European Metals : Interim Financial Report 31 December 2021

EUROPEAN METALS HOLDINGS

LIMITED

ARBN 154 618 989

INTERIM FINANCIAL REPORT

31 DECEMBER 2021

Note: The information contained in this condensed report is to be read in conjunction with European Metals Holding Limited's 2021 annual report and any announcements made by the company during the half year period ended 31 December 2021

European Metals Holdings Limited

ARBN 154 618 989

INTERIM FINANCIAL REPORT 31 DECEMBER 2021

CORPORATE DIRECTORY

Directors

Mr Keith Coughlan Mr Richard Pavlik Mr Kiran Morzaria

Mr Lincoln Palmer Bloomfield, Jr

Company Secretary Mr Dennis Wilkins

Registered Office in Australia

Level 3

35 Outram Street West Perth WA 6005

Telephone [phone] Facsimile 08 6245 2055

Email:www.europeanmet.com

Registered Address & Place of Incorporation Woodbourne Hall

PO Box 3162 Road Town TORTOLA VG1 110 BRITISH VIRGIN ISLANDS

Share Register

Computershare Investor Services Limited Level 11

172 St Georges Terrace PERTH WA 6000 Telephone: [phone] Facsimile: [phone]

Auditor

Stantons International Audit & Consulting Pty Ltd Level 2, 40 Kings Park Road

WEST PERTH WA 6005 Telephone: [phone] Facsimile: [phone]

Securities Exchange Listing - Australia Australian Securities Exchange Limited Level 40, Central Park

152-158 St Georges Terrace PERTH WA 6000

ASX Code: EMH

Securities Exchange Listing - NASDAQ Nasdaq Inc

151 W. 42nd Street New York City

NY 10036 United States NASDAQ Code: EMHXYExecutive Chairman Executive Director Non-Executive Director Non-Executive Director

Registered Office in Czech Republic GEOMET s.r.o.

Ruska 287 417 01 Dubi Bystrice The Czech Republic Telephone: [phone]

Nominated Nomad & Joint Broker WH Ireland Ltd

24 Martin Lane LONDON EC4R 0DR UNITED KINGDOM

Joint Broker

Shard Capital Partners LLP 23rd Floor, 20 Fenchurch Street LONDON EC3M 3BY

UNITED KINGDOM

UK Depository

Computershare Investor Services plc The Pavilions

Bridgewater Road BRISTOL BS99 6ZZ UNITED KINGDOM

Reporting Accountants (UK)

Chapman Davis LLP

2 Chapel Court LONDON SE1 1HH UNITED KINGDOM

Securities Exchange Listing - United Kingdom London Stock Exchange plc

10 Paternoster Square LONDON EC4M 7LS UNITED KINGDOM AIM Code: EMH

1

European Metals Holdings Limited

ARBN 154 618 989

INTERIM FINANCIAL REPORT 31 DECEMBER 2021

CONTENTS

Directors' Report 3

Auditor's Independence Declaration 11

Consolidated Statement of Profit or Loss and Other Comprehensive Income 12

Consolidated Statement of Financial Position 13

Consolidated Statement of Changes in Equity 14

Consolidated Statement of Cash Flows 15

Condensed Notes to the Consolidated Financial Statements 16

Directors' Declaration 22

Independent Audit Review Report to the members of European Metals Holdings Limited 23

2

European Metals Holdings Limited

ARBN 154 618 989

INTERIM FINANCIAL REPORT 31 DECEMBER 2021

DIRECTORS' REPORT

Your directors submit the financial report of the consolidated group for the half year ended 31 December 2021.

Directors

The names of the directors who held office during or since the end of the half year.

Mr Keith Coughlan	Executive Chairman	Appointed 30 June 2020
Previously Managing Director	Appointed 6 September 2013
Mr Richard Pavlik	Executive Director	Appointed 27 June 2017
Mr Kiran Morzaria	Non-Executive Director	Appointed 10 December 2015
Ambassador Lincoln Palmer	Non-Executive Director	Appointed 3 January 2021
Bloomfield, Jr
Results of Operations

The consolidated loss for the half year ended 31 December 2021 amounted to $1,949,974 (2020: $2,317,327 loss).

Review of Operations

For the reporting period the Company continued to manage the advancement of the Cinovec Lithium/Tin Project in Czech Republic with a significant resource upgrade following an extensive drilling programme and very positive results returned from a life cycle environmental assessment ("LCA") conducted by Minviro, further highlighting the strong ESG credentials of the Project. The macro conditions relative to the Project have been very strong for the period. Prices for the Project's two key metals, lithium and tin, continued to increase significantly.

Subsequent to the end of the reporting period, the Company made two very significant announcements.

The first of these was an update to the 2019 Preliminary Feasibility Study, highlighting significant increases in the key financial parameters of the Project, an increase in overall lithium production, and further enhancements to the ESG credentials. The 2022 PFS Update shows an NPV of US$1.938B (post tax, 8%); an up-front capital cost of US$644M; and an increase in the overall annual production of battery-grade lithium hydroxide ("LiOH") to 29,386 tpa (refer to the Company's ASX release dated 19 January 2022). In addition, the post tax IRR has increased to 36.3% (PFS Update delivers outstanding results).

Secondly, the Company successfully completed a capital raising of approximately AUD 14.4 million and welcomed Ellerston Capital, a leading Sydney-based fund manager, and another institutional fund to the register. (refer to the Company's ASX release dated 19 January 2022) (Successful Placing to raise AUD14.4M).

The Coronavirus (COVID-19) pandemic is ongoing and has had a negative impact on the Project's timelines. Travel logistics globally have improved since the end of the period, however it is difficult to estimate the ongoing potential impact. The situation is rapidly developing and is dependent on measures imposed by various governments, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

3

European Metals Holdings Limited

ARBN 154 618 989

INTERIM FINANCIAL REPORT 31 DECEMBER 2021

PFS UPDATE DELIVERS OUTSTANDING RESULTS

As announced on 19 January 2022, the 2019 PFS Update for the Cinovec Project has been updated to demonstrate the effect of changes in the mining process to incorporate the use of paste backfill, which results in an increase in annual production, together with changes in lithium and by-product prices to reflect current and expected market conditions.

The effect of the use of the paste backfill option was to enable the mining schedule to increase the mine life to 25 years whilst increasing the amount of ore mined to 2.25mtpa, thereby increasing the amount of lithium hydroxide produced each year from 25,267 tonnes to 29,386 tonnes.

The use of approximately 54% of the plant tailings for backfill will result in a far smaller environmental impact, with much smaller dry stack tailings storage required, further enhancing the already strong ESG credentials of the Project.

NPV8 (post tax) increases from US$1.108B to US$1.938B, an increase of 74.9%

The 2022 PFS Update highlights the very strong increase in value which results from the increase in the price of battery-grade lithium hydroxide when combined with the use of backfill, and an increase in the overall production of battery-grade lithium hydroxide to 29,386 tpa. The 2022 PFS Update shows a NPV of US$1.938B (post tax, 8%) and an up-front capital cost of US$644M.

Metric	Value	Metric	Value
NPV @8% Discount	$1,108 M	Average LiOH Production rate	25,267 tpa
IRR (Post tax)	28.8 %	Avg Production Cost (without credits)	$4,876 /t LiOH
Capital Expenditure	$482.6 M	Avg Production Cost (with credits)	$3,435 /t LiOH
Total Mined Ore	34.4 Mt	Avg Mill Rate (yr. 3-20)	1.68 Mtpa
Peak Mill Feed	1.8 Mtpa	Life of Mine	21 years

Table 1: 2019 PFS Update Project Financial Summary

Metric	Value	Metric	Value
NPV @8% Discount	$1.94B	Average LiOH Production rate	29,386 tpa
IRR (Post tax)	36%	Avg Production Cost (without credits)	$6,727 /t LiOH
Capital Expenditure	$644 M	Avg Production Cost (with credits)	$5,567 /t LiOH
Total Mined Ore	54.5 Mt	Avg Mill Rate (yr. 2-25)	2.25 Mtpa
Peak Mill Feed	2.34Mtpa	Life of Mine	25 years

Table 2: 2022 PFS Update Project Financial Summary

LCA QUANTIFIES CINOVEC LITHIUM CHEMICAL PRODUCTION CO2 EMISSIONS AND MITIGATION SCENARIOS IDENTIFIED TO PRODUCE LOW CARBON PRODUCTS, CEZ TO PROVIDE GREEN POWER TO PROJECT

In line with Environmental, Social and Governance (ESG) adoption, the Company engaged UK-based and globally recognised sustainability and life cycle assessment consultancy, Minviro, to provide an ISO-compliant life cycle assessment (LCA) of the Cinovec project. This assessment covered both battery-grade lithium carbonate and battery-grade lithium hydroxide and was benchmarked against global lithium peers. Minviro has identified decarbonisation optimisation in the developing feasibility study for Cinovec.

4