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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| European Metals Holdings Limited | LSE:EMH | London | Ordinary Share | VGG3191T1021 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.40 | -6.83% | 19.10 | 19.00 | 20.00 | 19.50 | 19.50 | 19.50 | 218,271 | 16:35:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Miscellaneous Metal Ores,nec | 1.12M | -5.93M | -0.0286 | -8.39 | 49.76M |
From Apr 2019 to Apr 2024
TIDMEMH
RNS Number : 0549O
European Metals Holdings Limited
30 September 2019
For immediate release
30 September 2019
EUROPEAN METALS HOLDINGS LIMITED
Annual Results
The Directors of European Metals Holdings Limited ("European Metals" or "the Company") (ASX and AIM: EMH) are pleased to announce the Company's annual results for the year ended 30 June 2019.
The annual report has been released on the Australian Stock Exchange ("ASX) as required under the listing rules of the ASX.
Whilst the financial information included in this announcement has been prepared in accordance with the accounting policies and basis of preparation set out below, this announcement does not constitute the Company's statutory financial statements.
A copy of the annual report will be posted to shareholders and is also available on the Company's website www.europeanmet.com.
A copy of the Corporate Governance Statements are also available on the Company's website www.europeanmet.com.
Enquiries:
Hot Features
Premium
European Metals Holdings Limited
Keith Coughlan, Chief Executive Tel: +61 (0) 419 996 333
Officer Email: keith@europeanmet.com
Tel: +61 (0) 6141 3504
Email: julia@europeanmet.com
Julia Beckett, Company Secretary
Beaumont Cornish (Nomad & Tel: +44 (0) 20 7628 3396
Broker)
Michael Cornish
Roland Cornish
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
EUROPEAN METALS HOLDINGS LIMITED
ABRN 154 618 989
ANNUAL REPORT 30 JUNE 2019
CORPORATE DIRECTORY
Directors
Mr David Reeves Non-Executive Chairman
Mr Keith Coughlan Managing Director and Chief
Mr Richard Pavlik Executive Officer
Mr Kiran Morzaria Executive Director
Non-Executive Director
Company Secretary
Ms Julia Beckett
Registered Office in Australia Nominated Advisor & Broker
Suite 12, Level 1 Beaumont Cornish Limited
11 Ventnor Avenue 10(th) Floor
WEST PERTH WA 6005 30 Crown Place
Telephone 08 6245 2050 LONDON EC2A 4EB
Facsimile 08 6245 2055 UNITED KINGDOM
Email www.europeanmet.com
Registered Office in Czech Registered Address and Place
Republic of Incorporation - BVI
Jaselska 193/10, Veveri Rawlinson & Hunter
602 00 Brno Woodbourne Hall
Czech Republic PO Box 3162
Tel: +420 732 671 666 Road Town
Tortola VG1 110
British Virgin Islands
Share Register - Australia UK Depository
Computershare Investor Services Computershare Investor Services
Limited plc
Level 11 The Pavilions
172 St Georges Terrace Bridgewater Road
Perth WA 6000 BRISTOL BS99 6ZZ
Telephone 1300 850 505 (within UNITED KINGDOM
Australia)
Telephone +61 3 9415 4000
(outside Australia)
Facsimile 1800 783 447 (within
Australia)
Facsimile +61 3 9473 2555
(outside Australia)
Auditor Reporting Accountants (UK)
Stantons International Audit Chapman Davis LLP
and Consulting Pty Ltd 2 Chapel Court
Level 2, 1 Walker Avenue LONDON SE1 1HH
West Perth WA 6005 UNITED KINGDOM
Telephone +61 8 9481 3188
Facsimile +61 8 9321 1204
Securities Exchange Listing Securities Exchange Listing
- Australia - United Kingdom
ASX Limited London Stock Exchange plc
Level 40, Central Park 10 Paternoster Square
152-158 St Georges Terrace LONDON EC4M 7LS
PERTH WA 6000 UNITED KINGDOM
ASX Code: EMH AIM Code: EMH
CHAIRMANS LETTER
Dear Shareholders
Welcome to the 2019 Annual Report for European Metals Holdings limited ("European Metals" or "the Company").
On behalf of the Board of Directors, I am pleased to report on what has been a busy and transformational year for your Company as we continue to advance our strategy to become a Czech based lithium and tin producer.
The year was marked by the completion of the updated Preliminary Feasibility Study (PFS) that through process optimisations and the production of lithium hydroxide saw an increase in NPV to in excess of USD 1 billion. Most importantly, it shows a globally competitive cost of $3,435/t per tonne of lithium hydroxide. The process improvements not only see improved recoveries, lower reagent consumption and reduced roast times, they also result in a simpler flowsheet which will assist greatly in the physical operation of the circuit.
There has been recent upheaval in the spodumene concentrate market which we believe supports our strategy of becoming an integrated producer of lithium carbonate and/or lithium hydroxide supplying directly into the European market. This strategy eliminates counter party risk and delivers European product into the rapidly expanding European EV and battery storage markets.
The deposit is uniquely located, being in the centre of the Czech and European car industry and only 90km from the first VW EV factory located in Zwickau, Germany which is due to commence production in November of this year. VW have also recently announced the construction of a 16GWh battery cell factory with Northvolt to service this rapidly growing aspect of their business which will require a steady state of battery materials to satisfy demand.
Subsequent to the year end, we were delighted to announce the potential partnership with CEZ Group (CEZ) one of Central and Eastern Europe's largest power utilities that is 70% owned by the Czech Government. Due diligence and partnership negotiations have continued since the announcement and we look forward to updating the market in the near term on the outcome of these discussions.
The Company is now entering into detailed engineering, permitting and offtake discussions as it moves towards development on Europe's largest lithium resource for the benefit of all stakeholders.
Finally, I would like to take this opportunity to thank all staff, advisors, contractors and our shareholders who have supported us over the past year.
I look forward to updating you throughout the new financial year as we continue to advance the Cinovec Lithium/Tin Project.
David Reeves
CHAIRMAN
PROJECT REVIEW
European Metals, through its wholly owned subsidiary, Geomet s.r.o., controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 372.4Mt at 0.45% Li(2) O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt at 0.39% Li(2) O and 0.04% Sn containing a combined 7.18 million tonnes Lithium Carbonate Equivalent and 263kt of tin reported 28 November 2017. An initial Probable Ore Reserve of 34.5Mt at 0.65% Li(2) O and 0.09% Sn reported 4 July 2017 has been declared to cover the first 20 years mining at an output of 22,500tpa of lithium carbonate reported 11 July 2018.
This makes Cinovec the largest 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.
In June 2019 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD1.108B and an IRR of 28.8% and 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 at excellent recoveries. 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.
There are no other material changes to the original information and all the material assumptions continue to apply to the forecasts.
Project Development
It has been a significant year for the Company from the perspective of Project Development. The updated Preliminary Feasibility Study ("PFS") demonstrates significant improvements in the economics of the project. These improvements stem from the successful completion of optimisation work throughout the year improving recoveries and the economics of the roast process. The successful production of battery grade lithium hydroxide is also a very significant development, from both an economic and market perspective.
The Company announced early in the year the increase in modelled production of battery grade lithium carbonate which was a result of the prior optimisation work. Improved recoveries in the leach circuit, lower cost reagent usage and reduced roast times all contributed to the modelled increase which is likely to improve cash margins by approximately 10%.
Lithium hydroxide test work began following this optimisation with the Company announcing the successful production of battery grade lithium hydroxide earlier this year. This is an important step in the development of the project as it allows the Company to produce either of the main lithium compounds required by the battery industry and therefore deliver whichever product potential off takers will require.
This work culminated in the release of the Company's updated PFS in June 2019. The updated PFS demonstrates robust economic parameters for the project as outlined below (all $ figures are US Dollars and increases refer to the 2017 PFS Lithium Carbonate study):
* Net estimated overall cost of production post
credits: $3,435 / tonne LiOH.H(2) O;
* Project Net Present Value ("NPV") increases 105% to:
$1.108B (post tax, 8%);
* Internal Rate of Return ("IRR") increased 37% to
28.8% (post tax);
* Total Capital Cost: $482.6M;
* Annual production of Battery Grade Lithium Hydroxide:
25,267 tonnes;
* Studies are based on only 9.3% of reported Indicated
Mineral Resource and a mine life of 21 years
processing an average of 1.68 Mtpa ore; and
* The process used to produce lithium hydroxide allows
for the staging of lithium carbonate and then lithium
hydroxide production to minimize capital and startup
risk and enables the production of either battery
grade lithium hydroxide or carbonate as markets
demand.
Drill Programme
The Company conducted further drilling during the year following the granting of permits for both geotechnical and Definitive Feasibility Study ("DFS") level drilling as announced in September 2018.
Geotechnical drilling began in that month focused on confirming the location of the portal and decline for the planned underground operations. Resource drilling for the DFS began in November 2018 and the Company subsequently released the results of this drilling. The highlights of the drill programme were:
* Hole CIS-11 returned 129.3m averaging 0.51% Li2O,
incl. 2m @ 0.93% Li2O, 2m @0.93% Li2O; 5m @ 0.56% Sn
and 0.11% W, 5m @ 0.21% Sn, and 7m @ 0.11% Sn;
* Hole CIS-13 returned 108m averaging 0.45% Li2O and
0.11% Sn, incl. 4m @ 0.99% Li2O; 6m @ 0.29% Sn, 5m @
0.34% Sn, 3m @ 0.77% Sn and 0.12% W, and 2m @ 1.03%
Sn, incl. 1m @ 1.92% Sn;
* Hole CIS-10 returned 89m averaging 0.47% Li2O, incl.
6m @ 1.02% Li2O and 6m @ 0.91% Li2O; 5m @ 0.26% Sn,
5m @ 0.14% Sn, and 7m @ 0.077% W;
* Hole CIS-12 returned 93m averaging 0.48% Li2O, incl.
2m @ 1.32% Li2O, 2.4m @ 1.17% Li2O and 3m @ 1.08%
Li2O; 8m @ 0.83% Li2O and 0.18% Sn, 4m @ 0.13% Sn,
and 5m @ 0.16% W; and
* Hole CIS-14 returned 67m averaging 0.43% Li2O (incl.
3m @ 0.99% Li2O and 0.18% Sn); 8m @ 0.67% Li2O and
0.20% Sn (incl. 4.15m @ 1.00% Li2O and 0.35% Sn); 8m
@ 0.21% Sn, 4m @ 0.39% Sn; and 3m @ 0.20% Sn.
Developments Post 30 June 2019
On 16 July 2019 the Company was very pleased to announce a potential strategic partnership with CEZ Group (CEZ), one of Central and Eastern Europe's largest power utilities. CEZ is currently conducting due diligence on the Company and Project. The successful outcome of the due diligence process could see CEZ become the largest shareholder and co-development partner for the Cinovec Lithium/Tin Project.
Progress of Mining Licence
On 5 August 2019 the Company announced the granting of an extension of the Cinovec Exploration Licence that was due to expire in July 2019. The licence has now been extended until 31 December 2020. Exploration licence covers the two granted Preliminary Mining Permits (PMP) that convey the sole and exclusive rights upon the Company to apply for a Final Mining Permit.
Corporate
The Company announced in November 2018 that it had raised gross proceeds of GBP1,035,500 ($1.82 M) via a share placing to Australian and UK investors to advance the Company's corporate strategy including:
-- To progress drilling programme and upgrade the resource model to include measured resources and facilitate an estimation of proven reserves;
-- Begin the engineering process for a Definitive Feasibility Study; -- Progress Environmental Impact Assessments for mining and processing; -- Operate a pilot plant for production of samples for marketing; and -- Progress discussions with potential strategic partners.
Corporate - Post Period
The successful capital raising of GBP750,000 via a share placing to UK investors was completed on 30 August 2019 to further this strategy.
Mineral Resource and Ore Reserve Statement
Based upon the Preliminary Feasibility Study undertaken for the Cinovec Project, the Company declares a maiden Probable Ore Reserve of 34.5 Mt @ 0.65% Li(2) O, as detailed below. The Probable Reserves have been declared solely from the Indicated Mineral Resource category and are classified based on a PFS level of study and category of Mineral Resource.
CINOVEC ORE RESERVES SUMMARY
Category Tonnes Li Li(2) Sn W
0
----------- ----- ------ ----- -----
(Millions) % % % %
----------- ----- ------ ----- -----
Proven Ore Reserves 0 0 0 0 0
----------- ----- ------ ----- -----
Probable Ore Reserves 34.5 0.30 0.64 0.09 0.03
----------- ----- ------ ----- -----
Total Ore Reserves 34.5 0.30 0.64 0.09 0.03
----------- ----- ------ ----- -----
Notes to Reserve Table:
1. Probable Ore Reserves have been prepared by Bara International in accordance with the guidelines of the JORC Code (2012).
2. The effective date of the Probable Ore Reserve is June 2017 3. All figures are rounded to reflect the relative accuracy of the estimate
4. The operator of the project is Geomet S.R.O a wholly-owned subsidiary of EMH. Gross and Net Attributable Probable Ore Reserve are the same.
5. Any apparent inconsistencies are due to rounding errors
The Ore Reserve is based on the Mineral Resource for the Cinovec deposit prepared by Widenbar and Associates and issued in February 2017. The Mineral Resource is reported in the report Cinovec Resource Estimation published by Widenbar and Associates and is reported in accordance with the JORC 2012 guidelines. The table below summarises the Mineral Resource declared.
CINOVEC NOVEMBER 2017 RESOURCE
Cutoff Tonnes Li Li(2) Sn W
0
------- ----------- ------ ------ ----- ------
% (Millions) % % % %
------- ----------- ------ ------ ----- ------
Indicated 0.1% 372.4 0.206 0.44 0.04 0.016
------- ----------- ------ ------ ----- ------
Inferred 0.1% 323.5 0.183 0.39 0.04 0.013
------- ----------- ------ ------ ----- ------
Total 0.1% 695.9 0.195 0.43 0.04 0.014
------- ----------- ------ ------ ----- ------
Notes:
1. Mineral Resources are not Reserves until they have demonstrated economic viability based on a feasibility study or prefeasibility study.
2. Mineral Resources are reported inclusive of any reserves and are prepared by Widenbar in accordance with the guidelines of the JORC Code (2012).
3. The effective date of the Mineral Resource is November 22, 2017. 4. All figures are rounded to reflect the relative accuracy of the estimate.
5. The operator of the project is Geomet s.r.o., a wholly-owned subsidiary of EMH. Gross and Net Attributable resources are the same.
6. Any apparent inconsistencies are due to rounding errors. 7. LCE is Lithium Carbonate Equivalent and is equivalent to Li2CO3
COMPETENT PERSON
Information that relates to exploration results is based on information compiled by Dr Pavel Reichl. Dr Reichl is a Certified Professional Geologist (certified by the American Institute of Professional Geologists), a member of the American Institute of Professional Geologists, a Fellow of the Society of Economic Geologists and is a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a Qualified Person for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009. Dr Reichl consents to the inclusion in the release of the matters based on his information in the form and context in which it appears. Dr Reichl holds CDIs in European Metals.
The information in this release that relates to Mineral Reserves is based on, and fairly represents, information and supporting documentation prepared by Mr Jim Pooley. Mr Pooley, who is a Fellow of the Southern African Institute of Mining and Metallurgy, is a full-time employee of Bara International Ltd and produced the estimate based on the Mineral Resource supplied by European Metals. Mr Pooley has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2012 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Pooley consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.
DIRECTORS' REPORT
Your Directors' present their report, together with the financial statements of the Group, being the Company and its controlled entities, for the year ended 30 June 2019.
Directors
The following persons were Directors of the Company and were in office for the entire year, and up to the date of this report, unless otherwise stated:
Mr David Reeves Non-Executive Appointed 6 March 2014
Chairman
Mr Keith Coughlan Managing Director Appointed 6 September 2013
Mr Richard Executive Director Appointed 27 June 2017
Pavlik
Mr Kiran Morzaria Non-Executive Appointed 10 December 2015
Director
Company Secretary
The following person held the position of Company Secretary at the end of the financial year:
Ms Julia Beckett holds a Certificate in Governance Practice and Administration and is an Affiliated Member of the Governance Institute of Australia. Julia is a Corporate Governance professional, having worked in corporate administration and compliance for the past 12 years. She has been involved in business acquisitions, mergers, initial public offerings, capital raisings as well as statutory and financial reporting. Julia is also Company Secretary of Calidus Resources Limited (ASX: CAI) Ragnar Metals Limited (ASX: RAG), Doriemus Plc (Joint) (ASX: DOR) and Metminco Limited (Joint) (ASX: MNC) and a number of non-listed companies. Julia has held non-executive director rules for a number of ASX listed companies.
Principal Activities
The Company is primarily involved in the development of a lithium and tin project in the Czech Republic.
Review of Operations
The 2019 Financial Year has been one of significant growth and development for the Company. For further information refer to the Project Review section of this report.
Results of Operations
The consolidated loss for year ended 30 June 2019 amounted to $3,252,815 (2018 loss: $4,655,209).
Financial Position
The net assets of the Group have increased by $59,967 to $12,459,065 at 30 June 2019.
Significant Changes in the State of Affairs
The successful capital raising of GBP750,000 via a share placing (Placing) to UK investors was completed on 30 August 2019. The net proceeds of the Placing will be used to continue to advance EMH's corporate strategy including to progress the development of the Cinovec Project and the progress discussions with CEZ Group and potential off take partners.
Dividends Paid or Recommended
No dividends were declared or paid during the year and the Directors do not recommend the payment of a dividend.
Information on
Directors
David Reeves Non-Executive Chairman - Appointed 6 March
2014
Qualifications Mining Engineer
Experience Mr Reeves is a qualified mining engineer
with 30 years' experience globally. Mr Reeves
holds a First Class Honours Degree in Mining
Engineering from the University of New South
Wales, a Graduate Diploma in Applied Finance
and Investment from the Securities Institute
of Australia and a First Class Mine Managers
Certificate of Competency.
Interest in CDIs Mr Reeves has 300,000 CDIs direct interest
and Options and 3,720,244 CDI indirect interest held
by Eleanor Jean Reeves <Elanwi A/C>, Mr Reeves'
spouse.
1,000,000 Options, 16.6 cents, expire 17
August 2020
542,651 Class A Performance Shares
542,651 Class B Performance Shares
Special Responsibilities Member of all the Committees
Directorships held Director of Keras Resources Plc (AIM)
in other listed Managing Director of Calidus Resources Limited
entities (ASX)
Keith Coughlan Managing Director (CEO) - Appointed 6 September
2013
Qualifications BA
Experience Mr Coughlan has 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 Mr Coughlan has 850,000 CDIs direct interest
and Options and 8,500,000 indirect interest held by Inswinger
Holdings Pty Ltd, an entity of which Mr Coughlan
is a director and a shareholder.
2,000,000 Options, 16.6 cents, expire 17
August 2020
Special Responsibilities Member of Audit and Risk Committee
Member of Nomination Committee
Directorships held Non-Executive Chairman of Doriemus plc
in other listed Non-Executive Director of Calidus Resources
entities Limited
Non-Executive Director of Southern Hemisphere
Mining Limited
Mr Coughlan previously held the position
of Non-Executive Chairman of Talga Resources
Limited from 17 September 2013 to 8 February
2017.
Richard Pavlik Executive Director - Appointed 27 June 2017
Qualifications Masters Degree in Mining Engineer
Experience Mr Pavlik is the General Manager of Geomet
sro, the Company's wholly owned Czech subsidiary,
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 300,000 CDIs
and Options 400,000 Options, 58 cents, expire 3 January
2020
Special Responsibilities Nil
Directorships held Nil
in other listed
entities
Kiran Morzaria Non-Executive Director - Appointed 10 December
2015
Qualifications Bachelor of Engineering (Industrial Geology)
from the Camborne School of Mines and an
MBA (Finance) from CASS Business School
Experience 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.
Interest in CDIs Mr Morzaria has 200,000 direct interest
and Options in CDIs. Mr Morzaria is a director and chief
executive of Cadence Minerals Plc which
owns 27,896,470 CDIs. Mr Morzaria has no
control on the acquisition or sale of the
shares held by Cadence Minerals plc
Special Responsibilities Member of Audit and Risk Committee
Member of Remuneration Committee
Directorships held Chief Executive Officer and Director of
in other listed Cadence Minerals plc and Director of UK
entities Oil & Gas plc. Mr Morzaria was previously
a Director of Bacanora Minerals plc.
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:
Directors' Meetings
Name Number attended Number eligible
to attend
David Reeves 5 5
Keith Coughlan 5 5
Richard Pavlik 5 5
Kiran Morzaria 5 5
Indemnifying officers or auditor
During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows:
i. 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 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 has been paid to auditors.
CDIs under option
Unissued CDIs of European Metals Holdings Limited under option and warrant at the date of this report is as follows:
Expiry date Exercise Price Number under option
---------------------- ---------------- --------------------
17 August 2020 16.6 cents 3,750,000
3 January 2020 58.0 cents 400,000
1 January 2021 35.0 cents 200,000
1 June 2021 40.18 cents 100,000
22 November
2021 31.5 cents 116,875
During and since the end of the reporting year, the following options and warrants were issued:
On the 22 November 2018, 116,875 warrants were granted to brokers as a cost of capital raising. The warrants have an exercise of 20 pence (31.5 cents) in line with the capital raise on the 20 November 2018.
On 19 July 2019, the Company issued 200,000 options exercisable at $0.35 on or before 1 January 2021 and 100,000 options exercisable at $0.4018 on or before 1 June 2021 to independent consultants in accordance with their consultancy agreements.
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. No options or warrants were exercised during the year or to the date of this report (2018: nil).
Performance Shares
Performance shares on issue at the date of this report is as follows:
Issue date Expiry date Number on
issue
--------- ------------- ------------- ----------
A Class 18 Dec 2018 18 Dec 2021 5,000,000
B Class 24 Nov 2016 24 Nov 2019 5,000,000
As at the date of this report, 5,000,000 A Class and 5,000,000 B Class Performance Shares were issued to the original vendors of the Cinovec Project. During the financial year, it had become apparent that the B Class Performance Shares approved at the 2016 AGM only represented half the value contemplated by the Original Performance Shares, as a result of the conversion mechanism provided for under the B Class Terms. As an incentive to the vendors, the company issued 5,000,000 A Class Performance Shares on the same terms and
conditions as the B Class Performance shares. Refer Note 14(d) for details.
CDIs Issued Under Employee Securities Incentive Plan (ESIP)
CDIs issued under ESIP as at the date of this report is as follows:
Number on Issue date issue ---------- ------------ 1,650,000 14 Dec 2017 1,500,000 6 Jun 2018
During the financial year, no CDIs were issued under ESIP.
Environmental Regulations
The Group's operations are subject to the environmental risks inherent in the mining industry.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit Services
Stantons International has not provided any non-audit services during the year.
Significant events after the reporting date
-- On 16 July 2019 the Company was very pleased to announce a potential strategic partnership with CEZ Group (CEZ), one of Central and Eastern Europe's largest power utilities. CEZ is currently conducting due diligence on the Company and Project. The successful outcome of the due diligence process could see CEZ become the largest shareholder and co-development partner for the Cinovec Lithium/Tin Project.
-- On 19 July 2019, the Company issued 200,000 options exercisable at $0.35 on or before 1 January 2021 and 100,000 options exercisable at $0.4018 on or before 1 June 2021 to independent consultants in accordance with their consultancy agreements.
-- On 5 August 2019, the Company announced it has been granted an extension to the Cinovec Exploration Licence.
-- On 14 August 2019, the Company completed a share placement issuing 4,166,666 new fully paid ordinary shares raising GBP 750,000 to existing investors.
-- The successful capital raising of GBP750,000 via a share placing (Placing) to UK investors was completed on 30 August 2019. The net proceeds of the Placing will be used to continue to advance EMH's corporate strategy including to progress the development of the Cinovec Project and the progress discussions with CEC Group and potential off take partners.
Except for the matters noted above there have been no other significant events arising after the reporting date.
Auditor's Independence Declaration
The auditor's independence declaration for the year ended 30 June 2019 has been received and can be found on page 22 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. The directors are pleased to present the remuneration report which sets out the remuneration information for European Metals Holdings Limited's non-executive directors, executive directors and other key management personnel.
A. Principles used to determine the nature and amount of remuneration
The remuneration policy of the Group has been designed to align Director and management objectives with shareholder and business objectives by providing a fixed remuneration component, and offering specific long-term incentives based on key performance areas affecting the Group financial results. The Board of the Company believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best management and Directors to run and manage the Group, as well as create goal congruence between Directors, Executives and shareholders.
The Board's policy for determining the nature and amount of remuneration for Board members and Senior Executives of the Group is as follows:
The remuneration policy, setting the terms and conditions for the Executive Directors and other Senior Executives, was developed by the Board. All Executives receive a base salary (which is based on factors such as length of service and experience), superannuation, options and performance incentives. The Board reviews Executive packages annually by reference to the Group's performance, executive performance, and comparable information from industry sectors and other listed companies in similar industries.
Executives are also entitled to participate in the employee share and option arrangements.
All remuneration paid to Directors and Executives is valued at the cost to the Group and expensed.
The Board policy is to remunerate Non-executive Directors at commercial market rates for comparable companies for time, commitment, and responsibilities. The Board determines payments to the Non-executive Directors and reviews their remuneration annually based on market practice, duties, and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at the Annual General Meeting. Fees for Non- Executive Directors are not linked to the performance of the Group. However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold CDIs in the Company.
The remuneration policy has been tailored to increase the direct positive relationship between shareholders' investment objectives and Directors' and Executives' performance. Currently, this is facilitated through the issue of options to the majority of Directors and Executives to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. For details of Directors' and Executives' interests in CDIs, options and performance shares at year end, refer to the remuneration report.
B. Details of Remuneration
Details of the nature and amount of each element of the emoluments of each of the KMP of the Company (the Directors) for the year ended 30 June 2019 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.
2019
Group Key Short-term benefits Post- Long-term Equity-settled Total % of
Management employment benefits share-based remuneration
Personnel benefits payments as share
based
payments
Salary, Profit Non-monetary Other(1) Super- Other Equity Options
fees share annuation (2) (3)
and and
leave bonuses
Directors $ $ $ $ $ $ $ $ $
David Reeves 36,000 - - - - - 86,824 - 122,824 71%
Keith
Coughlan 240,000 - - 34,571 26,084 - - - 300,655 -
Kiran
Morzaria 24,000 - - - - - - - 24,000 -
Richard
Pavlik 165,878 - - - - - - 59,117 224,995 26%
Key
Management
Personnel
James
Carter(i) 18,231 - - - 1,610 - - - 19,841 -
Neil
Meadows(ii) 183,333 - - 3,810 17,779 - 260,148 - 465,070 56%
667,442 - - 38,381 45,473 - 346,972 59,117 1,157,385
------- ------- ------------ -------- ---------- --------- ------- ------- --------- ------------
Notes:
(i) Resigned 21 Sept 2018.
(ii) Resigned 10 June 2019.
2018
Group Key Short-term benefits Post- Long-term Equity-settled Total % of
Management employment benefits share-based remuneration
Personnel benefits payments as share
based
payments
Salary, Profit Non-monetary Other Super- Other Equity Options
fees share (1) annuation (2) (3)
and and
leave bonuses
Directors $ $ $ $ $ $ $ $ $
David
Reeves 36,000 - - 17,000 - - 209,028 - 262,028 80%
Keith
Coughlan 240,000 - - - 22,800 - 592,245 - 855,045 69%
Kiran
Morzaria 24,000 - - - - - 139,352 - 163,352 85%
Richard
Pavlik 159,542 - - - - - 209,028 58,388 426,958 63%
Key
Management
Personnel
James
Carter 30,125 - - 19,833 2,862 - - - 52,820 -
Neil
Meadows 76,083 - - - 7,228 - 6,228 - 89,539 17%
565,750 - - 36,833 32,890 - 1,155,881 58,388 1,849,742
------- ------- ------------ ------ ---------- --------- --------- ------- --------- ------------
1. During the year ended 30 June 2019, Mr Coughlan and Mr Meadows received payouts of $34,571 and $3,810, respectively, representing unused annual leave.
In the prior period, consulting services of Company Non-Executive Director (David Reeves) and the Company which he controls, Wilgus Investments Pty Ltd. The amounts billed related to this consulting service amounted to nil (2018: $17,000) based on normal market rates and the amount outstanding at reporting date was nil (2018: nil).
In the prior period, consulting services of Mr Carter and the Company which he controls Stillwater Resources Group Pty Ltd (Stillwater) to provide Chief Financial Officer services to the Company. The amounts billed related to his consulting service amounted to $nil (2018: $19,833) based on normal market rates and the amount outstanding at reporting date was nil (2018: nil)
2. Loan CDIs are treated similar to options and value is an estimate calculated using an appropriate mathematical formula based on Black-Scholes option pricing model. The amount disclosed as part of remuneration for the financial year is the amount expensed over the vesting period.
3. The value of the options granted to key management personnel as part of their remuneration is calculated as at the grant date using the Black and Scholes. The amount disclosed as part of remuneration for the financial year is the amount expensed over the vesting period.
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, Managing Director, to receive a salary of $240,000 per annum plus SGC of 9.5% from 1 April 2017.
Mr James Carter, Chief Financial Officer, to receive a salary of $72,300 per annum plus SGC of 9.5% from 1 February 2018. (Resigned 21 September 2018).
Mr Neil Meadows, Chief Operating Officer, to receive a salary of $220,000 per annum plus SGC of 9.5% from 20 February 2018. (Resigned 10 June 2019)
D. Share-based compensation
During the financial year, nil CDIs were issued to KMP under the Employee Securities Incentive Plan (ESIP) (2018: 3,050,000).
CDIs on issue to KMP under the ESIP are as follows:
30 June Lapsed/Cancelled Balance at End of
2019 Loan CDIs Grant Details Exercised Year
Grant Date No. Value No. Value No. Value No. No. Value
$ $ $ Vested Not Vested $
Group KMP
30 Nov
David Reeves 2017 300,000 209,028 - - - - 300,000 - 209,028
30 Nov
Keith Coughlan 2017 850,000 592,245 - - - - 850,000 - 592,245
Richard 30 Nov
Pavlik 2017 300,000 209,028 - - - - 300,000 - 209,028
30 Nov
Kiran Morzaria 2017 200,000 139,352 - - - - 200,000 - 139,352
James
Carter(i, 6 June
iii) 2018 400,000 106,550 - - - - - 400,000 106,550
Neil
Meadows(ii, 6 June
iv) 2018 1,000,000 266,376 - - - - 1,000,000 - 266,376
3,050,000 1,522,579 - - - - 2,650,000 400,000 1,522,579
--------- --------- ---- ----- ------- ----------- --------- ---------- ---------
30 June Balance at End of
2018 Loan CDIs Grant Details Exercised Lapsed Year
Grant Date No. Value No. Value No. Value No No. Value
$ $ $ Vested Not Vested $
Group KMP
30 Nov
David Reeves 2017 300,000 209,028 - - - - 300,000 - 209,028
30 Nov
Keith Coughlan 2017 850,000 592,245 - - - - 850,000 - 592,245
Richard 30 Nov
Pavlik 2017 300,000 209,028 - - - - 300,000 - 209,028
30 Nov
Kiran Morzaria 2017 200,000 139,352 - - - - 200,000 - 139,352
6 June
James Carter 2018 400,000 106,550 - - - - - 400,000 106,550
6 June
Neil Meadows 2018 1,000,000 266,376 - - - - - 1,000,000 266,376
3,050,000 1,522,579 - - - - 1,650,000 1,400,000 1,522,579
--------- --------- ---- ----- --- ----- --------- ---------- ---------
Notes:
(i) Resigned 21 Sept 2018. (ii) Resigned 10 June 2019. (iii) At 30 June 2019, the Board was in the process of cancelling Mr Carter's CDIs .
(iv) At 30 June 2019, the Board agreed to not cancel Mr Meadows CDIs upon his resignation and they had fully vested.
Employee Securities Incentive Plan
Key quality employees of European Metals were issued 3,050,000 CDIs under the Employee Securities Incentive Plan in the year ended 30 June 2018. The terms of the employee securities were as follows:
-- Employee securities had the following issue price: o $0.725 per CDI for 1,650,000 CDIs o $0.4848 per share for 1,400,000 CDIs
-- The employee must remain employed by a member of the Group for one year after the date the employee securities are issued
-- 1,650,000 of the employee securities are held in a voluntary holding lock for a period of 12 months from the date of issue, until 14 December 2018
-- 1,400,000 of the employee securities are held in a voluntary holding lock until 26 February 2019
-- An interest free loan for the full amount to purchase the employee securities will be made available to the employee. The terms of the loan were as follows:
o The Company agrees to lend the amount equal to the issue price multiplied by the number of employee securities
o The employee can repay the balance outstanding on the loan at any time o The loan is interest free o The outstanding amount of the loan will become payable on the earliest of:
-- The repayment date for 1,650,000 CDIs - 15 years after the date of loan advance
-- The repayment date for 1,400,000 CDIs - 7 years after the date of loan advice
-- The employee securities being sold
-- The employee becoming insolvent
-- The employee ceasing to be an employee
-- The employee securities being acquired by a third party by way of an amalgamation, arrangement or formal takeover bid
o The employee may not repay the balance outstanding on the loan in respect of the employee securities which are in voluntary holding lock.
E. Options issued as part of remuneration for the year ended 30 June 2019
No options were issued as part of the remuneration for the year ended 30 June 2019 (2018: nil).
F. Options on issue as part of remuneration
Balance at End
30 June 2019 Options Grant Details Exercised Lapsed of Year
Value
Grant Date No. (1) No. Value No. Value No. Value
$ $ $ $
Group KMP
David Reeves - - - - - - - - -
Keith Coughlan - - - - - - - - -
3 January
Richard Pavlik 2017 400,000 177,352 - - - - 400,000 177,352
Kiran Morzaria - - - - - - - - -
James Carter(i) - - - - - - - - -
Neil Meadows(ii) - - - - - - - - -
400,000 177,352 - - - - 400,000 177,352
------- ------- ---- ----- --- ----- ------- -------
(i) Resigned 21 September 2018
(ii) Resigned 10 June 2019
Notes:
1. The value of the options granted to key management personnel as part of their remuneration is calculated as at the grant date using the Black and Scholes. 250,000 of the options issued will vest at completion of the Definitive Feasibility Study and the balance will vest 12 months thereafter. The value of the options have been prorated over the vesting period, therefore, the value has been included in Section B of the remuneration report as at 30 June 2019.
G. Equity instruments issued on exercise of remuneration options
There were no equity instruments issued during the year to Directors or other KMP as a result of options exercised that had previously been granted as compensation.
H. Loans to Directors and Key Management Personnel
Apart from Loan CDIs issued to Directors and Key Management Personnel during the year ended 30 June 2018, there were no other loans to Key Management Personnel during the financial year. The deemed value of the Loan on issue to directors was $1,198,250 based on an issue price of $0.725 per Loan CDI and the deemed value of the loans issued to other key management personnel was $678,720 based on the issue price of $0.4848 per Loan CDI.
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.
J. Other information
Options held by Key Management Personnel
The number of options to acquire CDIs in the Company held during the 2019 and 2018 reporting period by each of the Key Management Personnel of the Group; including their related parties are set out below.
Balance Unvested
at the Granted Exercised Other changes Balance
start of during during the during the at the end Vested
30 June 2019 the year the year year year of the year and exercisable
David Reeves 1,000,000 - - - 1,000,000 1,000,000 -
Keith Coughlan 2,000,000 - - - 2,000,000 2,000,000 -
Kiran Morzaria - - - - - - -
Richard Pavlik 400,000 - - - 400,000 - 400,000
James Carter(i) - - - - - - -
Neil Meadows(ii) - - - - - - -
Total 3,400,000 - - - 3,400,000 3,000,000 400,000
========= ========= =========== ============= ============ ================ ========
Balance Unvested
at the Granted Exercised Other changes Balance
start of during during the during the at the end Vested
30 June 2018 the year the year year year of the year and exercisable
David Reeves 1,000,000 - - - 1,000,000 1,000,000 -
Keith Coughlan 2,000,000 - - - 2,000,000 2,000,000 -
Kiran Morzaria - - - - - - -
Richard Pavlik 400,000 - - - 400,000 - 400,000
James Carter - - - - - - -
Neil Meadows - - - - - - -
Total 3,400,000 - - - 3,400,000 3,000,000 400,000
========= ========= =========== ============= ============ ================ ========
Notes:
(i) Resigned 21 Sept 2018. (ii) Resigned 10 June 2019.
Chess Depositary Interests ('CDIs') held by Key Management Personnel
The number of ordinary CDIs held in the Company during the 2019 and 2018 reporting period held by each of the Key Management Personnel of the Group; including their related parties are set out below.
The CDIs held directly have been obtained through the Employee Securities Incentive Plan.
Balance Granted Issued Other Changes Balance
at Start as remuneration on exercise during at end
2019 of year during the of options the year of year
Name year (1)
David Reeves 300,000 - - - 300,000
Indirect(1) 3,720,244 - - - 3,720,244
Keith Coughlan 850,000 - - - 850,000
Indirect(2) 8,500,000 - - - 8,500,000
Kiran Morzaria 200,000 - - - 200,000
Indirect(3) 27,846,470 - - 50,000 27,896,470
Richard Pavlik 300,000 - - - 300,000
James Carter(i) 400,000 - - - 400,000
Neil Meadows(ii) 1,000,000 - - - 1,000,000
Total 43,116,714 - - 50,000 43,166,714
=========== ================= ============= ============== ===========
Notes:
1. Mr Reeves has 300,000 CDIs direct interest and 3,720,244 CDI indirect interest held by Eleanor Jean Reeves <Elanwi A/C>, Mr Reeves' spouse.
2. Mr Coughlan has 850,000 CDIs direct interest and 8,500,000 indirect interest held by Inswinger Holdings Pty Ltd, an entity of which Mr Coughlan is a director and a shareholder.
3. Mr Morzaria has 27,846,470 indirect interest held by Cadence Minerals Plc, an entity of which Mr Morzaria is a director and chief executive.
(i) Resigned 21 September 2018. The balance at end of year represents balance at date of resignation.
(ii) Resigned 10 June 2019. The balance at end of year represents balance at date of resignation.
Balance Granted Issued Other Changes Balance
at Start as remuneration on exercise during at end
2018 of year during the of options the year of year
Name year (1)
David Reeves - 300,000 - - 300,000
Indirect 3,720,244 - - - 3,720,244
Keith Coughlan - 850,000 - - 850,000
Indirect 8,500,000 - - - 8,500,000
Kiran Morzaria - 200,000 - - 200,000
Indirect (2) 26,860,756 - - 985,714 27,846,470
Richard Pavlik - 300,000 - - 300,000
James Carter - 400,000 - - 400,000
Neil Meadows - 1,000,000 - - 1,000,000
Total 39,081,000 3,050,000 - 985,714 43,116,714
=========== ================= ============= ============== ===========
Notes:
1. Issue of Loan CDIs through the Employee Securities Incentive Plan.
2. Mr Morzaria is a director and chief executive of Cadence Minerals Plc. On 24 November 2016, Cadence Minerals Plc acquired a further 5,000,000 CDIs as part of a CDI placement to raise $2,600,000. On 17 October 2016, Cadence Minerals Plc exercised 2,000,000 listed options at 20 cents. On 20 December 2017, Cadence Minerals Plc acquired a further 985,714 CDIs as part of a CDI placement to raise approximately $4,000,000.
Performance Shares granted to Key Management Personnel
The number of Performance shares held in the Company during the 2019 reporting period held by each of the Key Management Personnel of the Group:
Balance at
30 June 2019 Grant Details Exercised Lapsed/cancelled End of Year
Grant No. Value
Date No. Value No. Value No. Value
$ $ $ Unvested $
Group KMP
18 Dec
David Reeves A Class 2018 542,651 86,824 - - - - 542,651 86,824
24 Nov
David Reeves B Class 2016 542,651 289,932 - - - - 542,651 289,932
Keith Coughlan - - - - - - - - -
Richard Pavlik - - - - - - - - -
Kiran Morzaria - - - - - - - - -
24 Nov
James Carter(i) B Class 2016 514,650 274,971 - - - - 514,650 274,971
Neil Meadows(ii) - - - - - - - - -
---------
1,599,952 651,727 - - - - 1,599,952 651,727
--------- ------- ---- ----- ------ ---------- --------- -------
(i) Resigned 21 September 2018. The balance at end of year represents balance at date of resignation.
(ii) Resigned 10 June 2019
Balance at
30 June 2018 Grant Details Exercised Lapsed End of Year
Grant No. Value
Date No. Value No. Value No. Value
$ $ $ Unvested $
Group KMP
24 Nov
David Reeves 2016 542,651 289,932 - - - - 542,651 289,932
Keith Coughlan - - - - - - - - -
Richard Pavlik - - - - - - - - -
Kiran Morzaria - - - - - - - - -
24 Nov
James Carter 2016 514,650 274,971 - - - - 514,650 274,971
Neil Meadows - - - - - - - - -
---------
1,057,301 564,903 - - - - 1,057,301 564,903
--------- ------- ---- ----- --- ----- --------- -------
Description of Performance Shares
During the financial year, it had become apparent that the B Class Performance Shares approved at the 2016 AGM only represented half the value contemplated by the Original Performance Shares, as a result of the conversion mechanism provided for under the B Class Terms. As an incentive to the vendors the company issued 5,000,000 A Class Performance Shares on the same terms and conditions as the B Class Performance shares.
The terms of the Performance Shares are as follows:
The 5,000,000 B Class Performance Shares and 5,000,000 A Class Performance Shares will convert in accordance with the below:
(i) 1,000,000 B Class and 1,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the Company's Mineral Resource at Cinovec South and Cinovec Main being entered in the State Balance. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the Mineral Resource is entered.
(Explanatory Note: Under Czech law a mineral resource must be registered and henceforth treated as a resource by the Czech Government before mining licenses can be granted. A mineral resource has to be calculated according to the Czech regulations, and defended in front of a committee of state certified experts);
(ii) 1,000,000 B Class and 1,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the issuance of the preliminary mining licenses relating to the Cinovec Project. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the final preliminary mining license is issued; and
(iii) 3,000,000 B Class and 3,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax net present value of not less than US$250,000,000. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS,
(together the Milestones and each a Milestone). For the avoidance of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the B Class Performance Shares will not exceed a ratio of 1 for 1.
(iv) If the Milestone is not achieved or the Change of Control Event does not occur by the required date, then each Performance Share held by a Holder will be automatically redeemed by the Company for the sum of $0.000001 within 10 ASX trading days of non-satisfaction of the Milestone.
Other transactions with Key Management Personnel
Purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. The Group acquired the following services from entities that are controlled by members of the Group's KMP:
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they control or significantly influence the financial or operating policies of those entities. During the year, the following entities provided corporate services and rental to the Group. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Entity Nature of transactions Key Management Total Transactions Payable Balance
Personnel
2019 2018 2019 2018
$ $ $ $
Wilgus Investments Pty
Ltd Rental David Reeves 40,200 59,000 - 6,270
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
MANAGING DIRECTOR
Dated at 27 September 2019
AUDITOR'S INDEPENCE DECLARATION
27 September 2019
Board of Directors
European Metals Holdings Limited
Suite 12, Level 1
11 Ventnor Avenue
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 the Audit Director for the audit of the financial statements of European Metals Holdings Limited for the year ended 30 June 2019, 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
(Trading as Stantons International)
(An Authorised Audit Company)
Samir R Tirodkar
Director
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2019
Note 30 June 30 June
2019 2018
$ $
Revenue - interest income 1,461 1,599
Other income 424,643 645,554
Professional fees (1,187,270) (944,334)
Audit fees 6 (40,000) (33,175)
Directors' fees (60,000) (60,000)
Share based payments 16 (1,179,090) (1,216,018)
Advertising and Promotion (94,879) (94,951)
Employees' benefits (640,291) (580,751)
Travel and accommodation (173,619) (187,683)
Office and rent expense (64,032) (83,470)
Insurance expense (10,764) (46,777)
Impairment expense - (1,880,742)
Share registry expense (97,211) (154,844)
Depreciation expense (4,180) (1,945)
Other expenses (127,583) (17,672)
------------ ------------
Loss before income tax (3,252,815) (4,655,209)
Income tax expense 3 - -
------------ ------------
Loss for the year (3,252,815) (4,655,209)
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss - exchange differences
on translating foreign operations 443,780 517,841
------------ ------------
Other comprehensive income/(loss) for
the year, net of tax 443,780 517,841
Total comprehensive loss for the year
attributable to members of the Company (2,809,035) (4,137,368)
============ ============
Basic and diluted loss per CDI (cents) 7 (2.25) (3.43)
The above statement should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
The above statement should be read in conjunction with the accompanying notes.
2019 2018
Note $ $
CURRENT ASSETS
Cash and cash equivalents 8 426,178 2,223,109
Other receivables 9 92,180 32,640
Other assets 10 23,587 11,982
TOTAL CURRENT ASSETS 541,945 2,267,731
------------ ------------
NON-CURRENT ASSETS
Property, plant and equipment 11 385,158 372,997
Exploration and evaluation expenditure 12 11,684,072 10,169,177
Intangible assets - 6,056
------------ ------------
TOTAL NON-CURRENT ASSETS 12,069,230 10,548,230
------------ ------------
TOTAL ASSETS 12,611,175 12,815,961
------------ ------------
CURRENT LIABILITIES
Trade and other payables 13a 128,977 342,214
Provisions - employee entitlements 13b 23,133 74,649
------------ ------------
TOTAL CURRENT LIABILITIES 152,110 416,863
------------ ------------
TOTAL LIABILITIES 152,110 416,863
------------ ------------
NET ASSETS 12,459,065 12,399,098
============ ============
EQUITY
Issued capital 14 22,074,314 20,413,074
Reserves 15 6,798,846 5,147,304
Accumulated losses (16,414,095) (13,161,280)
------------ ------------
TOTAL EQUITY 12,459,065 12,399,098
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30 JUNE 2019
Issued Capital Share Based Foreign Currency Accumulated
Payment Reserve Translation Losses Total
Reserve
$ $ $ $ $
Balance at 1 July 2017 15,587,656 3,087,801 325,644 (8,506,071) 10,495,030
Loss attributable to
members of the Company - - - (4,655,209) (4,655,209)
Other comprehensive income - - 517,841 - 517,841
---------- --------- --------- ------------ -----------
Total comprehensive loss
for the year - - 517,841 (4,655,209) (4,137,368)
---------- --------- --------- ------------ -----------
Transactions with owners,
recognised directly in
equity
CDIs issued during the
year, net of costs 4,825,418 - - - 4,825,418
Equity based payments - 58,386 - - 58,386
CDI's issued pursuant
to loan plan - 1,157,632 - - 1,157,632
Balance at 30 June 2018 20,413,074 4,303,819 843,485 (13,161,280) 12,399,098
========== ========= ========= ============ ===========
Balance at 1 July 2018 20,413,074 4,303,819 843,485 (13,161,280) 12,399,098
Loss attributable to
members of the Company - - - (3,252,815) (3,252,815)
Other comprehensive income - - 443,780 - 443,780
---------- --------- --------- ------------ -----------
Total comprehensive loss
for the year - - 443,780 (3,252,815) (2,809,035)
---------- --------- --------- ------------ -----------
Transactions with owners,
recognised directly in
equity
CDIs issued during the
year, net of costs 1,661,240 28,672 - - 1,689,912
Equity based payments - 1,179,090 - - 1,179,090
Balance at 30 June 2019 22,074,314 5,511,681 1,287,265 (16,414,095) 12,459,065
========== ========= ========= ============ ===========
The above statement should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 30 JUNE 2018
30 June 30 June
2019 2018
Note $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (2,714,709) (1,658,465)
Interest received 1,461 1,599
R&D Rebate 355,745 820,647
Net cash (used in) operating activities 17 (2,357,503) (836,219)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation
expenditure (1,165,022) (2,190,590)
Payments for property, plant and equipment - (4,436)
Net cash (used in) investing activities (1,165,022) (2,195,026)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs 1,817,303 5,018,667
Proceeds from related party - 200,000
Repayment of related party - (200,000)
Capital raising costs paid (127,391) (212,674)
----------- -----------
Net cash from financing activities 1,689,912 4,805,993
----------- -----------
Net (decrease)/increase in cash and cash
equivalents (1,832,613) 1,774,748
Cash and cash equivalents at the beginning
of the financial year 2,223,109 446,112
Change in foreign currency held 35,682 2,249
----------- -----------
Cash and cash equivalents at the end
of financial year 426,178 2,223,109
----------- -----------
The above statement should be read in conjunction with the accompanying notes.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 30 JUNE 2018
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These consolidated financial statements and notes represent
those of European Metals Holdings Limited ("the Company") and
Controlled Entities (the "Consolidated Group" or "Group").
The 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 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 Group is a listed public company, incorporated in the British
Virgin Islands and registered in Australia.
(i) Accounting policies
The Group has consistently applied the following accounting
policies to all periods presented in the financial statements.
The Group has considered the implications of new and amended
Accounting Standards applicable for annual reporting periods
beginning after 1 January 2018 but determined that their application
to the financial statements is either not relevant or not material.
(ii) Statement of Compliance
The financial report was authorised for issue on 27 September
2019.
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) Going Concern
The directors have prepared the financial statements on going
concern basis, which contemplates continuity of normal business
activities and the realisation of assets and extinguishment
of liabilities in the ordinary course of business.
At 30 June 2019, the consolidated entity comprising the Company
and its subsidiaries has incurred a loss for the year amounting
to $3,252,815. The Consolidated entity has a net working capital
of $389,835, current liabilities of $152,110 and cash and cash
equivalents of $426,178.
The directors consider these funds, combined with the convertible
loan arrangement entered into with CEZ Group and the additional
funds from any capital raising to be sufficient for planned
expenditure on the mineral project for the ensuing 12 months
as well as for corporate and administrative overhead costs.
The Company currently has no intention of drawing down the
convertible loan, and the option to do so lies entirely with
the Company. Although the decision to convert the convertible
loan would stay with the lender, the directors believe that
the convertible loan will be converted, not requiring the return
of the funds received. The directors will review this assessment
closer to the maturity date of the loan, should the loan be
drawn down.
The directors also believe that they have the capacity to raise
additional capital should that become necessary.
For these reasons, the directors believe the going concern
basis of preparation is appropriate.
(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 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.
(iv) Critical accounting estimates and judgements (continued)
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation
expenditure is dependent on a number of factors, including
whether the Group decides to exploit the related lease itself
or, if not, whether it successfully recovers the related exploration
and evaluation asset through sale.
Factors that could impact the future recoverability include
the level of reserves and resources, future technological
changes, which could impact the cost of mining, future legal
changes (including changes to environmental restoration obligations)
and changes to commodity prices.
To the extent that capitalised exploration and evaluation
expenditure is determined not to be recoverable in the future,
profits and net assets will be reduced in the period in which
this determination is made.
Recognition of deferred tax assets
Deferred tax assets relating to temporary differences and
unused tax losses have not been recognised as the Directors
are of the opinion that it is not probable that future taxable
profit will be available against which the benefits of the
deferred tax assets can be utilised.
(b) Income Tax
Current income tax expense charged to the profit or loss is
the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at
reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered
from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred
tax asset and deferred tax liability balances during the year
as well unused tax losses.
Current and deferred income tax expense (income) is charged
or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged
directly to equity.
Deferred tax assets and liabilities are ascertained based
on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts
have been fully expensed but future tax deductions are available.
No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the
tax rates that are expected to apply to the period when the
asset is realised or the liability is settled, based on tax
rates enacted or substantively enacted at reporting date.
Their measurement also reflects the manner in which management
expects to recover or settle the carrying amount of the related
asset or liability.
Deferred tax assets relating to temporary differences and
unused tax losses are recognised only to the extent that it
is probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments
in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can
be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally
enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement
of the respective asset and liability will occur. Deferred
tax assets and liabilities are offset where a legally enforceable
right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority
on either the same taxable entity or different taxable entities
where it is intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will
occur in future periods in which significant amounts of deferred
tax assets or liabilities are expected to be recovered or
settled.
(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 revenue is recognised on a
proportional basis taking
into account the interest rates
applicable to the financial
assets.
(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.
(i) 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.
(j) 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.
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.
Exploration and evaluation assets are only recognised if the
rights of tenure to the area of interest are current and either:
(a) The expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or
(b) 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:
(i) Sufficient data exists to determine technical feasibility
and commercial viability, and
(ii) 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.
(l) Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument. Financial instruments (except for trade
receivables) are measured initially at fair value adjusted by
transaction costs, except for those carried at 'fair value through
profit or loss', in which case transaction costs are expensed
to profit or loss. Where available, quoted prices in an active
market are used to determine the fair value. In other circumstances,
valuation techniques are adopted. Subsequent measurement of financial
assets and financial liabilities are described below.
Trade receivables are initially measured at the transaction
price if the receivables do not contain a significant financing
component in accordance with AASB 15.
Financial assets are derecognised when the contractual rights
to the cash flows from the financial asset expire, or when the
financial asset and all substantial risks and rewards are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expired.
Classification and measurement
Financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:
-- amortised cost; -- fair value through other comprehensive income (FVOCI); and -- fair value through profit or loss (FVPL).
Classifications are determined by both:
-- the contractual cash flow characteristics of the financial assets; and
-- the Group's business model for managing the financial asset.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet with the following conditions (and are not designated
as FVPL);
* they are held within a business model whose objective
is to hold the financial assets and collect its
contractual cash flows; and
* the contractual terms of the financial assets give
rise to cash flows that are solely payments of
principal and interest on the principal amount
outstanding.
After initial recognition, these are measured at amortised
cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The
Group's cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Financial assets at fair value through other comprehensive
income
The Group measures debt instruments at fair value through
OCI if both of the following conditions are met:
* the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding; and
* the financial asset is held within a business model
with the objective of both holding to collect
contractual cash flows and selling the financial
asset.
For debt instruments at fair value through OCI, interest
income, foreign exchange revaluation and impairment losses
or reversals are recognised in the statement of profit or
loss and computed in the same manner as for financial assets
measured at amortised cost. The remaining fair value changes
are recognised in OCI.
Upon initial recognition, the Group can elect to classify
irrevocably its equity investments as equity instruments
designated at fair value through OCI when they meet the
definition of equity under AASB 132 Financial Instruments:
Presentation and are not held for trading.
Financial assets at fair value through profit or loss (FVPL)
Financial assets at fair value through profit or loss include
financial assets held for trading, financial assets designated
upon initial recognition at fair value through profit or
loss or financial assets mandatorily required to be measured
at fair value. Financial assets are classified as held for
trading if they are acquired for the purpose of selling
or repurchasing in the near term.
Financial liabilities
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables or as derivatives
designated
as hedging instruments in an effective hedge, as appropriate.
Financial liabilities are initially measured at fair value,
and, where applicable, adjusted for transaction costs unless
the Group designated a financial liability at fair value
through profit or loss.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method except for derivatives
and financial liabilities designated at FVPL, which are
carried subsequently at fair value with gains or losses
recognised in profit or loss.
All interest-related charges and, if applicable, gains and
losses arising on changes in fair value are recognised in
profit or loss.
Impairment
From 1 July 2018, the Group assesses on a forward-looking basis
the expected credit loss associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology
applied depends on whether there has been a significant increase
in credit risk. For trade receivables, the Group applies the
simplified
approach permitted by AASB, which requires expected lifetime
losses
to be recognised from initial recognition of the receivables.
Comparative information
The Group has applied AASB 9 Financial Instruments
retrospectively,
but has elected not to restate comparative information. As a
result,
the comparative information provided continues to be accounted
for in accordance with the Group's previous accounting policy.
Classification
Until 30 June 2018, the Group classified its financial assets
in the following categories:
-- financial assets at fair value through profit or
loss;
-- loans and receivables;
-- held-to-maturity investments; and
-- available for sale financial assets.
The classification depended on the purpose for which the
investments
were acquired. Management determined the classification of its
investments at initial recognition and, in the case of assets
classified as held-to-maturity, re-evaluated this designation
at the end of each reporting period.
(m) 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.
(n) Earnings Per CDI
Basic earnings per CDI
Basic earnings per CDI is determined by dividing the profit
or loss attributable to ordinary shareholders of the Company,
by the weighted average number of CDIs outstanding during
the period, adjusted for bonus elements in CDIs issued during
the period.
Diluted earnings per CDI
Diluted earnings per CDI adjusts the figure used in the
determination
of basic earnings per CDI to take into account the after
income tax effect of interest and other financial costs
associated
with dilutive potential CDIs and the weighted average number
of CDIs assumed to have been issued for no consideration
in relation to dilutive potential CDIs, which comprise
convertible
notes and CDI options granted.
(o) 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 income in the
period in which they are incurred.
(p) 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.
(q) 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 Managing
Director to make decisions about resources to be allocated
to the segment and assess its performance, and for which
discrete financial information is available.
(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 are treated similar to options and value is an
estimate calculated using an appropriate mathematical formula
based on Black-Scholes option pricing model. The choice of
models and the resultant Loan CDI value require assumptions
to be made in relation to the likelihood and timing of the
vesting of the Loan CDIs and the value and volatility of
the price of the underlying shares.
(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.
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 are classified as equity. Incremental costs directly
attributable to the issue of new CDIs or options are shown
in equity as a deduction, net of tax, from the proceeds. Incremental
costs directly attributable to the issue of new CDIs or options
for the acquisition of a new business are not included in
the cost of acquisition as part of the purchase consideration.
(u) 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 20.
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.
NOTE 2: DETERMINATION OF FAIR VALUES
A number of the Group's accounting policies and disclosures require
the determination of fair value, for both financial and non-financial
assets and liabilities. Fair values have been determined for measurement
and / or disclosure purposes based on the following methods. When
applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to
that asset or liability.
CDI-based payment transactions
The fair value of the employee CDI options and the share appreciation
right 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 fair value.
Note 3: INCOME TAX 30 June 30 June
2019 2018
$ $
(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 - -
================ ============
(b) Reconciliation of income tax expense
to prima facie tax payable
Net loss before tax (3,252,815) (4,655,209)
Prima facie tax on operating loss at 30%
(2018: 27.5%) (975,845) (1,280,182)
Add / (Less): Non-deductible items
-Impairments 439,967 947,825
Current year tax loss not recognised 535,878 332,357
Income tax attributable to operating loss - -
---------------- ------------
The applicable weighted average effective
tax rates are as follows: Nil% Nil%
Balance of franking account at year end Nil Nil
a. Deferred tax assets
Tax losses 1,234,662 706,261
Accruals 12,750 4,950
Capital raising costs 30,574 -
Provisions 13,123 20,529
---------------- ------------
Unrecognised deferred tax asset 1,291,109 731,740
Set-off deferred tax liabilities (1,068) (36,274)
Net deferred tax assets 1,290,041 695,466
---------------- ------------
Deferred tax liabilities
Exploration expenditure - (35,295)
Property, plant and equipment (1,068) (979)
---------------- ------------
(1,068) (36,274)
Set-off deferred tax assets 1,068 36,274
---------------- ------------
Net deferred tax liabilities - -
---------------- ------------
Tax losses
Unused tax losses for which no deferred tax
asset has been recognised 4,115,539 2,568,222
---------------- ------------
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 the taxation regulations of the Czech Republic where it currently holds mining license via Geomet S.R.O, and also to UK taxation regulations in respect of European Metals (UK) Limited.
NOTE 4: RELATED PARTY TRANSCTIONS
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Other than transactions with Key Management Personnel and their related entities (refer Note 5), there were no other related party transactions during the year.
NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the Remuneration Report contained in the Directors' Report for details of the remuneration paid or payable to each member of the Group's key management personnel (KMP) for the year ended 30 June 2019 and 30 June 2018.
The totals of remuneration paid to KMP during the year are as follows:
2019 2018
$ $
Short-term benefits 667,442 565,750
Post-employment benefits 45,473 32,890
Equity settled 406,089 1,214,269
Other payments 38,381 36,833
1,157,385 1,849,742
========== ==========
Loans to Key Management Personnel
Apart from Loan CDIs issued to Directors and Key Management Personnel during the year ended 30 June 2018, there were no other loans to Key Management Personnel during the financial year. The deemed value of the Loan on issue to directors was $1,198,250 based on an issue price of $0.725 per Loan CDI and the deemed value of the loans issued to other key management personnel was $678,720 based on the issue price of $0.4848 per Loan CDI.
Other transactions with Key Management Personnel
Purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. The Group acquired the following services from entities that are controlled by members of the Group's KMP:
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they control or significantly influence the financial or operating policies of those entities. During the year, the following entities provided corporate services and rental to the Group. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Entity Nature of transactions Key Management Total Transactions Payable Balance
Personnel
2019 2018 2019 2018
$ $ $ $
Wilgus Investments Pty
Ltd Rental David Reeves 40,200 59,000 - 6,270
There were no other transactions with Key Management Personnel during the financial year.
NOTE 6: AUDITOR'S REMUNERATION 2019 2018
$ $
Details of the amounts paid to the auditor of the Group, Stantons
International Audit and
Consulting Pty Ltd for audit and non-audit services provided during
the year are set out below:
Auditor's services
Audit and review of financial report 40,000 33,175
-------- --------
NOTE 7: BASIC AND DILUTED LOSS PER CDI 2019 2018
Basic and diluted loss per CDI (cents) (2.25) (3.43)
Loss attributable to members of European Metals
Holdings Limited (3,252,815) (4,655,209)
Weighted average number of CDI outstanding during
the year 144,514,487 135,979,290
----------- -----------
The Group is in a loss making position and it is unlikely that
the conversion to, calling of, or subscription for, CDI capital
in respect of potential CDIs would lead to diluted earnings per
CDI that shows an inferior view of the earnings per CDI. For this
reason, the diluted losses per CDI for the year ended 30 June 2019
are the same as basic loss per CDI.
NOTE 8: CASH AND CASH EQUIVALENTS 2019 2018
$ $
Cash at bank 426,278 2,223,109
------- ---------
Total cash and cash equivalents in the Statement
of Cash Flows 426,278 2,223,109
------- ---------
NOTE 9: OTHER RECEIVABLES 2019 2018
$ $
CURRENT
GST and VAT Receivable 33,526 34,526
Other receivables 58,654 (1,886)
----------- ------------
92,180 32,640
----------- ------------
Current trade receivables are non-interest bearing and are normally
settled on 60-day terms. This balance is current receivables incurred
on a day to day operational basis and considered unimpaired.
2019 2018
NOTE 10: OTHER ASSETS $ $
Current
Prepayments 23,587 11,982
23,587 11,982
----------- -----------------
NOTE 11: PROPERTY, PLANT AND EQUIPMENT 2019 2018
$ $
Land at cost 371,458 352,660
------- -------
Buildings at cost 6,160 5,848
Less accumulated depreciation (767) (427)
------- -------
5,393 5,421
------- -------
Plant and equipment at cost 14,388 18,641
Less accumulated depreciation (6,081) (3,725)
------- -------
8,307 14,916
------- -------
Total Property, Plant and Equipment at cost 392,006 377,149
Less accumulated Depreciation (6,848) (4,152)
------- -------
Total Property, Plant and Equipment 385,158 372,997
------- -------
Reconciliation
Reconciliation of the carrying amounts set
out below.
Opening Property, Plant and Equipment 372,997 349,024
Additions - 5,444
Disposals - (1,411)
Depreciation (4,180) (4,152)
Foreign currency differences 16,341 24,092
------- -------
Carrying amount at the end of the year 385,158 372,997
------- -------
NOTE 12: EXPLORATION AND EVALUATION EXPITURE 2019 2018
$ $
Exploration at cost
Balance at the beginning of the year 10,169,177 9,752,757
Exploration of tenements 1,086,353 1,772,258
Impairment of exploration assets - (1,880,742)
Foreign exchange movement 428,542 524,904
11,684,072 10,169,177
---------- -----------
NOTE 13: TRADE AND OTHER PAYABLES 2019 2018
$ $
a) CURRENT
Trade payables 53,763 263,409
Accrued expenses and other liabilities 75,214 78,805
------- -------
128,977 342,214
------- -------
Payables are normally due for payment within 30
days.
b) PROVISIONS
Employee entitlements 23,133 74,649
23,133 74,649
------ ------
NOTE 14: ISSUED CAPITAL Number $
(a) Issued and paid up capital
146,642,227 (30 June 2018: 141,464,727
CDIs) 146,642,227 22,074,314
-----------
Total issued capital 146,642,227 22,074,314
----------- ----------
(b) Movements in CDIs
Date Number $
Balance at the beginning of the
year 1 July 2017 130,333,909 15,587,656
CDI issue under the Funding Facility
Agreement @ $0.7061 per CDI 1 August 2017 364,679 257,500
CDI issue under the Funding Facility
Agreement @ $0.7327 per CDI 10 August 2017 351,448 257,505
CDI issue under the Funding Facility 1 September
Agreement @ $0.685 per CDI 2017 375,905 257,495
CDI issued under the Funding Facility 10 October
Agreement @ $0.693 per CDI 2017 371,644 257,550
CDI issue to Directors under the
Employee Securities Incentive Plan 14 December
@ $0.725 per CDI 2017 1,650,000 -
CDI capital raising @ $0.615 per 20 December
CDI 2017 6,517,142 4,008,042
CDIs issued under the Employee Securities
Incentive Plan @0.4848 per CDI 6 June 2018 1,500,000 -
Capital raising cost - (212,674)
----------- ----------
Balance at the end of the year 30 June 2018 141,464,727 20,413,074
----------- ----------
Date Number $
Balance at the beginning of the
year 1 July 2018 141,464,727 20,413,074
CDI issue under Placement @ $0.351 27 November
per CDI 2018 5,177,500 1,817,303
Capital raising cost - (156,063)
----------- ----------
Balance at the end of the year 30 June 2019 146,642,227 22,074,314
----------- ----------
(c) Loan CDIs Reserve
Unit Value
Date Number $ Total $ Amount Expensed
Balance at the beginning - - - -
of the year 1 Jul 2017
Loan CDIs Employee Securities 14 Dec
Incentive Plan 2017 1,650,000 $0.69676 1,149,653 1,149,653
Loan CDIs Employee Securities
Incentive Plan 6 Jun 2018 1,500,000 $0.26638 399,564 7,979
--------- ---------------
30 June
Balance at end of the year 2018 3,150,000 - - 1,157,632
--------- ---------------
Balance at beginning of 1 July
the year 2018 3,150,000 - - 1,157,632
--------- ---------------
CDI movement during the
year - - - 285,034
--------- ---------------
30 June
Balance at end of the year 2019 3,150,000 - - 1,444,666
--------- ---------------
CDIs entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show of hands every holder of a CDI present at a meeting in person or by proxy, is entitled to one vote, and in a poll each share is entitled to one vote.
European Metals Holdings limited is a company limited by shares incorporated in the British Virgin Islands with an authorised share capital of 200,000,000 no par value shares of a single class. Pursuant to the prospectus dated 26 April 2012, the Company issued CDIs in July 2012. The holder of the CDIs has beneficial ownership in the underlying shares instead of legal title. Legal title and the underlying shares is held by Chess Depository Nominees Pty Ltd.
Holders of CDIs have the same entitlement benefits of holding the underlying shares. Each Share in the Company confers upon the Shareholder:
1. the right to one vote at a meeting of the Shareholders of the Company or on any Resolution of Shareholders;
2. the right to an equal share in any dividend paid by the Company; and
3. the right to an equal share in the distribution of the surplus assets of the Company on its liquidation.
(d) Movements Performance Shares
Date Number $
Balance at the beginning of the
year 1 July 2017 5,000,000 2,671,444
Balance at the end of the year 30 June 2018 5,000,000 2,671,444
---------- ---------
Balance at the beginning of the
year 1 July 2018 5,000,000 2,671,444
---------- ---------
Issue of A Class Performance Shares 18 Dec 2018 5,000,000 800,000
---------- ---------
Balance at the end of the year 30 June 2019 10,000,000 3,471,444
---------- ---------
During the financial year, it had become apparent that the B Class Performance Shares approved at the 2016 AGM only represented half the value contemplated by the Original Performance Shares, as a result of the conversion mechanism provided for under the B Class Terms. As an incentive to the vendors the company issued 5,000,000 A Class Performance Shares on the same terms and conditions as the B Class Performance shares issued in the 2017 period.
The terms of the Performance Shares are as follows:
The 5,000,000 B Class Performance Shares and 5,000,000 A Class Performance Shares will convert in accordance with the below:
(i) 1,000,000 B Class and 1,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the Company's Mineral Resource at Cinovec South and Cinovec Main being entered in the State Balance. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the Mineral Resource is entered. (Explanatory Note: Under Czech law a mineral resource must be registered and henceforth treated as a resource by the Czech Government before mining licenses can be granted. A mineral resource has to be calculated according to the Czech regulations, and defended in front of a committee of state certified experts);
(ii) 1,000,000 B Class and 1,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the issuance of the preliminary mining licenses relating to the Cinovec Project. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the final preliminary mining license is issued; and
(iii) 3,000,000 B Class and 3,000,000 A Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax net present value of not less than US$250,000,000. The Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS,
(together the Milestones and each a Milestone). For the avoidance of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the B Class Performance Shares and A Class Performance Shares will not exceed a ratio of 1 for 1.
(iv) If the Milestone is not achieved or the Change of Control Event does not occur by the required date, then each Performance Share held by a Holder will be automatically redeemed by the Company for the sum of $0.000001 within 10 ASX trading days of non-satisfaction of the Milestone.$2,671,444 has been attributed to the Performance Shares.
During the current financial year, $800,000 was expensed in relation to the issue of the A Class Performance Shares.
(e) 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.
Due to the nature of the Group's activities, being mineral exploration, 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:
2019 2018
$ $
Cash and cash equivalents 426,178 2,223,109
Other receivables 92,180 32,640
Trade and other payables (128,977) (342,214)
Employee entitlements (23,133) 74,649
366,248 1,988,184
--------- ---------
The Group is not subject to any externally imposed capital requirements.
NOTE 15: RESERVES 2019 2018
$ $
Option and Warrant Reserve 597,470 474,743
Performance Shares Reserve 3,471,444 2,671,444
CDIs Reserve 1,442,667 1,157,632
Foreign Currency Translation Reserve 1,287,265 843,485
--------- ---------
Total Reserves 6,798,846 5,147,304
--------- ---------
Option and Warrant Reserve 2019 2018
$ $
Balance at the beginning of the financial year 474,743 416,357
Equity based payment expense 94,055 58,386
Equity based payment as capital raising cost 28,672 -
------- -------
Balance at the end of the financial year 597,470 474,743
------- -------
The options and warrant reserve is used to recognise the fair value of all options and warrants on issue but not yet exercised.
At 30 June 2019 the following options are outstanding:
-- 3,750,000 unlisted options exercisable at 16.6 cents on or before 17 August 2020 were issued to key management personnel.
-- 400,000 unlisted options were issued on 3 January 2017 to Richard Pavlik a director of the Company with an exercise price of 58 cents and expiry date of 3 January 2020. 250,000 of these options will vest at the completion of the Definitive Feasibility Study and the balance will vest 12 months thereafter.
-- 200,000 unlisted options exercisable at 35 cents on or before 1 January 2021 were issued to key management personnel post 30 June 2019. $23,136 has been included in the share-based expenses for the year.
-- 100,000 unlisted options exercisable at 40.18 cents on or before 1 June 2021 were issued to key management personnel post 30 June 2019. $11,802 has been included in share-based expenses for the year.
-- 116,875 warrants exercisable at 20 pence (AUD 31.5 cents) on or before 22 November 2021 were granted to brokers as a cost of capital raising.
Performance Share Reserve
The Performance Share reserve records the fair value of the Performance Shares issued.
2019 2018
$ $
Balance at the beginning of the financial year 2,671,444 2,671,444
Equity based payment 800,000 -
--------- ---------
Balance at the end of the financial year 3,471,444 2,671,444
--------- ---------
Loan CDIs Reserve
The CDIs reserve records the fair value of the Loan CDIs issued.
2019 2018
$ $
Balance at the beginning of the financial year 1,157,632 -
Loan CDIs issued to directors - equity based expense - 1,149,653
Loan CDIs issued to employees - equity based expense 285,035 7,979
--------- ---------
Balance at the end of the financial year 1,442,667 1,157,632
--------- ---------
Employee securities incentive plan
During the year 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 represent an option arrangement. Loan CDIs vested immediately. The key terms of the Employee Share Plan and of each limited recourse loan provided under the Plan are as follows:
i. The total loan equal to issue price multiplied by the number of Plan CDIs applied for ("Advance"), which shall be deemed to have been draw down at Settlement upon issued of the Loan Shares.
ii. 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.
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 - 15 years after the date of loan advance and the repayment date for 1,500,000 Employee CDIs - 7 years after the date of loan advice.
v. The Loan is repayable on the earlier of: (a) The repayment date; (b) The plan CDIs being sold; (c) The borrower becoming insolvent; (d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs being acquired by a third party by way of an amalgamation, arrangement or formal takeover bid for not less than all the outstanding CDIs.
Loan Forgiveness
vi. The Board may, in its sole discretion, waive the right to repayment of all or any part of the outstanding balance of an Advance where:
(i) The borrower dies or becomes permanently disabled; or
(ii) 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
i. In accordance with the terms of the Plan and the Invitation, the Loan CDIs cannot be sold, transferred, assigned, charged or otherwise encumbered with the Plan CDIs except in accordance with the Plan.
Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.
2019 2018
$ $
Balance at the beginning of the financial year 843,485 325,644
Movement during the year 443,780 517,841
--------- -------
Balance at the end of the financial year 1,287,265 843,485
--------- -------
NOTE 16: SHARE BASED PAYMENT EXPENSE
No options issued as share-based payments during the current period.
The Company issued 300,000 options post 30 June 2019, which were granted during the period and 116,875 warrants were granted during the year and are yet to be issued.
Number Weighted
Average
Exercise
Price
Options outstanding as at 30 June 2017 4,150,000 $0.206
--------- ---------
Options outstanding as at 30 June 2018 4,150,000 $0.206
--------- ---------
Options Outstanding as at 1 July 2018 4,150,000 $0.206
Warrants granted during the period (i) 28,672 $0.315
--------- ---------
Options granted during the period (ii) 388,203 $0.264
Options outstanding as at 30 June 2019 4,566,875 $0.219
--------- ---------
The following option share-based payment arrangements existed 30
June 2019 and 30 June 2018:
On 17 August 2015 3,750,000 options with an exercise price of 16.6
cents and exercisable on or before 17 August 2020 were granted to
directors. These remain outstanding as at 30 June 2019 and 30 June
2018.
On 3 January 2017, 400,000 options with an exercise price of 58 cents
and exercisable on or before the 3 January 2020 were granted to a
Director of the Company. 250,000 of these options will vest at the
completion of the Definitive Feasibility Study and the balance will
vest 12 months thereafter. The options were valued under the Black
and Scholes at $177,352. The value of the options has been pro-rated
over the vesting period. A fair value adjustment of $59,117 (2018:
58,386) was recognised as a share based payment in the profit and
loss in 2019.
(i) Warrants granted but not yet issued
On the 22 November 2018, 116,875 warrants were granted to brokers as a cost of capital raising. The warrants have an exercise of 20 pence (31.5 cents) in line with the capital raise on the 20 November 2018. Warrants are exercisable on or before 22 November 2021. The warrants were valued under the Black and Scholes at $28,672 with the share based payment recognised as a capital raising cost. The key inputs to the models used were as follows.
Grant date 22 November 2018 Expected life of 3 Years
warrants (years)
Dividend yield Underlying share
(%) Nil price ($) $0.39
Expected volatility Warrant exercise
(%) 91.27% price ($) $0.315
Risk-free interest Value of warrant
rate (%) 2.115% ($) $0.24532
(ii) Options granted but not yet issued
On 12 July 2019, 200,000 unlisted options exercisable at 35 cents on or before 1 January 2021 were issued to a consultant post 30 June 2019. The options were valued under the Black and Scholes at $23,136 with the share based payment recognised in the Statement of Profit or Loss in 2019. The key inputs to the models used were as follows.
Grant date 1 January 2019 Expected life of 3 Years
options (years)
Dividend yield Underlying share
(%) Nil price ($) $0.27
Expected volatility Option exercise
(%) 92.16% price ($) $0.35
Risk-free interest Value of option
rate (%) 1.85% ($) $0.11568
On 12 July 2019, 100,000 unlisted options exercisable at 40.18 cents on or before 1 June 2021 were issued to a consultant post 30 June 2019. The options were valued under the Black and Scholes at $11,802 with the share based payment recognised in the Statement of Profit or Loss in 2019. The key inputs to the models used were as follows.
Grant date 1 January 2019 Expected life of 3 Years
options (years)
Dividend yield Underlying share
(%) Nil price ($) $0.27
Expected volatility Option exercise
(%) 92.16% price ($) $0.4018
Risk-free interest Value of option
rate (%) 1.01% ($) $0.11802
The following performance share-based payment arrangements existed at 30 June 2019 and 30 June 2018:
Instruments granted are as follows:
Performance Shares granted are as follows:
2019 2018
Grant Date Number $ Number $
B Class - 18 November 2016
(related parties) 1,057,301 564,903 1,057,301 564,903
B Class - 18 November 2016
(non-related parties) 3,942,699 2,106,541 3,942,699 2,106,541
A Class- 18 December 2018
(related parties) 1,057,301 169,168 - -
A Class- 18 December 2018
(non-related parties) 3,942,699 630,832 - -
----------- ---------- ---------- ----------
10,000,000 3,471,444 5,000,000 2,671,444
----------- ---------- ---------- ----------
$800,000 has been attributed to the Performance Shares in the current reporting period (2018: $2,671,444).
Fair value of Loan CDIs in existence at 30 June 2019 and 30 June 2018
The fair value of Loan CDIs granted have been valued using a Black Scholes Methodology, taking into account the terms and conditions upon which the Loan CDIs were granted. The exercise price of the Loan CDI's is equal to the market price of the underlying shares being the VWAP of shares traded on the ASX over the 5 trading days immediately preceding the date of grant.
The following Loan CDIs share-based payment arrangements existed at 30 June 2019 and 30 June 2018
Value to
be recognised
Value recognised Value recognised in future
Number 2019 2018 years
Director Loan CDIs 1,650,000 - 1,149,653 -
Employee Securities Incentive
Plan Loan CDIs (1) 1,500,000 285,035 7,979 -
Note:
1. These Loan CDIs are being expensed over the vesting period.
A summary of the inputs used in the valuation of the loan CDIs issued to directors are as follows:
Loan CDIs Keith Coughlan David Reeves Richard Pavlik Kiran Morzaria
Issue price $0.725 $0.725 $0.725 $0.725
Share price at date
of issue $0.70 $0.70 $0.70 $0.70
Grant date 30 November 30 November 30 November 30 November
2017 2017 2017 2017
Expected volatility 143.41% 143.41% 143.41% 143.41%
Expiry date 30 November 30 November 30 November 30 November
2032 2032 2032 2032
Expected dividends Nil Nil Nil Nil
Risk free interest
rate 2.47% 2.47% 2.47% 2.47%
Value per loan CDI $0.69676 $0.69676 $0.69676 $0.69676
Number of loan CDIs 850,000 300,000 300,000 200,000
Total value $592,245 $209,028 $209,028 $139,352
A summary of the inputs used in valuation of the loan CDIs issued to employees in the prior year.
Loan CDIs Tranche Tranche Tranche Tranche Tranche
1 2 (1) 3 (2) 4 (3) 5 (4)
$0.4848
$0.365
6 June 2018
85.9%
6 June 2025
Exercise price $0.4848 $0.4848 $0.4848 $0.4848 $0.4848
Share price at
date of issue $0.365 $0.365 $0.365 $0.365 $0.365
Grant date 6 June 2018 6 June 2018 6 June 2018 6 June 2018 6 June 2018
Expected volatility 85.9% 85.9% 85.9% 85.9% 85.9%
Expiry date 6 June 2025 6 June 2025 6 June 2025 6 June 2025 6 June 2025
Expected dividends Nil Nil Nil Nil Nil
Risk free interest
rate 2.42% 2.42% 2.42% 2.42% 2.42%
Value per loan
CDI $0.2664 $0.2664 $0.2664 $0.2664 $0.2664
Number of loan
CDIs 550,000 250,000 250,000 200,000 250,000
Total value $146,507 $66,594 $66,594 $53,275 $66,594
Notes:
1. Tranche 2 escrowed until company announcing completion of the definitive feasibility study
2. Tranche 3 escrowed until company announcing construction has commenced at the Cinovec Project
3. Tranche 4 escrowed until the completion of project finance for the Cinovec Project
4. Tranche 5 escrowed until the practical completion of the Cinovec Project
NOTE 17: CASH FLOW INFORMATION 2019 2018
$ $
(a) Reconciliation of cash flow from operating
activities with the loss after tax
Loss after income tax (3,252,815) (4,655,209)
Adjustments for:
Exploration costs expensed - 442,029
Impairment of exploration - 1,880,742
Share based payments 1,179,090 1,216,018
Unrealised foreign exchange
loss/ (gain) (37,814) (35,442)
Depreciation expense 4,180 1,945
Changes in assets and liabilities
Decrease/ (Increase) in other
receivables (59,540) 203,463
(Increase)/ Decrease in other
assets (11,605) 25,623
(Decrease)/ Increase in trade
and other payables (127,483) 9,963
(Decrease)/ Increase in provisions (51,516) 74,649
----------- -----------
Cash flow (used in)/from operating
activities (2,357,503) (836,219)
----------- -----------
(b) Credit standby facilities
The Company had no credit standby facilities as at 30 June 2019 and 2018.
(c) Investing and Financing Activities - Non-Cash
There were no non-cash movements during the year.
NOTE 18: OPERATING SEGMENTS
The accounting policies used by the Group in reporting segments are in accordance with the measurement principles of Australian Accounting Standards.
The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors. According to AASB 8 Operating Segments, two or more operating segments may be aggregated into a single operating segment if the segments have similar economic characteristics, and the segments are similar in each of the following respects:
-- The nature of the products and services; -- The nature of the production processes; -- The type or class of customer for their products and services; -- The methods used to distribute their products or provide their services; and
-- If applicable, the nature of the regulatory environment, for example; banking, insurance and public utilities.
The Group currently has one project which takes into account each of the above mentioned aspects. The principal activity for the project is exploration of Lithium. This is expected to be the same for future projects. Accordingly, management has identified one operating segment based on the location of the project, that being the Czech Republic and two geographical segments.
Australia Czech Total
$ $ $
30 June 2019
REVENUE
Interest revenue 1,461 - 1,461
Other revenue 355,745 68,898 424,643
Total segment revenue 357,206 68,898 426,104
------------ ----------- ------------
Net expenditure (3,322,556) (356,363) (3,678,919)
Loss before income tax (2,965,350) (287,465) (3,252,815)
============
Segment assets 437,644 12,173,531 12,611,175
============ =========== ============
Segment liabilities 124,042 28,068 152,110
------------------------ ============ =========== ============
Australia Czech Total
$ $ $
30 June 2018
REVENUE
Interest revenue 1,599 - 1,599
Other Revenue 645,554 - 645,554
------------ ------------ ------------
Total segment revenue 647,153 - 647,153
------------ ------------ ------------
Net expenditure (3,193,197) (2,109,165) (5,302,362)
Loss before income tax (2,546,044) (2,109,165) (4,655,209)
============
Segment assets 2,240,188 10,575,773 12,815,961
============ ============ ============
Segment liabilities 339,820 77,043 416,863
------------------------ ============ ============ ============
NOTE 19: FINANCIAL RISK MANAGEMENT
The Group's financial instruments consist mainly of deposits with banks, equity instruments and accounts receivable and payable.
The main purpose of non-derivative financial instruments is to raise finance for Group's operations. The Group does not speculate in the trading of derivative instruments.
The Group holds the following financial instruments:
2019 2018
$ $
Financial assets
Cash and cash equivalents 426,178 2,223,109
Other receivables 92,180 32,640
Total financial assets 518,358 2,255,749
------- ---------
Trade and other payables 128,977 342,214
Total financial liabilities 128,977 342,214
------- ---------
The fair value of the Group's financial assets and liabilities approximate their carrying value.
Specific Financial Risk Exposures and Management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk) credit risk and liquidity risk.
(i) Market risk
The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.
Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments.
Interest rate risk is not material to the Group as no interest bearing debt arrangements have been entered into.
Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group is not exposed to securities price risk as it does not hold any investments.
Foreign exchange risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in foreign currencies may impact on the Group's financial results. The Group's exposure to foreign exchange risk is monitored by the Board. The majority of the Group's funds are held in Australian dollars, British Stirling and Czech Koruna.
At 30 June 2019, the Group has financial assets and liabilities denominated in the foreign currencies detailed below:
2019 2018
Amount Amount Amount in Amount Amount Amount in
in CZK in GBP AUD in CZK in GBP AUD
Cash and cash
equivalents in
EMHL - 111,156 - - 823,600 -
Intercompany
payables to EMHL
by subsidiaries - 11,143,599 - 24,608 4,225,696
--------- ----------------------- ----------- -------- -------- ----------
- 111,156 11,143,599 - 848,208 4,225,696
----------------------------- ----------------------- ----------- -------- -------- ----------
5% effect in
foreign exchange
rates - 5,558 557,180 - 42,410 211,285
Other than intercompany balances there were no financial assets and liabilities denominated in foreign currencies for EMH UK or Geomet s.r.o..
(ii) Credit risk
Credit exposure represents the extent of credit related losses that the Group may be subject to on amounts to be received from financial assets. Credit risk arises principally from trade and other receivables. The objective of the Group is to minimise the risk of loss from credit risk. Although revenue from operations is minimal, 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 Statement of Financial Position and notes to the financial statements.
The credit quality of the financial assets was high during the year. The table below details the credit quality of the financial assets at the end of the year:
2019 2018
Financial assets Credit Quality $ $
Cash and cash equivalents held at Komercni
Bank High 22,715 10,924
Cash and cash equivalents held at Westpac
Bank
* Interest-bearing deposits High 240,107 735,960
Cash and cash equivalents held at ANZ
bank High 163,356 1,476,225
Other receivables and deposits High 92,180 32,640
------- ---------
518,358 2,255,749
------- ---------
(iii) Liquidity risk
Liquidity risk is the risk that the entity will not be able to meet its financial obligations as they fall due. The objective of the Group is to maintain sufficient liquidity to meet commitments under normal and stressed conditions.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities. Due to the lack of material revenue, the Group aims at maintaining flexibility in funding by maintaining adequate reserves of liquidity.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting arrangements.
Carrying Contractual <3 months 6-24
Amount Cash flows 3-6 months months
As at 30 June 2019 $ $ $ $ $
Trade and other
payables 128,977 128,977 128,977 - -
128,977 128,977 128,977 - -
--------------- ------------------ ---------------- ----------------- --------------
Carrying Contractual <3 months 6-24
Amount Cash flows 3-6 months months
As at 30 June 2018 $ $ $ $ $
Trade and other
payables 342,214 342,214 342,214 - -
342,214 342,214 342,214 - -
--------------- ------------------ ---------------- ----------------- --------------
(iv) Cash flow and fair value 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 income and operating cash flows are not expected to be materially exposed to changes in market interest rates in the future and the exposure to interest rates is limited to the cash and cash equivalents balances.
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 rates on classes of financial assets and financial liabilities:
Floating Non-interest 2019 Floating Non-interest 2018
Interest bearing Total Interest bearing Total
Rate Rate
$ $ $ $ $ $
Financial assets
* Within one year
Cash and cash equivalents 426,178 - 426,178 2,223,109 - 2,223,109
Other receivables - 92,180 92,180 - 32,640 32,640
Total financial
assets 426,178 92,180 518,358 2,223,109 32,640 2,255,749
-------------- ------------- ---------------- -------------
Weighted average
interest rate 0.11% 0.10%
Financial Liabilities
* Within one year
Trade and other
Payables - (128,977) (128,977) - (342,214) (342,214)
Total financial
liabilities - (128,977) (128,977) - (342,214) (342,214)
-------------- ------------- ---------------- -------------
Net financial assets/
(liabilities) 426,178 (36,797) 389,381 2,223,109 (309,574) 1,913,535
-------------- ------------- ---------- ---------------- ------------- ----------
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 $13,509 (2018: loss $16,642).
(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.
NOTE 20: CONTROLLED ENTITIES
Subsidiaries of European Metals Holdings Limited
Controlled entity Country of Incorporation Class of Shares Percentage Owned
2019 2018
Equamineral Group British Virgin
Limited (EGL)* Islands Ordinary 100% 100%
Equamineral SA (ESA
Congo) Republic of Congo Ordinary 100% 100%
European Metals UK
Limited ** United Kingdom Ordinary 100% 100%
Geomet S.R.O Czech Republic Ordinary 100% 100%
*EGL was incorporated on 8 December 2010 and domiciled in the British Virgin Islands. EGL is the parent company for Equamineral SA (ESA Congo) located in the Republic of Congo. EGL is the beneficial holder of 100% of the issued share capital in Equamineral SA. This company is currently in the process of being deregistered.
**EMH UK Limited is the parent company for Geomet S.R.O
NOTE 21: PARENT ENTITY DISCLOSURE
The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards.
Statement of Financial Position
2019 2018
$ $
ASSETS
Current assets 435,430 2,236,630
Non-current assets 2,214 3,512
------- ---------
TOTAL ASSETS 437,644 2,240,142
------- ---------
LIABILITIES
Current liabilities 124,043 339,820
TOTAL LIABILITIES 124,043 339,820
------- ---------
NET ASSETS 313,601 1,900,322
------- ---------
EQUITY 2019 2018
$ $
Issued capital 22,074,314 20,413,074
Reserves 5,511,581 4,303,818
Accumulated losses (27,272,294) (22,816,570)
------------ ------------
TOTAL EQUITY 313,601 1,900,322
============ ============
Profit or Loss and Other Comprehensive Income
Loss for the year (4,455,724) (4,674,841)
Total comprehensive loss (4,455,724) (4,674,841)
=========== ===========
Guarantees
There are no guarantees entered into by European Metals Holdings Limited for the debts of its subsidiaries as at 30 June 2019.
Contingent liabilities
There are no contingent liabilities as at 30 June 2019.
Commitments
There were no commitments as at 30 June 2019.
NOTE 22: CAPITAL COMMITMENTS
There are no capital commitments as at 30 June 2019.
NOTE 23: CONTINGENT LIABILITIES
There are no contingent liabilities as at 30 June 2019.
NOTE 24: SIGNIFICANT EVENTS AFTER THE REPORTING DATE
-- On 16 July 2019 the Company was very pleased to announce a potential strategic partnership with CEZ Group (CEZ), one of Central and Eastern Europe's largest power utilities. CEZ is currently conducting due diligence on the Company and Project. The successful outcome of the due diligence process could see CEZ become the largest shareholder and co-development partner for the Cinovec Lithium/Tin Project.
-- On 19 July 2019, the Company issued 200,000 options exercisable at $0.35 on or before 1 January 2021 and 100,000 options exercisable at $0.4018 on or before 1 June 2021 to independent consultants in accordance with their consultancy agreements.
-- On 5 August 2019, the Company announced it has been granted an extension to the Cinovec Exploration Licence.
-- On 14 August 2019, the Company completed a share placement issuing 4,166,666 new fully paid ordinary shares raising GBP 750,000 to existing investors.
-- The successful capital raising of GBP750,000 via a share placing (Placing) to UK investors was completed on 30 August 2019. The net proceeds of the Placing will be used to continue to advance EMH's corporate strategy including to progress the development of the Cinovec Project and the progress discussions with CEC Group and potential off take partners.
Except for the matters noted above there have been no other significant events arising after the reporting date.
NOTE 25: ACCOUNTING POLICIES
(a) New and Revised Accounting Standards Adopted by the Group
The Group has adopted AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments which became effective for financial reporting periods commencing on or after 1 January 2018
AASB 15 Revenue from contracts with customers
AASB 15 replaces AASB 118 Revenue, AASB 111 Construction Contracts and several revenue-related Interpretations. AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue to be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The Group has applied the new Standard effective from 1 July 2018 using the modified retrospective approach. Under this method, the cumulative effect of initial application is recognised as an adjustment to the opening balance of retained earnings at 1 July 2018 and comparatives are not restated.
The adoption of AASB 15 does not have a significant impact on the Group as the Group does not currently have any revenue from customers, other than grant income.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement, impairment, and hedge accounting.
As a result of adopting AASB 9 Financial Instruments, the Group has amended its financial instruments accounting policies to align with AASB 9. AASB 9 makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an 'expected credit loss' model for impairment of financial assets.
There were no financial instruments which the Group designated at fair value through profit or loss under AASB 139 that were subject to reclassification. The Board assessed the Group's financial assets and determined the application of AASB 9 does not result in a change in the classification of the Group's financial instruments.
The adoption of AASB 9 does not have a significant impact on the financial report.
(b) New and revised Accounting Standards for Application in Future Periods
AASB 16: Leases applies to annual reporting periods beginning on or after 1 January 2019.
This Standard supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, AASB intrpretation 115 Operating Leases-Incentives and AASB intrpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of lease. AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under AASB 117.
The key features of AASB 16 are as follows:
- Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.
- A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial liabilities.
- Assets and Liabilities arising from the lease are initially measured on a present value basis. The measurement includes non-cancellable lease payments (including inflation-linked payments), and also includes payments to be mad in optional periods if the lessee is reasonably certain to exercise an option to extend to lease, or not to exercise an option to terminate the lease.
- AASB 16 contains disclosure requirements for leases.
Lessor accounting
- AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
- AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor's risk exposure, particularly to residual value risk.
The Group has elected to not early adopt AASB 16, however and has conducted an assessment of the impact of the new standard and have determined that based on the current lease agreements and intentions, there is no quantifiable impact of the application of the standard.
Other standards not yet applicable
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 periods and on foreseeable future transactions.
DIRECTORS DECLARATION
The Directors of the Company declare that:
1. the financial statements, notes and the additional disclosures are
in accordance with the Corporations Act 2001 including :
(a) comply 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 2019 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) the financial records of the Group
for the financial year
have been properly maintained in
accordance with
s286 of the Corporations Act 2001;
(b) 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
MANAGING DIRECTOR
Dated at Perth on 27 September 2019
INDEPENT AUDIT 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 subsidiaries (the Group), which comprises the statement of the consolidated financial position as at 30 June 2019, 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 2019 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.
We have defined the matters described below to be key audit matters to be communicated in our 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.
Carrying Value of Exploration
and Evaluation Expenditure
The Group has capitalised exploration Inter alia, our audit procedures
and evaluation expenditure totalling included the following:
$11,684,072 (refer to Note 12)
in terms of the application i. Assessing the Group's right
of the Group's accounting policy to tenure over exploration assets
for exploration and evaluation by corroborating the ownership
expenditure, as set out in Note of the relevant licences for
1(k). mineral resources to government
registries and relevant third
The carrying value of Capitalised party documentation;
Exploration and Evaluation expenditure
is a key audit matter due to: ii. Reviewing the directors'
assessment of the carrying value
* The significance of the total balance (92% of total of the exploration and evaluation
assets); expenditure, ensuring the veracity
of the data presented and that
management has considered the
effect of potential impairment
* The necessity to assess management's application of indicators, commodity prices
the requirements of the accounting standard and the stage of the Group's
Exploration for and Evaluation of Mineral Resources projects against AASB 6;
("AASB 6"), in light of any indicators of impairment
that may be present; iii. Evaluation of Group documents
for consistency with the intentions
for the continuing of exploration
and evaluation activities in
* The assessment of significant judgements made by certain areas of interest, and
management in relation to the Capitalised Exploration corroborated with enquiries
and Evaluation Expenditure. of management. Inter alia, the
documents we evaluated included:
* Minutes of meetings of the board and management;
* Announcements made by the Group to the Australian
Securities Exchange;
* Reassessed the discount rate, resource tonnage,
current commodity prices in global markets, applied
to the pre-existing NPV model of the Cinovec Project
and compared with the updated PFS announced on the
ASX; and
* Cash forecasts;
iv. Consideration of the requirements
of accounting standard AASB
6. We assessed the financial
statements in relation to AASB
6 to ensure appropriate disclosures
are made.
Valuation of Share Based Payments
The Company issued a number
of share options and warrants Inter alia, our audit procedures
to consultants of the Company, included the following:
performance shares to related
and unrelated parties and expensed i. We reviewed the inputs used
the value attributed to the in the models; the underlying
CDIs issued through the non-recourse assumptions used and discussed
loans to the employees in the with management the justification
prior period. for inputs;
The Company prepared the valuation ii. We assessed the accounting
of the options, warrants and treatment and its application
performance shares and continued in accordance with AASB 2; and
the amortisation of the value
attributed to the CDIs issued iii. We assessed whether the
through the non-recourse loans Group's disclosures met the
in accordance to its accounting requirements of various accounting
policy and accounting standard standards.
Share-based Payment AASB 2 ("AASB
2").
The valuation of these instruments
is a key audit matter as it
involved judgement in assessing
their fair value and the accounting
for them.
============================================================== =================================================================
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 2019, 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 has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable 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, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 20 of the directors' report for the year ended 30 June 2019. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of European Metals Holdings Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
West Perth, Western Australia
27 September 2019
ASX CORPORATE GOVERNANCE STATEMENT
This Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by the ASX Corporate Governance Council in its publication 'Corporate Governance Principles and Recommendations (3(rd) Edition)' (Recommendations). The Recommendations are not mandatory, however, the Recommendations that will not be followed have been identified and reasons have been provided for not following them.
The Company's Corporate Governance Plan has been posted on the Company's website at www.europeanm
Principles COMPLY EXPLANATION
and RECOMMATIONs
Principle 1: Lay solid foundations for management and oversight
Recommendation 1.1 Complying The Company has adopted a
A listed entity should have Board Charter.
and disclose a charter which: The Board Charter sets out
(a) sets out the respective the specific responsibilities
roles and responsibilities of the Board, requirements
of the board, the chair as to the Boards composition,
and management; and the roles and responsibilities
(b) includes a description of the Chairman and Company
of those matters expressly Secretary, the establishment,
reserved to the board and operation and management of
those delegated to management. Board Committees, Directors
access to company records
and information, details of
the Board's relationship with
management, details of the
Board's performance review
and details of the Board's
disclosure policy.
A copy of the Company's Board
Charter is stated in Schedule
1 of the Corporate Governance
Plan which is available on
the Company's website.
------------------- -------------------------------------------------
Recommendation 1.2 Complying (a) The Company has detailed
A listed entity should: guidelines for the appointment
(a) undertake appropriate and selection of the Board.
checks before appointing The Company's Corporate Governance
a person, or putting forward Plan requires the Board to
to security holders a candidate undertake appropriate checks
for election, as a director; before appointing a person,
and or putting forward to security
(b) provide security holders holders a candidate for election,
with all material information as a director.
relevant to a decision on (b) Material information relevant
whether or not to elect to any decision on whether
or re-elect a director. or not to elect or re-elect
a Director will be provided
to security holders in the
notice of meeting holding
the resolution to elect or
re-elect the Director.
------------------- -------------------------------------------------
Recommendation 1.3 Complying The Company's Corporate Governance
A listed entity should have Plan requires the Board to
a written agreement with ensure that each Director
each director and senior and senior executive is a
executive setting out the party to a written agreement
terms of their appointment. with the Company which sets
out the terms of that Director's
or senior executive's appointment.
------------------- -------------------------------------------------
Recommendation 1.4 Complying The Board Charter outlines
The company secretary of the roles, responsibility
a listed entity should be and accountability of the
accountable directly to Company Secretary. The Company
the board, through the chair, Secretary is accountable directly
on all matters to do with to the Board, through the
the proper functioning of chair, on all matters to do
the board. with the proper functioning
of the Board.
------------------- -------------------------------------------------
Recommendation 1.5 (a) The Company has adopted
A listed entity should: Complying a Diversity Policy.
(a) have a diversity policy (i) The Diversity Policy provides
which includes requirements a framework for the Company
for the board: to achieve a list of 6 measurable
(i) to set measurable objectives objectives that encompass
for achieving gender diversity; gender equality.
and (ii) The Diversity Policy
(ii) to assess annually provides for the monitoring
both the objectives and and evaluation of the scope
the entity's progress in and currency of the Diversity
achieving them; Policy. The company is responsible
(b) disclose that policy for implementing, monitoring
or a summary or it; and and reporting on the measurable
(c) disclose as at the end objectives.
of each reporting period: (b) The Diversity Policy is
(i) the measurable objectives stated in Schedule 10 of the
for achieving gender diversity Corporate Governance Plan
set by the board in accordance which is available on the
with the entity's diversity company website.
policy and its progress (c)
towards achieving them; (i) The measurable objectives
and set by the Board will be included
(ii) either: in the annual key performance
(A) the respective proportions indicators for the CEO, MD
of men and women on the and senior executives. In
board, in senior executive addition, the Board will review
positions and across the progress against the objectives
whole organisation (including in its annual performance
how the entity has defined assessment.
"senior executive" for these (ii) The Company currently
purposes); or has no employees and utilizes
(B) the entity's "Gender external consultants and contractors
Equality Indicators", as as and when required.
defined in the Workplace The Board will review this
Gender Equality Act 2012. position on an annual basis
and will implement measurable
objectives as and when they
deem the Company to require
them.
------------------- -------------------------------------------------
Recommendation 1.6 Complying (a) The Board is responsible
A listed entity should: for evaluating the performance
(a) have and disclose a of the Board and individual
process for periodically directors on an annual basis.
evaluating the performance It may do so with the aid
of the board, its committees of an independent advisor.
and individual directors; The process for this can be
and found in Schedule 6 of the
(b) disclose in relation Company's Corporate Governance
to each reporting period, Plan.
whether a performance evaluation (b) The Company's Corporate
was undertaken in the reporting Governance Plan requires the
period in accordance with Board to disclosure whether
that process. or not performance evaluations
were conducted during the
relevant reporting period.
Due to the size of the Board
and the nature of the business,
it has not been deemed necessary
to institute a formal documented
performance review program
of individuals. However, the
Chairman intends to conduct
formal reviews each financial
year whereby the performance
of the Board as a whole and
the individual contributions
of each director are disclosed.
The Board considers that at
this stage of the Company's
development an informal process
is appropriate.
The review will assist to
indicate if the Board's performance
is appropriate and efficient
with respect to the Board
Charter.
The Board regularly reviews
its skill base and whether
it remains appropriate for
the Company's operational,
legal and financial requirements.
New Directors are obliged
to participate in the Company's
induction process, which provides
a comprehensive understanding
of the Company, its objectives
and the market in which the
Company operates.
Directors are encouraged to
avail themselves of resources
required to fulfil the performance
of their duties.
------------------- -------------------------------------------------
Recommendation 1.7 Complying (a) The Board is responsible
A listed entity should: for evaluating the performance
(a) have and disclose a of senior executives. The
process for periodically Board is to arrange an annual
evaluating the performance performance evaluation of
of its senior executives; the senior executives.
and (b) The Company's Corporate
(b) disclose in relation Governance Plan requires the
to each reporting period, Board to conduct annual performance
whether a performance evaluation of the senior executives.
was undertaken in the reporting Schedule 6 'Performance Evaluation'
period in accordance with requires the Board to disclose
that process. whether or not performance
evaluations were conducted
during the relevant reporting
period.
During the financial year
an evaluation of performance
of the individuals was not
formally carried out. However,
a general review of the individuals
occurs on an on-going basis
to ensure that structures
suitable to the Company's
status as a listed entity
are in place.
------------------- -------------------------------------------------
Principle 2: Structure the board to add value
Recommendation 2.1 Part (a) The Nomination Committee
The board of a listed entity -Complying was formed on 26 August 2015.
should: There are currently two members
(a) have a nomination committee of the Committee being Mr
which: Reeves (Chairman) and Mr Coughlan.
(i) has at least three members, Given the Company's present
a majority of whom are independent size and scope of the Company's
directors; and operations, no efficiencies
(ii) is chaired by an independent or benefits would be gained
director, by having a third member.
and disclose: The Board intends to re-evaluate
(iii) the charter of the the requirement for another
committee; member as the Company's operations
(iv) the members of the increase in size and scale.
committee; and The role and responsibilities
(v) as at the end of each of the Nomination Committee
reporting period, the number are outlined in Nomination
of times the committee met Committee Charter available
throughout the period and online on the Company's website.
the individual attendances The Board devotes time at
of the members at those board meetings to discuss
meetings; or board succession issues. All
(b) if it does not have members of the Board are involved
a nomination committee, in the Company's nomination
disclose that fact and the process, to the maximum extent
processes it employs to permitted under the Corporations
address board succession Act and ASX Listing Rules.
issues and to ensure that The Board regularly updates
the board has the appropriate the Company's board skills
balance of skills, experience, matrix (in accordance with
independence and knowledge recommendation 2.2) to assess
of the entity to enable the appropriate balance of
it to discharge its duties skills, experience, independence
and responsibilities effectively. and knowledge of the entity.
------------------- -------------------------------------------------
Recommendation 2.2 Complying Board Skills Matrix Number of
A listed entity should have Directors
and disclose a board skill that Meet
matrix setting out the mix the Skill
of skills and diversity Executive & Non-
that the board currently Executive experience 4
has or is looking to achieve Industry experience
in its membership. & knowledge 4
Leadership 4
Corporate governance
& risk management 4
Strategic thinking 4
Desired behavioural
competencies 4
Geographic experience 4
Capital Markets
experience 4
Subject matter
expertise:
- accounting 3
- capital management 4
- corporate financing 4
- industry taxation
(1) 0
- risk management 4
- legal(2) 0
- IT expertise
(2) 1
-----------
(1) Skill gap noticed however
an external taxation firm
is employed to maintain taxation
requirements.
(2) Skill gap noticed however
an legal firm is employed
on an adhoc basis to maintain
IT requirements.
------------------- -------------------------------------------------
Recommendation 2.3 Complying (a) The Board Charter provides
A listed entity should disclose: for the disclosure of the
(a) the names of the directors names of Directors considered
considered by the board by the Board to be independent.
to be independent directors; None of the directors are
(b) if a director has an independent directors. The
interest, position, association details of the directors are
or relationship of the type disclosed in the Annual Report
described in Box 2.3 of and Company website.
the ASX Corporate Governance (b) The Board Charter requires
Principles and Recommendation Directors to disclose their
(3rd Edition), but the board interest, positions, associations
is of the opinion that it and relationships and requires
does not compromise the that the independence of Directors
independence of the director, is regularly assessed by the
the nature of the interest, Board in light of the interests
position, association or disclosed by Directors. Details
relationship in question of the Directors interests,
and an explanation of why positions associations and
the board is of that opinion; relationships are provided
and in the Annual Reports and
(c) the length of service Company website.
of each director (c) The Board Charter provides
for the determination of the
Directors' terms and requires
the length of service of each
Director to be disclosed.
The length of service of each
Director is provided in the
Annual Reports and Company
website.
------------------- -------------------------------------------------
Recommendation 2.4 Not-complying The Board Charter requires
A majority of the board that where practical the majority
of a listed entity should of the Board will be independent.
be independent directors. Given the Company's present
size and scope it is currently
not Company policy to have
a majority of Independent
Directors.
Details of each Director's
independence are provided
in the Annual Reports and
Company website.
------------------- -------------------------------------------------
Recommendation 2.5 Not-complying The Board Charter provides
The chair of the board of that where practical, the
a listed entity should be Chairman of the Board will
an independent director be a non-executive director.
and, in particular, should Mr David Reeves is the Chairman
not be the same person as of the Board and is not an
the CEO of the entity. independent director.
Keith Coughlan is the Managing
Director of the Company and
is not an independent director.
If the Chairman resigns the
Board will consider appointing
a lead independent Director.
------------------- -------------------------------------------------
Recommendation 2.6 Complying The Board Charter states that
A listed entity should have a specific responsibility
a program for inducting of the Board is to procure
new directors and providing appropriate professional development
appropriate professional opportunities for Directors.
development opportunities The Board is responsible for
for continuing directors the approval and review of
to develop and maintain induction and continuing professional
the skills and knowledge development programs and procedures
needed to perform their for Directors to ensure that
role as a director effectively. they can effectively discharge
their responsibilities.
------------------- -------------------------------------------------
Principle 3: Act ethically and responsibly
Recommendation 3.1 Complying (a) The Corporate Code of
A listed entity should: Conduct applies to the Company's
(a) have a code of conduct directors, senior executives
for its directors, senior and employees.
executives and employees; (b) The Company's Corporate
and Code of Conduct is in Schedule
(b) disclose that code or 2 of the Corporate Governance
a summary of it. Plan which is on the Company's
website.
------------------- -------------------------------------------------
Principle 4: Safeguard integrity in financial reporting
Recommendation 4.1 Part-Complying (a) The Audit and Risk Committee
The board of a listed entity was formed on 26 August 2015,
should: with directors appointed as
(a) have an audit committee members of the Committee,
which: being Mr Kiran Morzaria (Chairman),
(i) has at least three members, Mr Reeves and Mr Coughlan.
all of whom are non-executive Given the Company's present
directors and a majority size and scope of the Company's
of whom are independent operations, no efficiencies
directors; and or benefits would be gained
(ii) is chaired by an independent by having a third non-executive
director, who is not the director member. The Board
chair of the board, intends to re-evaluate the
and disclose: requirement for another member
(iii) the charter of the as the Company's operations
committee; increase in size and scale.
(iv) the relevant qualifications The role and responsibilities
and experience of the members of the Audit and Risk Committee
of the committee; and are outlined in Audit and
(v) in relation to each Risk Committee Charter available
reporting period, the number online on the Company's website.
of times the committee met The Board devote time at annual
throughout the period and board meetings to fulfilling
the individual attendances the roles and responsibilities
of the members at those associated with maintaining
meetings; or the Company's internal audit
(b) if it does not have function and arrangements
an audit committee, disclose with external auditors. All
that fact and the processes members of the Board are involved
it employs that independently in the Company's audit function
verify and safeguard the to ensure the proper maintenance
integrity of its financial of the entity and the integrity
reporting, including the of all financial reporting.
processes for the appointment
and removal of the external
auditor and the rotation
of the audit engagement
partner.
------------------- -------------------------------------------------
Recommendation 4.2 Complying The Company's Corporate Governance
The board of a listed entity Plan states that a duty and
should, before it approves responsibility of the Board
the entity's financial statements is to ensure that before approving
for a financial period, the entity's financial statements
receive from its CEO and for a financial period, the
CFO a declaration that the CEO and CFO have declared
financial records of the that in their opinion the
entity have been properly financial records of the entity
maintained and that the have been properly maintained
financial statements comply and that the financial statements
with the appropriate accounting comply with the appropriate
standards and give a true accounting standards and give
and fair view of the financial a true and fair view of the
position and performance financial position and performance
of the entity and that the of the entity and that the
opinion has been formed opinion has been formed on
on the basis of a sound the basis of a sound system
system of risk management of risk management and internal
and internal control which control which is operating
is operating effectively. effectively.
------------------- -------------------------------------------------
Recommendation 4.3 Complying The Company's Corporate Governance
A listed entity that has Plan provides that the Board
an AGM should ensure that must ensure the Company's
its external auditor attends external auditor attends its
its AGM and is available AGM and is available to answer
to answer questions from questions from security holders
security holders relevant relevant to the audit.
to the audit.
------------------- -------------------------------------------------
Principle 5: Make timely and balanced disclosure
Recommendation 5.1 Complying (a) The Board Charter provides
A listed entity should: details of the Company's
(a) have a written policy disclosure policy. In addition,
for complying with its continuous Schedule 7 of the Corporate
disclosure obligations under Governance Plan is entitled
the Listing Rules; and 'Disclosure - Continuous
(b) disclose that policy Disclosure' and details the
or a summary of it. Company's disclosure requirements
as required by the ASX Listing
Rules and other relevant
legislation.
(b) The Board Charter and
Schedule 7 of the Corporate
Governance Plan are available
on the Company website.
------------------- -----------------------------------------------
Principle 6: Respect the rights of security holders
Recommendation 6.1 Complying Information about the Company
A listed entity should provide and its governance is available
information about itself in the Corporate Governance
and its governance to investors Plan which can be found on
via its website. the Company's website.
------------------- -----------------------------------------------
Recommendation 6.2 Complying The Company has adopted a
A listed entity should design Shareholder Communications
and implement an investor Strategy which aims to promote
relations program to facilitate and facilitate effective
effective two-way communication two-way communication with
with investors. investors. The Shareholder
Communications Strategy outlines
a range of ways in which
information is communicated
to shareholders.
The Shareholder Communications
Strategy can be found in
Schedule 11 of the Board
Charter which is available
on the Company website.
------------------- -----------------------------------------------
Recommendation 6.3 Complying The Shareholder Communications
A listed entity should disclose Strategy states that as a
the policies and processes part of the Company's developing
it has in place to facilitate investor relations program,
and encourage participation Shareholders can register
at meetings of security with the Company Secretary
holders. to receive email notifications
of when an announcement is
made by the Company to the
ASX, including the release
of the Annual Report, half
yearly reports and quarterly
reports. Links are made available
to the Company's website
on which all information
provided to the ASX is immediately
posted.
Shareholders are encouraged
to participate at all EGMs
and AGMs of the Company.
Upon the despatch of any
notice of meeting to Shareholders,
the Company Secretary shall
send out material with that
notice of meeting stating
that all Shareholders are
encouraged to participate
at the meeting.
------------------- -----------------------------------------------
Recommendation 6.4 Complying Security holders can register
A listed entity should give with the Company to receive
security holders the option email notifications when
to receive communications an announcement is made by
from, and send communications the Company to the ASX.
to, the entity and its security Shareholders queries should
registry electronically. be referred to the Company
Secretary at first instance.
------------------- -----------------------------------------------
Principle 7: Recognise and manage risk
Recommendation 7.1 Complying (a) The Audit and Risk Committee
The board of a listed entity was formed on 26 August 2015,
should: with directors appointed
(a) have a committee or as members of the Committee,
committees to oversee risk, being Mr Kiran Morzaria,
each of which: Mr Reeves and Mr Coughlan.
(i) has at least three members, The role and responsibilities
a majority of whom are independent of the Audit and Risk Committee
directors; and are outlined in Schedule
(ii) is chaired by an independent 3 of the Company's Corporate
director, Governance Plan available
and disclose: online on the Company's website.
(iii) the charter of the The Board devote time at
committee; annual board meeting to fulfilling
(iv) the members of the the roles and responsibilities
committee; and associated with overseeing
(v) as at the end of each risk and maintaining the
reporting period, the number entity's risk management
of times the committee met framework and associated
throughout the period and internal compliance and control
the individual attendances procedures.
of the members at those
meetings; or
(b) if it does not have
a risk committee or committees
that satisfy (a) above,
disclose that fact and the
process it employs for overseeing
the entity's risk management
framework.
------------------- -----------------------------------------------
Recommendation 7.2 Complying (a) The Company process for
The board or a committee risk management and internal
of the board should: compliance includes a requirement
(a) review the entity's to identify and measure risk,
risk management framework monitor the environment for
with management at least emerging factors and trends
annually to satisfy itself that affect these risks,
that it continues to be formulate risk management
sound, to determine whether strategies and monitor the
there have been any changes performance of risk management
in the material business systems. Schedule 8 of the
risks the entity faces and Corporate Governance Plan
to ensure that they remain is entitled 'Disclosure -
within the risk appetite Risk Management' and details
set by the board; and the Company's disclosure
(b) disclose in relation requirements with respect
to each reporting period, to the risk management review
whether such a review has procedure and internal compliance
taken place. and controls.
(b) The Board Charter requires
the Board to disclose the
number of times the Board
met throughout the relevant
reporting period, and the
individual attendances of
the members at those meetings.
Details of the meetings will
be provided in the Company's
Annual Report.
------------------- -----------------------------------------------
Recommendation 7.3 Complying Schedule 3 of the Company's
A listed entity should disclose: Corporate Plan provides for
(a) if it has an internal the internal audit function
audit function, how the of the Company. The Board
function is structured and Charter outlines the monitoring,
what role it performs; or review and assessment of
(b) if it does not have a range of internal audit
an internal audit function, functions and procedures.
that fact and the processes
it employs for evaluating
and continually improving
the effectiveness of its
risk management and internal
control processes.
------------------- -----------------------------------------------
Recommendation 7.4 Complying Schedule 3 of the Company's
A listed entity should disclose Corporate Plan details the
whether, and if so how, Company's risk management
it has regard to economic, systems which assist in identifying
environmental and social and managing potential or
sustainability risks and, apparent business, economic,
if it does, how it manages environmental and social
or intends to manage those sustainability risks (if
risks. appropriate). Review of the
Company's risk management
framework is conducted at
least annually, and reports
are continually created by
management on the efficiency
and effectiveness of the
Company's risk management
framework and associated
internal compliance and control
procedures.
------------------- -----------------------------------------------
Principle 8: Remunerate fairly and responsibly
Recommendation 8.1 Part -Complying The Remuneration Committee
The board of a listed entity was formed on 26 August 2015,
should: with directors appointed
(a) have a remuneration as members of the Committee,
committee which: being Mr Reeves (Chairman)
(i) has at least three members, and Mr Morzaria. Given the
a majority of whom are independent Company's present size and
directors; and scope of the Company's operations,
(ii) is chaired by an independent no efficiencies or benefits
director, would be gained by having
and disclose: a third member. The Board
(iii) the charter of the intends to re-evaluate the
committee; requirement for another member
(iv) the members of the as the Company's operations
committee; and increase in size and scale.
(v) as at the end of each The role and responsibilities
reporting period, the number of the Remuneration Committee
of times the committee met are outlined in Remuneration
throughout the period and Committee Charter available
the individual attendances online on the Company's website.
of the members at those The Board devote time at
meetings; or annual board meetings to
(b) if it does not have fulfilling the roles and
a remuneration committee, responsibilities associated
disclose that fact and the with setting the level and
processes it employs for composition of remuneration
setting the level and composition for Directors and senior
of remuneration for directors executives and ensuring that
and senior executives and such remuneration is appropriate
ensuring that such remuneration and not excessive.
is appropriate and not excessive.
------------------ ----------------------------------------
Recommendation 8.2 Complying The Company's Corporate Governance
A listed entity should separately Plan requires the Board to
disclose its policies and disclose its policies and
practices regarding the practices regarding the remuneration
remuneration of non-executive of non-executive, executive
directors and the remuneration and other senior directors.
of executive directors and
other senior executives
and ensure that the different
roles and responsibilities
of non-executive directors
compared to executive directors
and other senior executives
are reflected in the level
and composition of their
remuneration.
------------------ ----------------------------------------
Recommendation 8.3 Complying (a) Company's Corporate Governance
A listed entity which has Plan states that the Board
an equity-based remuneration is required to review, manage
scheme should: and disclose the policy (if
(a) have a policy on whether any) on whether participants
participants are permitted are permitted to enter into
to enter into transactions transactions (whether through
(whether through the use the use of derivatives or
of derivatives or otherwise) otherwise) which limit the
which limit the economic economic risk of participating
risk of participating in in the scheme. The Board
the scheme; and must review and approve any
(b) disclose that policy equity based plans.
or a summary of it. (b) A copy of the Company's
Corporate Governance Plan
is available on the Company's
website.
------------------ ----------------------------------------
QCA CORPORATE GOVERNANCE REPORT
The following sets out the Company's Corporate Governance Report in accordance with the AIM Rules for Companies, a copy of which is also available from the Company's website at:
https://www.europeanmet.com/wp-content/uploads/2018/09/Corporate-Governance-Website-Disclosure-EMH-Sept-2018-Final.pdf
INTRODUCTION
In April 2018, the Quoted Companies Alliance (QCA) published an updated version of its Code which provides UK small and mid-sized companies such as European Metals Limited with a corporate governance framework that is appropriate for a Company of our size and nature. The Board considers the principles and recommendations contained in the QCA Code are appropriate and have therefore chosen to apply the QCA Code.
The updated 2018 QCA Code has 10 principles that should be applied. Each principle is listed below together with an explanation of how the Company applies or otherwise departs from each of the principles.
PRINCIPLE ONE
Business Model and Strategy
The Company is a minerals exploration and development company and has a clear and definitive vision of the Company's purpose, business model and strategy, being to develop the Cinovec lithium-tin project. The Company is currently preparing a definitive feasibility study.
European Metals owns 100% of the Cinovec lithium-tin project in the Czech Republic, through its wholly owned subsidiary Geomet s.r.o.. Cinovec is an historic mine incorporating a significant undeveloped lithium-tin resource with by-product potential including tungsten, rubidium, scandium, niobium and tantalum and potash. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 348Mt @ 0.45% Li(2) 0 and 0.04% Sn and an Inferred Mineral Resource of 309Mt @ 0.39 Li(2) 0 and 0.04% Sn containing a combined 7.0 million tonnes Lithium Carbonate Equivalent and 263kt of tin.
An initial Probable Ore Reserve of 34.5Mt @ 0.65% Li(2) 0 and 0.09% Sn has been declared to cover the first 20 years mining at an output of 20,800tpa of lithium carbonate. This makes Cinovec the largest lithium deposit in Europe, the fourth largest non-brine deposit in the world and a globally significant tin resource.
PRINCIPLE TWO
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting. Investors also have access to current information on the Company though its website, www.europeanmet.com, and via Keith Coughlan, Managing Director, who is available to answer investor relations enquiries.
The Company has adopted a Shareholder Communications Strategy which aims to promote and facilitate effective two-way communication with investors. The Shareholder Communications Strategy outlines a range of ways in which information is communicated to shareholders.
The Shareholder Communications Strategy can be found in Schedule 11 of the Board Charter which is available on the Company website, www.europeanmet.com/corporate-governance.
PRINCIPLE THREE
Considering wider stakeholder and social responsibilities
The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders.
The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company.
PRINCIPLE FOUR
Risk Management
The Audit and Risk Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Kiran Morzaria, Mr Reeves and Mr Coughlan. The role and responsibilities of the Audit and Risk Committee are outlined in Schedule 3 of the Company's Corporate Governance Plan available online on the Company's website, www.europeanmet.com/corporate-governance.
The Board devotes time at board meetings to fulfilling the roles and responsibilities associated with overseeing risk and maintaining the entity's risk management framework and associated internal compliance and control procedures.
The Company process for risk management and internal compliance includes a requirement to identify and measure risk, monitor the environment for emerging factors and trends that affect these risks, formulate risk management strategies and monitor the performance of risk management systems. Schedule 8 of the Corporate Governance Plan is entitled 'Disclosure - Risk Management' and details the Company's disclosure requirements with respect to the risk management review procedure and internal compliance and controls.
The Board Charter requires the Board to disclose the number of times the Board met throughout the relevant reporting period, and the individual attendances of the members at those meetings. Details of the meetings will be provided in the Company's Annual Report.
PRINCIPLE FIVE
A Well Functioning Board of Directors
The Board currently comprises of 4 members: 2 Executive members (the Managing Director, Keith Coughlan and Executive Director, Richard Pavlik) and 2 Non-Executive members (the Chairman, Dave Reeves and Non-executive Director, Kiran Morzaria). Biographical details of the current Directors are set out within Principle Six below. Pursuant to Article 8.5 of the Company's Articles of Association, at each annual general meeting one third of the directors (or, if their number is not a multiple of three, the number nearest to but nor more than one-third shall retire from office by rotation. A retiring director shall be eligible for re-election. All the Executive Directors are full time and the Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required.
All letters of appointment of Directors are available for inspection at the Company's registered office during normal business hours. The Board elects a Chairman to chair every meeting.
All letters of appointment of Directors are available for inspection at the Company's registered office during normal business hours. The Board elects a Chairman to chair every meeting.
The Board holds formal meetings periodically as issues arise and require more details. The Directors are in contact and discuss all necessary issues on a regular basis and to ensure that the Non-Executive Directors while not involved in the day to day running of the Company are still kept up to date on a regular basis.
The Company has established Audit, Remuneration, and Nomination committees, particulars of which are set out in Principle Nine below.
The QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. The Board Charter provides for the disclosure of the names of Directors considered by the Board to be independent.
Mr Morzaria is a Board nominee of Cadence Minerals Plc (previously named Rare Earth Minerals Plc), which owns 26,860,756 CDIs in the Company. Mr Morzaria is also a director and chief executive of Cadence Minerals Plc. On this basis, Mr Morzaria is not an independent Non-executive Director. Mr Reeves is interested in CDIs, options and Class B Performance Shares, and on this basis is also not an independent Non-executive Director. However, the Board believes that both Mr Reeves and Morzaria are relevant qualified professionals and with an understanding of what is expected of a Non-Executive Director and discharge their duties as Non-Executive Directors in an effective and appropriate manner on behalf of shareholders as a whole.
Given the Company's present size and scope of the Company's operations, no efficiencies or benefits would be gained appointing a Senior Independent Director ("SID"). The Board intends to re-evaluate the requirement for a SID as the Company's operations increase in size and scale.
The details of the directors are disclosed in the Annual Report and Company website, www.europeanmet.com/directors-and-senior-management.
The Board Charter requires Directors to disclose their interest, positions, associations and relationships and requires that the independence of Directors is regularly assessed by the Board in light of the interests disclosed by Directors. Details of the Directors interests, positions associations and relationships are provided in the Annual Reports and Company website, www.europeanmet.com/directors-and-senior-management.
The Board Charter provides for the determination of the Directors' terms and requires the length of service of each Director to be disclosed. The length of service of each Director is provided in the Annual Reports and Company website, www.europeanmet.com/directors-and-senior-management. The Corporate Code of Conduct, which applies to the Company's directors, senior executives and employees. is in Schedule 2 of the Corporate Governance Plan which is on the Company's website, www.europeanmet.com/corporate-governance.
PRINCIPLE SIX
Appropriate Skills and Experience of the Directors
The Company believes the current balance of skills in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and each of the Director's has experience in public markets. An assessment of the Board's skills and expertise is also set out in the Corporate Governance Report included in the Company's Annual Report and Accounts, and which is available on the Company's website, https://www.europeanmet.com/shareholdercentre-reports.
The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.
Profiles of the Directors are set out below:
Mr David Reeves - Non-executive Chairman
Mr Reeves is a qualified mining engineer with 25 years' experience globally. Mr Reeves holds a First Class Honours Degree in Mining Engineering from the University of New South Wales, a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia and a First Class Mine Managers Certificate of Competency. Mr Reeves is the Managing Director of Calidus Resources Limited (ASX). Mr Reeves is currently a member of the Remuneration Committee, Audit and Risk Committee and Nomination Committee.
Mr Keith Coughlan - Managing Director
Mr Coughlan has 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 is currently Non-executive Director of Calidus Resources Limited (ASX), Doriemus Limited (ASX) and Southern Hemisphere Mining Limited (ASX). He previously held the position of Non-executive Chairman of Talga Resources Limited (ASX) from 17 September 2013 to 8 February 2017. Mr Coughlan is currently a member of the Audit and Risk Committee and Nomination Committee.
Mr Richard Pavlik - Executive Director
Mr Pavlik is the General Manager of Geomet s.r.o., the Company's wholly owned Czech subsidiary, 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 Kiran Morzaria - Non-executive Director
Mr Morzaria has a Bachelor of Engineering (Industrial Geology) and an MBA (Finance). He 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 is a Director and Chief Executive of Cadence Minerals plc (AIM) and a director of UK Oil & Gas plc (AIM). He was previously a Director of Bacanora Minerals plc (AIM). Mr Morzaria is currently a member of the Remuneration Committee and the Audit and Risk Committee.
The CFO is not currently a member of the Board, which the Company believes is acceptable given the current focus of the Company on preparation of a definitive feasibility on the Cinovec deposit. As the scale and complexity of the Group develops, the Board will consider any further appointments to the Board as appropriate. The Company's Chief Financial Officer, James Carter, is a CPA and Chartered Company Secretary with 20 years' international experience in the mining industry and he is currently the Chief Financial Officer (CFO) of Keras Resources Plc (AIM).
PRINCIPLE SEVEN
Evaluation of Board Performance
The Board is responsible for evaluating the performance of the Board and individual directors on an annual basis. It may do so with the aid of an independent advisor. The process for this can be found in Schedule 6 of the Company's Corporate Governance Plan which requires the Board to disclose whether or not performance evaluations were conducted during the relevant reporting period.
Due to the size of the Board and the nature of the business, it has not been deemed necessary to institute a formal documented performance review program of individuals. However, the Chairman intends to conduct formal reviews each financial year whereby the performance of the Board as a whole and the individual contributions of each director are disclosed. The Board considers that at this stage of the Company's development an informal process is appropriate.
The review will assist to indicate if the Board's performance is appropriate and efficient with respect to the Board Charter.
The Board regularly reviews its skill base and whether it remains appropriate for the Company's operational, legal and financial requirements. New Directors are obliged to participate in the Company's induction process, which provides a comprehensive understanding of the Company, its objectives and the market in which the Company operates.
Directors are encouraged to avail themselves of resources required to fulfil the performance of their duties.
PRINCIPLE EIGHT
Corporate Culture
The Corporate Code of Conduct applies to the Company's directors, senior executives and employees.
The purpose of the Corporate Code of Conduct is to provide a framework for decisions and actions in relation to ethical conduct in employment. It underpins the Company's commitment to integrity and fair dealing in its business affairs and to a duty of care to all employees, clients and stakeholders. The document sets out the principles covering appropriate conduct in a variety of contexts and outlines the minimum standard of behaviour expected from employees.
The directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.
PRINCIPLE NINE
Maintenance of Governance Structures and Processes
The QCA Code recommends that the Company maintains governance structures and processes in line with its culture and appropriate to its size and complexity.
Ultimate authority for all aspects of the Company's activities rests with the Board, the respective responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Company's business and primary contact with shareholders has been delegated by the Board to the Managing Director.
The Board has established the following committees.
Audit and Risk Committee
The Audit and Risk Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Kiran Morzaria, Mr Reeves and Mr Coughlan. The role and responsibilities of the Audit and Risk Committee are outlined in Schedule 3 of the Company's Corporate Governance Plan available online on the Company's website, www.europeanmet.com/corporate-governance.
This committee has primary responsibility for monitoring the Financial Reporting function and internal controls in order to ensure that the financial performance of the Company is properly measured and reported. The committee receives the financial reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company's auditors.
Remuneration Committee
The Remuneration Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Kiran Morzaria, Mr Reeves. The role and responsibilities of the Remuneration Committee are outlined in Schedule 3 of the Company's Corporate Governance Plan available online on the Company's website, www.europeanmet.com/corporate-governance.
The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company's Remuneration Policy.
Nominations Committee
The Nominations Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Reeves and Mr Coughlan. The role and responsibilities of the Nominations Committee are outlined in Schedule 3 of the Company's Corporate Governance Plan available online on the Company's website, www.europeanmet.com/corporate-governance.
PRINCIPLE TEN
Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company's Annual General Meeting.
Investors also have access to current information on the Company though its website, www.europeanmet.com, and via Keith Coughlan, Managing Director, who is available to answer investor relations enquiries.
The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.
ADDITIONAL INFORMATION FOR LISTED PUBLIC COMPANIES
The following additional information is required by the Australian
Securities Exchange Ltd in respect of listed public companies
only.
1 Shareholding as at 18 September 2019
(a) Distribution of Shareholders
Number
Category (size of holding) of Shareholders
1 - 1,000 104
1,001 - 5,000 234
5,001 - 10,000 155
10,001 - 100,000 280
100,001 - and over 127
900
----------------------------------------
(b) The number of shareholdings held in less than marketable parcels
is 159.
(c) Voting Rights
The voting rights attached to each class of equity security
are as follows:
146,642,227 CDIs
- Each CDI is entitled to one vote when a poll is called,
otherwise each member present at a meeting or by proxy
has one vote on a show of hands.
(d) 20 Largest Shareholders - CDIs as at 18 September 2019
Rank Shareholder Number of CDIs % Held
------------------------------------------------ ------------------------ ---------------- ------------------------
J P Morgan Nominees
Australia Pty
1. Limited 22,472,298 14.90
Citicorp Nominees Pty
2. Limited 17,034,002 11.30
3. Armco Barriers Pty Ltd 13,000,000 8.62
Inswinger Holdings Pty
4. Ltd 8,500,000 5.64
Jim Nominees Limited
5. <Jarvis> 5,675,013 3.76
Mrs Eleanor Jean Reeves
<Elanwi
6. A/C> 3,720,244 2.47
Barclays Direct
Investing Nominees
7. Limited < Client1> 3,332,013 2.21
Vidacos Nominees Limited
8. <Clrlux> 3,258,471 2.16
Hargreaves Lansdown
(Nominees) Limited
9. <15942> 2,807,235 1.86
Hargreaves Lansdown
(Nominees) Limited
10. <Vra> 2,623,713 1.74
Lawshare Nominees
11. Limited <Sipp> 2,375,411 1.58
Interactive Investor
Services Nominees
12. Limited <Smktisas> 2,372,818 1.57
13. Hsdl Nominees Limited 1,993,312 1.32
Hsbc Global Custody
Nominee (Uk)
14. Limited <777329> 1,910,000 1.27
Mr Neil Thacker
15. Maclachlan 1,707,483 1.13
16. Cgwl Nominees Limited 1,703,433 1.13
17. Share Nominees Ltd 1,553,785 1.03
Interactive Investor
Services Nominees
18. Limited <Smktnoms> 1,529,579 1.01
Hsdl Nominees Limited
19. <Maxi> 1,401,481 0.93
Lichter Services Pty Ltd
<Lichter
20. Family S/F A/C> 1,388,000 0.92
Total Top 20 Shareholders 100,358,291 66.55
2 The name of the Company Secretary is Ms Julia Beckett.
3 The address of the principal registered office in Australia
is Suite 12, Level 1, 11 Ventnor Avenue, West Perth WA
6005. Telephone +61 8 6245 2050.
4 Registers of securities are held at the following addresses
Computershare Investor Services Limited
Level 11
172 St Georges Terrace
Perth, Western Australia 6000
5 Securities Exchange Listing
Quotation has been granted for all the CDIs of the Company
on all Member Exchanges of the Australian Securities Exchange
Limited.
6 Unquoted Securities
A total of 4,450,000 options over unissued CDIs are on
issue.
A total of 5,000,000 A Class Performance Shares
A total of 5,000,000 B Class Performance Shares
7 Use of Funds
The Company has used its funds in accordance with its initial
business objectives.
TENEMENT SCHEDULE
Permit Code Deposit Interest Acquired Interest
at beginning / Disposed at end of
of Quarter Quarter
Cinovec 100% N/A 100%
-------------------- --------------- -------------- ------------ -----------
Cinovec
II 100% N/A 100%
-------------------- -------------- ------------ -----------
Cinovec
III 100% N/A 100%
-------------------- -------------- ------------ -----------
Exploration Cinovec
Area IV N/A 100% N/A 100%
--------- --------- -------------- ------------ -----------
Preliminary Cinovec Cinovec
Mining Permit I East 100% N/A 100%
--------- --------- -------------- ------------ -----------
Cinovec Cinovec
II South 100% N/A 100%
--------- -------------------------- -------------- ------------ -----------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR LIFIIARIIVIA
(END) Dow Jones Newswires
September 30, 2019 02:00 ET (06:00 GMT)
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