Further to the announcement on 20 November 2019, European Metals Holdings Limited ('European Metals' or 'the Company') (ASX & AIM: EMH) announces that it has today posted a circular to shareholders (the 'Circular') containing the details of the proposed subscription (the 'Proposed Subscription') of EUR34,061,265 by CEZ a.s. ('CEZ') through its wholly-owned subsidiary SDAS, for 51% of Geomet s.r.o. the Company's wholly owned Czech subsidiary and the holder of the Cinovec licences.

Summary of the terms of the Agreement

Pursuant to the Exclusivity and Framework Agreement, CEZ has the option, but not the obligation, to subscribe through SDAS for such number of Geomet Shares as will result in SDAS holding Geomet Shares comprising fifty-one per cent. (51%) of the ownership interests and voting rights in Geomet, attached with the right to receive fifty-one per cent. (51%) of dividends, liquidation balance and other proceeds payable by Geomet to Geomet Shareholders following completion of the subscription.

The amount to be paid by CEZ to Geomet under the option is in total approximately EUR34.06m, equivalent to approximately GBP29.15m and AUD55.25m. This compares to EMH's market valuation of approximately GBP32.88m (EUR38.42m; AUD62.32m) based on the closing price of an EMH share in London of 21.8 pence on 19 November 2019, the day immediately before announcement by EMH of the Proposed Subscription. The amounts in GBP and AUD included above have been calculated using an average exchange rate for EUR/GBP and EUR/AUD respectively as at 18 November 2019.

Completion of the Proposed Subscription is conditional, inter alia, on the satisfaction of the following conditions: (i) completion of due diligence in respect of the Company and the Cinovec Project to the satisfaction of CEZ at its sole discretion; (ii) the passing of the Ordinary Resolution at the Annual General Meeting and delivery of a certified copy of the Ordinary Resolution to CEZ; (iii) agreement of the initial work programme and budget for Geomet and (iv) CEZ and EMH agreeing the identity of the Chief Executive Officer, the Chief Operating Officer and the statutory auditor of Geomet to be appointed with effect from completion.

EMH has agreed to provide CEZ with a period of exclusivity under the Exclusivity and Framework Agreement, with certain break fees payable by EMH if it does not proceed with the Proposed Subscription. In particular, EMH and Geomet have undertaken until 31 March 2020 not to conduct discussions or negotiations or enter into any agreement or arrangement with any person or entity other than CEZ or SDAS in respect of an acquisition of an interest over or in, and/or establishment of a joint venture, partnership or other cooperation in connection with, the Cinovec Project and/or Geomet, by any means.

EMH and CEZ have also agreed the form of Geomet Shareholders' Agreement which sets out their rights and obligations as shareholders in Geomet should CEZ exercise the option. The Geomet Shareholders' Agreement includes certain minority shareholder protections with a number of reserved matters which require the approval of both CEZ and EMH, together with deadlock provisions in the event that on completion of the proposed work programme, the parties disagree on a construction decision.

Posting of Circular and notice of Annual General Meeting

The proposed subscription by SDAS would constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules and is therefore conditional on, inter alia, the passing of the Ordinary Resolution at the Annual General Meeting. The Company will, however, remain an operating minerals company under the AIM Rules given its remaining material minerals interest and ongoing involvement in the Cinovec Project after the Proposed Subscription has completed.

ASX Listing Rule 11.2 also provides that an entity may not dispose of its main undertaking (that is, its main asset or business) without the approval of its shareholders. While the Proposed Subscription may be considered to constitute the Company disposing of its main undertaking, the Company will not be making any change to its main undertaking. That is, the Company will remain engaged in the same principal business activities following completion of the Proposed Subscription. Accordingly, the Company seeks Shareholder approval under Listing Rule 11.2 for completeness.

The approval is by way of an ordinary resolution at General Meeting. Accordingly, shareholder approval to the Proposed Subscription is being sought at a General Meeting of the Company to be held at the office of White & Case LLP, 5 Old Broad Street, London EC2N 1DW at 11.00am GMT on 20 December 2019.

EMH has posed the Circular containing details of the Proposed Subscription and notice of General Meeting. Further details of the Proposed Subscription are set out in the Circular posted to Shareholders.

Unless the context otherwise requires, capitalised terms of this announcement shall have the same meaning ascribed to them in the Circular.

The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of EU Regulation 596/2014, prior to its release. The person who arranged for the release of this announcement on behalf of the Company was Keith Coughlan, Managing Director.

Contact:

Julia Beckett

Tel: +61 (0) 419 996 333

Email: keith@europeanmet.com

(C) 2019 Electronic News Publishing, source ENP Newswire