ARBN 154 618 989 | ASX & AIM: EMH,
OTCQX: EMHXY, ERPNF and EMHLF
Annual Report
30 JUNE 2022
CORPORATE DIRECTORY
Directors
Executive Chairman
Mr Keith Coughlan
Executive Director
Mr Richard Pavlik
Mr Kiran Morzaria
Non-Executive Director
Ambassador Lincoln Palmer Bloomfield, Jr Non-Executive Director
Company Secretary
Mr David Koch
Registered Office in Australia
Level 3
35 Outram Street
West Perth WA 6005
Telephone 08 6245 2050
08 6245 2055
Facsimile
www.europeanmet.com
Email
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
Telephone
Facsimile
Facsimile
1300 850 505 (within Australia)
+61 3 9415 4000 (outside Australia)
1800 783 447 (within Australia)
+61 3 9473 2555 (outside Australia)
Registered Office in Czech Republic
GEOMET s.r.o.
Ruska 287
417 01 Dubi Bystrice
The Czech Republic
Telephone +420 732 671 666
AIM Nominated Advisor & Joint Broker
WH Ireland Ltd
24 Martin Lane
London EC4R 0DR
United Kingdom
Joint Broker
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
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, 40 Kings Park Road
West Perth WA 6005
Telephone
Facsimile
+61 8 9481 3188
+61 8 9321 1204
Reporting Accountants (UK)
Chapman Davis LLP
2 Chapel Court
London SE1 1HH
United Kingdom
Securities Exchange Listing – United Kingdom
London Stock Exchange plc
10 Paternoster Square
London EC4M 7LS
United Kingdom
AIM Code: EMH
Securities Exchange Listing - Australia
ASX Limited
Level 40, Central Park
152-158 St Georges Terrace
Perth WA 6000
ASX Code: EMH
Securities Exchange Listing – OTCQX Best Market
OTC Markets Group
300 Vesey Street, 12th Floor
New York City
NY 10282 United States
OTCQX Codes: EMHXY, ERPNF and EMHLF
1
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022 S
T
N
E
T
N
O
C
Chairman’s Letter
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
3
5
8
14
18
19
20
21
22
23
54
55
59
60
ABOUT
EUROPEAN
METALS
European Metals Holdings (ASX & AIM:
EMH, OTCQX: EMHXY, ERPNF and EMHLF)
is a mineral exploration and development
company advancing the Cinovec vertically
integrated battery metals project in Czech
Republic. The strategic location and size of
the Cinovec Project is perfectly placed to
capitalise on the EU’s accelerated transition to
renewable energy and electric vehicles.
2
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022 3
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 CHAIRMAN’S LETTER 3 Dear Shareholders Welcome to the 2022 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, in which the foundation has been set to finalise our studies, secure project finance and long-term high quality off take agreements and take the project towards a final investment decision. Our stated strategy is to become a Czech based lithium and tin producer. Significant progress has been made in the past year towards that goal, and along with the further improvement in macro conditions, we are moving closer towards making that goal a reality. The lithium price has increased dramatically over the past year and there is a growing awareness of the need to secure long-term supply. The status of Cinovec as the largest hard rock lithium project in Europe enhances its importance to European supply security. In September, the President of the European Commission announced the European Critical Raw Materials Act - legislation to assist in the development of projects like Cinovec. We expect this legislation specifically, and the growing European awareness in general, to greatly assist in the development of the Cinovec Project. Project development highlights over the year were primarily reflected in the update of the Project’s Preliminary Feasibility Study (PFS), a significant resource upgrade, and the publication of a very positive independent Life Cycle Assessment (LCA) – a report into the ESG credentials of the Project. The updated PFS, released in January, demonstrated significant enhancements to the financial model based on the introduction of a back fill model and the effect of higher prices for the Project’s main products, lithium and tin. At that time, the Project NPV8 increased 75% to USD 1.94b (post tax) with an IRR of post-tax 36.3%. This was based on an increase in production of lithium hydroxide of 16% to ~29,400 tonnes pa. This update assumed a lithium hydroxide price of USD 17,000 per tonne. With that price sitting in the vicinity of USD 70,000 per tonne at the time of writing this report, we expect the Project’s financial credentials have further improved dramatically. The Company announced a significant resource upgrade at the Project earlier in the year. This was the culmination of a drilling campaign at Cinovec South, comprising 22 diamond drill core holes for 6,622 metres, with the goal of increasing resource certainty in the existing resource model in and around the initial planned mining areas and upgrading part of the resource from the Indicated category to the higher confidence Measured category. The goals of the campaign were certainly met, with in excess of 53 million tonnes re-classified into Measured Resource category and in excess of 28 million tonnes re-classified into Indicated Resource category. The overall lithium resource at Cinovec was increased to 7.39 million tonnes Lithium Carbonate Equivalent – the 4th largest hard rock lithium deposit in the world. Shareholders would no doubt be aware of the growing importance of Environmental, Social and Governance (ESG) credentials of mining projects. The Company engaged Minviro Ltd, an independent environmental consultancy to undertake an LCA of the Project during the period. The LCA assessed the Project’s credentials in the key areas of Global Warming Potential, water usage, and acidification. The assessment concluded that the Project rated very well in the three key areas and could have one of the lowest CO2 intensities of all global lithium projects. This formal assessment supports the Company’s view that the Project will also have a minimal impact on the local community at Cinovec. The Company feels that the positive ESG profile and the low impact nature of the development will assist in the timely granting of the permits necessary to develop the Project. Financially the Company is in a very sound position with approximately AUD 18.6m at bank at the time of this report. In addition, the project company, Geomet is also well funded and we do not envisage the need to seek additional funding until Final Investment Decision, at which point a full Project Financing is expected to be completed. 4
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 CHAIRMAN’S LETTER 3 Dear Shareholders Welcome to the 2022 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, in which the foundation has been set to finalise our studies, secure project finance and long-term high quality off take agreements and take the project towards a final investment decision. Our stated strategy is to become a Czech based lithium and tin producer. Significant progress has been made in the past year towards that goal, and along with the further improvement in macro conditions, we are moving closer towards making that goal a reality. The lithium price has increased dramatically over the past year and there is a growing awareness of the need to secure long-term supply. The status of Cinovec as the largest hard rock lithium project in Europe enhances its importance to European supply security. In September, the President of the European Commission announced the European Critical Raw Materials Act - legislation to assist in the development of projects like Cinovec. We expect this legislation specifically, and the growing European awareness in general, to greatly assist in the development of the Cinovec Project. Project development highlights over the year were primarily reflected in the update of the Project’s Preliminary Feasibility Study (PFS), a significant resource upgrade, and the publication of a very positive independent Life Cycle Assessment (LCA) – a report into the ESG credentials of the Project. The updated PFS, released in January, demonstrated significant enhancements to the financial model based on the introduction of a back fill model and the effect of higher prices for the Project’s main products, lithium and tin. At that time, the Project NPV8 increased 75% to USD 1.94b (post tax) with an IRR of post-tax 36.3%. This was based on an increase in production of lithium hydroxide of 16% to ~29,400 tonnes pa. This update assumed a lithium hydroxide price of USD 17,000 per tonne. With that price sitting in the vicinity of USD 70,000 per tonne at the time of writing this report, we expect the Project’s financial credentials have further improved dramatically. The Company announced a significant resource upgrade at the Project earlier in the year. This was the culmination of a drilling campaign at Cinovec South, comprising 22 diamond drill core holes for 6,622 metres, with the goal of increasing resource certainty in the existing resource model in and around the initial planned mining areas and upgrading part of the resource from the Indicated category to the higher confidence Measured category. The goals of the campaign were certainly met, with in excess of 53 million tonnes re-classified into Measured Resource category and in excess of 28 million tonnes re-classified into Indicated Resource category. The overall lithium resource at Cinovec was increased to 7.39 million tonnes Lithium Carbonate Equivalent – the 4th largest hard rock lithium deposit in the world. Shareholders would no doubt be aware of the growing importance of Environmental, Social and Governance (ESG) credentials of mining projects. The Company engaged Minviro Ltd, an independent environmental consultancy to undertake an LCA of the Project during the period. The LCA assessed the Project’s credentials in the key areas of Global Warming Potential, water usage, and acidification. The assessment concluded that the Project rated very well in the three key areas and could have one of the lowest CO2 intensities of all global lithium projects. This formal assessment supports the Company’s view that the Project will also have a minimal impact on the local community at Cinovec. The Company feels that the positive ESG profile and the low impact nature of the development will assist in the timely granting of the permits necessary to develop the Project. Financially the Company is in a very sound position with approximately AUD 18.6m at bank at the time of this report. In addition, the project company, Geomet is also well funded and we do not envisage the need to seek additional funding until Final Investment Decision, at which point a full Project Financing is expected to be completed. EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 CHAIRMAN’S LETTER 4 The Definitive Feasibility Study and associated works continue, although there have been some 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. There has also emerged a shortage of key technical staff with lithium experience, given the current nature of the lithium market. The Company has been successful in addressing this to a degree with the addition to the team of some key members. Despite these delays, we have made steady progress of the Project with continued positive developments in optimisation work and permitting advancement. The latter of these factors has been greatly enhanced by the work of our project partner, CEZ who has significant and long- term expertise in this area within the Czech Republic. Cinovec advances towards being a significant producer of lithium for the European market at a time where this sector is displaying unprecedented growth. The demand for electric vehicles, batteries and therefore lithium is growing faster in Europe than anywhere else in the world. The size, location, economics and ESG credentials of the Cinovec Project place it in an enviable position to become a significant contributor to the solution of critical metals security in Europe. Finally, I would like to take this opportunity to thank all staff, advisors, contractors, our Project partners, CEZ 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 5
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 REVIEW OF OPERATIONS 5 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 Measured, Indicated and Inferred Mineral Resource of 708.2Mt at 0.43% Li2O and 0.05% Sn containing a combined 7.39 million tonnes Lithium Carbonate Equivalent and 335.1kt of tin, as reported to ASX on 13 October 2021 (Resource Upgrade at Cinovec Lithium Project). This followed previous reports, 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 January 2022 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV8 of USD1.94B and a post-tax IRR of 36.3%. 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. 6
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 REVIEW OF OPERATIONS 5 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 Measured, Indicated and Inferred Mineral Resource of 708.2Mt at 0.43% Li2O and 0.05% Sn containing a combined 7.39 million tonnes Lithium Carbonate Equivalent and 335.1kt of tin, as reported to ASX on 13 October 2021 (Resource Upgrade at Cinovec Lithium Project). This followed previous reports, 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 January 2022 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV8 of USD1.94B and a post-tax IRR of 36.3%. 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. EUROPEAN METALS HOLDINGS LIMITED ARBN 154 618 989 ANNUAL REPORT 30 JUNE 2022 REVIEW OF OPERATIONS 6 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 2021 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 covered both battery-grade lithium carbonate and battery grade lithium hydroxide and was benchmarked against global lithium peers. Minviro was actively engaged to identify decarbonisation optimisation in the developing feasibility study for Cinovec. EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
REVIEW OF OPERATIONS
CORPORATE
The Company successfully completed a capital raising of approximately AUD 14.4 million and welcomed
Ellerston Capital, a leading Sydney-based fund manager, and another institutional fund to the register.
(refer to the Company’s ASX release dated 19 January 2022) (Successful Placing to raise AUD14.4M).
The Company announced the appointment of Mr David Koch as the Company Secretary on 27 April 2022
(Change of Company Secretary).
On 12 May 2022, the Company announced that it had accepted to trade on the globally renowned US
based OTCQX ® Best Market Platform, which is run by the OTC Markets Group, following increased US
investor interest in European Metals’ Cinovec project, the largest hard rock lithium deposit in Europe.
The Company commenced trading on 12 May 2022 under the symbols “EMHLF”; “EMHXY”; and “ERPNF”
(Commencement of trading on OTCQX Best Market).
COVID-19 UPDATE
The Coronavirus (COVID-19) pandemic is ongoing and has had a negative impact on the Project’s
timelines. Travel logistics globally have improved since the end of the period, however it is difficult to
estimate the ongoing potential impact. The situation is rapidly developing and is dependent on measures
imposed by various governments, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
7
7
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
On 12 May 2022, the Company announced that it had accepted to trade on the globally renowned US
based OTCQX ® Best Market Platform, which is run by the OTC Markets Group, following increased US
investor interest in European Metals’ Cinovec project, the largest hard rock lithium deposit in Europe.
The Company commenced trading on 12 May 2022 under the symbols “EMHLF”; “EMHXY”; and “ERPNF”
(Commencement of trading on OTCQX Best Market).
The Coronavirus (COVID-19) pandemic is ongoing and has had a negative impact on the Project’s
timelines. Travel logistics globally have improved since the end of the period, however it is difficult to
estimate the ongoing potential impact. The situation is rapidly developing and is dependent on measures
imposed by various governments, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
REVIEW OF OPERATIONS
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
CORPORATE
Your Directors present their report, together with the consolidated 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 2022.
The Company successfully completed a capital raising of approximately AUD 14.4 million and welcomed
Ellerston Capital, a leading Sydney-based fund manager, and another institutional fund to the register.
(refer to the Company’s ASX release dated 19 January 2022) (Successful Placing to raise AUD14.4M).
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:
The Company announced the appointment of Mr David Koch as the Company Secretary on 27 April 2022
Mr Keith Coughlan
(Change of Company Secretary).
Mr Richard Pavlik
Mr Kiran Morzaria
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
COVID-19 UPDATE
Principal Activities
Ambassador Lincoln Palmer Bloomfield, Jr 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 2022 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 2022 was $6,802,895 (2021: $3,962,450).
Financial Position
The net assets of the Group have increased by $10,521,595 to $35,799,510 at 30 June 2022 (2021: $25,277,915).
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.
7
8
8
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
Information on Directors
Keith Coughlan
Executive Chairman – Appointed 30 June 2020
Qualifications
Experience
Interest
and Options
in CDIs/shares
Performance Rights
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.
Mr Coughlan held, at the end of the financial year, a 850,000 CDIs/shares
direct interest and 4,900,000 CDIs/shares indirect interest held by Inswinger
Holdings Pty Ltd, an entity of which Mr Coughlan is a director and a
shareholder.
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 been issued on 2 March 2022.
Special Responsibilities
Member of Nomination Committee
Directorships held in other
listed entities
Member of Environment, Social and Governance Committee
Non-Executive Chairman of Doriemus plc
Mr Coughlan was previously a Non-Executive Director of Calidus Resources
Limited
Richard Pavlik
Qualifications
Experience
Interest
and Options
in CDIs/shares
Performance Rights
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.
Mr Pavlik has 300,000 CDIs/shares direct interest
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 been issued on 2 March 2022.
Special Responsibilities
Member of Environment, Social and Governance Committee
Member of Nomination Committee
Directorships held in other
listed entities
Nil
9
9
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
Information on Directors
Information on Directors (continued)
Keith Coughlan
Executive Chairman – Appointed 30 June 2020
Kiran Morzaria
Non-Executive Director – Appointed 10 December 2015
Qualifications
Experience
Interest in CDIs/shares and
Options
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/shares direct interest. Mr Morzaria is a
director and chief executive of Cadence Minerals Plc which owns
16,444,914 CDIs/shares. 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 in CDIs/shares and
Options
Ambassador Bloomfield has 182,500 direct interest in CDIs/shares.
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
9
10
10
Previously Managing Director (CEO) – Appointed 6 September 2013 to 30
Qualifications
Experience
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
in CDIs/shares
Mr Coughlan held, at the end of the financial year, a 850,000 CDIs/shares
and Options
direct interest and 4,900,000 CDIs/shares 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 been issued on 2 March 2022.
Special Responsibilities
Member of Nomination Committee
Member of Environment, Social and Governance Committee
Directorships held in other
Non-Executive Chairman of Doriemus plc
listed entities
Mr Coughlan was previously a Non-Executive Director of Calidus Resources
Limited
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
in CDIs/shares
Mr Pavlik has 300,000 CDIs/shares direct interest
and Options
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 been issued on 2 March 2022.
Special Responsibilities
Member of Environment, Social and Governance Committee
Member of Nomination Committee
Directorships held in other
Nil
listed entities
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
Company Secretary
Mr David Koch (appointed 27 April 2022)
Mr Koch is a Chartered Secretary and CPA with 30+ years’ experience working in the precious metals and
mining services industries. He is a Fellow of the Governance Institute of Australia and holds a Bachelor of
Business with majors in Accounting and IT, and a Graduate Diploma of Applied Corporate Governance.
Formerly, he has held various senior corporate governance, risk, and financial management positions with
ASX listed entities and public/private partnerships, including more recently with The Perth Mint (Gold
Corporation). Mr Koch also serves as the Chief Financial Officer of the Company.
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
Indemnifying officers or auditor
Directors’ Meetings
Number attended
Number eligible to attend
5
5
5
5
5
5
5
5
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 $93,090 (2021: $73,500) 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/shares under option/warrant
During the year, no unquoted options and warrants were issued to consultants.
Unissued CDIs/shares 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/warrants
31 December 2022
23 October 2023
23 October 2023
31 January 2023
25 cents
42 cents
45 cents
$1.10
10,000,000
2,024,000
600,000
1,200,000
11
11
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
Company Secretary
Mr David Koch (appointed 27 April 2022)
Mr Koch is a Chartered Secretary and CPA with 30+ years’ experience working in the precious metals and
mining services industries. He is a Fellow of the Governance Institute of Australia and holds a Bachelor of
Business with majors in Accounting and IT, and a Graduate Diploma of Applied Corporate Governance.
Formerly, he has held various senior corporate governance, risk, and financial management positions with
ASX listed entities and public/private partnerships, including more recently with The Perth Mint (Gold
Corporation). Mr Koch also serves as the Chief Financial Officer of the Company.
Director Meetings
CDIs/shares under option/warrant (continued)
During the year ended 30 June 2022, the following ordinary shares were issued on the exercise of options
granted:
Issued to
Grant date/Issue date
Exercise Price
Number of Shares Issued
Consultant
Consultant
25 September 2020/ 16 July 2021
8 October 2020/4 March 2022
42 cents
45 cents
238,000
400,000
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:
No options/warrants were exercised since the end of the reporting year.
Directors’ Meetings
Number attended
Number eligible to attend
Name
Keith Coughlan
Richard Pavlik
Kiran Morzaria
Lincoln Palmer Bloomfield, Jr
5
5
5
5
Indemnifying officers or auditor
5
5
5
5
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.
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.
ii.
The Company has paid premiums of $93,090 (2021: $73,500) 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/shares under option/warrant
During the year, no unquoted options and warrants were issued to consultants.
Unissued CDIs/shares 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/warrants
31 December 2022
23 October 2023
23 October 2023
31 January 2023
25 cents
42 cents
45 cents
$1.10
10,000,000
2,024,000
600,000
1,200,000
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 Rights
Performance rights on issue at the date of this report is as follows:
Issued to
Grant date/Issue date
Expiry date
Number on issue
Consultant
24 November 2021/30 November 2021
30 November 2024
100,000
Keith Coughlan
17 December 2020/2 March 2022
2 March 2025
Richard Pavlik
17 December 2020/2 March 2022
2 March 2025
2,400,000
1,200,000
Employee in terms of
ESIP
27 February 2022 /2 March 2022
2 March 2025
1,200,000
Consultant
22 February 2022/ 2 March 2022
2 March 2025
29 August 2022/ 1 September 2022
2 March 2025
900,000
750,000
Environmental, Social and Governance
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.
11
12
12
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
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 has not provided any non-audit services during the year.
Significant events after the reporting date
There have been no significant events arising after the reporting date.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2022 has been received and can be
found on page 19 of the financial 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/shares in the Company.
13
13
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
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
Significant events after the reporting date
There have been no significant events arising after the reporting date.
Auditor’s Independence Declaration
found on page 19 of the financial report.
REMUNERATION REPORT (AUDITED)
The auditor’s independence declaration for the year ended 30 June 2022 has been received and can be
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/shares in the Company.
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
A. Principles used to determine the nature and amount of remuneration (continued)
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/shares, options and performance shares at year end,
refer to the remuneration report.
Stantons has not provided any non-audit services during the year.
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 2022 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.
2022
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 Rights/
Options
Directors
$
$
$
$
$
$
$
$
$
%
Keith Coughlan(i)
318,000
51,226
- 27,160
31,800
6,263
- 1,264,087 1,698,536
Kiran Morzaria(ii)
43,570
-
Richard Pavlik
Lincoln Palmer
Bloomfield, Jr
79,351
35,431
50,741
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,570
- 632,043
746,825
-
-
50,741
491,662
86,657
- 27,160
31,800
6,263
- 1,896,130 2,539,672
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 $3,507 accrual of June 2022 fee.
74
-
85
-
75
13
14
14
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
B. Details of Remuneration (continued)
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
Rights/
Options
Directors
$
$
$
$
$
$
$
$
$
Keith Coughlan(i) 279,000 99,490
- 27,407
27,345
17,825
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.
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 $318,000 plus statutory superannuation
contribution from 1 Jan 2021 to 30 June 2022.
D. Share-based compensation
During the financial year, nil CDIs/shares were issued to KMP under the Employee Securities Incentive Plan
(ESIP) (2021: nil).
Loan CDIs/shares on issue to KMP under the ESIP are as follows:
30 June 2022
Loan CDIs/shares 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
15
15
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
B. Details of Remuneration (continued)
2021
Group Key
Management
Personnel
employment
benefits
Long-
term
Equity-settled
share-based
benefits
payments
remuneration
as share
based
payments
Salary,
Profit
Non-
Other
Super-
Long
Equity
Rights/
share
monetary
annuation
Service
Options
Leave
fees
and
and
leave
bonuses
Directors
$
$
$
$
$
$
$
$
$
Keith Coughlan(i) 279,000 99,490
- 27,407
27,345
17,825
Kiran Morzaria
33,567
-
Richard Pavlik
Lincoln Palmer
Bloomfield, Jr (ii)
- 50,469
27,468 19,714
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 451,067
-
-
-
33,567
50,469
47,182
-
-
-
-
-
340,035 169,673
- 27,407
27,345
17,825
- 582,285
Notes:
(ii) Includes $4,689 accrual of June 2021 fee.
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 $318,000 plus statutory superannuation
contribution from 1 Jan 2021 to 30 June 2022.
D. Share-based compensation
Short-term benefits
Post-
Total
% of
Grant Date
No.
Value
No.
Value
No.
Value
No.
Value
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
D. Share-based compensation (continued)
30 June 2021
Loan CDIs/shares Grant Details
Exercised
Lapsed/Cancelled
Balance at
End of Year
$
$
$
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
The terms of the loan CDIs/shares are disclosed in Note 17.
E. Options issued for the year ended 30 June 2022
No options were issued as part of the remuneration for the year ended 30 June 2022 (2021: nil).
F. Performance Rights granted for the year ended 30 June 2022
(i) During the financial year, a total of $137,280 of Mr Coughlan’s remuneration was reimbursed by Geomet s.r.o.
30 June 2022
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 2022, management’s assessment is that the performance rights will vest by 30 June 2023.
During the financial year, nil CDIs/shares were issued to KMP under the Employee Securities Incentive Plan
(ESIP) (2021: nil).
G. Equity instruments issued on exercise of remuneration options
Loan CDIs/shares on issue to KMP under the ESIP are as follows:
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.
30 June 2022
Loan CDIs/shares Grant Details
Exercised
Lapsed/Cancelled
End of Year
H. Loans to Directors and Key Management Personnel
Balance at
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
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.
15
16
16
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
J. Other information (continued)
2. Mr Morzaria is a director and chief executive of Cadence Minerals plc, an entity which owns 16,444,914 CDIs/shares
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.
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
1. Mr Coughlan held, at the end of the financial year, a 850,000 CDIs/shares direct interest and 8,500,000 CDIs/shares
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/shares
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.
Performance Shares held by Key Management Personnel
There were no Performance rights held by Key Management Personnel of the Group during the 2022 and
2021 financial year.
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 July 2021, the Company received accounting and bookkeeping services of $144,218 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 2022 was $8,011.70 (2021: $12,528).
The Company received rental income of $52,415 plus GST for the period 1 July 2021 to 30 June 2022 from
Everest Corporate for subletting the office in West Perth.
On 24 November 2021, the Company granted 100,000 performance rights to Everest Corporate, a company
controlled by the spouse of Executive Chairman, Keith Coughlan. The performance rights have a expiry date
which is 3 years from the date of issue.
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 30 September 2022
17
18
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
AUDITOR’S INDEPENDENCE DECLARATION
[to be inserted]
PO Box 1908
West Perth WA 6872
Australia
Level 2, 40 Kings Park Road
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 2022
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 2022, 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 sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(An Authorised Audit Company)
Martin Michalik
Director
Liability limited by a scheme approved under Professional Standards Legislation
Stantons Is a member of the Russell
Bedford International network of firms
19
18
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Revenue
Research and Development rebate
Other income
Share based payments
Equity accounting on investment in Geomet s.r.o
Professional fees
Employees’ benefits
Advertising and promotion
Share registry and listing expense
Directors’ fees
Insurance expense
Audit fees
Depreciation and amortisation expense
Facility, advance fee and finance costs
Foreign exchange gain/(loss)
Travel and accommodation
Other expenses
Derecognition of foreign currency reserve
Loss before income tax
Income tax expense
Loss from operations
Note
30 June
2022
$
30 June
2021
$
6
1,102,944
1,102,953
56,187
97,198
289,335
66,199
17,18
13
7
(2,884,447)
(987,490)
(1,367,744)
(1,263,167)
(1,278,103)
(1,565,631)
(822,968)
(559,026)
(475,966)
(244,206)
(173,662)
(88,699)
(50,575)
(40,412)
(405,276)
(239,475)
(80,748)
(64,619)
(43,526)
(8,876)
(4,031)
(61,155)
(16,544)
(84,475)
(7,460)
(7,248)
(544,101)
(127,240)
16,709
-
(6,802,895)
(3,962,450)
3
-
-
(6,802,895)
(3,962,450)
(Loss)/Income for the year attributable to the members of the Company
(6,802,895)
(3,962,450)
Other comprehensive income/(loss)
Items that will not be reclassified to profit or 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 income/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year attributable to members
of the Company
-
-
(5,598)
9,644
853,136
(242,337)
847,538
(232,693)
(5,955,357)
(4,195,143)
Loss per share for loss from continuing operations
Basic and diluted loss per CDI/share (cents)
8
(3.78)
(2.39)
The above statement should be read in conjunction with the accompanying notes.
19
20
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other assets
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
2022
$
2021
$
9
10
11
11
12
13
14
15
12
12
19,055,509
7,880,673
782,518
53,046
53,094
337,196
19,891,121
8,270,915
47,392
87,930
47,392
136,122
16,946,419
17,461,027
17,081,741
17,644,541
36,972,862
25,915,456
939,822
147,048
45,707
439,798
99,850
6,038
1,132,577
545,686
40,775
40,775
91,855
91,855
1,173,352
637,541
35,799,510
25,277,915
16
17
47,881,352
34,087,930
12,283,791
8,752,723
(24,365,633)
(17,562,738)
35,799,510
25,277,915
The above statement should be read in conjunction with the accompanying notes.
21
20
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2022
Issued Capital
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Total
$
$
$
$
$
Balance at 1 July 2020
23,954,204
7,950,773
(235,186)
(13,600,288)
18,069,503
Income attributable to members
of the Company
Other comprehensive loss
Total comprehensive income for
the year
-
-
-
Transactions with owners,
recognized directly in equity
CDIs/shares issued during the year
9,100,000
-
-
-
-
Capital raising costs
(526,387)
355,000
Exercise of options and warrants
Repayment of Loan CDIs/shares
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
Balance at 1 July 2021
34,087,930
9,220,602
(467,879)
(17,562,738)
25,277,915
Loss attributable to members of
the Company
Transfer on derecognition of
subsidiaries1
Other comprehensive
income/(loss)
Total comprehensive income/(loss)
for the year
-
-
-
Transactions with owners,
recognized directly in equity
CDIs/shares issued
Capital raising costs
Exercise of options and warrants
14,399,000
(885,538)
279,960
-
-
-
-
-
-
Share based payments
-
2,683,530
-
(6,802,895)
(6,802,895)
(16,709)
864,247
-
-
(16,709)
864,247
847,538
(6,802,895)
(5,955,357)
-
-
-
-
-
-
-
-
14,399,000
(885,538)
279,960
2,683,530
Balance at 30 June 2022
47,881,352
11,904,132
379,659
(24,365,633)
35,799,510
The above statement should be read in conjunction with the accompanying notes.
1Refer to Note 22 Controlled entities for further detail on the deregistration.
21
22
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Revenue received
Payments to suppliers and employees
Research and Development Rebate
Interest received
Government grant
Note
30 June 2022
$
30 June 2021
$
827,208
1,011,041
(2,602,747)
(2,640,953)
56,187
29,466
-
289,335
1,340
55,118
Payments for Cinovec associated costs
(887,098)
(1,007,678)
Net cash (used in) operating activities
19
(2,576,984)
(2,291,797)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs /shares
Capital raising costs paid
Proceeds from exercise of options and warrants
Proceeds from repayment of loan CDIs/shares
Payment for lease liability
Net cash from financing activities
-
-
14,399,000
(885,538)
279,960
-
(36,577)
9,100,000
(171,387)
958,733
271,380
(47,391)
13,756,845
10,111,335
Net increase in cash and cash equivalents
11,179,861
7,819,538
Cash and cash equivalents at the beginning of the financial
year
Exchange differences in foreign currency held
7,880,673
(5,025)
58,951
2,184
Cash and cash equivalents at the end of financial year
9
19,055,509
7,880,673
The above statement should be read in conjunction with the accompanying notes.
23
22
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
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 consolidated financial statements are general purpose financial statements, which have been
prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations,
other 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 consolidated 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
AASB 2021-3: Amendments to Australian Accounting Standards – COVID-19 Related Rent Concessions
beyond 30 June 2021
The Group has applied AASB 2021-3: Amendments to Australian Accounting Standards – COVID-19-Related
Rent Concessions beyond 30 June 2021 this reporting period.
The amendment amends AASB 16 to extend by one year, the application of the practical expedient added
to AASB 16 by AASB 2020-4: Amendments to Australian Accounting Standards – COVID-19-Related Rent
Concessions. The practical expedient permits lessees not to assess whether rent concessions that occur as
a direct consequence of the COVID-19 pandemic and meet specified conditions are lease modifications
and instead, to account for those rent concessions as if they were not lease modifications. The amendment
has not had a material impact on the Group’s financial statements.
AASB 2020-8: Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase
2
The Group has applied AASB 2020-8 which amends various standards to help listed entities to provide
financial statement users with useful information about the effects of the interest rate benchmark reform on
those entities’ financial statements. As a result of these amendments, an entity:
• will not have to derecognise or adjust the carrying amount of financial statements for changes required
by the reform, but will instead update the effective interest rate to reflect the change to the alternative
benchmark rate;
• will not have to discontinue its hedge accounting solely because it makes changes required by the
reform, if the hedge meets other hedge accounting criteria; and
• will be required to disclose information about new risks arising from the reform and how it manages the
transition to alternative benchmark rates. The amendment has not had a material impact on the Group’s
financials.
23
24
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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”).
(a) Basis of preparation (continued)
(i) Accounting policies (continued)
The consolidated financial statements are general purpose financial statements, which have been
prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations,
other 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 consolidated 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
AASB 2021-3: Amendments to Australian Accounting Standards – COVID-19 Related Rent Concessions
beyond 30 June 2021
The Group has applied AASB 2021-3: Amendments to Australian Accounting Standards – COVID-19-Related
Rent Concessions beyond 30 June 2021 this reporting period.
The amendment amends AASB 16 to extend by one year, the application of the practical expedient added
to AASB 16 by AASB 2020-4: Amendments to Australian Accounting Standards – COVID-19-Related Rent
Concessions. The practical expedient permits lessees not to assess whether rent concessions that occur as
a direct consequence of the COVID-19 pandemic and meet specified conditions are lease modifications
and instead, to account for those rent concessions as if they were not lease modifications. The amendment
has not had a material impact on the Group’s financial statements.
AASB 2020-8: Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase
2
The Group has applied AASB 2020-8 which amends various standards to help listed entities to provide
financial statement users with useful information about the effects of the interest rate benchmark reform on
those entities’ financial statements. As a result of these amendments, an entity:
• will not have to derecognise or adjust the carrying amount of financial statements for changes required
by the reform, but will instead update the effective interest rate to reflect the change to the alternative
benchmark rate;
financials.
• will not have to discontinue its hedge accounting solely because it makes changes required by the
reform, if the hedge meets other hedge accounting criteria; and
• will be required to disclose information about new risks arising from the reform and how it manages the
transition to alternative benchmark rates. The amendment has not had a material impact on the Group’s
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 29 September 2022.
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 consolidated 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 2022, the Group comprising the Company and its subsidiaries has incurred a loss for the year
amounting to $6,802,895 (2021: loss of $3,962,450). The Group has a net working capital surplus of
$18,758,544 (2021: surplus of $7,725,229) and cash and cash equivalents of $19,055,509 (2021: $7,880,673).
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 2022 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.
24
25
24
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
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 right-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 consolidated 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.
25
26
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
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 right-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 consolidated 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.
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.
26
27
26
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
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.
28
27
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Goods and Services Tax (GST)
(j) Exploration and Evaluation Assets
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
the related service is provided.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
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.
28
Exploration and evaluation costs, including costs of acquiring licenses, are capitalised as exploration
and evaluation assets on an area of interest basis. Costs of acquiring licences which are pending the
approval of the relevant regulatory authorities as at the date of reporting are capitalised as
exploration and evaluation cost if in the opinion of the Directors it is virtually certain the Group will be
granted the licences.
The expenditures are expected to be recouped through successful development and
Exploration and evaluation assets are only recognised if the rights of tenure to the area of interest are
current and either:
•
exploitation of the area of interest; or
•
Activities in the area of interest have not at the reporting date, reached a stage which permits
a reasonable assessment of the existence or otherwise of economically recoverable reserves and
active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment when:
Sufficient data exists to determine technical feasibility and commercial viability; and
•
•
Facts and circumstances suggest that the carrying amount exceeds the recoverable amount
(see impairment accounting policy in Note 1(c). For the purposes of impairment testing, exploration
and evaluation assets are allocated to cash-generating units to which exploration activity relates. The
cash generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an
area of interest are demonstrable, exploration and evaluation assets attributable to that area of
interest are first tested for impairment and then reclassified from intangible assets to mining property
and development assets within property, plant and equipment.
(k) 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 price
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 asse
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
29
28
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Financial Instruments (continued)
Classification and measurement (continued)
Financial assets (continued)
•
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.
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.
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.
•
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.
30
29
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k) Financial Instruments (continued)
Classification and measurement (continued)
Financial assets (continued)
•
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 are measured at amortised cost if the assets meet with the following conditions (and
•
they are held within a business model whose objective is to hold the financial assets and collect
Financial assets at amortised cost
are not designated as FVPL);
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.
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.
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.
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
hedge, as appropriate.
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
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.
30
(k)
Financial Instruments (continued)
Financial liabilities (continued)
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.
(l)
(m)
All interest-related charges and, if applicable, gains and losses arising on changes in fair value are
recognised in profit or loss.
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/share
Basic earnings per CDI/share
Basic earnings per CDI/share is determined by dividing the profit or loss attributable to ordinary
shareholders of the Company, by the weighted average number of CDIs/shares outstanding during the
period, adjusted for bonus elements in CDIs/shares issued during the period.
Diluted earnings per CDI/share
Diluted earnings per CDI/share adjusts the figure used in the determination of basic earnings per
CDI/share to take into account the after income tax effect of interest and other financial costs associated
with dilutive potential CDIs/shares and the weighted average number of CDIs/shares assumed to have
been issued for no consideration in relation to dilutive potential CDIs/shares, which comprise convertible
notes and CDI/share options granted.
(n)
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.
All other borrowing costs are recognised in as expenses in the period in which they are incurred.
((o)
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.
(p)
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.
31
30
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q)
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.
(r)
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/shares 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/shares and the value and volatility of the price of the underlying shares.
(s) 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.
32
31
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q)
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.
(r)
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/shares 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/shares and the value and volatility of the price of the underlying shares.
(s) 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.
32
(s)
Foreign Currency Transactions and Balances (Continued)
Transaction and balances (Continued)
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.
Exchange differences arising on translation of foreign operations recognised in the other
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.
(t)
Issued capital
CDIs/shares are classified as equity. Incremental costs directly attributable to the issue of new CDIs/shares
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/shares or options for the acquisition of a new business are not included
in the cost of acquisition as part of the purchase consideration.
(u) 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 equal 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.
(v) 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.
33
32
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(v) Leases (continued)
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.
(w) Fair value measurement hierarchy
The Group is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the
asset or liability. Considerable judgement is required to determine what is significant to fair value and
therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These
include discounted cash flow analysis or the use of observable inputs that require significant adjustments
based on unobservable inputs.
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.
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
33
34
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NOTE 2: DETERMINATION OF FAIR VALUES (continued)
(v) Leases (continued)
Lease payments included in the measurement of the lease liability are as follows:
•
fixed lease payments less any lease incentives;
• variable lease payments that depend on an index or rate, initially measured using the index or rate at
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.
(w) Fair value measurement hierarchy
The Group is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for the
asset or liability. Considerable judgement is required to determine what is significant to fair value and
therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These
include discounted cash flow analysis or the use of observable inputs that require significant adjustments
based on unobservable inputs.
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.
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that
the transaction will take place either: in the principal market; or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, are used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting
date and transfers between levels are determined based on a reassessment of the lowest level of input that is
significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on
market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the
latest valuation and a comparison, where applicable, with external sources of data.
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.
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
2022
$
30 June
2021
$
-
-
-
-
-
-
-
-
-
-
-
-
* 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 2022.
(b) Reconciliation of income tax expense to prima facie tax payable
Net (loss)/profit before tax
(6,802,895)
(3,962,450)
Prima facie tax on operating loss at 25% (2021: 26%)
(1,700,724)
(1,030,237)
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
34
1,322,354
378,370
484,048
546,189
-
Nil%
Nil
-
Nil%
Nil
35
34
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 3: INCOME TAX (continued)
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
1,311,243
1,124,435
(19,976)
(68,059)
1,177
31,343
47
(21,982)
21,621
36,762
-
9,838
466,341
(35,392)
25,452
25,962
1,360,235
1,548,577
-
-
1,360,235
1,548,577
Unused tax losses for which no deferred tax asset has been recognised
5,244,970
4,324,751
(b) Reconciliation of income tax expense to prima facie tax payable (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 $1,102,944 (2021: $1,102,953) 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 $144,218 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 2022 was $8,012 (2021: $12,528).
The Company received rental income of $52,415 plus GST from Everest Corporate for subletting the office in
West Perth.
On 24 November 2021, the Company granted 100,000 performance rights to Everest Corporate, a company
controlled by the spouse of Executive Chairman, Keith Coughlan. The performance rights have a expiry date
which is 3 years from the date of issue.
There were no other transactions with related parties during the financial year.
35
36
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 3: INCOME TAX (continued)
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
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 2022
and 30 June 2021.
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
2022
$
2021
$
605,479
537,115
31,800
6,263
1,896,130
27,345
17,825
-
2,539,672
582,285
1,311,243
1,124,435
(19,976)
(68,059)
1,177
31,343
47
(21,982)
21,621
36,762
-
9,838
466,341
(35,392)
25,452
25,962
1,360,235
1,548,577
-
-
1,360,235
1,548,577
Unused tax losses for which no deferred tax asset has been recognised
5,244,970
4,324,751
There were no loans to Key Management Personnel during the financial year (2021: nil). The total value of loan
CDIs/shares at 30 June 2022 amounted to $1,442,666 (30 June 2021: $1,442,666). The fair value of the remaining
1,100,000 loan CDIs/shares is $1,442,666 at 30 June 2022.
(b) Reconciliation of income tax expense to prima facie tax payable (continued)
NOTE 6: REVENUE
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.
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/share
2022
$
2021
$
1,102,944
1,102,953
2022
$
2021
$
48,665
1,910
50,575
39,000
4,526
43,526
2022
$
2021
$
Loss attributable to members of European Metals Holdings Limited ($)
(6,802,895)
(3,962,450)
Weighted average number of CDIs/shares outstanding
179,817,540
166,032,891
Basic and diluted loss per CDI/share (cents)
(3.78)
(2.39)
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
Term deposit
Total cash and cash equivalents in the Statement of Cash Flows
2022
$
2021
$
14,035,258
2,880,673
5,020,251
5,000,000
19,055,509
7,880,673
36
37
36
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 $1,102,944 (2021: $1,102,953) 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 $144,218 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 2022 was $8,012 (2021: $12,528).
The Company received rental income of $52,415 plus GST from Everest Corporate for subletting the office in
West Perth.
On 24 November 2021, the Company granted 100,000 performance rights to Everest Corporate, a company
controlled by the spouse of Executive Chairman, Keith Coughlan. The performance rights have a expiry date
which is 3 years from the date of issue.
There were no other transactions with related parties during the financial year.
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 10: TRADE AND OTHER RECEIVABLES
Trade and other receivable
GST and VAT receivable
Interest receivable
NOTE 11: OTHER ASSETS
Current
Deposit
Prepayments
Unbilled revenue
Non-Current
Bank guarantee on office lease
NOTE 12: OFFICE LEASE
(a) Right-of-use asset
Right-of-use asset at cost
Less accumulated depreciation
Reconciliation of Right-of-use asset:
Opening balance
Additions/lease modification
Depreciation
Closing balance
(b) Lease liability
Opening balance
Additions/lease modification
Interest expense
Payments
Closing balance
37
2022
$
2021
$
694,907
60,808
26,803
782,518
17,966
23,594
11,486
53,046
2022
$
2021
$
-
6,345
53,094
250,279
-
80,572
53,094
337,196
47,392
47,392
47,392
47,392
2022
$
2021
$
136,122
144,129
(48,192)
(8,007)
87,930
136,122
2022
$
2021
$
136,122
-
(8,547)
144,129
(40,185)
(8,007)
87,390
136,122
97,893
20,025
5,141
-
144,129
1,155
(36,577)
(47,391)
86,482
97,893
38
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 10: TRADE AND OTHER RECEIVABLES
NOTE 12: OFFICE LEASE
(b) Lease liability
Current
Non-current
Closing balance
2022
$
2021
$
45,707
40,775
86,482
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%.
NOTE 13: INVESTMENT IN ASSOCIATE
Opening balance
Share of loss – associate
Share of other comprehensive income/(loss) - associates
2022
$
2021
$
17,461,027
18,966,531
(1,367,744)
(1,263,167)
853,136
(242,337)
16,946,419
17,461,027
Effective 28 April 2020, Geomet was equity accounted (i.e., 49% of share of the profit or loss of the investee after
the date of acquisition) for as Investment in Associate by EMH. 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
2022
$
2021
$
26,418,644
38,660,683
28,724,124
17,091,493
55,142,768
55,752,176
3,500,606
755,929
-
-
3,500,606
755,929
51,642,162
54,996,247
5,250
17,422
(2,796,568)
(2,594,480)
(2,791,318)
(2,577,058)
39
38
Trade and other receivable
GST and VAT receivable
Interest receivable
NOTE 11: OTHER ASSETS
Current
Deposit
Prepayments
Unbilled revenue
Non-Current
Bank guarantee on office lease
NOTE 12: OFFICE LEASE
(a) Right-of-use asset
Right-of-use asset at cost
Less accumulated depreciation
Reconciliation of Right-of-use asset:
Opening balance
Additions/lease modification
Depreciation
Closing balance
(b) Lease liability
Opening balance
Additions/lease modification
Interest expense
Payments
Closing balance
2022
$
2021
$
694,907
60,808
26,803
782,518
17,966
23,594
11,486
53,046
2022
$
2021
$
53,094
250,279
-
-
6,345
80,572
53,094
337,196
47,392
47,392
47,392
47,392
2022
$
2021
$
136,122
144,129
(48,192)
(8,007)
87,930
136,122
2022
$
2021
$
136,122
-
(8,547)
144,129
(40,185)
(8,007)
87,390
136,122
97,893
20,025
5,141
-
144,129
1,155
(36,577)
(47,391)
86,482
97,893
38
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 14: TRADE AND OTHER PAYABLES
Trade payables
Accrued expenses and other liabilities
Advance fee received
Payables are normally due for payment within 30 days.
NOTE 15: PROVISIONS
Provision for annual leave
Provision for long service leave
NOTE 16: ISSUED CAPITAL
(a) Issued and paid up capital
186,042,485 CDIs/shares (30 June 2021: 175,119,485
CDIs/shares)
Total issued capital
(b) Movements in CDIs/shares
2022
$
2021
$
584,039
355,783
-
939,822
295,612
125,800
18,386
439,798
2022
$
2021
$
96,259
50,789
147,048
55,362
44,488
99,850
2022
$
2021
$
47,881,352
34,087,930
47,881,352
34,087,930
Date
Number
$
Balance at the beginning of the year
1 July 2020
154,703,973
23,954,204
CDI/share issue under the Funding Facility Agreement
@ A$0.238 per CDI/share
Exercise of unlisted options @ 16.6c
Exercise of unlisted options @ 16.6c
CDI/share issue under the Funding Facility Agreement
@ A$0.27 per CDI/share
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/share issue under the Funding Facility Agreement
@ A$0.34 per CDI/share
CDI/share issue under the Funding Facility Agreement
@ A$0.34 per CDI/share
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
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
CDI/share issue under the Funding Facility Agreement
@ A$0.683 per CDI/share
6 January 2021
1,463,734
1,000,000
40
39
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 14: TRADE AND OTHER PAYABLES
NOTE 16: ISSUED CAPITAL (continued)
(b) Movements in CDIs/shares
Issue of CDIs/shares in lieu of consultant options
18 January 2021
1,613,708
-
Share Placement @ A$1.10 per CDI/share
8 February 2021
6,454,546
7,100,000
Issue of CDIs/shares in lieu of consultant options
cancelled
Issue of CDIs/shares for services provided @A$1.10 per
CDI/share
4 March 2021
2,435,880
-
4 March 2021
300,000
Repayment of Loan CDIs/shares @ A$0.485 per CDI
15,19,22 March 2021
Repayment of Loan CDIs/shares @ 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
Balance at the beginning of the year
Exercise of unlisted options @ 42c
10 May 2021
238,000
30 June 2021
175,119,485
34,087,930
-
(526,387)
Date
Number
$
1 July 2021
175,119,485
34,087,930
16 July 2021
238,000
99,960
Share placement @ A$1.40 per CDI/share
28 January 2022
10,285,000
14,399,000
Exercise of unlisted options @ 45c
Capital raising cost
Balance at the end of the year
4 March 2022
400,000
180,000
-
(885,538)
30 June 2022
186,042,485
47,881,352
(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)
6 January 2021
1,463,734
1,000,000
The Group is not subject to any externally imposed capital requirements.
2022
$
2021
$
19,055,509
7,880,673
782,518
53,046
53,094
337,196
(939,822)
(439,798)
(147,048)
(99,850)
(45,707)
(6,038)
18,758,544
7,725,229
41
40
2022
$
2021
$
584,039
355,783
-
939,822
295,612
125,800
18,386
439,798
2022
$
2021
$
96,259
50,789
147,048
55,362
44,488
99,850
2022
$
2021
$
47,881,352
34,087,930
Trade payables
Accrued expenses and other liabilities
Advance fee received
Payables are normally due for payment within 30 days.
NOTE 15: PROVISIONS
Provision for annual leave
Provision for long service leave
NOTE 16: ISSUED CAPITAL
(a) Issued and paid up capital
CDIs/shares)
Total issued capital
(b) Movements in CDIs/shares
186,042,485 CDIs/shares (30 June 2021: 175,119,485
47,881,352
34,087,930
Date
Number
$
Balance at the beginning of the year
1 July 2020
154,703,973
23,954,204
CDI/share issue under the Funding Facility Agreement
@ A$0.238 per CDI/share
Exercise of unlisted options @ 16.6c
Exercise of unlisted options @ 16.6c
17 July 2020
5 August 2020
1,049,825
750,000
18 August 2020
3,000,000
250,000
124,500
498,000
CDI/share issue under the Funding Facility Agreement
@ A$0.27 per CDI/share
27 August 2020
927,300
250,000
Exercise of unlisted options @ 25c
17 September 2020
50,000
12,500
CDI/share issue under the Funding Facility Agreement
@ A$0.34 per CDI/share
23 October 2020
723,323
250,000
CDI/share issue under the Funding Facility Agreement
@ A$0.34 per CDI/share
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/share issue under the Funding Facility Agreement
@ A$0.683 per CDI/share
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
40
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 17: RESERVES
Option and Warrant Reserve 17(a)
Performance Shares Reserve 17 (b)
Performance Rights Reserve 17 (c)
Loan CDIs/shares Reserve 17 (d)
Foreign Currency Translation Reserve 17 (e)
Total Reserves
(a) Option and Warrant Reserve
Balance at the beginning of the financial year
Equity based payment expense (Note 18)
Equity based payment as capital raising cost
Balance at the end of the financial year
2022
$
2021
$
4,370,589
4,306,491
3,471,444
3,471,444
2,619,432
-
1,442,667
1,442,667
379,659
(467,879)
12,283,791
8,752,723
2022
2021
$
$
4,306,491
3,036,662
64,098
914,829
-
355,000
4,370,589
4,306,491
The following options and warrants existed as at 30 June 2021 and 30 June 2022:
Expiry
date
Balance at
30 June 2021
Issued during
the year
Exercised
during the year
Expired
Balance at
30 June 2022
Options @ 25cents
31 Dec 22
10,000,000
Options @ 42cents
Options @ 45cents
23 Oct 23
23 Oct 23
Warrants @ 20pence
22 Nov 21
2,262,000
1,000,000
27,500
Warrants @ $1.10
31 Jan 23
1,200,000
Total
14,489,500
-
-
-
-
-
-
-
(238,000)
(400,000)
-
-
-
10,000,000
2,024,000
600,000
-
-
(27,500)
-
-
1,200,000
(638,000)
(27,500)
13,824,000
• 638,000 unlisted options were exercised during the year as detailed in the table above.
• 27,500 warrants exercisable at 20 pence expired on 22 November 2021.
(b) Performance Share Reserve
The Performance Share reserve records the fair value of the Performance Shares issued. No performance shares
were on issue at 30 June 2022.
Date
Number
$
Balance at the beginning of the period
Balance at end of the period
Balance at the beginning of the period (Class A)
Expiry of A Class Performance Shares1
Balance at end of the period
1 July 2020
3,000,000
30 June 2021
3,000,000
1 July 2021
3,000,000
3,471,444
3,471,444
3,471,444
(3,000,000)
-
30 June 2022
-
3,471,444
1The performance shares lapsed during the period, as the milestone was not achieved by the required date and the
shares have been automatically redeemed by the entity.
41
42
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 17: RESERVES (continued)
(c) Performance Rights Reserve
30 June 2022
30 June 2021
Number
$
Number
$
Balance at the beginning of the period
3,600,000
-
3,600,000
Performance rights granted to directors on 17 Dec 20201
-
1,896,130
Performance Rights granted to a consultant on 24 Nov 20212
Performance Rights granted to directors on 2 Mar 20223
Performance Rights granted to a consultant on 2 Mar 20223
100,000
1,200,000
900,000
107,440
344,803
271,059
-
-
-
Balance at the end of the period
5,800,000
2,619,432
3,600,000
-
-
-
-
-
1On 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. As at 30 June 2021 and 31 Dec 2021, the management had
assessed that the probability to achieve the performance hurdles was below 50% therefore, the management had not
expensed any of the value of these performance rights in accordance with AASB 2. For the year ended 30 June 2022,
management assessed the probability of achieving the finance hurdles to be over 50%, as a result of which, a share-
based expense of $1,896,130 was recognized in the statement of profit or loss and other comprehensive income for
the period. The 3,600,000 Performance Rights were issued on 2 March 2022.
2 On 24 November 2021, the shareholders approved the grant of 100,000 Performance Rights to a consultant for
remuneration of consultant fees. The share-based expense of $107,440 was recognized in the statement of profit or loss
and other comprehensive income for the period. The Performance Rights were issued on 30 November 2021.
3 On 2 March 2022, the directors approved the grant of 1,200,000 performance rights to an employee and 900,000
performance rights to a consultant, in terms of the employee share incentive plan. Refer to Note 18 for further detail.
The share-based expense of $615,862 was recognized in the statement of profit or loss and other comprehensive
income for the period.
(d) Loan CDIs/shares 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/shares reserve records the fair value of the Loan CDIs/shares issued.
NOTE 17: RESERVES
Option and Warrant Reserve 17(a)
Performance Shares Reserve 17 (b)
Performance Rights Reserve 17 (c)
Loan CDIs/shares Reserve 17 (d)
Foreign Currency Translation Reserve 17 (e)
Total Reserves
(a) Option and Warrant Reserve
Balance at the beginning of the financial year
Equity based payment expense (Note 18)
Equity based payment as capital raising cost
Balance at the end of the financial year
2022
$
2021
$
4,370,589
4,306,491
3,471,444
3,471,444
2,619,432
-
1,442,667
1,442,667
379,659
(467,879)
12,283,791
8,752,723
2022
2021
$
$
4,306,491
3,036,662
64,098
914,829
-
355,000
4,370,589
4,306,491
The following options and warrants existed as at 30 June 2021 and 30 June 2022:
Expiry
date
Balance at
Issued during
Exercised
Balance at
30 June 2021
the year
during the year
Expired
30 June 2022
Options @ 25cents
31 Dec 22
10,000,000
Options @ 42cents
Options @ 45cents
23 Oct 23
23 Oct 23
Warrants @ 20pence
22 Nov 21
2,262,000
1,000,000
27,500
Warrants @ $1.10
31 Jan 23
1,200,000
(238,000)
(400,000)
-
-
-
-
-
-
-
10,000,000
2,024,000
600,000
1,200,000
(27,500)
-
-
-
-
-
-
-
Total
14,489,500
(638,000)
(27,500)
13,824,000
• 638,000 unlisted options were exercised during the year as detailed in the table above.
• 27,500 warrants exercisable at 20 pence expired on 22 November 2021.
(b) Performance Share Reserve
were on issue at 30 June 2022.
The Performance Share reserve records the fair value of the Performance Shares issued. No performance shares
Balance at the beginning of the period
Balance at end of the period
Balance at the beginning of the period (Class A)
Expiry of A Class Performance Shares1
Balance at end of the period
1 July 2020
3,000,000
30 June 2021
3,000,000
1 July 2021
3,000,000
3,471,444
3,471,444
3,471,444
(3,000,000)
-
30 June 2022
-
3,471,444
1The performance shares lapsed during the period, as the milestone was not achieved by the required date and the
shares have been automatically redeemed by the entity.
42
iii. All or part of the loan may be repaid prior to the Advance repayment Date.
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/shares - 15 years after the
date of loan advance and the repayment date for 1,500,000 Employee CDIs/shares – 7 years after the date
of loan advice.
The Loan is repayable on the earlier of:
(a) The repayment date;
(b) The plan CDIs/shares being sold;
(c) The borrower becoming insolvent;
v.
43
42
The total loan equal to issue price multiplied by the number of Plan CDIs/shares/shares 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.
The Loan CDIs/shares represent an option arrangement. Loan CDIs/shares vested immediately. The key terms of
the Employee Share Plan and of each limited recourse loan provided under the Plan are as follows:
i.
Date
Number
$
ii.
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 17: RESERVES (CONTINUED)
(d) Loan CDIs/shares Reserve (continued)
(d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs/shares being acquired by a third party by way of an amalgamation, arrangement, or
formal takeover bid for not less than all the outstanding CDIs/shares.
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:
(a) The borrower dies or becomes permanently disabled; or
(b) The Board otherwise determines that such waiver is appropriate
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/shares
i.
In accordance with the terms of the Plan and the Invitation, the Loan CDIs/shares cannot be sold,
transferred, assigned, charged or otherwise encumbered with the Plan CDIs/shares except in accordance
with the Plan.
Balance at beginning of the year
Loan CDIs/shares repaid during
the year
30 June 2022
30 June 2021
Number
1,350,000
-
Amount
Expensed
1,442,667
-
Number
1,750,000
(400,000)
Amount
Expensed
1,442,667
-
Balance at end of the year
1,350,000
1,442,667
1,350,000
1,442,667
Loan CDIs/shares Reserve
CDIs/shares 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/share 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/shares were issued to the executive members under the Employee Securities Incentive Plan on 6
June 2018.
Holders of CDIs/shares 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.
(e) 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 deconsolidation of
EQHSA.
Balance at the beginning of the financial year
Transfer of foreign currency to profit or loss on deregistration of EQHSA
Movement during the year
Balance at the end of the financial year
43
2022
$
2021
$
(467,879)
(235,186)
(16,709)
-
864,247
(232,693)
379,659
(467,879)
44
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 17: RESERVES (CONTINUED)
(d) Loan CDIs/shares Reserve (continued)
(d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs/shares being acquired by a third party by way of an amalgamation, arrangement, or
formal takeover bid for not less than all the outstanding CDIs/shares.
NOTE 17: RESERVES (continued)
(c) Performance Rights Reserve
30 June 2022
30 June 2021
Number
$
Number
$
vi.
The Board may, in its sole discretion, waive the right to repayment of all or any part of the outstanding
Balance at the beginning of the period
3,600,000
-
3,600,000
Performance rights granted to directors on 17 Dec 20201
-
1,896,130
Performance Rights granted to a consultant on 24 Nov 20212
Performance Rights granted to directors on 2 Mar 20223
Performance Rights granted to a consultant on 2 Mar 20223
100,000
1,200,000
900,000
107,440
344,803
271,059
-
-
-
Balance at the end of the period
5,800,000
2,619,432
3,600,000
-
-
-
-
-
1On 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. As at 30 June 2021 and 31 Dec 2021, the management had
assessed that the probability to achieve the performance hurdles was below 50% therefore, the management had not
expensed any of the value of these performance rights in accordance with AASB 2. For the year ended 30 June 2022,
management assessed the probability of achieving the finance hurdles to be over 50%, as a result of which, a share-
based expense of $1,896,130 was recognized in the statement of profit or loss and other comprehensive income for
the period. The 3,600,000 Performance Rights were issued on 2 March 2022.
2 On 24 November 2021, the shareholders approved the grant of 100,000 Performance Rights to a consultant for
remuneration of consultant fees. The share-based expense of $107,440 was recognized in the statement of profit or loss
and other comprehensive income for the period. The Performance Rights were issued on 30 November 2021.
3 On 2 March 2022, the directors approved the grant of 1,200,000 performance rights to an employee and 900,000
performance rights to a consultant, in terms of the employee share incentive plan. Refer to Note 18 for further detail.
The share-based expense of $615,862 was recognized in the statement of profit or loss and other comprehensive
income for the period.
(d) Loan CDIs/shares 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/shares reserve records the fair value of the Loan CDIs/shares issued.
Loan Forgiveness
balance of an Advance where:
(a) The borrower dies or becomes permanently disabled; or
(b) The Board otherwise determines that such waiver is appropriate
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/shares
with the Plan.
i.
In accordance with the terms of the Plan and the Invitation, the Loan CDIs/shares cannot be sold,
transferred, assigned, charged or otherwise encumbered with the Plan CDIs/shares except in accordance
Balance at beginning of the year
1,350,000
Loan CDIs/shares repaid during
-
the year
Number
30 June 2022
30 June 2021
Amount
Expensed
1,442,667
-
Number
1,750,000
(400,000)
Amount
Expensed
1,442,667
-
Balance at end of the year
1,350,000
1,442,667
1,350,000
1,442,667
Loan CDIs/shares Reserve
CDIs/shares 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/share 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/shares were issued to the executive members under the Employee Securities Incentive Plan on 6
June 2018.
Shareholders;
1.
2.
3.
Holders of CDIs/shares have the same entitlement benefits of holding the underlying shares. Each Share in the
Company confers upon the Shareholder:
the right to one vote at a meeting of the Shareholders of the Company or on any Resolution of
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.
(e) 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 deconsolidation of
EQHSA.
Balance at the beginning of the financial year
Transfer of foreign currency to profit or loss on deregistration of EQHSA
Movement during the year
Balance at the end of the financial year
2022
$
2021
$
(467,879)
(235,186)
(16,709)
-
864,247
(232,693)
379,659
(467,879)
44
iii. All or part of the loan may be repaid prior to the Advance repayment Date.
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/shares - 15 years after the
date of loan advance and the repayment date for 1,500,000 Employee CDIs/shares – 7 years after the date
of loan advice.
The Loan is repayable on the earlier of:
(a) The repayment date;
(b) The plan CDIs/shares being sold;
(c) The borrower becoming insolvent;
v.
43
44
The total loan equal to issue price multiplied by the number of Plan CDIs/shares/shares 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.
The Loan CDIs/shares represent an option arrangement. Loan CDIs/shares vested immediately. The key terms of
the Employee Share Plan and of each limited recourse loan provided under the Plan are as follows:
i.
ii.
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 17: RESERVES (CONTINUED)
(d) Loan CDIs/shares Reserve (continued)
(d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs/shares being acquired by a third party by way of an amalgamation, arrangement, or
formal takeover bid for not less than all the outstanding CDIs/shares.
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:
(a) The borrower dies or becomes permanently disabled; or
(b) The Board otherwise determines that such waiver is appropriate
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/shares
i.
In accordance with the terms of the Plan and the Invitation, the Loan CDIs/shares cannot be sold,
transferred, assigned, charged or otherwise encumbered with the Plan CDIs/shares except in accordance
with the Plan.
Balance at beginning of the year
Loan CDIs/shares repaid during
the year
30 June 2022
30 June 2021
Number
1,350,000
-
Amount
Expensed
1,442,667
-
Number
1,750,000
(400,000)
Amount
Expensed
1,442,667
-
Balance at end of the year
1,350,000
1,442,667
1,350,000
1,442,667
Loan CDIs/shares Reserve
CDIs/shares 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/share 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/shares were issued to the executive members under the Employee Securities Incentive Plan on 6
June 2018.
During the year, the Group incurred a share-based payments expense for a total of $2,884,447 resulting from
NOTE 18: SHARE BASED PAYMENT EXPENSE
the transactions detailed below.
(i) Share based payments granted during the year:
On 24 November 2021, the shareholders approved the grant of 100,000 Performance Rights to a consultant for
remuneration of consultant fees with the vesting terms as below:
Tranche 1:
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.
Tranche 2:
Tranche 2 shall vest upon CFO and Consultancy Performance up to 30 June 2022.
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 were issued as at 31 December 2021.
Number
granted
Term of
maturity
Grant date
Share price
Value per
Total fair
% vested
right
value
Tranche 1
50,000
24 Nov 21
3 years
Tranche 2
50,000
24 Nov 21
3 years
$1.535
$1.535
$76,750
$76,750
0%
100%
on grant
date
$1.535
$1.535
The total fair value of the Performance Rights is expensed over the estimated vesting periods. Although Tranche 1 has
not vested for the year ended 30 June 2022, management assessed the probability of achieving the finance hurdles
to be over 50%, as a result of which, the share-based payment expense has been recognized over the vesting period.
The performance rights for Tranche 2 vested fully as at 30 June 2022. A share-based expense of $107,440 was
recognized in the statement of profit or loss and other comprehensive income for the period, in respect of tranche 1
and 2.
On 22 February 2022, the directors approved the grant of 900,000 Performance Rights to a consultant for remuneration
of consultant fees 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 an announcement by the Company to the ASX stating that the Company has made a
Decision to Mine in respect of the Cinovec Project.
3. Class C shall vest upon the attainment of Project Finance for the Cinovec Project.
45
(e) 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 deconsolidation of
EQHSA.
Balance at the beginning of the financial year
Transfer of foreign currency to profit or loss on deregistration of EQHSA
Movement during the year
Balance at the end of the financial year
45
2022
$
2021
$
(467,879)
(235,186)
(16,709)
-
864,247
(232,693)
379,659
(467,879)
44
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.
Holders of CDIs/shares have the same entitlement benefits of holding the underlying shares. Each Share in the
Company confers upon the Shareholder:
1.
2.
3.
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 18: SHARE BASED PAYMENT EXPENSE
During the year, the Group incurred a share-based payments expense for a total of $2,884,447 resulting from
the transactions detailed below.
(i) Share based payments granted during the year:
On 24 November 2021, the shareholders approved the grant of 100,000 Performance Rights to a consultant for
remuneration of consultant fees with the vesting terms as below:
Tranche 1:
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.
Tranche 2:
Tranche 2 shall vest upon CFO and Consultancy Performance up to 30 June 2022.
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 were issued as at 31 December 2021.
Number
granted
Grant date
Term of
maturity
Share price
on grant
date
Value per
right
Total fair
value
% vested
Tranche 1
50,000
24 Nov 21
3 years
Tranche 2
50,000
24 Nov 21
3 years
$1.535
$1.535
$1.535
$1.535
$76,750
$76,750
0%
100%
The total fair value of the Performance Rights is expensed over the estimated vesting periods. Although Tranche 1 has
not vested for the year ended 30 June 2022, management assessed the probability of achieving the finance hurdles
to be over 50%, as a result of which, the share-based payment expense has been recognized over the vesting period.
The performance rights for Tranche 2 vested fully as at 30 June 2022. A share-based expense of $107,440 was
recognized in the statement of profit or loss and other comprehensive income for the period, in respect of tranche 1
and 2.
On 22 February 2022, the directors approved the grant of 900,000 Performance Rights to a consultant for remuneration
of consultant fees 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 an announcement by the Company to the ASX stating that the Company has made a
Decision to Mine in respect of the Cinovec Project.
3. Class C shall vest upon the attainment of Project Finance for the Cinovec Project.
45
46
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 18: SHARE BASED PAYMENT EXPENSE (continued)
NOTE 18: SHARE BASED PAYMENT EXPENSE (continued)
(i) Share based payments granted during the year: (continued)
(i) 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. The share-based expense of $271,059 has been recognised in the current year in
the statement of profit or loss and other comprehensive income.
Number
granted
Grant date
Term of
maturity
Share price
on grant
date
Value per
right
Total fair
value
% vested
Tranche 1
900,000
22 Feb 22
3 years
$1.16
$1.16
$1,044,000
0%
On 22 February 2022, the directors approved the grant of 1,200,000 Performance Rights to an employee for
remuneration in line with the employee share incentive plan, 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 an announcement by the Company to the ASX stating that the Company has made a
Decision to Mine in respect of the Cinovec Project.
3. Class C shall vest upon the attainment of Project Finance for the Cinovec Project.
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. The share-based expense of $344,803 has been recognised in the current
year in the statement of profit or loss and other comprehensive income.
Number
granted
Grant date
Term of
maturity
Share price
on grant
date
Value per
right
Total fair
value
% vested
Tranche 1
1,200,000
27 Feb 22
3 years
$1.14
$1.14
$1,368,000
0%
(ii) Share-based payment arrangements granted in prior years and existed during the financial year ended
30 June 2022:
• 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. As at 30 June 2021 and 31 Dec 2021, the
management had assessed that the probability to achieve the performance hurdles was below 50% therefore,
the management had not expensed any of the value of these performance rights in accordance with AASB 2.
For the year ended 30 June 2022, management assessed the probability of achieving the finance hurdles to be
over 50%, as a result of which, a share-based expense of $1,896,130 was recognised in the statement of profit
or loss and other comprehensive income for the period. The 3,600,000 Performance Rights were issued on 2
March 2022.
Number
granted
Grant date
Exercise
price
Term of
maturity
Share
price on
grant date
Value
per right
Total fair
value
% vested
Tranche 1
3,600,000
17 Dec 20
Nil
3 years
$0.87
$0.87
$3,132,000
0%
• 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. The last tranche of share-based payment expense of $200,917 has been recognised
in the current year in the statement of profit or loss and other comprehensive income.
• 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 model at $256,390 with the share-
based payment expense of $64,098 recognised in the current year in the statement of profit or loss and other
comprehensive income, being the last tranche of the fair value expensed over the vesting period.
Number
granted
Grant
date
Exercise
price
Term of
maturity
Share
Value
Total fair
% vested
price on
per
value
grant date
option
1,000,000
8 Oct 20
$0.45
3 years
$0.43
$0.256
$256,390
100%
Loan CDIs/shares granted in prior years and existed during the financial year ended 30 June 2022:
Director Loan CDIs/shares
Number
Repaid during
Number
30 June 2021
the year
30 June 2022
1,350,000
1,350,000
-
-
1,350,000
1,350,000
No loan CDIs/shares were granted/repaid during the financial year.
The total fair value of the Loan CDIs/shares 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/shares at 30 June 2022 and the inputs used in the valuation
of the loan CDIs/shares issued to Directors are as follows:
Loan CDIs/shares
Issue price
Share price at date of issue
Keith Coughlan
Richard Pavlik
Kiran Morzaria
$0.725
$0.70
$0.725
$0.70
$0.725
$0.70
Grant date
Expected volatility
Expiry date
Expected dividends
Risk free interest rate
Value per loan CDI
Number of loan CDIs/shares
Total value
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
47
46
47
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 18: SHARE BASED PAYMENT EXPENSE (continued)
(i) Share based payments granted during the year: (continued)
• 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. The last tranche of share-based payment expense of $200,917 has been recognised
in the current year in the statement of profit or loss and other comprehensive income.
• 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 model at $256,390 with the share-
based payment expense of $64,098 recognised in the current year in the statement of profit or loss and other
comprehensive income, being the last tranche of the fair value expensed over the vesting period.
Number
granted
Grant
date
Exercise
price
Term of
maturity
Share
price on
grant date
Value
per
option
Total fair
value
% vested
1,000,000
8 Oct 20
$0.45
3 years
$0.43
$0.256
$256,390
100%
Loan CDIs/shares granted in prior years and existed during the financial year ended 30 June 2022:
Director Loan CDIs/shares
Number
30 June 2021
Repaid during
the year
Number
30 June 2022
1,350,000
1,350,000
-
-
1,350,000
1,350,000
No loan CDIs/shares were granted/repaid during the financial year.
The total fair value of the Loan CDIs/shares 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/shares at 30 June 2022 and the inputs used in the valuation
of the loan CDIs/shares issued to Directors are as follows:
Loan CDIs/shares
Issue price
Share price at date of issue
Keith Coughlan
Richard Pavlik
Kiran Morzaria
$0.725
$0.70
$0.725
$0.70
$0.725
$0.70
Grant date
Expected volatility
Expiry date
Expected dividends
Risk free interest rate
Value per loan CDI
Number of loan CDIs/shares
Total value
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
47
48
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
Foreign exchange risk (Continued)
2022
Amount in
EUR
Amount in
GBP
Amount
in USD
Amount in
AUD
Amount
in EUR
2021
Amount
in GBP
Amount in
AUD
Cash and cash
equivalents in EMHL
Trade and other
payables in EMHL
Intercompany
payables to EMHL
by subsidiaries
Total per foreign
currency
5% effect in foreign
exchange rates
3,054
25,287
-
9,450
105,593
600
-
-
-
-
- 10,938,978
-
-
522,338
23,999
24,106
-
-
- 10,927,193
12,504
130,880
600 10,938,978
522,338
48,105 10,927,193
625
6,544
30
546,949
26,117
2,405
546,360
Other than intercompany balances there were no financial assets and liabilities denominated in foreign
currencies for EMH UK.
(i) 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 consolidated 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
2022
$
2021
$
131,265
1,031,382
18,924,244
6,849,291
47,392
782,518
-
47,392
53,046
80,572
19,885,419
8,061,683
(i) 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.
49
50
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
Liquidity risk (continued)
As at 30 June 2022
Financial assets
Carrying
Amount
$
Contractual
Cash flows
$
<3 months
$
3-6
months
$
6-24
months
$
Cash and cash equivalents
19,055,509
19,055,509
19,055,509
Other receivables
Other assets
Cash inflows
782,518
47,392
782,518
782,518
47,392
-
19,885,419
19,885,419
19,838,027
Financial liabilities
Trade and other payables
Lease liabilities
Cash outflows
As at 30 June 2021
Financial assets
939,822
86,482
939,822
939,822
86,482
11,155
11,297
64,030
1,026,304
1,026,304
950,977
11,297
64,030
Carrying
Amount
$
Contractual
Cash flows
$
<3 months
$
3-6
months
$
6-24
months
$
Cash and cash equivalents
7,880,673
7,880,673
7,880,673
Other receivables
Other assets
Cash inflows
53,046
127,964
53,046
127,964
53,046
80,572
8,061,683
8,061,683
8,014,291
-
-
-
-
-
-
-
47,392
47,392
-
-
-
-
-
-
-
-
-
47,392
47,392
As at 30 June 2021
Financial liabilities
Trade and other payables
Lease liabilities
Cash outflows
Carrying
Amount
Contractual
Cash flows
<3 months
3-6
months
6-24
months
$
$
$
439,798
97,893
537,691
439,798
439,798
97,893
-
537,691
439,798
$
-
-
-
$
-
97,893
97,893
(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:
51
50
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
Foreign exchange risk (Continued)
Cash and cash
equivalents in EMHL
Trade and other
payables in EMHL
Intercompany
payables to EMHL
by subsidiaries
Total per foreign
currency
5% effect in foreign
exchange rates
currencies for EMH UK.
(i) Credit risk
2022
2021
Amount in
Amount in
Amount
Amount in
Amount
Amount
Amount in
EUR
GBP
in USD
AUD
in EUR
in GBP
AUD
3,054
25,287
-
522,338
23,999
9,450
105,593
600
24,106
-
-
-
-
-
-
-
-
- 10,938,978
- 10,927,193
12,504
130,880
600 10,938,978
522,338
48,105 10,927,193
625
6,544
30
546,949
26,117
2,405
546,360
Other than intercompany balances there were no financial assets and liabilities denominated in foreign
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 consolidated 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
High
High
High
High
High
2022
$
2021
$
131,265
1,031,382
18,924,244
6,849,291
47,392
782,518
-
47,392
53,046
80,572
19,885,419
8,061,683
Other receivables
Other assets
(i) 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.
50
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
NOTE 21: FINANCIAL RISK MANAGEMENT (CONTINUED)
(iv) Interest rate risk (continued)
As at 30 June 2022
Financial assets
Cash and cash equivalents
Other receivables
Bank guarantee
Financial liabilities
Trade and other payables
Lease liabilities
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
Weighted Average
Interest Rate
Floating
Interest Rate
Fixed
Interest
Non-interest
bearing
Total
%
1.62%
$
$
$
$
-
-
-
-
-
-
-
18,029,343
1,026,166 19,055,509
-
721,710
721,710
47,392
-
47,392
18,076,735
1,747,876 19,824,611
-
-
-
918,029
918,029
86,482
86,482
1,004,511
1,004,511
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
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 $180,767 (2021: $79,280).
(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.
51
52
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
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
2022
0%
0%
100%
100%
2021
0%
0%
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. The companies (ESA and Congo and EGL) have been
deregistered on 6 December 2018, however the deregistration was only taken into account during the year
ended 30 June 2022. The effect of the deconsolidation is not considered to be material to the group.
NOTE 23: PARENT ENTITY DISCLOSURE
The following information has been extracted from the books and records of the parent, European Metals
Holdings Limited, 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
2022
$
2021
$
19,889,522
8,270,838
135,422
182,711
20,024,944
8,453,549
1,132,577
40,775
1,173,352
545,686
91,855
637,541
18,851,592
7,816,008
47,881,352
34,087,930
11,904,132
9,220,602
(40,933,892)
(35,492,524)
18,851,592
7,816,008
(5,441,368)
(2,689,539)
(5,441,368)
(2,689,539)
53
52
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL FINANCIAL REPORT 30 JUNE 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022
Guarantees
There are no guarantees entered into by European Metals Holdings Limited for the debts of its subsidiaries as at
30 June 2022.
NOTE 23: PARENT ENTITY DISCLOSURE (Continued)
Contingent liabilities
There are no contingent liabilities of the parent as at 30 June 2022 and 30 June 2021.
Commitments
There were no commitments for the parent as at 30 June 2022 and 30 June 2021.
NOTE 24: CAPITAL COMMITMENTS
There are no capital commitments for the Group as at 30 June 2022 and 30 June 2021.
NOTE 25: CONTINGENT LIABILITIES
There are no contingent liabilities for the Group as at 30 June 2022 and 30 June 2021.
NOTE 26: SIGNIFICANT EVENTS AFTER THE REPORTING DATE
There have been no significant events arising after the reporting date.
53
54
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2021
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the consolidated 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 2022 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 2022
55
54
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS LIMITED
PO Box 1908
West Perth WA 6872
Australia
Level 2, 40 Kings Park Road
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 entity
(the Group), which comprises the consolidated statement of the financial position as at 30 June 2022, 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 2022 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
Stantons Is a member of the Russell
Bedford International network of firms
56
55
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS LIMITED
Key Audit Matters
How the matter was addressed in the audit
Valuation of Share-based payments
As disclosed in notes 17 and 18 of the financial
report,
the Company granted a number of
performance rights to consultants, employees and
the Directors of the Company.
The Company prepared valuations of
the
performance rights and recorded the related
expense in accordance with its accounting policy
and with AASB 2 Share-based Payment (“AASB
2”) in the consolidated statement of profit or loss
and other comprehensive income.
In assessing the valuation of performance rights,
inter alia, our audit procedures included:
i. Obtaining an understanding of the underlying
transactions, reviewing agreements, minutes of
the Board meetings and ASX announcements;
ii. Assessing management’s determination of the
fair value of the share-based payments granted,
the inputs used in the valuation models, the
underlying assumptions used and discussing
with management the justification for these
inputs;
In addition, Options and CDIs issued in the prior
period were required to be expensed as Share-
Based Payments in the current period.
iii. Evaluating the allocation of the share-based
payment expense over the relevant vesting
period;
Accounting
for share-based payments was
identified as a key audit matter due to the
involved, and
the amounts
significance of
complexity and judgmental estimates used in
determining the fair value of the equity instruments
granted, the grant date, vesting conditions and
vesting periods.
Investment in associates accounted for using
the equity method
As disclosed in note 13 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”) thus
reducing the Group’s interest in Geomet to 49%.
Geomet has been equity accounted as an
investment in associates in accordance with AASB
128 Investments in Associates and Joint Ventures
(“AASB 128”) since that date.
The Group accounted for 49% of the loss incurred
by Geomet in the period, totalling $1,367,744, and
for 49% of the other comprehensive income
recorded by Geomet totalling $853,136. This
resulted in an investment in associate value at 30
June 2022, amounting to $16,946,419.
The investment in associates accounted for using
the equity method is considered to be a key audit
matter as the investment represents 46% of the
total assets of the Group as well as requires
significant effort in the performance of the audit of
the Group.
iv. Considering the accounting treatment and its
application in accordance with AASB 2; and
v. Assessing whether the Company’s disclosures
the accounting
requirements of
the
met
standards.
In assessing the accounting for the investment in
associates, inter alia, our audit procedures included:
i. Performing audit procedures on Geomet’s trial
balance for the year ended 30 June 2022;
ii. Ensuring that management correctly applied
the Equity method as per AASB 128
Investments in Associates and Joint Ventures,
recognising the 49% share of the loss and the
movement in reserves recorded for the period
by Geomet;
iii. Assessing the existence of any impairment
indicators regarding the investment in the
associate; and
iv. Ensuring that the disclosures made in the
financial report were complete, sufficient and in
accordance with
the
accounting standards.
the requirements of
57
56
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS LIMITED
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 2022, 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.
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,
57
58
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS LIMITED
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
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 18 of the directors’ report for the year ended
30 June 2022.
In our opinion, the Remuneration Report of European Metals Holdings Limited, for the year ended 30 June 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilites
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.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(An Authorised Audit Company)
Martin Michalik
Director
West Perth, Western Australia
30 September 2022
59
58
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
ADDITIONAL INFORMATION
The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public
companies only.
1
Shareholding as at 15 September 2022
(a) 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
Number
of Shareholders
746
968
410
507
162
2,793
(b) The number of shareholdings held in less than marketable parcels is 351.
(c) Voting Rights
The voting rights attached to each class of equity security are as follows:
186,082,485 CDIs/shares
-
Each CDI/share 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/shares as at 15 September 2022
Rank
Shareholder
Number of
CDIs/shares held
Percentage of
capital held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Armco Barriers Pty Ltd
Cadence Minerals Plc
BNP Paribas Nominees Pty Ltd
Vidacos Nominees Limited
United Super Pty Ltd
Hargreaves Lansdown (Nominees) Limited
Interactive Investor Services Nominees Limited
Mr Keith Coughlan
Lawshare Nominees Limited
HSDL Nominees Limited
Barclays Direct Investing Nominees Limited
Citicorp Nominees Pty Limited
Mrs Donna Rose Coughlan
Jim Nominees Limited
BankAmerica Nominees Limited
Mr Andrew Ernest Goodall
Securities Services Nominees Limited
Roy Nominees Limited
Morgan Stanley Client Securities Nominees Limited
HSBC Custody Nominees (Australia) Limited
16,497,000
16,444,914
15,535,237
10,317,104
10,128,480
8,487,041
5,954,570
5,750,000
4,887,523
4,561,454
3,894,944
3,192,934
2,880,000
2,161,881
1,950,629
1,775,000
1,764,986
1,526,885
1,457,433
1,440,828
8.87
8.84
8.35
5.55
5.44
4.56
3.20
3.09
2.63
2.45
2.09
1.72
1.55
1.16
1.05
0.95
0.95
0.82
0.78
0.77
Total Top 20 Shareholders
120,608,843
64.83
60
59
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
EUROPEAN METALS HOLDINGS LIMITED
ARBN 154 618 989
ANNUAL REPORT 30 JUNE 2022
ADDITIONAL INFORMATION
2
3
4
The name of the Company Secretary is Mr David Koch.
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/shares 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/shares are on issue.
A total of 1,200,000 Warrants over unissued CDIs/shares are on issue.
A total of 6,550,000 performance shares 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%
61
60
EUROPEAN METALS HOLDINGS LIMITED | ARBN 154 618 989 | ANNUAL REPORT 30 JUNE 2022
This page is intentionally left blank
europeanmet.com | ASX & AIM: EMH,
OTCQX: EMHXY, ERPNF and EMHLF