AASB 16 Leases are discounted using the Group’s incremental borrowing rate of 5%.
Recognition of deferred tax assets
Deferred tax assets relating to temporary differences and unused tax losses have not been recognised
as the Directors are of the opinion that it is not probable that future taxable profit will be available
against which the benefits of the deferred tax assets can be utilised.
(b)
Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date.
Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered
from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well unused tax losses. Current and deferred income tax expense (income)
is charged or credited directly to equity instead of the profit or loss when the tax relates to items that
are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax
assets also result where amounts have been fully expensed but future tax deductions are available. No
deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at reporting date. Their measurement also reflects the manner in which management expects
to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the
extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised. Where temporary differences exist in relation to investments in
subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not
recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-
off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
29
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Impairment of Assets
At the end of each reporting period the Group assesses whether there is an indication that an asset
may be impaired. If any such indication exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the
higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such
cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset unless the asset is carried at
revalued amount in which case the impairment loss is treated as a revaluation decrease.
An assessment is also made at each reporting period as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which
case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is
adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a
systematic basis over its remaining useful life.
(d) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are shown within short-term borrowings in current liabilities in the Statement of Financial
Position.
(e) Revenue
Interest
Interest income is recognised using the effective interest method.
Services Revenue
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to
be entitled in exchange for transferring goods or services to a customer. For each contract with a
customer, the Group: identifies the contract with a customer; identifies the performance obligations in
the contract; determines the transaction price which takes into account estimates of variable
consideration and the time value of money; allocates the transaction price to the separate
performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in
a manner that depicts the transfer to the customer of the goods or services promised.
30
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f)
Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables
and payables in the Statement of Financial Position are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
(g)
Trade and other receivables
Trade receivables are measured on initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest rate method, less any allowance for impairment. Trade
receivables are generally due for settlement within 30 days. Impairment of trade receivables is
continually reviewed and those that are considered to be uncollectible are written off by reducing the
carrying amount directly. An allowance account is used when there is objective evidence that the
Group will not be able to collect all amounts due according to the original contractual terms. Factors
considered by the Group in making this determination include known significant financial difficulties of
the debtor, review of financial information and significant delinquency in making contractual payments
to the Group.
The impairment allowance is set equal to the difference between the carrying amount of the receivable
and the present value of estimated future cash flows, discounted at the original effective interest rate.
Where receivables are short-term discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the profit and loss within other expenses. When a
trade receivable for which an impairment allowance had been recognised becomes uncollectible in
a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in the profit and loss.
(h) Government grants
An unconditional government grant is recognised in profit or loss as other income when the grant
becomes receivable. Grants that compensate the Group for expenses incurred are recognised in profit
or loss as other income on a systematic basis in the same period in which the expenses are recognised.
Research and development tax incentives are recognised in the statement of profit or loss when
received or when the amount to be received can be reliably estimated.
(i)
Employee Benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
Other long-term employee benefits
Provision is made for the liability due to employee benefits arising from services rendered by employees
to the reporting date. Employee benefits expected to be settled within one year together with benefits
arising out of wages and salaries, sick leave and annual leave which will be settled after one year, have
been measured at their nominal amount. Other employee benefits payable later than one year have
been measured at the present value of the estimated future cash outflows to be made for those benefits.
Contributions made to defined employee superannuation funds are charged as expenses when
incurred.
31
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the financial instrument. Financial instruments (except for trade receivables) are
measured initially at fair value adjusted by transaction costs, except for those carried at ‘fair value through
profit or loss’, in which case transaction costs are expensed to profit or loss. Where available, quoted
prices in an active market are used to determine the fair value. In other circumstances, valuation
techniques are adopted. Subsequent measurement of financial assets and financial liabilities are
described below.
Trade receivables are initially measured at the transaction price if the receivables do not contain a
significant financing component in accordance with AASB 15 Revenue from Contracts with Customers.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expired.
Classification and measurement
Financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 15 Revenue from Contracts with Customers,
all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective
as hedging instruments are classified into the following categories upon initial recognition:
•
•
•
amortised cost;
fair value through other comprehensive income (FVOCI); and
fair value through profit or loss (FVPL).
Classifications are determined by both:
•
•
the contractual cash flow characteristics of the financial assets; and
the Group’s business model for managing the financial asset.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet with the following conditions (and are
not designated as FVPL);
•
they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at fair value through other comprehensive income
The Group measures debt instruments at fair value through OCI if both of the following conditions are
met:
•
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding; and
the financial asset is held within a business model with the objective of both holding to collect
contractual cash flows and selling the financial asset.
•
32
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial Instruments (continued)
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the
same manner as for financial assets measured at amortised cost. The remaining fair value changes are
recognised in OCI.
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under AASB 132
Financial Instruments: Presentation and are not held for trading.
Financial assets at fair value through profit or loss (FVPL)
Financial assets at fair value through profit or loss include financial assets held for trading, financial assets
designated upon initial recognition at fair value through profit or loss or financial assets mandatorily
required to be measured at fair value. Financial assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing in the near term.
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVPL, which are carried subsequently at fair
value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, gains and losses arising on changes in fair value are
recognised in profit or loss.
(k)
(l)
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 period that are unpaid and arise when
the Group becomes obliged to make future payments in respect of the purchase of these goods and
services. Trade and other payables are presented as current liabilities unless payment is not due within 12
months.
Earnings Per CDI
Basic earnings per CDI
Basic earnings per CDI is determined by dividing the profit or loss attributable to ordinary shareholders of
the Company, by the weighted average number of CDIs outstanding during the period, adjusted for
bonus elements in CDIs issued during the period.
Diluted earnings per CDI
Diluted earnings per CDI adjusts the figure used in the determination of basic earnings per CDI to take
into account the after income tax effect of interest and other financial costs associated with dilutive
potential CDIs and the weighted average number of CDIs assumed to have been issued for no
consideration in relation to dilutive potential CDIs, which comprise convertible notes and CDI options
granted.
33
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m)
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that
necessarily take a substantial period of time to prepare for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
(n)
(o)
(p)
All other borrowing costs are recognised in as expenses in the period in which they are incurred.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, when
appropriate, the risks specific to the liability.
Segment reporting
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. Operating segments’ results are reviewed by the Group’s
Executive Chairman to make decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available.
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
European Metals Holdings Limited and all of the subsidiaries. Subsidiaries are entities the parent controls.
The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. A list of the
subsidiaries is provided in Note 22.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of
the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is
discontinued from the date that control ceases. Intercompany transactions, balances and unrealised
gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting
policies of subsidiaries have been changed and adjustments made where necessary to ensure
uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-
controlling interests". The Group initially recognises non-controlling interests that are present ownership
interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on
liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's
net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit
or loss and each component of other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial position and statement of
comprehensive income.
34
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q) CDI based payments
The grant date fair value of CDI-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to
reflect the number of awards for which the related service and non-market vesting conditions are expected
to be met, such that the amount ultimately recognised as an expense is based on the number of awards
that do not meet the related service and non-market performance conditions at the vesting date. For CDI-
based payment awards with non-vesting conditions, the grant date fair value of the CDI-based payment
is measured to reflect such conditions and there is no true-up for differences between expected and actual
outcomes.
Loan CDIs are treated similar to options and value is an estimate calculated using an appropriate
mathematical formula based on Black-Scholes option pricing model. The choice of models and the
resultant Loan CDI value require assumptions to be made in relation to the likelihood and timing of the
vesting of the Loan CDIs and the value and volatility of the price of the underlying shares.
(r) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented
in Australian dollars which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing
at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange
rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at
the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in Profit or Loss, except
where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising
on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss
is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in
Profit or Loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Group’s presentation currency are translated as follows:
•
•
•
•
Assets and liabilities are translated at year end exchange rates prevailing at the end of the reporting
period;
Income and expenses are translated at average exchange rates for the period; and
Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
in the other
Exchange differences arising on translation of foreign operations recognised
comprehensive income and included in the foreign currency translation reserve in the Statement of
Financial Position. These differences are reclassified into Profit or Loss in the period in which the
operation is disposed.
(s)
Issued capital
CDIs are classified as equity. Incremental costs directly attributable to the issue of new CDIs or options are
shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the
issue of new CDIs or options for the acquisition of a new business are not included in the cost of acquisition
as part of the purchase consideration.
35
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t)
Investments in associates
Associates are entities over which the consolidated entity has significant influence but not control or joint
control. Investments in associates are accounted for using the equity method. Under the equity method, the
share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in
equity is recognised in other comprehensive income. Investments in associates are carried in the statement
of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of
the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is
neither amortised nor individually tested for impairment. Dividends received or receivable from associates
reduce the carrying amount of the investment.
When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate,
including any unsecured long-term receivables, the consolidated entity does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the associate.
The consolidated entity discontinues the use of the equity method upon the loss of significant influence over
the associate and recognises any retained investment at its fair value. Any difference between the
associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised
in profit or loss.
(u) Leases
At inception of a contract, the Group assesses if the contract contains a lease or is a lease. If there is a
lease present, a right-of-use asset and a corresponding lease liability are recognised by the Group where
the Group is a lessee. However, all contracts that are classified as short-term leases (i.e. a lease with a
remaining lease term of 12 months or less) and leases of low-value assets are recognised as an operating
expense on a straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at the
commencement date. The lease payments are discounted at the interest rate implicit in the lease. If this
rate cannot be readily determined, the Group uses the incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as follows:
•
• variable lease payments that depend on an index or rate, initially measured using the index or rate at
fixed lease payments less any lease incentives;
the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
•
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
•
•
lease payments under extension options, if the lessee is reasonably certain to exercise the options; and
• payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to
terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease
payments made at or before the commencement date and any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is
the shortest. Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset
reflects that the Group anticipates to exercise a purchase option, the specific asset is depreciated over
the useful life of the underlying asset.
36
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 2: DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and / or
disclosure purposes based on the following methods. When applicable, further information about the assumptions
made in determining fair values is disclosed in the notes specific to that asset or liability.
CDI-based payment transactions
The fair value of the employee CDI options is measured using the Black-Scholes formula. Measurement inputs
include CDI price on measurement date, exercise price of the instrument, expected volatility (based on weighted
average historic volatility adjusted for changes expected due to publicly available information), weighted
average expected life of the instruments (based on historical experience and general option holder behaviour),
expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining the fair value.
The fair value of consultant CDI options and warrants is measured at the fee of the services received, except for
when the fair value of the services cannot be estimated reliably, the fair value is measured using the Black-Scholes
formula.
The fair value of performance rights granted to Directors is measured using the share price at grant date. Service
and non-market performance conditions attached to the transactions are not taken into account in determining
the fair value.
37
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Deferred income tax expense included in income tax expense
comprises:
(Increase) in deferred tax assets
Increase in deferred tax liabilities*
30 June
2021
$
30 June
2020
$
-
-
-
-
-
-
-
-
-
-
-
-
* Any capital gain on disposal of shares in Geomet held by EMH UK is tax-exempt under the current UK legislation
(Schedule 7AC of the Taxation of Chargeable Gains Act 1992). For this reason, no deferred tax liability has been
recognised as at 30 June 2020.
(b) Reconciliation of income tax expense to prima facie tax payable
Net (loss)/profit before tax
(3,962,450)
2,813,807
Prima facie tax on operating loss at 26% (2020: 27.5%)
(1,030,237)
773,797
Add / (Less): Non-deductible items
Non-deductible expenses/(Non-assessable income)
Current year tax loss not recognised
Income tax attributable to operating profit/loss
The applicable weighted average effective tax rates are as follows:
Balance of franking account at year end
Deferred tax assets/(liabilities)
Tax losses
Other receivables and other assets
Unrealised foreign exchange gain
Accruals
Business related costs
Right-of-use assets
Lease liabilities
Provisions
Unrecognised deferred tax asset
Set-off deferred tax liabilities
Net deferred tax assets
Tax losses
484,048
(1,035,056)
546,189
261,259
-
Nil%
Nil
-
Nil%
Nil
1,124,435
1,080,484
(68,059)
-
9,838
466,341
(35,392)
25,452
25,962
(1,406)
(12,380)
53,784
155
-
-
40,296
1,548,577
1,160,933
-
-
1,548,577
1,160,933
Unused tax losses for which no deferred tax asset has been recognised
4,324,751
3,929,089
38
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 3: INCOME TAX (CONTINUED)
The Company is registered in the British Virgin Islands (BVI) and the Company is a tax resident of Australia. The
unused tax losses are representative of losses incurred in Australia.
There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company.
The Company is subject to UK taxation regulations in respect of European Metals (UK) Limited.
NOTE 4: RELATED PARTY TRANSACTIONS
Transactions between related parties are at arms’ length and on normal commercial terms and conditions no
more favourable than those available to other parties unless otherwise stated.
During the year, the Company received $1,102,953 (2020: $183,824) from its associate, Geomet s.r.o for providing
services of managing the Cinovec project development. The Company’s Directors also received remuneration
from Geomet s.r.o in arm’s length transaction during the financial year.
Purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions.
From January 2021, the Company received accounting and bookkeeping services of $56,256 plus GST from
Everest Corporate, a company controlled by the spouse of Executive Chairman, Keith Coughlan. Amount
payable to Everest Corporate as at 30 June 2021 was $12,528.
From 1 May 2021, the Company received rental income of $24,515 plus GST from Everest Corporate for subletting
the office in West Perth.
During the 2021 financial year, the Company paid $4,900 plus GST for office rental to Wild West Enterprises Pty
Ltd, an entity controlled by former director, David Reeves (2020: $15,600).
There were no other transactions with related parties during the financial year.
NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or
payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2021
and 30 June 2020.
The totals of remuneration paid to KMP during the year are as follows:
Short-term benefits
Post-employment benefits
Long service leave
Equity settled
Loans to Key Management Personnel
2021
$
2020
$
537,115
445,513
27,345
17,825
-
22,800
26,663
29,802
582,285
524,778
There were no loans to Key Management Personnel during the financial year (2020: nil). The total value of loan
CDIs at 30 June 2021 amounted to $1,442,666. 1,650,000 loan CDIs were issued to Directors with fair value of
$1,149,653 in prior years of which 300,000 CDIs were repaid in the current year. Of the 1,500,000 loan CDIs that
were issued to employees, 400,000 loan CDIs were forfeited in prior year. The fair value of the remaining 1,100,000
loan CDIs was $293,013 at 30 June 2021 of which 100,000 CDIs were repaid in the current financial year.
39
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 6: REVENUE
Service revenue – Cinovec project development
NOTE 7: AUDITOR’S REMUNERATION
Auditor’s services
Audit and review of financial report
- Under provision in prior year
NOTE 8: BASIC AND DILUTED LOSS PER CDI
Loss per share for income from continuing operations
Loss attributable to owners ($)
Basic loss per CDI (cents)
Diluted loss per CDI (cents)
Earnings per share for gain from discontinued operations
Profit attributable to owners
Basic earnings per CDI (cents)
Diluted earnings per CDI (cents)
Weighted average number of CDIs
2021
$
2020
$
1,102,953
183,824
2021
$
2020
$
39,000
4,526
43,526
46,525
7,925
54,450
2021
$
2020
$
(3,962,450)
(4,608,729)
(2.39)
(2.39)
(3.05)
(3.05)
-
-
-
7,422,536
4.92
4.92
Weighted average number of CDIs used in calculating earnings per share
166,032,891
150,957,617
Adjustments for calculation of diluted earnings per share:
CDIs under options with diluted effect
-
51,370
Weighted average number of CDI used in calculating diluted loss per share
166,032,891
151,008,987
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
Term deposit
Total cash and cash equivalents in the Statement of Cash Flows
2021
$
2020
$
2,880,673
58,951
5,000,000
-
7,880,673
58,951
40
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 10: OTHER ASSETS
Current
Deposit
Prepayments
Unbilled revenue
Non-Current
Bank guarantee on office lease
NOTE 11: OFFICE LEASE
(a) Right-of-use asset
Right-of-use asset at cost
Less accumulated amortisation
Reconciliation of Right-of-use asset:
Opening balance
Additions
Amortisation
Closing balance
(b) Lease liability
Opening balance
Additions
Interest expense
Payments
Closing balance
Current
Non-current
Closing balance
2021
$
2020
$
-
5,110
-
5,110
6,345
250,279
80,572
337,196
47,392
47,392
2021
$
2020
$
144,129
(8,007)
136,122
-
144,129
(8,007)
136,122
144,129
1,155
(47,391)
97,893
6,038
91,855
97,893
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group’s West Perth office is leased under a lease agreement assigned to the Group commencing on 1 May
2021 for a period of three years with a three-year renewal option and rental of $50,000 plus GST per year payable
plus outgoings. The lease liability is measured at the present value of the remaining lease payments, discounted
using the Group’s incremental borrowing rate as at 1 May 2021. The Group’s incremental borrowing rate is the
rate at which a similar borrowing could be obtained from an independent creditor under comparable terms
and conditions. The weighted-average rate applied was 5%.
41
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 12: INVESTMENT IN ASSOCIATE
On initial recognition at fair value
Opening balance
Share of (loss)/profit – associate
Share of post-acquisition movement in reserve
2021
$
2020
$
-
18,476,480
18,966,531
-
(1,263,167)
490,051
(242,337)
-
17,461,027
18,966,531
Effective 28 April 2020, Geomet was equity accounted (ie 49% of share of the profit or loss of the investee after
the date of acquisition) for as Investment in Associate (Note 20). The Company was appointed to provide
services of managing the Cinovec project development.
Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Summarised statement of profit or loss and other comprehensive income*
Revenue
Expenses
Loss for the year
* The results for FY2020 is from 28 April 2020 – 30 June 2020.
NOTE 13: TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses and other liabilities
Advance fee received
Payables are normally due for payment within 30 days.
NOTE 14: PROVISIONS
Provision for annual leave
Provision for long service leave
2021
$
2020
$
38,660,683
47,280,678
17,091,493
9,497,797
55,752,176
56,778,475
755,929
132,262
-
-
755,929
132,262
54,996,247
56,646,213
17,422
2,709
(2,594,480)
(1,002,813)
(2,577,058)
(1,000,104)
2021
$
2020
$
295,612
125,800
18,386
439,798
471,604
361,076
91,912
924,592
2021
$
2020
$
55,362
44,488
99,850
27,955
26,663
54,618
42
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 15: ISSUED CAPITAL
(a) Issued and paid up capital
175,119,485 (30 June 2020: 154,703,973 CDIs)
Total issued capital
(b) Movements in CDIs
2021
$
2020
$
34,087,930
23,954,204
34,087,930
23,954,204
Balance at the beginning of the year
1 July 2019
146,642,227
22,074,314
CDI issue under Placement @ A$0.324 (£0.18) per CDI
29 August 2019
4,166,666
1,349,831
CDI issue under Placement @ A$0.294 (£0.1525) per CDI
23 January 2020
2,295,080
675,074
Date
Number
$
Forfeiture of CDIs
Conversion of A Class Performance Shares
Conversion of B Class Performance Shares
Conversion of A Class Performance Shares
Capital raising cost
Balance at the end of the year
30 January 2020
(1,400,000)
30 April 2020
30 April 2020
4 June 2020
1,000,000
1,000,000
1,000,000
-
-
-
-
30 June 2020
154,703,973
23,954,204
-
(145,015)
Date
Number
$
Balance at the beginning of the year
1 July 2020
154,703,973
23,954,204
CDI issue under the Funding Facility Agreement @
A$0.238 per CDI
Exercise of unlisted options @ 16.6c
Exercise of unlisted options @ 16.6c
CDI issue under the Funding Facility Agreement @
A$0.27 per CDI
17 July 2020
5 August 2020
1,049,825
750,000
18 August 2020
3,000,000
250,000
124,500
498,000
27 August 2020
927,300
250,000
Exercise of unlisted options @ 25c
17 September 2020
50,000
12,500
CDI issue under the Funding Facility Agreement @
A$0.34 per CDI
CDI issue under the Funding Facility Agreement @
A$0.34 per CDI
Exercise of unquoted warrants @ £0.20 (36.3c)
Exercise of unlisted options @ 35c
Exercise of unlisted options @ 40.18c
Exercise of unlisted options @ 31.11c
Exercise of unlisted options @ 25c
CDI issue under the Funding Facility Agreement @
A$0.683 per CDI
Issue of CDIs in lieu of consultant options
Share Placement @ A$1.10 per CDI
23 October 2020
723,323
250,000
13 November 2020
25 November 2020
25 November 2020
21 December 2020
21 December 2020
21 December 2020
719,821
89,375
200,000
100,000
100,000
200,000
250,000
32,483
70,000
40,180
31,110
50,000
6 January 2021
1,463,734
1,000,000
18 January 2021
1,613,708
-
8 February 2021
6,454,546
7,100,000
Issue of CDIs in lieu of consultant options cancelled
4 March 2021
2,435,880
Issue of CDIs for services provided @A$1.10 per CDI
4 March 2021
300,000
Repayment of Loan CDIs @ A$0.485 per CDI
15,19,22 March 2021
Repayment of Loan CDIs @ A$0.743 per CDI
18 March 2021
-
-
-
330,000
48,480
222,900
99,960
Exercise of unlisted options @ 42c
Capital raising cost
Balance at the end of the year
10 May 2021
238,000
30 June 2021
175,119,485
34,087,930
-
(526,387)
43
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 15: ISSUED CAPITAL (CONTINUED)
(c) Capital risk management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it may continue to provide returns for shareholders and benefits for other stakeholders.
The capital structure of the Group consists of equity comprising issued capital, reserves and accumulated
losses.
The Group does not have ready access to credit facilities, with the primary source of funding being equity
raisings. Therefore, the focus of the Group’s capital risk management is to maintain sufficient current working
capital position to meet the requirements of the Group to meet exploration programs and corporate
overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated
operating requirements, with a view to initiating appropriate capital raisings as required.
The working capital position of the Group at 30 June is as follows:
Cash and cash equivalents
GST and other receivables
Other assets
Trade and other payables
Provisions
Lease liability
Working capital surplus/(deficit)
The Group is not subject to any externally imposed capital requirements.
NOTE 16: RESERVES
Option and Warrant Reserve
Performance Shares Reserve
Loan CDIs Reserve
Foreign Currency Translation Reserve
Total Reserves
Option and Warrant Reserve
Balance at the beginning of the financial year
Equity based payment expense (Note 17)
Equity based payment as capital raising cost
Balance at the end of the financial year
2021
$
7,880,673
53,046
337,196
2020
$
58,951
17,252
5,110
(439,798)
(924,592)
(99,850)
(54,618)
(6,038)
-
7,725,229
(897,897)
2021
$
2020
$
4,306,491
3,036,662
3,471,444
3,471,444
1,442,667
1,442,667
(467,879)
(235,186)
8,752,723
7,715,587
2021
2020
$
$
3,036,662
597,470
914,829
2,439,192
355,000
-
4,306,491
3,036,662
44
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 16: RESERVES (CONTINUED)
The following options and warrants existed as at 30 June 2020 and 30 June 2021:
Expiry
date
Balance at
30 June 2020
Issued during
the year
Exercised
during the year Cancelled
Balance at
30 June 2021
Options @ 16.6cents
17 Aug 20
3,750,000
Options @ 35cents
1 Jan 21
Options @ 40.18cents
1 June 21
Options @ 31.11cents
1 Dec 21
200,000
100,000
100,000
Options @ 25cents
31 Dec 22
15,000,000
-
-
-
-
-
(3,750,000)
(200,000)
(100,000)
(100,000)
-
-
-
-
-
-
-
-
-
(5,000,000)
10,000,000
Options @ 25cents
15 June 22
Options @ 42cents
Options @ 45cents
23 Oct 23
23 Oct 23
-
-
-
250,000
2,500,000
1,000,000
(250,000)
(238,000)
-
Warrants @ 20pence
22 Nov 21
116,875
-
(89,375)
Warrants @ $1.10
31 Jan 23
-
1,200,000
-
-
-
-
-
-
-
2,262,000
1,000,000
27,500
1,200,000
Total
19,266,875
4,950,000
(4,727,375)
(5,000,000)
14,489,500
On 17 July 2020, the Company issued 250,000 unlisted options exercisable at $0.25 on or before 15 June 2022
to a consultant in accordance with the consultancy agreement dated 15 June 2020. The unlisted options
were valued using a Black & Scholes option pricing model. The share-based expense of $36,331 was
recognised in the statement of profit or loss and other comprehensive income for the year. These options
were exercised during the year.
On 23 October 2020, 1,000,000 unlisted options exercisable at 45 cents on or before 23 October 2023 were
issued to consultants. On 23 October 2020, 2,500,000 unlisted options exercisable at 42 cents on or before 23
October 2023 were issued to consultants. The unlisted options were valued using a Black & Scholes option
pricing model. The share-based expense of $878,498 was recognised in the statement of profit or loss and
other comprehensive income for the year.
On 4 March 2021, the Company issued 1,200,000 unlisted warrants exercisable at $1.10 on or before 31
January 2023 to an investor relations consultant pursuant to raising $7,100,000 in the Share Placement on 5
February 2021. The warrants represent fee based on 5% of the capital raised. The share-based expense of
$355,000 was recognised in equity as capital raising costs.
4,727,375 unlisted options were exercised during the year as detailed in the table above.
5,000,000 unlisted options were cancelled during the year and the Company issued 4,049,588 CDIs in lieu of
these options in accordance with the terms and conditions of the consultant options held by European
Energy and Infrastructure Group Limited. The CDIs have been issued for nil consideration per the terms and
conditions of the options. As the fair value of the replacement CDIs was lower than the fair value of the
cancelled options, no additional expense was recognized in accordance with AASB 2 Share-based
Payment.
Performance Share Reserve
The Performance Share reserve records the fair value of the Performance Shares issued. Performance shares on
issue at 30 June 2020 and 30 June 2021 is as follows:
Issue date
Expiry date
Number on issue
A Class
18 Dec 2018
18 Dec 2021
3,000,000
45
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 16: RESERVES (CONTINUED)
Performance Shares Reserve (continued)
Balance at the beginning of the year
B Class Performance Shares Lapsed1
Conversion of A Class Performance Shares
Conversion of B Class Performance Shares
Conversion of A Class Performance Shares
Date
Number
$
1 July 2019
10,000,000
3,471,444
29 Nov 2019
(4,000,000)
30 April 2020
(1,000,000)
30 April 2020
(1,000,000)
4 June 2020
(1,000,000)
-
-
-
-
Balance at the end of the year
30 June 2020
3,000,000
3,471,444
A Class Performance Shares
Balance at the beginning of the year
Balance at the end of the year
1 July 2020
3,000,000
3,471,444
30 June 2021
3,000,000
3,471,444
1 The milestone was achieved prior to B Class Performance Share expiring.
No performance shares were issued during the year (30 June 2020: nil). B Class performance shares lapsed
during the financial year ended 30 June 2020. During the financial year ended 30 June 2020, under the
applicable terms and conditions, the performance shares convert into new CDIs in accordance with the
following milestones:
2,000,000 A Class Performance Shares
1. 1,000,000 of the performance shares convert into Shares and an equivalent number of CDIs upon the
Company’s Mineral Resource at Cinovec South and Cinovec Main being entered in the State register;
and
2. 1,000,000 of the performance shares convert into Shares and an equivalent number of CDIs upon the
issuance of the preliminary mining licenses relating to the Cinovec Project.
1,000,000 B Class Performance Shares
1. 1,000,000 of the performance shares convert into Shares and an equivalent number of CDIs upon the
issuance of the preliminary mining licenses relating to the Cinovec Project. The remaining 4,000,000 B Class
Performance Shares lapsed during the year.
The terms of the Performance Shares are as follows:
The remaining 3,000,000 A Class Performance Shares will convert in accordance with the below:
(i) 3,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon
the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable
to be submitted to a financial institution as the basis for lending of funds for the development and
operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on
the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs
and display a pre-tax net present value of not less than US$250,000,000. The Performance Shares shall
convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 and divided by the
greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal
of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS,
(together the Milestones and each a Milestone). For the avoidance of doubt, the number of Shares and
equivalent number of CDIs which will be issued on conversion of the B Class Performance Shares and A
Class Performance Shares will not exceed a ratio of 1 for 1.
(ii) If the Milestone is not achieved or the Change of Control Event does not occur by the required date,
then each Performance Share held by a Holder will be automatically redeemed by the Company for the
sum of $0.000001 within 10 ASX trading days of non-satisfaction of the Milestone. $2,671,444 has been
attributed to the Performance Shares.
46
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 16: RESERVES (CONTINUED)
Loan CDIs Reserve
Employee securities incentive plan
In prior years, remuneration in the form of Employee Securities Incentive Plan were issued to the Directors and
employees to attract, motivate and retain such persons and to provide them with an incentive to deliver growth
and value to shareholders.
The Loan CDIs reserve records the fair value of the Loan CDIs issued.
The Loan CDIs represent an option arrangement. Loan CDIs vested immediately. The key terms of the Employee
Share Plan and of each limited recourse loan provided under the Plan are as follows:
i.
The total loan equal to issue price multiplied by the number of Plan CDIs applied for (“Advance”), which
shall be deemed to have been draw down at Settlement upon issued of the Loan Shares.
The Loan shall be interest free. However, if the advance is not repaid on or before the Repayment date,
the Advance will accrue interest at the rate disclosed in the Plan from the Business Day after the Repayment
Date until the date the Advance is repaid in full.
ii.
iii. All or part of the loan may be repaid prior to the Advance repayment Date.
v.
Repayment date
iv. Notwithstanding paragraph iii. above, (“the borrower”) may repay all or part of the Advance at any time
before the repayment date i.e. The repayment date for 1,650,000 Director CDIs - 15 years after the date of
loan advance and the repayment date for 1,500,000 Employee CDIs – 7 years after the date of loan advice.
The Loan is repayable on the earlier of:
(a) The repayment date;
(b) The plan CDIs being sold;
(c) The borrower becoming insolvent;
(d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs being acquired by a third party by way of an amalgamation, arrangement or formal
takeover bid for not less than all the outstanding CDIs.
Loan Forgiveness
vi.
The Board may, in its sole discretion, waive the right to repayment of all or any part of the outstanding
balance of an Advance where:
The borrower dies or becomes permanently disabled; or
The Board otherwise determines that such waiver is appropriate
(i)
(ii)
vii. Where the Board waives repayment of the Advance in accordance with clause 6(a), the Advance is
deemed to have been repaid in full for the purposes of the Plan in this agreement.
Sale of loan CDIs
i.
In accordance with the terms of the Plan and the Invitation, the Loan CDIs cannot be sold, transferred,
assigned, charged or otherwise encumbered with the Plan CDIs except in accordance with the Plan.
Balance at beginning of the year
Date
1 July 2019
Loan CDIs cancelled during the year
30 January 2020
Balance at end of the year
30 June 2020
Balance at beginning of the year
Loan CDIs repaid during the year
Balance at end of the year
1 July 2020
March 2021
30 June 2021
Number
3,150,000
(1,400,000)
1,750,000
1,750,000
(400,000)
1,350,000
Amount Expensed
1,442,667
-
1,442,667
1,442,667
-
1,442,667
47
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 16: RESERVES (CONTINUED)
Loan CDIs Reserve (continued)
CDIs entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of shares held. On a show of hands every holder of a CDI present at a meeting in person or by
proxy, is entitled to one vote, and in a poll each share is entitled to one vote.
The Loan CDIs were issued to the executive members under the Employee Securities Incentive Plan on 6 June
2018.
Holders of CDIs have the same entitlement benefits of holding the underlying shares. Each Share in the Company
confers upon the Shareholder:
1.
the right to one vote at a meeting of the Shareholders of the Company or on any Resolution of
Shareholders;
the right to an equal share in any dividend paid by the Company; and
the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.
2.
3.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled
subsidiaries, the Group’s share of foreign exchange movement in Geomet s.r.o. and the effect of the
deconsolidation of Geomet s.r.o.
Balance at the beginning of the financial year
Movement during the year
Derecognition of foreign currency reserve
Balance at the end of the financial year
NOTE 17: SHARE BASED PAYMENT EXPENSE
Options and warrants outstanding as at 1 July 2019
Options granted during the year
Options lapsed
Options and warrants outstanding as at 30 June 2020
Options and warrants outstanding as at 1 July 2020
Options and warrants granted during the year (i)
Options exercised
Warrants exercised
Options cancelled
Options and warrants outstanding as at 30 June 2021
2021
$
2020
$
(235,186)
1,287,265
(232,693)
(1,582,667)
-
60,216
(467,879)
(235,186)
Number
Weighted
Average
Exercise
Price
4,566,875
15,100,000
(400,000)
19,266,875
19,266,875
4,950,000
(4,638,000)
(89,375)
(5,000,000)
14,489,500
$0.219
$0.250
$0.580
$0.236
$0.236
$0.582
$0.20
$0.363
$0.250
$0.360
48
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: SHARE BASED PAYMENT EXPENSE (CONTINUED)
During the year, the Group incurred a share-based payments expense for a total of $987,490 resulting from the
transactions detailed below.
(i) Share based payments granted during the year:
On 17 July 2020, the Company issued 250,000 unlisted options exercisable at 25 cents on or before 15 June
2022 to a consultant in accordance with the consultancy agreement dated 15 June 2020. The unlisted
options vest immediately. The options were valued at $36,331 using a Black & Scholes option pricing model
with the share-based payment recognised as share-based payment expense in the statement of profit or
loss and other comprehensive income. The key inputs to the models used were as follows.
Grant date
15 June 2020
Expected life of options (years)
Dividend yield (%)
Nil Underlying share price ($)
Expected volatility (%)
100% Option exercise price ($)
Risk-free interest rate (%)
0.26% Value of option ($)
2 Years
$0.26
$0.25
$0.145
On 23 October 2020, 2,500,000 unlisted options exercisable at 42 cents on or before 23 October 2023 were
issued to a consultant. The options vest immediately. The options were valued under the Black and Scholes
at $686,205 as share based payment expense in the statement of profit or loss and other comprehensive
income. The key inputs to the models used were as follows.
Grant date
25 September 2020
Expected life of options (years)
Dividend yield (%)
Nil
Underlying share price ($)
Expected volatility (%)
100% Option exercise price ($)
Risk-free interest rate (%)
0.24% Value of option ($)
3 Years
$0.44
$0.42
$0.274
On 23 October 2020, 1,000,000 unlisted options exercisable at 45 cents on or before 23 October 2023 were
issued to a consultant. The options were valued under the Black and Scholes at $256,390 with the share-
based payment expense of $192,293 recognised in the current year in the statement of profit or loss and
other comprehensive income. The key inputs to the models used were as follows.
Grant date
8 October 2020
Expected life of options (years)
Dividend yield (%)
Nil
Underlying share price ($)
Expected volatility (%)
100%
Option exercise price ($)
Risk-free interest rate (%)
0.15%
Value of option ($)
3 Years
$0.43
$0.45
$0.256
On 5 March 2021, the Company issued 300,000 CDIs to an advisor in satisfaction of a $330,000 invoice fee
for the provision of digital marketing services. The $330,000 fee has been expensed over the length of the
service per the Service Agreement. Share- based payment expense of $72,661 has been recognised in the
current year in the statement of profit or loss and other comprehensive income.
On 17 December 2020, the shareholders approved the grant of 2,400,000 Performance Rights to Mr Keith
Coughlan and 1,200,000 Performance Rights to Mr Richard Pavlik, with the vesting terms as below:
1. Class A shall vest upon an announcement by the Company to the ASX stating that the Company has
executed an offtake agreement for at least 25% of the product planned to be produced from the
Cinovec Project.
2. Class B shall vest upon the attainment of Project Finance for the Cinovec Project.
3. Class C shall vest upon an announcement by the Company to the ASX stating that the Company has
made a Decision to Mine in respect of the Cinovec Project.
49
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: SHARE BASED PAYMENT EXPENSE (CONTINUED)
(ii) Share based payments granted during the year (continued):
The Performance Rights will expire three years from the date of issue, after which the Performance Rights
lapse and may no longer be exercised or converted. These Performance Rights have yet to be issued as at
30 June 2021.
Number
granted
Grant
date
Exercise
price
Term of
maturity
Share
price on
grant date
Total fair
value
%
vested
Class A
1,200,000
17 Dec 20
Class B
1,200,000
17 Dec 20
Class C
1,200,000
17 Dec 20
Nil
Nil
Nil
3 years
3 years
3 years
$0.87
$0.87
$0.87
$1,044,000
$1,044,000
$1,044,000
Nil
Nil
Nil
The total fair value of the Performance Rights is expensed when they vest. The share-based expense of nil
was recognized in the statement of profit or loss and other comprehensive income for the year. As at 30
June 2021, management has yet to indicate the number of these performance rights expected to vest,
hence has not expensed any of the value of these performance rights. Management shall revise this
estimate when subsequent information indicates that the number of performance rights expected to vest
differs from previous estimate.
During the year, the Company incurred a share-based payments recognised as capital raising costs of
$355,000 resulting from the transaction below.
On 4 March 2021, the Company issued 1,200,000 unlisted warrants exercisable at $1.10 on or before 31
January 2023 to an investor relations consultant pursuant to raising $7,100,000 in the Share Placement on 5
February 2021. The warrants represent the fee based on 5% of the capital raised. The share-based expense
of $355,000 was recognised in equity as capital raising costs.
Share-based payment arrangements granted in prior years and existed during the financial year ended 30
June 2021:
1. On 17 August 2015, 3,750,000 unlisted options exercisable at 16.6 cents on or before 17 August 2020 were
issued to key management personnel. These options were exercised during the year.
2. On 12 July 2019, 200,000 unlisted options exercisable at 35 cents on or before 1 January 2021 were issued
to a consultant. These options were exercised during the year.
3. On 12 July 2019, 100,000 unlisted options exercisable at 40.18 cents on or before 1 June 2021 were issued
to a consultant. These options were exercised during the year.
4. On 6 December 2019, 100,000 unlisted options exercisable at 31.11 cents on or before 1 December 2021
were issued to consultants. These options were exercised during the year.
5. On 26 March 2020, 15,000,000 unlisted options exercisable at 25 cents on or before 31 December 2022
were granted to consultants. 5,000,000 of these options were cancelled during the year and the
Company issued 4,049,588 CDIs in lieu of these options in accordance with the terms and conditions of
the consultant options held by European Energy and Infrastructure Group Limited. The CDIs have been
issued for nil consideration per the terms and conditions of the options.
6. On the 22 November 2018, 116,875 warrants were granted to brokers as a cost of capital raising. The
warrants have an exercise of 20 pence in line with the capital raise on the 20 November 2018. Warrants
are exercisable on or before 22 November 2021. 89,375 warrants were exercised during the year.
50
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 17: SHARE BASED PAYMENT EXPENSE (CONTINUED)
Performance share-based payment arrangements granted in prior years and existed during the financial
year ended 30 June 2021:
3,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the
completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be
submitted to a financial institution as the basis for lending of funds for the development and operation of
mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and
(iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax
net present value of not less than US$250,000,000. The A Class Performance Shares shall convert into the
number of Shares and equivalent number of CDIs equal to 3,000,000 multiplied by 0.5 and divided by the
greater of: (A)$0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of
$1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS. For avoidance
of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the A
Class Performance Shares will not exceed a ratio of 1 for 1.
If the Milestone is not achieved or the Change of Control Event does not occur by the required date, then
each Performance Share held by a Holder will be automatically redeemed by the Company for the sum of
$0.000001 within 10 ASX trading days of non-satisfaction of the Milestone. $2,671,444 has been attributed to
the Performance Shares.
No additional performance shares were granted during the year.
Loan CDIs granted in prior years and existed during the financial year ended 30 June 2021:
Number
30 June 2020
Repaid during
the year
Number
30 June 2021
Director Loan CDIs
1,650,000
(300,000)
1,350,000
Employee Securities Incentive Plan Loan CDIs
100,000
(100,000)
-
1,750,000
(400,000)
1,350,000
During the year, 400,000 Loan CDIs were repaid by former director, David Reeves and the previous executive
members when they resigned. Only 1,350,000 CDIs remained at 30 June 2021.
No loan CDIs were granted during the financial year.
The total fair value of the Loan CDIs was fully expensed in the statement of profit or loss and other
comprehensive income in the 2019 financial year.
A summary of the outstanding Director Loan CDIs at 30 June 2021 and the inputs used in the valuation of the
loan CDIs issued to Directors are as follows:
Loan CDIs
Issue price
Share price at date of issue
Grant date
Expected volatility
Expiry date
Expected dividends
Risk free interest rate
Value per loan CDI
Number of loan CDIs
Total value
Keith Coughlan
Richard Pavlik
Kiran Morzaria
$0.725
$0.70
$0.725
$0.70
$0.725
$0.70
30 November 2017
30 November 2017
30 November 2017
143.41%
143.41%
143.41%
30 November 2032
30 November 2032
30 November 2032
Nil
2.47%
$0.69676
850,000
$592,245
Nil
2.47%
$0.69676
300,000
$209,028
Nil
2.47%
$0.69676
200,000
$139,352
51
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 18: CASH FLOW INFORMATION
2021
$
2020
$
Reconciliation of cash flow from operating activities with (loss)/income after tax:
(Loss)/Income after income tax
(3,962,450)
2,813,807
Adjustments for:
Share based payments
Finance costs
Foreign exchange loss/ (gain)
Depreciation and amortisation expenses
Loss from discontinued operations to date of disposal
Equity accounted of investment in Geomet s.r.o
Gain on de-consolidation of Geomet s.r.o
Interest in assets and liabilities net of deemed disposal of subsidiary
(Increase)/decrease in other receivables
(Increase)/decrease in other assets
(Decrease)/increase in trade and other payables
Increase in provisions
Cash flow used in operating activities
987,490
2,439,192
1,155
7,460
8,876
-
(45,018)
1,344
-
209,510
1,263,167
(490,051)
-
(7,632,046)
(5,794)
(152,139)
74,928
18,478
(484,794)
715,613
45,232
31,485
(2,291,797)
(1,862,758)
(b) Credit standby facilities
The Company had no credit standby facilities as at 30 June 2021 and 2020.
(c) Investing and Financing Activities – Non-Cash
There were no non-cash investing activities during the year.
During the year, the Company issued 1,200,000 warrants, exercise price of $1.10 per warrant expiring on 31
January 2023, to an investor relations consultant. The warrants, valued at $355,000 was included as non-cash
capital raising costs in financing activities.
NOTE 19: OPERATING SEGMENTS
The accounting policies used by the Group in reporting segments are in accordance with the measurement
principles of Australian Accounting Standards.
The Group has identified its operating segments based on the internal reports that are provided to the Board of
Directors. According to AASB 8 Operating Segments, two or more operating segments may be aggregated into
a single operating segment if the segments have similar economic characteristics, and the segments are similar
in each of the following respects:
•
•
•
•
•
The nature of the products and services;
The nature of the production processes;
The type or class of customer for their products and services;
The methods used to distribute their products or provide their services; and
If applicable, the nature of the regulatory environment, for example; banking, insurance and public utilities.
Effective 28 April 2020, the Group has a 49% interest in Geomet s.r.o. which is accounted for in accordance with
AASB 128 Investment in Associates and Joint Venture. Therefore, the Group has only one operating segment
based on geographical location. The Australian segment incorporates the services provided to Geomet s.r.o. in
relation to the Cinovec project development along with head office and treasury function. Consequently, the
financial information for the sole operating segment is identical to the information presented in these financial
reports.”
52
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 20: DECONSOLIDATION OF GEOMET S.R.O
On 28 April 2020, the Company announced that the investment of EUR29.1 million by CEZ a.s. (“CEZ”) for a 51%
equity interest in Geomet, the Company’s Czech subsidiary and holder of the Cinovec licenses, had been
completed. The payment of EUR29.1 million, which has been received into the Geomet account, will see the
Cinovec project fully funded to the decision to construct, paving the way for Cinovec to become the first
European Union producer of battery grade lithium compounds from a local lithium resource. The payment of
EUR 29.1 million was split into two payments - EUR 12.3m (A$20.6m) was contributed to Geomet’s registered share
capital and EUR 16.8m (A$28.1m) is a monetary contribution to the equity Geomet outside of the Geomet’s
registered share capital. The Company ceased to fully consolidate Geomet’s results within EMH’s consolidated
accounts effective 28 April 2020. From 28 April 2020 onward, Geomet had been equity accounted (ie 49% of
share of the profit or loss of the investee after the date of acquisition) for as Investment in Associate by EMH
(Note 12). The Company was appointed to provide services of managing the Cinovec project development.
No cash consideration was received by EMH (Holdings) Limited as a result of the EUR29.1million investment by
CEZ. The 100% shareholding in Geomet s.r.o by EMH (Holdings) Limited was diluted through the issuance of shares
to CEZ. This is commonly referred as “deemed disposal”. A “deemed disposal” that results in the loss of control
of a subsidiary (ie Geomet s.r.o) is accounted for as a regular disposal.
a. Financial performance information
Other income
Employees' benefits
Interest expense
Other expenses
Professional fees
Depreciation expense
Travel and accommodation
Office and rent expense
Loss from discontinued operations – Until date of disposal
Gain on disposal
Gain from discontinued operation - De-consolidation of Geomet s.r.o
b. Cash flows from discontinued operations – De-consolidation of Geomet s.r.o
Cash flows from discontinued operations
Net cash (outflow) from operating activities
Period ended
27 April 2020
$
11,530
(131,423)
(942)
(17,471)
(45,512)
(1,663)
(4,958)
(19,071)
(209,510)
7,632,046
7,422,536
Period ended
27 April 2020
$
(191,325)
53
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 20: DECONSOLIDATION OF GEOMET s.r.o (CONTINUED)
c. Details of the de-consolidation of Geomet s.r.o
Fair value of interest retained in Geomet s.r.o A
Analysis of extracted assets and liabilities of Geomet s.r.o on date of de-consolidation:
30 June 2020
$
19,796,466
Current assets
Cash and cash equivalents
Accounts receivable
Total current assets
Non Current assets
Property, plant and equipment
Exploration assets
Total non current assets
Current liabilities
Accounts payables
Others
Total Current liabilities
$
21,982
84,520
106,502
366,887
11,553,630
11,920,517
9,928
27,937
37,865
Less: Net assets deconsolidated
Derecognition of foreign currency reserve
Foreign currency movement for the current period
Gain on de-consolidation of Geomet s.r.o
A Represents the fair value of 49% interest in Geomet s.r.o
11,989,154
60,216
(235,482)
7,632,046
54
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks, equity instruments and accounts
receivable and payable. The main purpose of non-derivative financial instruments is to raise finance for Group’s
operations. The Group does not speculate in the trading of derivative instruments.
The Group holds the following financial instruments:
Financial assets
Cash and cash equivalents
Other receivables
Other assets
Total financial assets
Trade and other payables
Lease liability
Total financial liabilities
2021
$
2020
$
7,880,673
29,452
127,964
58,951
17,252
-
8,038,089
76,203
397,535
924,592
97,893
-
495,428
924,592
The fair value of the Group’s financial assets and liabilities approximate their carrying value.
Specific Financial Risk Exposures and Management
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk
and price risk) credit risk and liquidity risk.
(i) Market risk
The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury
management strategies in the context of the most recent economic conditions and forecasts.
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed
rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. Interest
rate risk is not material to the Group as no interest bearing debt arrangements have been entered into.
Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market prices.
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument
fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial
instruments which are other than the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in foreign currencies may impact on the
Group’s financial results. The Group’s exposure to foreign exchange risk is monitored by the Board. The majority
of the Group’s funds are held in Australian dollars, British Stirling and EUR.
55
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
At 30 June 2021, the Group has financial assets and liabilities denominated in the foreign currencies detailed
below:
Amount in
EUR
2021
Amount
in GBP
522,338
23,999
Amount in
AUD
Amount in
EUR
2020
Amount
in GBP
Amount in
AUD
Cash and cash
equivalents in EMHL
Trade and other payables
in EMHL
Intercompany payables to
EMHL by subsidiaries
5% effect in foreign
exchange rates
24,106
-
-
-
10,927,193
-
-
7,846
15,436
-
-
-
-
-
-
10,919,537
522,338
48,105
10,927,193
7,846
15,436
10,919,537
26,117
2,405
546,360
392
772
545,977
Other than intercompany balances there were no financial assets and liabilities denominated in foreign
currencies for EMH UK.
(ii) Credit risk
Credit exposure represents the extent of credit related losses that the Group may be subject to on amounts to
be received from financial assets. Credit risk arises principally from trade and other receivables. The objective
of the Group is to minimise the risk of loss from credit risk. The Group trades only with creditworthy third parties. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is insignificant. The Group’s maximum credit risk exposure is limited to the carrying value of its financial
assets as indicated on the Consolidated Statement of Financial Position and notes to the financial statements.
The credit quality of the financial assets was high during the year. The table below details the credit quality of
the financial assets at the end of the year:
Financial assets
Credit Quality
Cash and cash equivalents held at Westpac Bank
Cash and cash equivalents held at ANZ bank
Bank guarantee held at ANZ bank
Other receivables
Other assets
High
High
High
High
High
2021
$
1,031,382
6,849,291
47,392
29,452
80,572
2020
$
29,954
28,997
-
17,252
-
8,038,089
76,203
56
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
(iii) Liquidity risk
Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due. The objective
of the Group is to maintain sufficient liquidity to meet commitments under normal and stressed conditions.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the
availability of funding through an adequate amount of committed credit facilities. The Group aims at
maintaining flexibility in funding by maintaining adequate reserves of liquidity.
The following are the contractual maturities of financial assets and financial liabilities, including estimated
interest receipts and payments and excluding the impact of netting arrangements.
Carrying
Amount
$
Contractual
Cash flows
$
<3 months
$
3-6
months
$
6-24
months
$
As at 30 June 2021
Financial assets
Cash and cash equivalents
7,880,673
7,880,673
7,880,673
Other receivables
Other assets
Cash inflows
Financial liabilities
Trade and other payables
Lease liabilities
Cash outflows
As at 30 June 2020
Financial assets
Cash and cash equivalents
GST and other receivables
Cash inflows
Financial liabilities
Trade and other payables
Cash outflows
29,452
127,964
29,452
127,964
29,452
80,572
8,038,089
8,038,089
7,990,697
397,535
97,893
495,428
397,535
397,535
97,893
-
495,428
397,535
Carrying
Amount
$
Contractual
Cash flows
$
58,951
17,252
76,203
58,951
17,252
76,203
3-6
months
$
<3 months
$
58,951
17,252
76,203
924,592
924,592
924,592
924,592
924,592
924,592
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,392
47,392
-
97,893
97,893
6-24
months
$
-
-
-
-
-
-
57
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
(iv) Interest rate risk
From time to time the Group has significant interest bearing assets, but they are as a result of the timing of equity
raising and capital expenditure rather than a reliance on interest income. The interest rate risk arises on the rise
and fall of interest rates. 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 comprises:
As at 30 June 2021
Financial assets
Cash and cash equivalents
Other receivables
Bank guarantee
Other assets
Financial liabilities
Trade and other payables
Lease liabilities
As at 30 June 2020
Financial assets
Cash and cash equivalents
GST and other receivables
Financial liabilities
Trade and other payables
Weighted Average
Interest Rate
Floating
Interest Rate
Fixed
Interest
Non-interest
bearing
Total
%
0.21%
0.32%
$
$
$
$
2,880,673
5,000,000
-
7,880,673
-
-
-
-
29,452
47,392
-
-
80,572
29,452
47,392
80,572
2,880,673
5,047,392
110,024
8,038,089
-
-
-
-
-
-
397,535
397,535
97,893
97,893
495,428
495,428
Weighted Average
Interest Rate
Floating
Interest Rate
Fixed
Interest
Non-interest
bearing
Total
%
0.00%
$
58,951
-
58,951
-
-
$
$
$
-
-
-
-
-
-
58,951
17,252
17,252
17,252
76,203
924,592
924,592
924,592
924,592
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in the interest rates at the reporting date would have increased or decreased the
Group’s equity and profit or loss by $79,280 (2020: $590).
(v) Net fair value of financial assets and liabilities
The net fair value of cash and cash equivalents and non-interest bearing monetary assets and financial liabilities
approximates their carrying values.
58
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 22: CONTROLLED ENTITIES
Subsidiaries of European Metals Holdings Limited
Controlled entity
Country of
Incorporation
Equamineral Group Limited (EGL)*
Equamineral SA (ESA Congo)
European Metals UK Limited (EMH UK) **
EMH (Australia) Pty Ltd
British Virgin Islands
Republic of Congo
United Kingdom
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Class of Shares
Percentage Owned
2021
100%
100%
100%
100%
2020
100%
100%
100%
100%
*EGL was incorporated on 8 December 2010 and domiciled in the British Virgin Islands. EGL is the parent
company for Equamineral SA (ESA Congo) located in the Republic of Congo. EGL is the beneficial holder of
100% of the issued share capital in Equamineral SA. This company is currently in the process of being
deregistered.
**EMH UK Limited was the parent company for Geomet s.r.o up to 27 April 2020.
NOTE 23: PARENT ENTITY DISCLOSURE
The following information has been extracted from the books and records of the parent and has been prepared
in accordance with Australian Accounting Standards.
Statement of Financial Position
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY/(DEFICIT)
Profit or Loss and Other Comprehensive Income
Loss for the year
Total comprehensive loss
2021
$
2020
$
8,270,838
182,711
8,453,549
79,689
1,513
81,202
545,686
91,855
637,541
979,210
-
979,210
7,816,008
(898,008)
2021
$
2020
$
34,087,930
23,954,204
9,220,602
7,950,773
(35,492,524)
(32,802,985)
7,816,008
(898,008)
(2,689,539)
(5,530,691)
(2,689,539)
(5,530,691)
59
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2021
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
NOTE 23: PARENT ENTITY DISCLOSURE (CONTINUED)
Guarantees
There are no guarantees entered into by European Metals Holdings Limited for the debts of its subsidiaries as at
30 June 2021.
Contingent liabilities
There are no contingent liabilities of the parent as at 30 June 2021 and 30 June 2020.
Commitments
There were no commitments for the parent as at 30 June 2021 and 30 June 2020.
NOTE 24: CAPITAL COMMITMENTS
There are no capital commitments for the Group as at 30 June 2021 and 30 June 2020.
NOTE 25: CONTINGENT LIABILITIES
There are no contingent liabilities for the Group as at 30 June 2021 and 30 June 2020.
NOTE 26: SIGNIFICANT EVENTS AFTER THE REPORTING DATE
On 16 July 2021, the Company issued 238,000 CDIs upon the exercise of unquoted options at 42 cents. The
options conversions raised a total of $99,960.
Except for the matters noted above there have been no other significant events arising after the reporting date.
60
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the financial statements, notes and the additional disclosures are in accordance with the
Corporations Act 2001 including:
(a) complying with Accounting Standards;
(b) are in accordance with International Financial Reporting Standards issued by the International
Accounting Standards Board, as stated in Note 1 to the financial statements; and
(c) give a true and fair view of the financial position as at 30 June 2021 and of the performance for
the year ended on that date of the Group.
2.
the Chief Executive Officer and Chief Finance Officer have each declared that:
(a)
(b)
the financial records of the Group for the financial year have been properly maintained in
accordance with s286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the Accounting Standards;
and
(c)
the financial statements and notes for the financial year give a true and fair view.
3.
in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on
behalf of the Directors by:
Keith Coughlan
EXECUTIVE CHAIRMAN
Dated at Perth on 30 September 2021
61
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
EUROPEAN METALS HOLDINGS LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of European Metals Holdings Limited (the Company), and its controlled entities
(the Group), which comprises the consolidated statement of the financial position as at 30 June 2021, and 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 the notes to the consolidated
financial statements, 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 2021 and of its financial
performance for the year then ended; 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 Company in accordance with the auditor independence requirements of 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 (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
We have determined the matters described below to be key audit matters to be communicated in the report.
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.
We have determined the matters described below to be the key audit matters to be communicated in our report.
Liability limited by a scheme approved under Professional Standards Legislation
62
Stantons Is a member of the Russell
Bedford International network of firms
Key Audit Matters
How the matter was addressed in the audit
Valuation of Share-based payments
As disclosed in notes 16 and 17 of the financial
report, during the period the Company granted a
number of options and warrants to consultants and
performance rights
the
Company.
the Directors of
to
During the period the Company also issued
replacement CDIs in lieu of options that were
cancelled by a consultant.
The Company prepared a valuation of options,
warrants and performance rights as well as
assessed
the
its
options’ cancellation
accounting policy and the accounting standard
AASB 2 - Share-based Payment.
implication of
in accordance with
the accounting
valuation of options, warrants and
The
performance rights and the accounting treatment
of the cancellation of options are considered to be
a key audit matter as they involved judgment in
assessing the fair value of the equity instruments
granted, the grant date, vesting conditions and
vesting periods.
Investment in associate accounted for using
the equity method
As disclosed in note 12 of the financial report,
effective 28 April 2020, the Group ceased to fully
consolidate Geomet s.r.o’s (‘Geomet’) results
within the Group’s consolidated accounts due to
the investment made by CEZ a.s. (“CEZ”) for a
51% equity interest in Geomet. Therefore, the
investment
the Group’s
interest to 49% and Geomet has been equity
accounted as an investment in associate in
accordance with AASB 128 - Investments in
Associates and Joint Ventures since that date.
injection
reduced
In assessing
warrants and performance
procedures included, among others:
the valuation of share options,
rights, our audit
i. Obtaining an understanding of the underlying
transactions, reviewing agreements, minutes of
the Board meetings and ASX announcements;
ii. Reviewing the inputs used in the valuation
models, the underlying assumptions used and
discussing with management the justification for
these inputs;
iii. Assessing the accounting treatment and its
application in accordance with AASB 2; and
iv. Assessing whether the Company’s disclosures
the accounting
requirements of
met
the
standards.
In assessing the investment in associate accounted
for using the equity method, our audit procedures
included, among others:
i. Performing the audit of Geomet’s accounts for
the year ended 30 June 2021;
ii. Reviewing
the management’s workings
to
ensure that the investment in Geomet was
correctly accounted for applying the equity
method;
iii. Assessing the existence of any impairment
indicators regarding the investment in the
associate.
iv. Ensuring that the disclosures made in the
in
the
report were complete and
the requirements of
financial
accordance with
accounting standards; and
The Group accounted for 49% of the loss
incurred by Geomet in the period totalling
$1,263,167 and recognised an investment in
associate at 30 June 2021 amounting
to
$17,461,027.
The investment in associate accounted for using
the equity method is considered to be a key audit
matter as the investment represents 67% of the
total assets of the Group and also due to the
significant audit effort required to perform the
audit of Geomet.
63
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2021, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance opinion 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 have 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 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.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional skepticism throughout the audit. An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor's judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Group's preparation of the financial report that gives a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.
64
We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore key audit matters. We describe these matters
in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 21 of the directors’ report for the year ended
30 June 2021. 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.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of European Metals Holdings Limited for the year ended 30 June 2021
complies with section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(An Authorised Audit Company)
Samir Tirodkar
Director
West Perth, Western Australia
30 September 2021
65
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
ADDITIONAL INFORMATION
The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public
companies only.
1
(a)
(b)
(c)
Shareholding as at 15 September 2021
Distribution of Shareholders
Category (size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
The number of shareholdings held in less than marketable parcels is 111.
Voting Rights
The voting rights attached to each class of equity security are as follows:
175,357,485 CDIs
Number
of Shareholders
733
977
422
470
153
2,755
-
Each CDI is entitled to one vote when a poll is called, otherwise each member present at a meeting or by
proxy has one vote on a show of hands.
(d)
20 Largest Shareholders — CDIs as at 15 September 2021
Rank
Shareholder
Number of CDIs
% Held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Citicorp Nominees Pty Limited
Armco Barriers Pty Ltd
Inswinger Holdings Pty Ltd
BNP Paribas Nominees Pty Ltd ACF Clearstream
Vidacos Nominees Limited
BNP Paribas Noms Pty Ltd
Hargreaves Lansdown (Nominees) Limited <15942>
Interactive Investor Services Nominees Limited
Barclays Direct Investing Nominees Limited
Hargreaves Lansdown (Nominees) Limited
Securities Services Nominees Limited <2197007>
HSDL Nominees Limited
Lawshare Nominees Limited
HSDL Nominees Limited
Jim Nominees Limited
Vidacos Nominees Limited
Lawshare Nominees Limited
Interactive Investor Services Nominees Limited
Mr Richard Keller
BankAmerica Nominees Limited
20,321,520
13,635,000
8,500,000
7,806,006
6,458,826
5,895,226
4,113,425
4,046,795
3,603,418
3,045,711
2,734,313
2,548,967
2,505,702
2,384,208
2,299,244
2,199,653
2,052,387
2,025,081
1,980,500
1,953,057
11.59
7.78
4.85
4.45
3.68
3.36
2.35
2.31
2.05
1.74
1.56
1.45
1.43
1.36
1.31
1.25
1.17
1.15
1.13
1.11
Total Top 20 Shareholders
100,109,039
57.09
66
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
ADDITIONAL INFORMATION
2
3
4
The name of the Company Secretary is Mr Dennis Wilkins.
The address of the principal registered office in Australia is Level 3, 35 Outram Street, West Perth WA 6005.
Telephone +61 8 6245 2050.
Registers of securities are held at the following addresses
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
Perth, Western Australia 6000
5
Securities Exchange Listing
Quotation has been granted for all the CDIs of the Company on all Member Exchanges of the Australian
Securities Exchange Limited.
6
Unquoted Securities
A total of 13,024,000 options over unissued CDIs are on issue.
A total of 3,000,000 A Class Performance Shares
A total of 1,227,500 Warrants over unissued CDIs are on issue.
7
Use of Funds
The Company has used its funds in accordance with its initial business objectives.
TENEMENT SCHEDULE
Permit
Code
Deposit
Interest at
beginning of
Quarter
Acquired /
Disposed
Interest at end
of Quarter
Exploration
Area
Cinovec
Cinovec II
Cinovec III
Cinovec IV
N/A
Preliminary
Mining Permit
Cinovec II
Cinovec South
Cinovec III
Cinovec East
Cinovec IV
Cinovec NorthWest
100%
100%
100%
100%
100%
100%
100%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100%
100%
100%
100%
100%
100%
100%
67