23rd Apr 2017: Research Report - (PDF - 381 Kb)

European Metals Holdings Limited

ARBN 154 618 989

Suite 12, Level 1

11 Ventnor Avenue West Perth WA 6005 PO Box 52

West Perth WA 6872 Phone + 61 8 6141 3500

Fax + 61 6141 3599

Website: www.europeanmet.com

Directors

David Reeves

Non-Executive Chairman

Keith Coughlan

Managing Director

Dr Pavel Reichl

Non-Executive Director

Kiran Morzaria

Non-Executive Director

Company Secretary

Ms Julia Beckett

Corporate Information

ASX: EMH AIM: EMH

Frankfurt: E861.F CDIs on Issue: 129M

24 April 2017 RESEARCH REPORT

European Metals Holdings Limited ("European Metals" or "the Company") advises that a research report on the Company has been published by Patersons Securities Limited.

To view a copy of the report, please visit the Company's website: www.europeanmet.com

Julia Beckett

COMPANY SECRETARY BACKGROUND INFORMATION ON CINOVEC PROJECT OVERVIEW Cinovec Lithium/Tin Project

European Metals owns 100% of the Cinovec lithium-tin deposit in the Czech Republic. 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 witha total Indicated Mineral Resource of 348Mt @ 0.45% Li2Oand 0.04% Sn and an Inferred Mineral Resource of 309Mt @ 0.39% Li2Oand 0.04% Sn containing a combined 7.0 million tonnes Lithium Carbonate Equivalent and 263kt of tin.

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.

EMH has completed a Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD540m and an IRR of 21%. It confirmed the deposit is be amenable to bulk underground mining. Metallurgical test work has produced both battery grade lithium carbonate and 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.

CONTACT

For further information on this update or the Company generally, please visit our website at www. http://europeanmet.com or contact:

Mr. Keith Coughlan Managing Director COMPETENT PERSON

Information in this release that relates to exploration results is based on information compiled by European Metals Director 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 Resources and Exploration Targets has been compiled by Mr Lynn Widenbar. Mr Widenbar, who is a Member of the Australasian Institute of Mining and Metallurgy, is a full time employee of Widenbar and Associates and produced the estimate based on data and geological information supplied by European Metals. Mr Widenbar 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 Widenbar consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.

CAUTION REGARDING FORWARD LOOKING STATEMENTS

Information included in this release constitutes forward-looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "continue", and "guidance", or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be

2 | P a g e

other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

Statements regarding plans with respect to the Company's mineral properties may contain forward‐ looking statements in relation to future matters that can only be made where the Company has a reasonable basis for making those statements.

This announcement has been prepared in compliance with the JORC Code 2012 Edition and the current ASX Listing Rules.

The Company believes that it has a reasonable basis for making the forward‐looking statements in this announcement, including with respect to any mining of mineralised material, modifying factors and production targets and financial forecasts. The following information is specifically provided in support of this belief:

The PFS was completed by independent specialist firms with oversight provided by the Company's Owner's Team under the direction of Andrew Smith (B.Eng., B.Com from University of Sydney).

As is normal for this type of study, the PFS has been prepared to an overall level of accuracy of approximately ±25% for capital and operating costs.

1. Production targets and financial forecasts disclosed in this announcement are based exclusively on Indicated Resource categories as defined under the JORC Code 2012.

2. European Metals will both commence infill drilling and will re-access the old exploration drives as part of its next programme to convert Indicated Resources into the Measured category. Given the vast quantity of data associated with the previous mine combined with the size, continuity of mineralisation, geometry of the deposit, the Company and its Resource Consultants Widenbar and Associates are confident of achieving this further mineral resource classification conversion.

3. The PFS metallurgical testwork programme was developed and supervised by industry leaders in Western Australia and Germany and was performed by specialist labs in the areas of expertise that included Anzaplan, Nagrom and ALS.

4. Mr Harman (B.Sc Chem Eng, B.Com) is an independent consultant with in excess of 7 years of lithium chemicals experience. Mr Harman supervised and reviewed the metallurgical test work and the process design criteria and flow sheets in relation to the LCP.

5. In conjunction with the independent consultants' EMH prepared the process design criteria and flowsheet based on metallurgical test work and typical industry design parameters.

6. The mine planning and scheduling for the 1.7Mtpa Base Case were undertaken by independent mining firm Bara Consultants, consisting of Mr Andrew Pooley and Mr Clive Brown (both mining professionals with a combined 50 years of mine planning and operations experience and both fellows of the SAIMM) utilising the DeswikCAD suite of mining software for UG mine planning.

7. Mining operating costs were based on estimates derived from equipment and mechanical quotes, first principle manpower buildups and an extensive industry database.

8. | P a g e

9. Processing operating costs were estimated based on the mechanical equipment list developed for the PFS design, metallurgical testwork and the process design criteria, typical local labour rates, quoted energy costs and typical consumables supply costs. The information in this announcement that relates to Process Plant capital and operating cost estimates is based on reports compiled by the independent consultants' services and EMH inputs.

10. Capital estimates are based on preliminary engineering designs produced by the independent consultants' services and EMH inputs. Each consultant provided a capital estimate for their respective scope of works. Based on process modelling and mass flow calculations, detailed mechanical equipment lists were compiled, with quotes for all items costing over $100 k. The mechanical equipment list was then used as a base for factoring other project commodities. Material take-offs from the 3D modelling were then used as an integrity check.

11. Mining related geotechnical engineering was undertaken by independent mining firm Bara Consulting and included extensive geotechnical logging and laboratory testing.

12. The Project will potentially be the first large-scale hard rock mine to be developed in the Czech Republic in many decades. As such, stakeholder engagement with the Government of Czech, both locally and regionally and in particular with the Ministry of Industry has been very positive. We therefore anticipate that given the potential size, scale and significance of the Project to Czech and the potential downstream use of the lithium product and assuming any development complies with all relevant mining and environmental legislation, all necessary approval processes will be able to be secured for the Project.

13. The Company has engaged a specialist environmental consulting firm in Czech, GET s.r.o Ltd, to advise it on all aspects of the ESIA process. This includes all environmental baseline studies.

14. The Company believes that the amount and detail of work and studies carried out for this Study in many areas exceeds what would normally be expected at a PFS level.

15. The Company's Board and management have had a very successful track record of developing and financing mineral resource development globally. The Company is confident there is a good possibility that it will continue to increase the mineral resources at the Project through exploration. The Company is confident that this exploration combined with the use of only 5% of the Resource base in the PFS, will extend the mine life greatly from that which is currently modelled.

16. The Project's positive technical and economic fundamentals provide a platform for the Company to advance discussions with traditional debt and equity financiers and forward sales arrangements. The size and location of the deposit in the middle of large end users associated with European electric vehicles that is driving lithium demand will make the project a strategic asset as evidenced by the large interest shown in the Project by end users and large lithium specialist companies to-date. An improvement in market conditions during 2015 and 2016 and a perceived high growth outlook for the global lithium market enhance the Company's view of the fundability of the Project.

17. Based on the above, the Board is confident the Company will be able to finance the Project through a combination of debt and equity, or forward sales. In addition, the Company's aim will be to avoid dilution to existing shareholders, to the greatest extent possible.

    The Company has been well supported by its largest shareholder, Cadence Minerals Plc which is listed on AIM in London. Cadence has a total of GBP38m in cash and investments. It has expressed interest in providing funding to maintain its existing shareholding. This based with

18. | P a g e