European Metals : Annual Report 30 June 2021

EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL REPORT

30 JUNE 2021

EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL REPORT 30 JUNE 2021

CORPORATE DIRECTORY

Directors
Mr Keith Coughlan
Mr Richard Pavlik
Mr Kiran Morzaria
Ambassador Lincoln Palmer Bloomfield, Jr	Non-Executive Director
Company Secretary
Mr Dennis Wilkins
Registered Office in Australia	Geomet s.r.o.
Level 3	Ruská 287, Bystřice
35 Outram Street	417 01 Dubí
West Perth WA 6005	Czech Republic
Telephone [phone]
Facsimile 08 6245 2055
Emailwww.europeanmet.com
Registered Address and Place of Incorporation -	Nominated Nomad & Joint Broker
BVI	WH Ireland Ltd
Woodbourne Hall	24 Martin Lane
PO Box 3162	London EC4R 0DR
Road Town	United Kingdom
Tortola VG1 110
British Virgin Islands	Joint Broker
Shard Capital Partners LLP
Share Register - Australia	23rd Floor, 20 Fenchurch Street
Computershare Investor Services Limited	London EC3M 3BY
Level 11	United Kingdom
172 St Georges Terrace
Perth WA 6000	UK Depository
Telephone [phone] (within Australia)	Computershare Investor Services plc
Telephone [phone] (outside Australia)	The Pavilions
Facsimile 1800 783 447 (within Australia)	Bridgewater Road
Facsimile [phone] (outside Australia)	Bristol BS99 6ZZ
United Kingdom
Auditor	Reporting Accountants (UK)
Stantons International Audit and Consulting Pty Ltd	Chapman Davis LLP
Level 2, 1 Walker Avenue	2 Chapel Court
West Perth WA 6005	London SE1 1HH
Telephone [phone]	United Kingdom
Facsimile [phone]
Securities Exchange Listing - Australia	Securities Exchange Listing - 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
Securities Exchange Listing - NASDAQ
Nasdaq Inc
151 W. 42nd Street
New York City
NY 10036 United States
NASDAQ Code: ERPNF

Executive Chairman Executive Director Non-Executive Director

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EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL REPORT 30 JUNE 2021

CONTENTS

Chairman's Letter Report 3

Review of Operations 5

Directors' Report 9

Remuneration Report 15

Auditor's Independence Declaration 22

Consolidated Statement of Profit or Loss and Other Comprehensive Income 23

Consolidated Statement of Financial Position 24

Consolidated Statement of Changes in Equity 25

Consolidated Statement of Cash Flows 26

Notes to the Consolidated Financial Statements 27

Directors' Declaration 61

Independent Audit Report to the members of European Metals Holdings Limited 62

Additional Information 66

Tenement Schedule 67

EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL REPORT 30 JUNE 2021

CHAIRMAN'S LETTER

Dear Shareholders

Welcome to the 2021 Annual Report for European Metals Holdings Limited ("European Metals" or "the Company").

On behalf of the Board of Directors, I am pleased to report to you on what has been another busy and productive year for your Company, set against a backdrop of significantly higher prices for both of our key products, lithium and tin. Our strategy is to become a Czech based lithium and tin producer. The progress we have made in the past year, along with the greatly improved macro conditions, bring us significantly closer towards making that aim a reality.

This has been partially reflected in the price of the Company's securities with the CDI's listed on ASX increasing from AUD 0.29 on 30 June 2020 to AUD 1.535 on 30 June 2021. The price of lithium performed well for the year also and has made very significant gains since year end.

As the lithium market moves into deficit, we anticipate the continuation of strong prices in the foreseeable future.

The Definitive Feasibility Study continues, albeit with some minor delays related primarily to Covid-19 and the effect that has had on logistics globally. Whilst we have had no direct Covid-19 related issues at site, moving samples and our people has been problematic at times. We don't anticipate any escalation in this.

Apart from these delays, we have made steady progress of the Cinovec Project with positive developments in the areas of our locked cycle testwork, permitting advancement and Measured Resource drilling programme. We have also advanced the Project's ESG credentials significantly and Cinovec is emerging as a project with not only very robust economic parameters, but one with a strong ESG profile relative to its peers. We will continue developing this aspect of the project over the coming year and expect to be able to present a positive Life Cycle Assessment (LCA) to the market shortly. The LCA will demonstrate the Project's anticipated life-time carbon emissions, which we expect to be comparatively very attractive.

The Project has been significantly de-risked and at the time of this report is moving rapidly towards a final investment decision.

In the previous year, we reported on the completion of an agreement with CEZ a.s., the Czech national power utility, by which CEZ became a 51% shareholder of the Project Company, Geomet and injected approximately EUR 29 million into the Project.

Early in the 2021 Financial Year the Company entered into a partnership agreement with EIT InnoEnergy, a European Union body that is the principal facilitator and organiser of the European Battery Alliance (EBA). The EBA was initiated by the European Commission to create a competitive and sustainable battery cell manufacturing value chain in Europe.

The purpose of the partnership agreement with EIT InnoEnergy is to facilitate the accelerated construction financing and ultimate commercialisation of Cinovec. This will be achieved through assistance in the sourcing of construction finance, grant funding and offtake introductions and negotiations.

Following this, the Company reported on the appointment of SMS group as the lead engineer for the minerals processing and lithium battery-grade chemicals production at the Project.

From a corporate perspective, we welcomed Ambassador Lincoln Bloomfield to the board in early January. Lincoln brings a wealth of experience to the Company in the fields of governance, international diplomacy, sustainability, resilience and renewable energy. Lincoln is based in the United States, home to the largest capital markets in the world and markets that are becoming increasingly invested in green energy companies. This, coupled with our recent US market listing via a NASDAQ ADS programme, provides the Company with another potential funding option as we head towards final investment decision next year.

EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL REPORT 30 JUNE 2021

CHAIRMAN'S LETTER

On funding, the Company raised AUD 7.1 million in January and remains in a very sound financial position relative to the project timeline. The cornerstone investor for this raising was Luxembourg-based Thematica Future Mobility.

The very strong commitment within the European Union to build a sustainable European battery industry and electric vehicle industry that we reported on last year has gathered greater momentum. Consequently, the demand for lithium in the region has grown dramatically and this is likely to continue. This, coupled with a growing global desire to develop local supply chains, has focused attention on European based projects involved in the battery metals supply chain. Cinovec is set to benefit significantly from these developments.

All things considered, I am very optimistic on the outlook for the Cinovec Project and for the future of your Company.

Finally, I would like to take this opportunity to thank all staff, advisors, contractors and our shareholders who have supported us over the past year. I look forward to updating you throughout the new financial year as we continue to advance the Cinovec Project.

Keith Coughlan

EXECUTIVE CHAIRMAN

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