TIDMEMH
RNS Number : 2225O
European Metals Holdings Limited
29 September 2023
For immediate release
29 September 2023
European Metals Holdings Limited
("European Metals" or the "Company")
ANNUAL RESULTS
European Metals Holdings Limited ( ASX & AIM: EMH, OTCQX:
EMHXY, ERPNF and EMHLF ) ("European Metals" or the "Company") are
pleased to announce the Company's annual results for the year ended
30 June 2023.
The annual report has been released on the Australian Securities
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.
CONTACT
For further information on this update or the Company generally,
please visit our website at www.europeanmet.com or see full contact
details at the end of this release.
ENQUIRIES:
European Metals Holdings Limited
Keith Coughlan, Executive Chairman Tel: +61 (0) 419 996 333
Email: keith@europeanmet.com
Kiran Morzaria, Non-Executive Tel: +44 (0) 20 7440 0647
Director
Tel: +61 (0) 418 675 845
Shannon Robinson, Company Secretary Email: shannon@europeanmet.com
WH Ireland Ltd (Nomad & Broker)
James Joyce / Darshan Patel / Tel: +44 (0) 20 7220 1666
Isaac Hooper
(Corporate Finance)
Harry Ansell (Broking)
Panmure Gordon (UK) Limited (Joint
Broker) Tel: +44 (0) 20 7886 2500
John Prior
Hugh Rich
James Sinclair Ford
Harriette Johnson
Blytheweigh (Financial PR) Tel: +44 (0) 20 7138 3222
Tim Blythe
Megan Ray
Chapter 1 Advisors (Financial
PR - Aus) Tel: +61 (0) 433 112 936
David Tasker
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
and is disclosed in accordance with the Company's obligations under
Article 17 of MAR. The person who authorised for the release of
this announcement on behalf of the Company was Keith Coughlan,
Executive Chairman.
CORPORATE DIRECTORY
Directors
Mr Keith Coughlan Executive Chairman
Mr Richard Pavlik Executive Director
Mr Kiran Morzaria Non-Executive Director
Ambassador Lincoln Bloomfield, Non-Executive Director
Jr
Company Secretary
Ms Shannon Robinson
Registered Office in Australia Registered Office in Czech
Level 3 Republic
35 Outram Street GEOMET s.r.o.
West Perth WA 6005 Ruska 287
Telephone 08 6245 2050 417 01 Dubi Bystrice
Facsimile 08 6245 2055 The Czech Republic
Email www.europeanmet.com Telephone: +420 732 671 666
Registered Address and Place AIM Nominated Advisor & Joint
of Incorporation - BVI Broker
Woodbourne Hall WH Ireland Ltd
PO Box 3162 24 Martin Lane
Road Town London EC4R 0DR
Tortola VG1 110 United Kingdom
British Virgin Islands
Joint Broker
Share Register - Australia Panmure Gordon (UK) Limited
Computershare Investor Services One New Change
Limited London EC4M 9AF
Level 17 United Kingdom
221 St Georges Terrace
Perth WA 6000 UK Depository
Telephone 1300 850 505 (within Computershare Investor Services
Australia) plc
Telephone +61 3 9415 4000 (outside The Pavilions
Australia) Bridgewater Road
Facsimile 1800 783 447 (within Bristol BS99 6ZZ
Australia) United Kingdom
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, 40 Kings Park Road 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
Securities Exchange Listing - OTCQX Best Market
OTC Markets Group
300 Vesey Street, 12th Floor
New York City
NY 10282 United States
OTCQX Codes: EMHXY, ERPNF and EMHLF
CONTENTS
Chairman's Letter 3
Review of Operations 5
Directors' Report 14
Remuneration Report 19
Auditor's Independence Declaration 24
Consolidated Statement of Profit or Loss and Other
Comprehensive Income 25
Consolidated Statement of Financial Position 26
Consolidated Statement of Changes in Equity 27
Consolidated Statement of Cash Flows 28
Notes to the Consolidated Financial Statements 29
Directors' Declaration 59
Independent Audit Report to the members of European
Metals Holdings Limited 60
Additional Information 64
Tenement Schedule 65
CHAIRMAN'S LETTER
Dear Shareholders
Welcome to the 2023 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 a very significant year for the Company in the
development of the Cinovec Lithium Project.
The team has had another busy and productive year and big steps
have been taken towards the realisation of our stated strategy to
become a lithium producer. The Cinovec Project stands on the cusp
of filling a significant role in addressing the supply and demand
imbalance for lithium in the European Union.
Awareness of this imbalance has been growing within the region
and formal steps have been taken by the European Union and the
European Commission to assist projects like Cinovec to be brought
into production as quickly as possible. The EU Critical Raw
Materials Act is an example of the recent level of support, and the
key tenets of the Act have received strong support within the Czech
Republic, our country of operation. The Czech Government has
recently become actively supportive of the Project, highlighted by
the visit of Czech Prime Minister Petr Fiala to Cinovec in May, and
his personal public endorsement of the project. The Company expects
that benefits will flow from this recent support, at both national
and regional levels.
The Project was awarded pre-approval for an EUR 49 million grant
under the EU's Just Transition Fund scheme in January 2023 -
indicative of the overall support for the Project and the industry.
Importantly, Cinovec was formally classified as a "Strategic
Project" as part of this grant scheme, potentially leading to
further assistance. The final application and approval process are
due to be completed in early 2024.
Other key milestones achieved during the year include the
appointment of DRA Global to complete the Definitive Feasibility
Study ("DFS"), the continuation of outstanding results from the
final test work, and the securing of the land necessary to build
the proposed lithium processing plant at Dukla, approximately 6.2km
from the proposed portal site.
DRA Global, a globally recognised leader in the delivery of
lithium projects, is making excellent progress on the DFS which
remains on track for publication before the end of 2023. As part of
the required test work for the study, the Company has continued to
deliver excellent results, particularly in the area of lithium
recoveries. This test work will shortly complete and battery grade
lithium samples will be available for distribution to selected
potential off take partners. Securing the land necessary for the
construction of the proposed beneficiation and processing plants
has been a significant development for the Project and was
concluded in early June 2023.
Post the completion of the reporting period, European Metals
received an investment from a significant strategic investor, the
European Bank for Reconstruction and Development ("EBRD"). The EBRD
is an International Financial Institution owned by the European
Union, European Investment Bank and 71 countries, including the
Czech Republic. The investment by EBRD is a strong endorsement of
the Cinovec Project's value and its commitment to the highest
environmental and social standards. The EBRD investment aims to
fund the project's predevelopment work and opens a pathway to
potentially securing project financing. The successful completion
of the technical due diligence process is a testament to the
quality of the Cinovec team and the work which has been done to
date, and a strong vote of confidence in the project. The EBRD
investment is confirmation that the Cinovec Project is a vital part
of establishing a strong, sustainable European electric vehicle
battery supply chain to support Europe's accelerating transition to
e-mobility.
These significant developments place your company in a sound
position to finalise our studies, secure project finance and
long-term, high quality off take agreements, and take the project
towards a final investment decision.
Financially the Company is in a sound financial position, with
approximately AUD$8.9 million at bank at the date of this report.
In addition, the project company, Geomet, is also well-funded and
we do not envisage the need to seek additional funding until Final
Investment Decision, at which point a full Project Financing is
expected to be completed.
Cinovec advances towards being a significant producer of lithium
for the European market at a time when this sector is displaying
unprecedented growth. The demand for electric vehicles, batteries
and therefore lithium is growing faster in Europe than anywhere
else in the world. The size, location, economics and ESG
credentials of the Cinovec Project place it in an enviable position
to become a significant contributor to the solution of critical
metals security in Europe.
Finally, I would like to take this opportunity to thank all
staff, advisors, contractors, our Project partners, CEZ 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
REVIEW OF OPERATIONS
PROJECT REVIEW
Geomet s.r.o. controls the mineral exploration licenses awarded
by the Czech Republic over the Cinovec Lithium Project.
Geomet s.r.o. is owned 49% by European Metals and 51% by CEZ
a.s. through its wholly owned subsidiary, SDAS. CEZ is a
significant energy group listed on various European Exchanges with
the ticker CEZ.
Cinovec hosts a globally significant hard-rock lithium deposit
with a total Measured, Indicated and Inferred Mineral Resource of
708.2Mt at 0.43% Li2O and 0.05% Sn containing a combined 7.39
million tonnes Lithium Carbonate Equivalent, as reported to ASX on
13 October 2021 (Resource Upgrade at Cinovec Lithium Project).
This followed previous reports: 28 November 2017 (Further
Increase in Indicated Resource at Cinovec South). An initial
Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported
on 4 July 2017 (Cinovec Maiden Ore Reserve - Further Information)
has been declared to cover the first 20 years' mining at an output
of 22,500tpa of battery-grade lithium carbonate reported on 11 July
2018 (Cinovec Production Modelled to Increase to 22,500tpa of
Lithium Carbonate).
This makes Cinovec the largest hard-rock 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 focussed on the recovery of tin only.
In January 2022 EMH completed an updated Preliminary Feasibility
Study, conducted by specialist independent consultants, which
indicated a return post tax NPV(8) of USD1.94B and a post-tax IRR
of 36.3%. The study 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. A Definitive Feasibility Study ("DFS")
for the Cinovec Project is currently underway and at an advanced
stage.
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.
ENGAGEMENT OF GERMAN STRATEGIC ENERGY INVESTMENT ADVISER
On 28 October 2022, the Company announced the appointment of
Luthardt Investment GmbH, a Berlin-based consultancy specializing
in energy production and government relations support to large
infrastructure projects internationally.
SIMPLIFIED EXTRACTION PROCESS
On 31 October 2022, the Company announced a simplification of
the flowsheet to deliver very high purity lithium hydroxide,
lithium carbonate, lithium sulphate or lithium phosphate. The
Company reported that this simplified new flowsheet had
demonstrated overall lithium recoveries of 88-93%. After roasting
and leaching, the pregnant leach solution ("PLS") is passed through
two cleaning steps to remove transition metal and calcium
impurities, resulting in a "polished" PLS of lithium sulphate
together with sulphates of other similar metals, principally sodium
and potassium. The last step in the earlier flowsheet was to purify
the crude lithium carbonate with a bicarbonation and
crystallisation step. The simplified flowsheet precipitates lithium
phosphate directly from the polished PLS and then goes on to clean
the lithium phosphate to enable precipitation of a much cleaner
crude lithium carbonate. The final purification step of
bicarbonation and re-precipitation is the same as in the earlier
flowsheet, but the end-product is of even higher quality due to the
input crude lithium carbonate being much cleaner. The
simplification of the central section of the LCP flowsheet reduces
the number of basic chemical engineering unit processes (after the
initial roast/water leach) from 15 to 7. The revised process also
results in the elimination of all energy-intensive cooling
processes.
The completed testwork for the re-engineered LCP flowsheet
produced the following crude and battery-grade lithium carbonate
products, compared with the published global standard
specification, YS/T 582-2013 with the Li2CO3 results highlighted in
yellow.
Li(2) Na K Mg Ca Mn Fe Ni Cu Zn Al Si Pb SO(4) Cl
CO(3) (2)
-
% ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm
YS/T
582-2013 >=99.5 250 10 80 50 3 10 10 3 3 10 30 3 800 30
------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Crude
LC 99.4 368 3 5 357 0 8 3.4 0.2 1.2 5.1 26 0 4860 NA
------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ -----
Battery-Grade
LC 99.99 3 0.8 0.9 2 0.7 6.3 3.4 0.2 1.3 2.8 2.1 0.07 95 <10
------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ -----
As can be seen from the table, the crude lithium carbonate first
precipitated (i.e., with no purification or re-precipitation steps)
meets the battery-grade specification for 10 of the 14 impurity
thresholds. The battery-grade lithium carbonate recrystallised
after a single bicarbonation step shows an exceptionally clean
battery-grade material. The ability to produce an exceptionally
clean battery-grade product in a single bicarbonation step is
expected to reduce Capex, energy and reagent costs and consequently
the Opex of production.
The Company made a further announcement in relation to the
testwork on 25 May 2023 which confirmed separation efficiency and
capability of flotation of lithium-bearing zinnwaldite. The updated
flotation testwork recently undertaken at Nagrom Laboratories
(Perth) has repeatedly reached >95% lithium recovery from
flotation concentrates at target Li-grades and mass yield. Ongoing
testwork to confirm the robust nature of the process and optimise
the Definitive Feasibility Study ("DFS") design has surpassed
previous performance indicators. Results from testing and
optimisation of flotation for the concentration of zinnwaldite in
fine ore has exceeded expectations and further demonstrated the
potential for high overall lithium recoveries when combined with
magnetic separation for the coarse particle size ranges.
European Union's Just Transition Fund approveD Cinovec as a
Strategic Project
On 30 January 2023, the Company announced the Cinovec Project
has been classified as a Strategic Project for the Usti Region of
the Czech Republic. The list of Strategic Projects has been
approved by the European Commission, the Czech Central Government
and the Czech Regional Government in Usti.
Being classified as such means that the Cinovec Project has
priority for grant funding from the Just Transition Fund ("JTF")
co-funding, ahead of many other projects that have been submitted.
The total amount allocated by the Just Transition fund for the
Czech Republic is CZK 41B (EUR1.64B) of which the Usti region has
been allocated CZK 15.8B (approx. EUR632M).
The first call for grant applications under the JTF opened on 14
November 2022 and closes on 31 December 2023. Given that the total
amount which may be applied for by the eleven designated Strategic
Projects in the Usti region in the first call is CZK 8.3B (approx.
EUR350M) and that the funds allocated in this first call from the
Just Transition Fund to these Strategic Projects totals CZK7.3B
(approx. EUR300M), although there can be no certainty, the Company
believes that the Cinovec Project is well-positioned to receive a
significant portion of the funds applied for from the JTF for the
Project. The maximum funding to be made available upon application
to each Strategic Project in the Usti Region is CZK 1.2bn (approx.
EUR49M).
The Cinovec Project has been allocated the maximum possible JTF
grant of CZK 1.2B (approx.. EUR49M), subject to passing through the
application process, funds remaining available, and obtaining the
necessary permits for the early-stage Cinovec work programmes to
which this grant funding is planned to be applied, in particular
the early full development of the twin decline entry/egress system
for the mine. Accordingly, Geomet s.r.o. (the Cinovec project
company) will apply for JTF Grant funding for the maximum amount of
CZK 1.2B (approx. EUR49M).
APPOINTMENT OF DRA GLOBAL AS DEFINITIVE FEASIBILITY STUDY
MANAGER
On 2 February 2023, the Company announced that DRA Global
Limited ("DRA") has been appointed to complete the DFS for the
Cinovec Project in the Czech Republic. With over 30 years'
experience in the development and execution of projects, DRA is a
recognised leader in the delivery of lithium projects globally. DRA
has the necessary capacity, expertise and track record to deliver
the Cinovec DFS in a timely and efficient manner and will be
working to build on all of the optimisation work that the Cinovec
team completed over the course of 2022, with a view to completion
of the DFS in Q4 2023. DRA's appointment for this vital piece of
project development work is testament to both the Company's and its
joint-venture partner CEZ s.a.'s commitment to, and the tremendous
prospectivity and value of, the Cinovec Project. The Cinovec
Project's in-house team will work closely with DRA to develop and
finalise the DFS.
DRA Global Limited (ASX: DRA | JSE: DRA) is a multi-disciplinary
consulting, engineering, project delivery and operations management
group predominantly focused on the mining and minerals resources
sector. DRA has an extensive global track record, spanning more
than three decades and more than 7,500 studies and projects as well
as operations, maintenance and optimisation solutions across a wide
range of commodities. DRA has expertise in mining, minerals and
metals processing, and related non-process infrastructure including
sustainability, water and energy solutions for the mining industry.
DRA delivers advisory, engineering and project delivery services
throughout the capital project lifecycle from concept through to
operational readiness and commissioning as well as ongoing
operations, maintenance and shutdown services.
Land Secured for Cinovec Lithium Plant
On 9 June 2023, the Company announced that Geomet s.r.o. (its
49% owned subsidiary) has agreed to purchase land at the industrial
site "Dukla" in the Újezdeček Municipality, 6.2 km south of the
planned Cinovec Mine portal area, on which it intends to construct
a lithium plant, for a total purchase consideration of US$
43.96m.
The Dukla site, which is subject to an existing industrial usage
permit, is owned by four private companies, with all peripheral and
adjacent land relevant to the site held by the Czech Republic state
and/or local public bodies. The Cinovec Project holding company,
Geomet s.r.o. (Geomet) which is a forty-nine percent (49%) owned
subsidiary of European Metals, has agreed to acquire one of the
privately held land packages and entered into exclusive and
unconditional option agreements for the purchase of the other
three. The Dukla site has been confirmed as an appropriate site
upon which to build a lithium plant for the beneficiation of
Cinovec ore and production of battery-grade lithium in accordance
with the ongoing DFS which is on track to be completed in 4Q23.
This confirmation has been obtained as a result of engineering
layout and design work undertaken in the DFS to-date,
geohydrological and geotechnical surveys over the site, completed
in early 2023.
An application to the Usti Regional Department of Land Use
Planning for the rezoning of the land around the Dukla site (which
is already zoned for industrial use), ore transport corridor
options and the Cinovec Mine portal area was made in April 2022.
The result of this re-zoning application is expected to be
finalised in 4Q23. Geomet intends to exercise its 3 options and
settle these land acquisitions after the re-zoning application has
been successful, anticipated to occur in 2024.
Czech PM visits Cinovec, signs key MoC with PM of Saxony
On 9 June 2023, the Company announced that Czech Republic Prime
Minister Petr Fiala had visited the Cinovec Project and stated that
he sought to expedite the development of significant projects such
as Cinovec.
Prime Minister Fiala commented on the Cinovec Project via social
media, which translates to: "Lithium is a critical and key raw
material. Cínovec is the largest European deposit of this raw
material. Thanks to this, the Czech Republic has a unique
opportunity to contribute to both its own and European raw material
security. We are on the threshold of a lithium revolution as the
use of lithium will grow significantly. As a country with a large
share of the automotive industry, it is important for us to support
it and capture current trends. We are offered a unique chance to
build the entire chain from mining to the production of electric
cars. That is why we need lithium and we are trying to build a
battery factory, the so-called gigafactory."
Prime Minister Fiala also commented on the Memorandum of
Cooperation with the Saxony Government via social media, which
translates to: "I believe that this memorandum will help our
cooperation on the development of the lithium deposit in Cínovec
and, in the future, the creation of the entire production chain for
the production of batteries for cars."
ESG - ENVIRONMENTAL, SOCIAL AND GOVERNANCE
ESG and impact investing have become key criteria for both
investors and fund managers, leading a new path to how companies
are being assessed. The acceleration has been driven by heightened
social, governmental and consumer attention on the broader impact
of corporations, as well as by the investors and executives who
acknowledge a strong ESG proposition is a key indicator of a
Company's long-term success. ESG reporting offers a tool and
roadmap for investors and society to hold companies to account, to
make sure issues such as climate change, social justice, equality,
diversity and environmental protection are reflected and
appropriately addressed by the Company.
European Metals has focused very strongly on the Company's ESG
criteria and, during 2021, adopted a set of ESG metrics and
disclosures following the recommendations released by the World
Economic Forum ("WEF") in Geneva, Switzerland which are
acknowledged as the gold standard for ESG reporting. The key points
of this initiative are -
-- Establishment of an ESG Committee at Board level, chaired by
Ambassador Lincoln Bloomfield who has considerable private sector
experience centred on sustainability, resilience and renewable
energy. The ESG Committee has met to consider relevant matters
including establishing ESG baseline reporting.
-- Engagement of Socialsuite ESG technology platform - a global
leader in ESG impact management systems and sustainability
reporting.
-- Continuation of ESG reporting, monitoring and improvement for
European Metals utilising Socialsuite.
-- EMH's ESG transparency commitment will include an independent
lithium production Life Cycle Assessment ("LCA") which includes a
full carbon footprint assessment.
LITHIUM LIFE CYCLE ASSESSMENT SPECIALIST ENGAGED
In line with the stated ESG adoption, the Project engaged
UK-based and globally recognised sustainability and life cycle
assessment consultancy, Minviro, to provide an updated ISO
compliant life cycle assessment ("LCA") of the Cinovec project.
This updated assessment will cover both battery-grade lithium
carbonate and battery grade lithium hydroxide, and will be
benchmarked against global lithium peers. Minviro is actively
engaged to identify decarbonisation optimisation in the definitive
feasibility study for Cinovec.
CORPORATE
The Company successfully completed a capital raising of
approximately EUR6 million by EBRD as a strategic investment in the
Company and the development of the Cinovec Project (refer to the
Company's ASX release dated 21 July 2023). As part of the due
diligence process, EBRD engaged an independent, international
mining consultancy to undertake a technical review of the Cinovec
Project. EBRD also performed a review of the Cinovec Project in
respect to compliance with EBRD's Environmental and Social Policy.
The Company's relationship with EBRD is expected to be highly
strategic as the European Union charts a path towards greater
lithium supply security and sustainability. Support for the
Company's lithium project aligns with these EU goals.
The EBRD is an international financial institution established
in 1991 to foster the economic transition process and to promote
private and entrepreneurial initiative in its countries of
operation including Central and Eastern Europe, former Soviet Union
and Eastern Mediterranean through provision of loans, equity
investments, conducting policy dialogue and providing technical
cooperation. It has since played a transformative role and gained
unique expertise in fostering change in the region and beyond,
investing EUR170 billion in more than 6,400 projects including
nearly EUR 3bn in some 70 mining projects across 15 countries of
operation.
The Company announced on 10 November 2022, the appointment of Mr
Marc Rowley, a lithium specialist, to lead its Definitive
Feasibility Study team to progress the Cinovec Project in the Czech
Republic.
The Company announced the appointment of Ms Shannon Robinson as
the Company Secretary on 20 April 2023.
RISKS AND UNCERTAINTIES
The Group's activities have inherent risk, and the Board is
unable to provide certainty of the expected results of activities,
or that any or all of the likely activities will be achieved. The
material business risks faced by the Group that could influence the
Group's future prospects, and how the Group manages these risks,
are provided below.
Operational risk
The Company may be affected by various operational factors. In
the event that any of these potential risks eventuate, the
Company's operational and financial performance may be adversely
affected. No assurances can be given that the Company will achieve
commercial viability through successful exploration outcomes on its
tenement holdings. Until the Company is able to realise value from
its projects, it is likely to incur ongoing operating losses.
The operations of the Company may be affected by various
factors, including failure to achieve predicted grades during
mining, operational and technical difficulties encountered during
mining, lack of infrastructure in the Company's areas of operation,
unanticipated metallurgical problems which may affect value of
defined resources, increases in the costs of consumables, spare
parts, plant and equipment.
Mineral Resource estimates are made in accordance with the 2012
edition of the JORC Code. Mineral resources are estimates only. An
estimate is an expression of judgement based on knowledge,
experience and industry practice. Estimates may alter significantly
when new information or techniques become available. Resource
estimates can be imprecise and depend on interpretations, which may
prove to be inaccurate.
The Company's interest in mining tenements are at various stages
of exploration and potential production, and potential investors
should understand that mineral exploration and production is a
speculative and high-risk undertaking that may be impeded by
circumstances and factors beyond the control of the Company. The
Company has interests in mining tenements in the Czech Republic
which operate under different regulatory conditions which may
impact on time taken to evaluate projects and may affect the
viability of resources.
There can no assurance that the tenements, or any other
exploration properties that may be acquired in the future, will
result in the exploitation of an economic mineral resource. Even
though an apparently viable deposit has been identified, there is
no guarantee that it can be economically exploited.
The Company will need to apply for a mining lease to undertake
development and mining on the relevant tenement. There is no
guarantee that the Company will be granted a mining lease and if it
is granted, it will be subject to conditions which may impact on
the financial viability of the project.
Renewals
Mining and exploration tenements are subject to periodic
renewal. The renewal of the term of granted tenements is subject to
compliance with the applicable mining legislation and regulations
and the discretion of the relevant mining authority. Renewal
conditions may include increased expenditure and work commitments
or compulsory relinquishment of areas of the tenements. The
imposition of new conditions or the inability to meet those
conditions may adversely affect the operations, financial position
and/or performance of the company. The company considers the
likelihood of tenure forfeiture to be low given the laws and
regulations governing exploration in the Czech Republic and the
ongoing expenditure budgeted for by the company. However, the
consequence of forfeiture or involuntary surrender of a granted
tenement for reasons beyond the control of the company could be
significant.
Title
Notwithstanding that the exploration licenses the subject of the
Cinovec Project has been granted, if the application for the
licenses did not strictly comply with the application requirements
(such as were required reports were not lodged or were lodged
late), there is a risk that the tenements could be deemed
invalid.
Global conditions
General economic conditions, movements in interest and inflation
rates and currency exchange rates may have an adverse effect on the
Company's potential development activities, as well as on its
ability to fund those activities. General economic conditions, laws
relating to taxation, new legislation, trade barriers, interest and
inflation rates, currency exchange controls, national and
international political circumstances (including outbreaks in
international hostilities, wars, terrorist acts, sabotage,
subversive activities, security operations, labour unrest, civil
disorder, and states of emergency), natural disasters (including
fires, earthquakes and floods), and quarantine restrictions,
epidemics and pandemics, may have an adverse effect on the
Company's operations and financial performance, including the
Company's exploration and development activities, as well as on its
ability to fund those activities.
Regulatory compliance
The company's operating activities are subject to extensive laws
and regulations relating to numerous matters including resource
licence consent, environmental compliance and rehabilitation,
taxation, employee relations, health and worker safety, waste
disposal, protection of the environment, protection of endangered
and protected species and other matters. The company requires
permits from regulatory authorities to authorise the company's
operations. These permits relate to exploration, development,
production and rehabilitation activities. While the company
believes that it will operate in substantial compliance with all
material current laws and regulations, agreements or changes in
their enforcement or regulatory interpretation could result in
changes in legal requirements or in the terms of existing permits
and agreements applicable to the company or its properties, which
could have a material adverse impact on the company's current
operations or planned activities. Obtaining necessary permits can
be a time-consuming process and there is a risk that company will
not obtain these permits on acceptable terms, in a timely manner or
at all. The costs and delays associated with obtaining necessary
permits and complying with these permits and applicable laws and
regulations could materially delay or restrict the company from
proceeding with the development of a project or the operation or
development of a mine. Any failure to comply with applicable laws
and regulations or permits, even if inadvertent, could result in
material fines, penalties or other liabilities. In extreme cases,
failure could result in suspension of the company's activities or
forfeiture of one or more of the tenements, the subject of the
Projects.
Climate
There are a number of climate-related factors that may affect
the operations and proposed activities of the company. The climate
change risks particularly attributable to the company include: (a)
the emergence of new or expanded regulations associated with the
transitioning to a lower-carbon economy and market changes related
to climate change mitigation. The company may be impacted by
changes to local or international compliance regulations related to
climate change mitigation efforts, or by specific taxation or
penalties for carbon emissions or environmental damage. These
examples sit amongst an array of possible restraints on industry
that may further impact the company and its business viability.
While the company will endeavour to manage these risks and limit
any consequential impacts, there can be no guarantee that the
company will not be impacted by these occurrences; and (b) climate
change may cause certain physical and environmental risks that
cannot be predicted by the company, including events such as
increased severity of weather patterns and incidence of extreme
weather events and longer-term physical risks such as shifting
climate patterns. All these risks associated with climate change
may significantly change the industry in which the company
operates.
General risks
Future funding requirements and the ability to access debt and
equity markets. The funds raised by the Company are considered
sufficient to meet the evaluation and development objectives of the
Company. Additional funding may be required in the event
development costs exceed the company's estimates and to effectively
implement its business and operations plans in the future, to take
advantage of opportunities for acquisitions, joint ventures or
other business opportunities, and to meet any unanticipated
liabilities or expenses which the company may incur, additional
financing will be required. In addition, should the company
consider that its development results justify commencement of
production on any of its projects, additional funding will be
required to implement the company's development plans, the quantum
of which, remain unknown at the date of the Annual report. The
company may seek to raise further funds through equity or debt
financing, joint ventures, production sharing arrangements or other
means. Failure to obtain sufficient financing for the company's
activities and future projects may result in delay
and indefinite postponement of development or production on the
company's properties or even loss of a property interest. There can
be no assurance that additional finance will be available when
needed or, if available, the terms of the financing might not be
favourable to the company and might involve substantial dilution to
shareholders.
Reliance on key personnel
The responsibility of overseeing the day-to-day operations and
the strategic management of the company depends substantially on
its senior management and its key personnel. There can be no
assurance given that there will be no detrimental impact on the
company if one or more of these employees cease their employment.
The company may not be able to replace its senior management or key
personnel with persons of equivalent expertise and experience
within a reasonable period of time or at all and the company may
incur additional expenses to recruit, train and retain personnel.
Loss of such personnel may also have an adverse effect on the
performance of the company.
Competition
The industry in which the company will be involved is subject to
domestic and global competition. Although the company will
undertake all reasonable due diligence in its business decisions
and operations, the company will have no influence or control over
the activities or actions of its competitors, which activities or
actions may, positively or negatively, affect the operating and
financial performance of the company's projects and business.
Market conditions
Share market conditions may affect the value of the company's
shares regardless of the company's operating performance. Share
market conditions are affected by many factors such as:
(a) general economic outlook;
(b) introduction of tax reform or other new legislation;
(c) interest rates and inflation rates;
(d) global health epidemics or pandemics;
(e) currency fluctuations;
(f) changes in investor sentiment toward particular market sectors;
(g) the demand for, and supply of, capital; (
(h) political tensions; and
(i) terrorism or other hostilities.
The market price of shares can fall as well as rise and may be
subject to varied and unpredictable influences on the market for
equities in general and resource exploration stocks in particular.
Neither the company nor the Directors warrant the future
performance of the company or any return on an investment in the
company. Potential investors should be aware that there are risks
associated with any securities investment. Securities listed on the
stock market, and in particular securities of exploration companies
experience extreme price and volume fluctuations that have often
been unrelated to the operating performance of such companies.
These factors may materially affect the market price of the shares
regardless of the company's performance. In addition, after the end
of the relevant escrow periods affecting shares in the company, a
significant sale of then tradeable shares (or the market perception
that such a sale might occur) could have an adverse effect on the
company's share price.
Commodity price volatility and exchange rate
If the company achieves success leading to mineral production,
the revenue it will derive through the sale of product exposes the
potential income of the company to commodity price and exchange
rate risks. Commodity prices fluctuate and are affected by many
factors beyond the control of the company. Such factors include
supply and demand fluctuations for precious and base metals,
technological advancements, forward selling activities and other
macro-economic factors. Furthermore, international prices of
various commodities are denominated in United States dollars,
whereas the income and expenditure of the company will be taken
into account in Australian currency, exposing the company to the
fluctuations and volatility of the rate of exchange between the
United States dollar and the Australian dollar as determined in
international markets.
Government policy changes
Adverse changes in government policies or legislation may affect
ownership of mineral interests, taxation, royalties, land access,
labour relations, and mining and exploration activities of the
company. It is possible that the current system of exploration and
mine permitting in the Czech Republic may change, resulting in
impairment of rights and possibly expropriation of the company's
properties without adequate compensation.
Dilution
In the future, the company may elect to issue shares or engage
in capital raisings to fund construction of the Project and growth,
for investments or acquisitions that the company may decide to
undertake, to repay debt or for any other reason the Board may
determine at the relevant time. While the company will be subject
to the constraints of the ASX Listing Rules regarding the
percentage of its capital that it is able to issue within a
12-month period (other than where exceptions apply), shareholder
interests may be diluted as a result of such issues of shares or
other securities.
Taxation
The acquisition and disposal of shares will have tax
consequences, which will differ depending on the individual
financial affairs of each investor. All potential investors in the
company are urged to obtain independent financial advice about the
consequences of acquiring shares from a taxation viewpoint and
generally. To the maximum extent permitted by law, the company, its
officers and each of their respective advisers accept no liability
and responsibility with respect to the taxation consequences of
subscribing for shares under the prospectus.
Litigation
The company is exposed to possible litigation risks including
native title claims, tenure disputes, environmental claims,
occupational health and safety claims and employee claims. Further,
the company may be involved in disputes with other parties in the
future which may result in litigation. Any such claim or dispute if
proven, may impact adversely on the company's operations,
reputation, financial performance and financial position. The
company is not currently engaged in any litigation.
Environmental regulation
The operations and proposed activities of the company are
subject to Czech laws and regulations concerning the environment.
As with most exploration projects and mining operations, the
company ' s activities are expected to have an impact on the
environment, particularly if advanced exploration or mine
development proceeds. It is the company's intention to conduct its
activities to the highest standard of environmental obligation,
including compliance with all environmental laws.
Mining operations have inherent risks and liabilities associated
with safety and damage to the environment and the disposal of waste
products occurring as a result of mineral exploration and
production. The occurrence of any such safety or environmental
incident could delay production or increase production costs.
Events, such as unpredictable rainfall or bushfires may impact on
the company ' s ongoing compliance with environmental legislation,
regulations, and licences. Significant liabilities could be imposed
on the company for damages, clean-up costs or penalties in the
event of certain discharges into the environment, environmental
damage caused by previous operations or non-compliance with
environmental laws or regulations.
The disposal of mining and process waste and mine water
discharge are under constant legislative scrutiny and regulation.
There is a risk that environmental laws and regulations become more
onerous making the company's operations more expensive.
Approvals are required for land clearing and for ground
disturbing activities. Delays in obtaining such approvals can
result in the delay to anticipated exploration programs or mining
activities.
DIRECTORS' REPORT
Your Directors present their report, together with the
consolidated financial statements of the Group, being European
Metals Holdings Limited ("EMH" or the "Company") and its controlled
entities ("Group"), for the year ended 30 June 2023.
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 Keith Coughlan Executive Chairman Appointed 30 June 2020
Previously Managing Appointed 6 September
Director 2013
Mr Richard Pavlik Executive Director Appointed 27 June 2017
Mr Kiran Morzaria Non-Executive Director Appointed 10 December
2015
Ambassador Lincoln Bloomfield Non-Executive Director Appointed 3 January
Jr 2021
Company Secretary
David Koch
Resigned 20 April 2023
Shannon Robinson
Appointed 20 April 2023
Principal Activities
The Group is primarily involved in the development of the
Cinovec lithium project in the Czech Republic.
Review of Operations
The 2023 Financial Year has been one of significant growth and
development for the Group. For further information refer to the
Project Review section of this report.
Results of Operations
The consolidated loss after tax for year ended 30 June 2023 was
$5,928,441 (2022: $6,802,895).
Financial Position
The net assets of the Group have increased by $507,883 to
$36,307,393 at 30 June 2023 (2022: $35,799,510).
Significant Changes in the State of Affairs
There have not been any significant changes in the state of
affairs of the Group during the financial year other than as
disclosed in the Review of Operations section of this report.
Dividends Paid or Recommended
No dividends were declared or paid during the year and the
Directors do not recommend the payment of a dividend for the
period.
Information on
Directors
Keith Coughlan E xecutive Chairman - Appointed 30 June 2020
Previously Managing Director (CEO) - Appointed
6 September 2013 to 30 June 2020
Qualifications BA
Experience Mr Coughlan has had 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/shares Mr Coughlan held, at the end of the financial
and Options year, 850,000 CDIs/shares direct interest and
4,900,000 CDIs/shares indirect interest held
by Inswinger Holdings Pty Ltd, an entity of
which Mr Coughlan is a director and a shareholder.
Performance Rights Mr Coughlan held, at the end of the financial
year, 2,400,000 Performance Rights indirect
interest held by KADAJE INVESTMENTS PTY LTD
<KADAJE A/C>, an entity of which Mr Coughlan
is a director and a shareholder.
Special Responsibilities Member of Nomination Committee
Member of Environment, Social and Governance
Committee
Directorships held Non-Executive Chairman of Doriemus plc
in other listed Mr Coughlan was previously a Non-Executive
entities Director of Calidus Resources Limited
Richard Pavlik Executive Director - Appointed 27 June 2017
Qualifications Masters Degree in Mining Engineer
Experience Mr Pavlik is the Chief Advisor to the CEO of
Geomet s.r.o. and is a highly experienced Czech
mining executive. Mr Pavlik holds a Masters
Degree in Mining Engineer from the Technical
University of Ostrava in the 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/shares Mr Pavlik held, at the end of the financial
and Options year, 300,000 CDIs/shares direct interest
Performance Rights Mr Pavlik held, at the end of the financial
year, 1,200,000 Performance Rights direct interest
Special Responsibilities Member of Environment, Social and Governance
Committee
Member of Nomination Committee
Directorships held Nil
in other listed
entities
Information on Directors (continued)
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/shares Mr Morzaria held, at the end of the financial
and Options year, 200,000 CDIs/shares direct interest.
Mr Morzaria is a director and chief executive
of Cadence Minerals Plc which owns 11,968,504
CDIs/shares. Mr Morzaria has no control on
the acquisition or sale of the shares held
by Cadence Minerals plc.
Special Responsibilities Chair of Remuneration Committee
Chair of Nomination Committee
Member of Audit and Risk Committee
Member of Environment, Social and Governance
Committee
Directorships held Chief Executive Officer and Director of Cadence
in other listed Minerals plc and Director of UK Oil & Gas
entities plc. Mr Morzaria was previously a Director
of Bacanora Minerals plc.
Lincoln Bloomfield Non-Executive Director - Appointed 3 January
Jr. 2021
Qualifications Harvard College (cum laude, Government, 1974),
Fletcher School of Law and Diplomacy (M.A.L.D.,
1980)
Experience Ambassador Bloomfield is based in Washington,
DC, and brings governance and regulatory experience,
years of international diplomacy and security
expertise to the EMH Board, along with a North
American presence, while his private sector
experience is centred on sustainability, resilience
and renewable energy.
Interest in CDIs/shares Ambassador Bloomfield held, at the end of
and Options the financial year, 250,500 direct interest
in CDIs/shares.
Special Responsibilities Chair of Environment, Social and Governance
Committee
Chair of Audit and Risk Committee
Member of Remuneration Committee
Member of Nomination Committee
Directorships held Nil
in other listed
entities
Company Secretary
Ms Shannon Robinson (appointed 20 April 2023)
Ms Robinson is a chartered secretary and corporate advisor with
20 years' experience in providing strategic advice on mergers and
acquisitions, capital raisings, and listings of companies on stock
exchanges such as the ASX and AIM, due diligence, compliance, and
managing legal issues associated with clients' activities. Shannon
is a former corporate lawyer, a graduate member of the Australian
Institute of Company Directors (AICD) and a fellow of the
Governance Institute of Australia (GIA). Shannon is currently
company secretary of Doriemus plc (ASX:DOR), and joint company
secretary of Echo IQ Limited (ASX:EIQ) and Viridis Mining and
Minerals Limited (ASX:VMM).
Mr David Koch (resigned 20 April 2023).
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 Audit and Risk
Committee
Name Number attended Number eligible Number eligible
to attend to and attended
Keith Coughlan 6 6 -
Richard Pavlik 6 6 -
Kiran Morzaria 6 6 2
Lincoln Bloomfield,
Jr 6 6 2
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 of $71,000 (2022: $93,090) 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 or insurance of auditors has been paid.
CDIs/shares under option/warrant
During the year, no unquoted options and warrants were issued to
consultants.
Unissued CDIs/shares 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/warrants
-------------------- ---------------- -----------------------------
23 October 2023 42 cents 2,024,000
23 October 2023 45 cents 200,000
31 December 2025 80 cents 2,000,000
CDIs/shares under option/warrant (continued)
The following ordinary shares of European Metals Holdings
Limited were issued during the year ended 30 June 2023 and up to
the date of this report on the exercise of options granted:
T ype D ate E xpiry Number C ancelled/expired Number exercised Exercise
options Date under option Price
granted
------------ ---------- ------------- -------------- ------------------- ----------------- ---------
30 April 31 December
Consultant 2020 2022 10,000,000 (3,656,993) 6,343,007 $0
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.
Performance Rights
Performance rights on issue at the date of this report is as
follows:
Issued to Grant date/Issue date Expiry date Number on
issue
---------------- ------------------------------ -------------- ----------
24 November 2021/30 November 30 November
Consultant 2021 2024 100,000
17 December 2020/2 March
Keith Coughlan 2022 2 March 2025 2,400,000
17 December 2020/2 March
Richard Pavlik 2022 2 March 2025 1,200,000
Employee in 27 February 2022 /2 March
terms of ESIP 2022 2 March 2025 1,200,000
12 December 2022/20 December
2022 2 March 2025 450,000
13 December 2022/20 December
2022 2 March 2025 300,000
14 December 2022/20 December
2022 2 March 2025 170,000
22 February 2022/ 2 March
Consultant 2022 2 March 2025 900,000
29 August 2022/ 1 September
2022 2 March 2025 750,000
Environmental, Social and Governance
The Company has adopted a set of Environmental, Social and
Governance ("ESG") metrics and disclosures following the
recommendations released by the World Economic Forum ("WEF") in
Geneva, Switzerland which are acknowledged as the gold standard for
ESG reporting.
The establishment of an ESG Committee at Board level is chaired
by Ambassador Lincoln Bloomfield who has considerable private
sector experience centred on sustainability, resilience and
renewable energy. Ambassador Bloomfield has stated, "European
Metals is making every effort to ensure that any finished product
containing our lithium will satisfy the public's need for assurance
that high ESG standards have been upheld at every stage of our
production process. We are committed to the well-being of our
workforce, minimizing environmental impact throughout our process,
and engaging with the local community".
The Company engaged Socialsuite ESG technology platform - a
global leader in ESG impact management systems and sustainability
reporting.
The Company has utilised Socialsuite's ESG technology platform
to establish its initial ESG baseline dashboard. The Company will
focus on delivering and reporting on its ESG metrics and
indicators. Socialsuite's ESG reporting technology provides an easy
way for investors and other stakeholders to assess the progress of
the Company on its journey.
The Company's ESG transparency commitment is a precursor to an
independent lithium production Life Cycle Assessment2 ("LCA") which
includes a full Carbon Footprint assessment.
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 has not provided any non-audit services during the
year.
Significant events after the reporting date
Subsequent to 30 June 2023, the following significant events
were undertaken by the Group:
- On 18 July 2023 a mortgage in favour of the joint venture
partners (Severoceske Doly and the Company) was granted over the
Deskform Property in the Czech Republic. Additional information is
disclosed in the Operations Report (refer to "Land Secured for
Cinovec Lithium Plant" section) and ASX Announcement dated 9 June
2023.
- As announced on 21 July 2023, the EBRD has invested
EUR6,000,000 to support the Group's development of the Cinovec
Project in the Czech Republic. The investment was implemented by
way of a private placement of 12,315,213 shares of the Group to
EBRD at a price of $0.803 per share.
- On 7 September 2023, 400,000 shares were issued on the
exercise of unlisted options which were granted on 23 October 2020
for an exercise price of $0.45.
Auditor's Independence Declaration
The auditor's independence declaration for the year ended 30
June 2023 has been received and can be found on page 24 of the
financial report.
Corporate Governance Statement
The Company's 2023 Corporate Governance Statement has been
released as a separate document and is located on the Company's
website at https://www.europeanmet.com/corporate-governance/.
REMUNERATION REPORT (AUDITED)
This report details the nature and amount of remuneration for
each Director of the Company, and key management personnel ("KMP").
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/shares 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 /shares , 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 2023 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.
2023
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- Long Rights/
fees share annuation Service Options
and and Leave (iii)
leave bonuses
Directors $ $ $ $ $ $ $ $ %
Keith
Coughlan(i) 425,901 48,922 - - 27,500 32,762 201,359 736,444 27
Kiran
Morzaria 57,048 - - - - - - 57,048 0
Richard
Pavlik
(ii) 141,295 33,647 - - - - 100,681 275,623 37
Lincoln
Bloomfield
Jr 70,852 - - - - - - 70,852 0
695,096 82,569 - - 27,500 32,762 302,040 1,139,967 26
-------- ------- ------------ ----- ---------- --------- -------------- --------- ------------
Notes:
(i) During the financial year, a total of $137,280 of Mr
Coughlan's remuneration was reimbursed by Geomet s.r.o.
(ii) In the current financial period, Mr Pavlik was reimbursed
for a salary that should have been paid to him by European Metals
Holdings Limited in 2021, in addition to the salary paid by Geomet.
The total salary for the period January 2021 to July 2022 was
$54,883 and a bonus of $33,647.
(iii) As noted in section F "Performance Rights granted for the
year ended 30 June 2023" of the Remuneration Report, performance
rights were granted to Keith Coughlan and Richard Pavlik on 17
December 2020. The Group's estimate of when
these performance rights will vest has been extended for
previous years, as disclosed in section F. As a result, no
additional share-based expense is recognised for the year ended 30
June 2023.
2022
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- Long Rights/
fees share annuation Service Options
and and Leave
leave bonuses
Directors $ $ $ $ $ $ $ $
Keith
Coughlan(i) 318,000 51,226 - 27,160 31,800 6,263 1,264,087 1,698,536 74
Kiran
Morzaria 43,570 - - - - - - 43,570 -
Richard
Pavlik 79,351 35,431 - - - - 632,043 746,825 85
Lincoln
Bloomfield
Jr (ii) 50,741 - - - - - - 50,741 -
491,662 86,657 - 27,160 31,800 6,263 1,896,130 2,539,672 75
------- ------- ------------ ------ ---------- --------- -------------- --------- ------------
Notes:
(i) During the financial year, a total of $137,280 of Mr
Coughlan's remuneration was reimbursed by Geomet s.r.o.
(ii) Includes $3,507 accrual of June 2022 fee.
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, Executive Chairman, received a salary of
$474,823 plus statutory superannuation contribution from 1 July
2022 to 30 June 2023.
D. Share-based compensation
During the financial year, nil CDIs /shares were issued to KMP
under the Employee Securities Incentive Plan (ESIP) (2022:
nil).
Loan CDIs /shares on issue to KMP under the ESIP are as
follows:
30 June Loan CDIs/shares Grant Balance at
2023 Details Exercised Lapsed/Cancelled End of Year
Grant Date No. Value No. Value No. Value No. Value
$ $ $ Vested $
Group KMP
Keith Coughlan 30 Nov 2017 850,000 592,245 - - - - 850,000 592,245
Richard Pavlik 30 Nov 2017 300,000 209,028 - - - - 300,000 209,028
Kiran Morzaria 30 Nov 2017 200,000 139,352 - - - - 200,000 139,352
1,350,000 940,625 - - - - 1,350,000 940,625
--------- ------- ---- ----- ------- ----------- --------- -------
30 June Loan CDIs/shares Grant Balance at
2022 Details Exercised Lapsed/Cancelled End of Year
Grant Date No. Value No. Value No. Value No. Value
$ $ $ Vested $
Group KMP
Keith Coughlan 30 Nov 2017 850,000 592,245 - - - - 850,000 592,245
Richard
Pavlik 30 Nov 2017 300,000 209,028 - - - - 300,000 209,028
Kiran Morzaria 30 Nov 2017 200,000 139,352 - - - - 200,000 139,352
1,350,000 940,625 - - - - 1,350,000 940,625
--------- ------- ---- ----- ------- ----------- --------- -------
The terms of the loan CDIs /shares are disclosed in Note
17(d).
E. Options issued for the year ended 30 June 2023
No options were issued as part of the remuneration for the year
ended 30 June 2023 (2022: nil).
F. Performance Rights granted for the year ended 30 June
2023
No performance rights were granted as part of the remuneration
for the year ended 30 June 2023 (2022: nil).
Granted
in prior Performance Rights Balance at Vested Unvested
year Details Exercised Lapsed End of Year
Grant
Date No. Value(1) No. Value No. Value No. Value(1) No. No.
$ $ $ $
Group KMP
17 Dec
Keith Coughlan 2020 2,400,000 2,088,000 - - - - 2,400,000 2,088,000 - 2,400,000
Richard 17 Dec
Pavlik 2020 1,200,000 1,044,000 - - - - 1,200,000 1,044,000 - 1,200,000
-------- ----------
3,600,000 3,132,000 - - - - 3,600,000 3,132,000 - 3,600,000
--------- --------- ---- ----- --- ----- --------- --------- -------- ----------
Notes:
1. The value of performance rights granted to key management
personnel is calculated as at the grant date based on the share
price at grant date. As at 30 June 2023, management's assessment is
that the performance rights will vest as follows:
- 1,200,000 Class A performance rights on 31 December 2023
- 1,200,000 Class B performance rights on 30 September 2024
- 1,200,000 Class A performance rights on 1 March 2025
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
There were no loans issued to Key Management Personnel during
the financial year.
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
Balance Granted Issued Other Balance
at Start as remuneration on exercise Changes at end
2023 of year during the of options during of year
Name year the year
Keith Coughlan 850,000 - - - 850,000
Indirect(1) 8,500,000 - - (3,600,000) 4,900,000
Richard Pavlik 300,000 - - - 300,000
Kiran Morzaria 200,000 - - - 200,000
Indirect(2) 17,663,864 - - (5,695,360) 11,968,504
Lincoln Bloomfield,
Jr 182,500 - - 68,000 250,500
Total 27,696,364 - - (9,227,360) 18,469,004
=========== ================= ============= ============ ===========
1. Mr Coughlan held, at the end of the financial year, 850,000
CDIs /shares direct interest and 8,500,000 CDIs /shares indirect
interest held by Inswinger Holdings Pty Ltd, an entity of which Mr
Coughlan is a director and a shareholder.
2. Mr Morzaria is a director and chief executive of Cadence
Minerals plc, an entity which owns 11,968,504 CDIs /shares in
European Metals Holdings Limited. Mr Morzaria does not have direct
control over the disposal of the shares either by means of his
directorship of Cadence Minerals plc or his shareholding in Cadence
Minerals plc.
K. Other transactions with Key Management Personnel
Purchases from related parties are made on terms equivalent to
those that prevail in arm's length transactions.
From July 2022, the Company received accounting and bookkeeping
services of $28,655 plus GST from Everest Corporate, a company
controlled by the spouse of Executive Chairman, Keith Coughlan.
Amount payable to Everest Corporate as at 30 June 2023 was $nil
(2022: $8,012).
From October 2022, the Company received company secretarial,
accounting and bookkeeping services of $89,105 plus GST from Nexia,
a company at which the spouse of Executive Chairman, Keith
Coughlan, acts as key management personnel. Amount payable to Nexia
as at 30 June 2023 was $17,028 (2022: $nil).
The Company received rental income of $13,349 plus GST from
Everest Corporate for subletting the office in West Perth, until
October 2022.
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
EXECUTIVE CHAIRMAN
Dated at 29 September 2023
AUDITOR'S INDEPENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 30 JUNE 2023
Note 30 June 30 June
2023 2022
$ $
Other income 6 1,116,293 1,155,359
Research and Development rebate - 56,187
Finance Income 479,783 44,783
Share based payments 17,18 (1,933,518) (2,884,447)
Equity accounting on investment in Geomet
s.r.o. 13 (1,845,158) (1,367,744)
Professional fees (1,544,741) (1,278,103)
Employees' benefits (719,705) (822,968)
Advertising and promotion (576,744) (475,966)
Travel and accommodation (175,848) (84,475)
Directors' fees (219,984) (173,662)
Share registry and listing expense (152,501) (244,206)
Insurance expense (76,357) (88,699)
Audit fees 7 (63,443) (50,575)
Depreciation and amortisation expense (48,873) (40,412)
Facility, advance fee and finance costs (3,092) (4,031)
Foreign exchange gain/(loss) 145,858 (16,544)
Other expenses (310,411) (544,101)
Derecognition of foreign currency reserve - 16,709
Loss before income tax (5,928,441) (6,802,895)
Income tax expense 3 - -
-------------- --------------
Loss from operations (5,928,441) (6,802,895)
(Loss) for the year attributable to the members
of the Company (5,928,441) (6,802,895)
-------------- --------------
Other comprehensive income/(loss)
Items that will not be reclassified to profit
or loss - -
Items that may be reclassified subsequently
to profit or loss
- Exchange differences on translating foreign
operations (25,452) (5,598)
* Equity accounting on investment in Geomet s.r.o. 4,528,258 853,136
Other comprehensive (loss)/income for the
year, net of tax 4,502,806 847,538
Total comprehensive (loss) for the year attributable
to members of the Company (1,425,635) (5,955,357)
============== ==============
Loss per share for loss from continuing operations
Basic and diluted loss per CDI/share (cents) 8 (3.14) (3.78)
The above statement should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE
2023
2023 2022
Note $ $
CURRENT ASSETS
Cash and cash equivalents 9 8,892,951 19,055,509
Trade and other receivables 10 8,619,578 782,518
Other assets 11 34,697 53,094
TOTAL CURRENT ASSETS 17,547,226 19,891,121
------------ ------------
NON-CURRENT ASSETS
Other assets 11 48,154 47,392
Right-of-use asset 12 39,968 87,930
Investments accounted for using equity
method 13 19,629,519 16,946,419
Property, plant and equipment 2,899 -
TOTAL NON-CURRENT ASSETS 19,720,540 17,081,741
------------ ------------
TOTAL ASSETS 37,267,766 36,972,862
------------ ------------
CURRENT LIABILITIES
Trade and other payables 14 818,977 939,822
Provisions - employee entitlements 15 16,570 147,048
Lease liability 12 40,775 45,707
------------ ------------
TOTAL CURRENT LIABILITIES 876,322 1,132,577
------------ ------------
NON-CURRENT LIABILITIES
Provisions - employee entitlements 15 84,051 -
Lease liability 12 - 40,775
TOTAL NON-CURRENT LIABILITIES 84,051 40,775
------------ ------------
TOTAL LIABILITIES 960,373 1,173,352
------------ ------------
NET ASSETS 36,307,393 35,799,510
============ ============
EQUITY
Issued capital 16 47,881,352 47,881,352
Reserves 17 18,720,115 12,283,791
Accumulated losses (30,294,074) (24,365,633)
------------ ------------
TOTAL EQUITY 36,307,393 35,799,510
============ ============
The above statement should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30
JUNE 2023
Issued Capital Share Based Foreign Currency Accumulated
Payment Reserve Translation Losses Total
Reserve
$ $ $ $ $
Balance at 1 July 2021 34,087,930 9,220,602 (467,879) (17,562,738) 25,277,915
Loss attributable to
members of the Company - - - (6,802,895) (6,802,895)
Transfer on derecognition
of subsidiaries (16,709) - (16,709)
Other comprehensive income/(loss) - - 864,247 - 864,247
---------- ---------- --------- ------------ -----------
Total comprehensive income/loss
for the year - - 847,538 (6,802,895) (5,955,357)
---------- ---------- --------- ------------ -----------
Transactions with owners,
recognized directly in
equity
CDIs/shares issued during
the year 14,399,000 - - - 14,399,000
Capital raising costs (885,538) - - - (885,538)
Exercise of options and
warrants 279,960 - - - 279,960
Share based payments - 2,683,530 - - 2,683,530
---------- ---------- --------- ------------ -----------
Balance at 30 June 2022 47,881,352 11,904,132 379,659 (24,365,633) 35,799, 510
========== ========== ========= ============ ===========
Balance at 1 July 2022 47,881,352 11,904,132 379,659 (24,365,633) 35,799, 510
Loss attributable to
members of the Company - - - (5, 928,441) (5,928,441)
Other comprehensive (loss) - - 4,502,806 - 4,502,806
Total comprehensive (loss)
for the year - - 4,502,806 (5, 928,441) (1,425,635)
---------- ---------- --------- ------------ -----------
Transactions with owners,
recognised directly in
equity
Share based payments - 1,933,518 - - 1,933,518
Balance at 30 June 2023 47,881,352 13,837,650 4,882,465 (30,294,074) 36,307,393
========== ========== ========= ============ ===========
The above statement should be read in conjunction with the
accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARED 30 JUNE
2023
30 June 30 June 2022
2023
Note $ $
CASH FLOWS FROM OPERATING ACTIVITIES
Other income 1,716,398 827,208
Payments to suppliers and employees (3,596,566) (2,602,747)
Research and Development Rebate - 56,187
Interest received 438,823 29,466
Payments for Cinovec associated costs (398,354) (887,098)
Net cash (used in) operating activities 19 (1,839,699) (2,576,984)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment (4,191) -
Payments to associate (8,420,065) -
------------ -------------
Net cash (used in) investing activities (8,424,256) -
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of CDIs /shares - 14,399,000
Capital raising costs paid - (885,538)
Proceeds from exercise of options and
warrants - 279,960
Payment for lease liability (48,799) (36,577)
------------ -------------
Net cash (used in)/provided by financing
activities (48,799) 13,756,845
------------ -------------
Net (decrease)/increase in cash and
cash equivalents (10,312,754) 11,179,861
Cash and cash equivalents at the beginning
of the financial year 19,055,509 7,880,673
Exchange differences in foreign currency
held 150,196 (5,025)
------------ -------------
Cash and cash equivalents at the end
of financial year 9 8,892,951 19,055,509
============ =============
The above statement should be read in conjunction with the
accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARED 30
JUNE 2023
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
These consolidated financial statements and notes represent those
of European Metals Holdings Limited ("EMHL" or "the Company")
and its Controlled Entities (the "Consolidated Group" or "Group").
The consolidated 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 consolidated 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 Company is a listed public company, incorporated in the British
Virgin Islands and registered in Australia.
(i) Accounting policies
The Group has considered the implications of new and amended
Accounting Standards which have become applicable for the current
financial reporting year.
New and Revised Accounting Standards Adopted by the Group
The Group has adopted all the new or amended Accounting
Standards and Interpretations issued by the Australian Accounting
Standards Board ("AASB") that are mandatory for the current
reporting period.
Any new or amended Accounting Standards or Interpretations that
are not yet mandatory have not been early adopted.
New and revised Accounting Standards for Application in Future
Periods
Any new, revised or amending Accounting Standards or Interpretations
that are not yet mandatory have not been early adopted. The adoption
of these Accounting Standards and Interpretations did not have
any significant impact on the financial performance or position
of the Group.
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 period and on foreseeable future
transactions.
(ii) Statement of Compliance
The financial report was authorised for issue on 29 September
2023.
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) Financial Position
The Directors have prepared the consolidated 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 2023, the Group comprising the Company and its subsidiaries
has incurred a loss for the year amounting to $5,928,441 (2022:
loss of $6,802,895). The Group has a net working capital surplus
of $16,670,909 (2022: surplus of $18,758,544) and cash and cash
equivalents of $8,892,951 (2022: $19,055,509).
The Directors have prepared a cash flow forecast, which indicates
that the Company will have sufficient cash flows to meet all
commitments and working capital requirements for the 12-month
period from the date of signing this financial report.
Based on the cash flow forecasts, the Directors are satisfied
that 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 and consultants 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.
Judgement has been exercised on the probability and timing of
achieving milestones related to performance rights granted to
Directors.
Estimation of the Group's borrowing rate
The lease payments used to determine the lease liability and
right-of-use of asset at 1 July 2020 under AASB 16 Leases are
discounted using the Group's incremental borrowing rate of 5%.
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.
Investment in associate
Control exists where the parent entity is exposed or has the
rights to variable returns from its involvement with the investee
and has the ability to affect those returns through its power
over the investee. Power over the investee exists when it has
existing rights to direct the relevant activities of the investee
which are those which significantly affect the investee's returns.
Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties
sharing control. Significant influence exists if the Group holds
20% or more of the voting power of an investee, and has the power
to participate in the financial and operating policy decisions
of the entity.
Estimates and judgements are required by the Group to consider
the existence of control, joint control or significant influence
over an investee. The Group has considered its investment in
Geomet concluding the Group has significant influence but not
control or joint control.
(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 consolidated
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 include 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 income is recognised using the effective interest
method.
Services Revenue
Revenue is recognised at an amount that reflects the
consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each
contract with a customer, the Group: identifies the contract with a
customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates
the transaction price to the separate performance obligations on
the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner
that depicts the transfer to the customer of the goods or services
promised.
(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.
(h) 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 consolidated statement of profit
or loss when received or when the amount to be received can be reliably estimated.
(i) 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.
(j) Exploration and Evaluation Assets
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:
-- The expenditures are expected to be recouped through successful development and exploitation
of the area of interest; or
-- 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:
-- Sufficient data exists to determine technical feasibility and commercial viability; and
-- 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.
(k) 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 significant financing component in accordance with AASB 15 Revenue from Contracts
with Customers.
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 Revenue from Contracts with
Customers , 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.
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.
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.
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.
(l) 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.
(m) Earnings Per CDI/share
Basic earnings per CDI/share is determined by dividing the profit or loss attributable to
ordinary shareholders of the Company, by the weighted average number of CDIs/shares outstanding
during the period, adjusted for bonus elements in CDIs/shares issued during the period.
Diluted earnings per CDI/share
Diluted earnings per CDI/share adjusts the figure used in the determination of basic earnings
per CDI/share to take into account the after income tax effect of interest and other financial
costs associated with dilutive potential CDIs/shares and the weighted average number of CDIs/shares
assumed to have been issued for no consideration in relation to dilutive potential CDIs/shares,
which comprise convertible notes and CDI/share options granted.
(n) 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 as expenses in the period in which they are incurred.
(o) 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.
(p) 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 Executive Chairman to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete financial information is
available.
(q) 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 22.
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.
(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/shares 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/shares 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/shares are classified as equity. Incremental costs directly
attributable to the issue of new CDIs/shares 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/shares or
options for the acquisition of a new business are not included
in the cost of acquisition as part of the purchase consideration.
(u) Investments in associates
Associates are entities over which the consolidated entity has
significant influence but not control or joint control. Investments
in associates are accounted for using the equity method. Under
the equity method, the share of the profits or losses of the
associate is recognised in profit or loss and the share of the
movements in equity is recognised in other comprehensive income.
Investments in associates are carried in the statement of financial
position at cost plus post-acquisition changes in the consolidated
entity's share of net assets of the associate. Goodwill relating
to the associate is included in the carrying amount of the investment
and is neither amortised nor individually tested for impairment.
Dividends received or receivable from associates reduce the carrying
amount of the investment.
When the consolidated entity's share of losses in an associate
equal or exceeds its interest in the associate, including any
unsecured long-term receivables, the consolidated entity does
not recognise further losses, unless it has incurred obligations
or made payments on behalf of the associate.
The consolidated entity discontinues the use of the equity method
upon the loss of significant influence over the associate and
recognises any retained investment at its fair value. Any difference
between the associate's carrying amount, fair value of the retained
investment and proceeds from disposal is recognised in profit
or loss.
(v) Leases
At inception of a contract, the Group assesses if the contract
contains a lease or is a lease. If there is a lease present , a
right-of-use asset and a corresponding lease liability are
recognised by the Group where the Group is a lessee. However, all
contracts that are classified as short-term leases (i.e. a lease
with a remaining lease term of 12 months or less) and leases of
low-value assets are recognised as an operating expense on a
straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value
of the lease payments still to be paid at the commencement date.
The lease payments are discounted at the interest rate implicit in
the lease. If this rate cannot be readily determined, the Group
uses the incremental borrowing rate.
Lease payments included in the measurement of the lease
liability are as follows:
-- fixed lease payments less any lease incentives;
-- variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date;
-- the amount expected to be payable by the lessee under residual value guarantees;
-- the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options;
-- lease payments under extension options, if the lessee is
reasonably certain to exercise the options; and
-- payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, any lease payments made at or before
the commencement date and any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or
useful life of the underlying asset, whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the
cost of the right-of-use asset reflects that the Group anticipates
to exercise a purchase option, the specific asset is depreciated
over the useful life of the underlying asset.
(w) Fair value measurement hierarchy
The Group is required to classify all assets and liabilities,
measured at fair value, using a three level hierarchy, based on the
lowest level of input that is significant to the entire fair value
measurement, being: Level 1: Quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at
the measurement date; Level 2: Inputs other than quoted prices
included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and Level 3: Unobservable
inputs for the asset or liability. Considerable judgement is
required to determine what is significant to fair value and
therefore which category the asset or liability is placed in can be
subjective.
The fair value of assets and liabilities classified as level 3
is determined by the use of valuation models. These include
discounted cash flow analysis or the use of observable inputs that
require significant adjustments based on unobservable inputs.
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.
When an asset or liability, financial or non-financial, is
measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes
that the transaction will take place either: in the principal
market; or in the absence of a principal market, in the most
advantageous market.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For
non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, are used, maximising the use of relevant
observable inputs and minimising the use of unobservable
inputs.
Assets and liabilities measured at fair value are classified into
three levels, using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. Classifications are
reviewed at each reporting date and transfers between levels are determined
based on a reassessment of the lowest level of input that is significant
to the fair value measurement.
For recurring and non-recurring fair value measurements, external
valuers may be used when internal expertise is either not available
or when the valuation is deemed to be significant. External valuers
are selected based on market knowledge and reputation. Where there
is a significant change in fair value of an asset or liability from
one period to another, an analysis is undertaken, which includes a
verification of the major inputs applied in the latest valuation and
a comparison, where applicable, with external sources of data.
CDI-based payment transactions
The fair value of the employee CDI options 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 the fair
value.
The fair value of consultant CDI options and warrants is
measured at the fee of the services received, except for when the
fair value of the services cannot be estimated reliably, the fair
value is measured using the Black-Scholes formula.
The fair value of performance rights granted to Directors is
measured using the share price at grant date. Service and
non-market performance conditions attached to the transactions are
not taken into account in determining the fair value.
Note 3: INCOME TAX 30 June 2023 30 June 2022
(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* - -
------------- -------------
- -
============= =============
* Any capital gain on disposal of shares in Geomet held by EMH UK
is tax-exempt under the current UK legislation (Schedule 7AC of the
Taxation of Chargeable Gains Act 1992). For this reason, no deferred
tax liability has been recognised as at 30 June 2023.
(b) Reconciliation of income tax expense to prima facie tax payable
Net (loss) before tax (5,928,441) (6,802,895)
Prima facie tax on operating loss at 25% (2022: 25%) (1,482,110) (1,700,724)
Add / (Less): Non-deductible items
Non-deductible expenses 1,333, 306 1,322,354
Adjustments recognised in the current year in relation to the current tax of 1,236 -
previous years
Current year tax loss not recognised 188,998 378,370
Temporary differences not recognised (41,430) -
------------- -------------
Income tax attributable to operating profit/loss - -
------------- -------------
The applicable weighted average effective tax rates are as follows: Nil% Nil%
Balance of franking account at year end Nil Nil
Deferred tax assets/(liabilities)
Tax losses 1,499,005 1,311,243
Other receivables and other assets (27,670) (19,976)
Unrealised foreign exchange gain - 1,177
Trade and other payables and Accruals 8,750 31,343
Business related costs - 47
Right-of-use assets (9,992) (21,982)
Lease liabilities 10,194 21,621
Provisions 27,517 36,762
------------- -------------
Unrecognised deferred tax asset 1,507,804 1,360,235
Set-off deferred tax liabilities (37,663) -
Net deferred tax assets 1,470,141 1,360,235
------------- -------------
Tax losses
Unused tax losses for which no deferred tax asset has been recognised 6,000,962 5,244,970
------------- -------------
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 UK taxation regulations in respect of European Metals
(UK) Limited.
NOTE 4: RELATED PARTY TRANSACTIONS
Transactions between related parties are at arms' length and on
normal commercial terms and conditions no more favourable than
those available to other parties unless otherwise stated.
During the year, the Company received $1,102,944 (2022:
$1,102,944) from its associate, Geomet s.r.o. for providing
services of managing the Cinovec project development. The Company's
Directors also received remuneration from Geomet s.r.o in arm's
length transaction during the financial year.
From July 2022, the Company received accounting and bookkeeping
services of $28,655 plus GST from Everest Corporate, a company
controlled by the spouse of Executive Chairman, Keith Coughlan.
Amount payable to Everest Corporate as at 30 June 2023 was $nil
(2022: $8,012).
From October 2022, the Company received company secretarial,
accounting and bookkeeping services of $89,105 plus GST from Nexia,
a company at which the spouse of Executive Chairman, Keith
Coughlan, acts as key management personnel. Amount payable to Nexia
as at 30 June 2023 was $17,028 (2022: $nil).
The Company received rental income of $13,349 plus GST from
Everest Corporate for subletting the office in West Perth, until
October 2022.
There were no other transactions with related parties during the
financial 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 2023 and 30 June 2022.
The totals of remuneration paid to KMP during the year are as
follows:
2023 2022
$ $
Short-term benefits 777,665 605,479
Post-employment benefits 27,500 31,800
Long service leave 32,762 6,263
Equity settled 302,040 1,896,130
1,139,967 2,539,672
========== ==========
Loans to Key Management Personnel
There were no loans to Key Management Personnel during the
financial year (2022: nil). The total value of loan CDIs/shares at
30 June 2023 amounted to $1,442,666 (30 June 2022: $1,442,666). The
fair value of the remaining 1,350,000 loan CDIs/shares is
$1,442,666 at 30 June 2023.
NOTE 6: Other Income 2023 2022
$ $
Service revenue - Cinovec project development 1,102,944 1,102,944
Other Income 13,349 52,415
----------- ---------
1,116,293 1,155,359
=========== =========
NOTE 7: AUDITOR'S REMUNERATION 2023 2022
$ $
Auditor's services
Audit and review of financial report 63,443 48,665
- Under provision in prior year - 1,910
----------- ---------
63,443 50,575
=========== =========
NOTE 8: BASIC AND DILUTED LOSS PER CDI/share
2023 2022
$ $
Loss attributable to members of European Metals
Holdings Limited ($) (5,928,441) (6,802,895)
Weighted average number of CDIs/shares outstanding 188,790,669 179,817,540
----------- -------------
Basic and diluted loss per CDI/share (cents) (3.14) (3.78)
=========== =============
NOTE 9: CASH AND CASH EQUIVALENTS 2023 2022
$ $
Cash at bank 6,758,425 14,035,258
Term deposit 2,134,526 5,020,251
--------- ----------
Total cash and cash equivalents in the consolidated
Statement of Cash Flows 8,892,951 19,055,509
========= ==========
NOTE 10: TRADE AND OTHER RECEIVABLES 2023 2022
$ $
Trade and other receivable 94,802 694,907
Advances to associate 8,418,872 -
GST and VAT receivable 38,903 60,808
Interest receivable 67,001 26,803
--------- ----------
8,619,578 782,518
========= ==========
The Group notes that no debtors are past due as at 30 June 2023
(2022: nil).
NOTE 11: OTHER ASSETS 2023 2022
$ $
Current
Prepayments - 53,094
Other receivables 34,697 -
-------- --------
34,697 53,094
-------- --------
NOTE 11: OTHER ASSETS (continued)
2023 2022
$ $
Non-Current
Bank guarantee on office lease 48,154 47,392
48,154 47,392
======== ========
NOTE 12: OFFICE LEASE 2023 2022
$ $
(a) Right-of-use asset
Right-of-use asset at cost 136,122 136,122
Less accumulated depreciation (96,154) (48,192)
39,968 87,930
======== ========
Reconciliation of Right-of-use asset:
2023 2022
$ $
Opening balance 87,930 136,122
Additions/lease modification - (8,007)
Depreciation (47,962) (40,185)
-------- --------
Closing balance 39,968 87,930
======== ========
(b) Lease liability
Opening balance 86,482 97,893
Additions/lease modification - 20,025
Interest expense 3,092 5,141
Payments (48,799) (36,577)
-------- --------
Closing balance 40,775 86,482
======== ========
2023 2022
(b) Lease liability $ $
Current 40,775 45,707
Non-current - 40,775
------ ------
Closing balance 40,775 86,482
====== ======
The Group's West Perth office is leased under a lease agreement
assigned to the Group commencing on 1 May 2021 for a period of
three years with a three-year renewal option and rental of $50,000
plus GST per year payable plus outgoings. The lease liability is
measured at the present value of the remaining lease payments,
discounted using the Group's incremental borrowing rate as at 1 May
2021. The Group's incremental borrowing rate is the rate at which a
similar borrowing could be obtained from an independent creditor
under comparable terms and conditions. The weighted-average rate
applied was 5%.
NOTE 13: INVESTMENT IN ASSOCIATE 2023 2022
$ $
Opening balance 16,946,419 17,461,027
Share of loss - associate (1,845,158) (1,367,744)
Share of other comprehensive income/(loss)
- associates 4,528,258 853,136
----------- -----------
19,629,519 16,946,419
=========== ===========
Effective 28 April 2020, Geomet was equity accounted (i.e. 49%
of share of the profit or loss of the investee after the date of
acquisition) for as Investment in Associate by EMH. The Company was
appointed to provide services of managing the Cinovec project
development.
Summarised statement of financial position 2023 2022
$ $
Current assets 24,328,436 26,418,644
Non-current assets 64,599,159 28,724,124
----------- -----------
Total assets 88,927,595 55,142,768
----------- -----------
Current liabilities 5,785,887 3,500,606
Non-current liabilities 17,193,373 -
----------- -----------
Total liabilities 22,979,260 3,500,606
----------- -----------
Net assets 65,948,335 51,642,162
----------- -----------
Summarised statement of profit or loss and other
comprehensive income
Revenue 18,399 5,250
Expenses (3,781,572) (2,796,568)
----------- -----------
Loss for the year (3,763,173) (2,791,318)
----------- -----------
NOTE 14: TRADE AND OTHER PAYABLES 2023 2022
$ $
Trade payables 747,492 584,039
Accrued expenses and other liabilities 71,485 355,783
818,977 939,822
============= =======
Payables are normally due for payment within 30
days.
NOTE 15: PROVISIONS 2023 2022
$ $
Current Liability
Provision for annual leave 16,570 96,259
Provision for long service leave
Non-current Liability - 50,789
Provision for long service leave 84,051 -
100,621 147,048
============= =======
NOTE 16: ISSUED CAPITAL 2023 2022
$ $
(a) Issued and paid up capital
192,385,492 CDIs/shares (30 June
2022: 186,042,485 CDIs/shares) 47,881,352 47,881,352
----------
Total issued capital 47,881,352 47,881,352
========== ==========
(b) Movements in CDIs/shares
Date Number $
Balance at the beginning of the
year 1 July 2021 175,119,485 34,087,930
Exercise of unlisted options @
42c 16 July 2021 238,000 99,960
Share placement @ A$1.40 per CDI/share 28 January 2022 10,285,000 14,399,000
Exercise of unlisted options @
45c 4 March 2022 400,000 180,000
Capital raising cost - (885,538)
Balance at the end of the year 30 June 2022 186,042,485 47,881,352
Date Number $
Balance at the beginning of the
year 1 July 2022 186,042,485 47,881,352
Issue to consultant @ 0c 9 January 2023 6,343,007 -
Balance at the end of the year 30 June 2023 192,385,492 47,881,352
=========== ==========
(c) 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.
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:
2023 2022
$ $
Cash and cash equivalents 8,892,951 19,055,509
GST and other receivables 8,619,578 782,518
Other assets 34,697 53,094
Trade and other payables (818,977) (939,822)
Provisions (16,570) (147,048)
Lease liability (40,775) (45,707)
------------ ------------
Working capital surplus/(deficit) 16,670,904 18,758,544
============ ============
The Group is not subject to any externally imposed capital
requirements.
NOTE 17: RESERVES 2023 2022
$ $
Option and Warrant Reserve 17(a) 4,788,589 4,370,589
Performance Shares Reserve 17 (b) 3,471,444 3,471,444
Performance Rights Reserve 17 (c) 4,134,950 2,619,432
Loan CDIs/shares Reserve 17 (d) 1,442,667 1,442,667
Foreign Currency Translation Reserve 17 (e) 4,882,465 379,659
---------- ----------
Total Reserves 18,720,115 12,283,791
========== ==========
(a) Option and Warrant Reserve 2023 2022
$ $
Balance at the beginning of the financial year 4,370,589 4,306,491
Share based payment expense (Note 18) 418,000 64,098
Balance at the end of the financial year 4,788,589 4,370,589
=========== ===========
The following options and warrants existed as at 30 June 2022
and 30 June 2023:
Balance Issued Exercised Balance
Expiry at 30 June during during the Expired/ at 30 June
date 2022 the year year cancelled 2023
Options @ 25cents 31 Dec 22 10,000,000 - - (10,000,000) -
Options @ 42cents 23 Oct 23 2,024,000 - - - 2,024,000
Options @ 45cents 23 Oct 23 600,000 - - - 600,000
Options @ 80
cents 31 Dec 2022(1) - 2,000,000 - (2,000,000) -
Options @ 80
cents 31 Dec 2025(2) - 2,000,000 - - 2,000,000
Warrants @ $1.10 31 Jan 23 1,200,000 - - (1,200,000) -
----------- --------- ----------- ------------ --------------
Total 13,824,000 4,000,000 - (13,200,000) 4,624,000
=========== ========= =========== ============ ==============
(1) 2,000,000 options were cancelled during the period lapsing
unvested due to the vesting criteria not being met.
(2) 2,000,000 options exercisable at $0.80 on or before 31
December 2023 were granted to consultants on 15 June 2023, subject
to vesting conditions. The share-based payment expense of $418,000
was recognised in the consolidated statement of profit or loss and
other comprehensive income for the year.
(b) Performance Shares Reserve
The Performance Shares reserve records the fair value of the
Performance Shares issued. No performance shares were on issue at
30 June 2023.
Date Number $
------- ---------
Balance at the beginning of the year 1 July 2022 - 3,471,444
------- ---------
Balance at the end of the year 30 June 2023 - 3,471,444
======= =========
(c) Performance Rights Reserve
30 June 2023 30 June 2022
Grant Date Number $ Number $
Balance at the beginning of the period 5,800,000 2,619,432 3,600,000 -
Granted to directors 17 Dec 2020 - 302,040 - 1,896,130
Granted to a consultant 24 Nov 2021 - (1,829) 100,000 107,440
Granted to an employee 2 Mar 2022 - 424,235 1,200,000 344,803
Granted to a consultant 2 Mar 2022 - 318,305 900,000 271,059
Granted to a consultant 29 Aug 2022 750,000 247,614 - -
Granted to an employee 12 Dec 2022 450,000 107,705 - -
Granted to an employee 13 Dec 2022 300,000 71,587 - -
Granted to an employee 14 Dec 2022 170,000 45,861 - -
Balance at the end of the period 7,470,000 4,134,950 5,800,000 2,619,432
--------- --------- --------- ---------
(d) Loan CDIs/shares Reserve
Employee securities incentive plan
In prior years, 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/shares reserve records the fair value of the Loan
CDIs/shares issued.
The Loan CDIs/shares represent an option arrangement. Loan
CDIs/shares 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/shares/shares 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/shares -
15 years after the date of loan advance and the repayment date for
1,500,000 Employee CDIs/shares - 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/shares being sold;
(c) The borrower becoming insolvent;
(d) The borrower ceasing to be employed by the Company; and
(e) The plan CDIs/shares being acquired by a third party by way
of an amalgamation, arrangement, or formal takeover bid for not
less than all the outstanding CDIs/shares.
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:
(a) The borrower dies or becomes permanently disabled; or
(b) 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/shares
viii. In accordance with the terms of the Plan and the
Invitation, the Loan CDIs/shares cannot be sold, transferred,
assigned, charged or otherwise encumbered with the Plan CDIs/shares
except in accordance with the Plan.
30 June 2023 30 June 2022
Number Amount Expensed Number Amount Expensed
Balance at beginning of the year 1,350,000 1,442,667 1,350,000 1,442,667
Loan CDIs/shares repaid during the year - - - -
----------- ----------------- ----------- -----------------
Balance at end of the year 1,350,000 1,442,667 1,350,000 1,442,667
=========== ================= =========== =================
Loan CDIs/shares Reserve
CDIs/shares 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/share 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.
The Loan CDIs/shares were issued to the executive members under
the Employee Securities Incentive Plan on 6 June 2018.
Holders of CDIs/shares 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.
(e) Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange
differences arising on translation of foreign controlled
subsidiaries, the Group's share of foreign exchange movement in
Geomet s.r.o. and the deconsolidation of EQHSA in prior year.
2023 2022
$ $
Balance at the beginning of the financial year 379,659 (467,879)
Transfer of foreign currency to profit or loss on
deregistration of EQHSA - (16,709)
Movement during the year 4,502,806 864,247
Balance at the end of the financial year 4,882,465 379,659
========= =========
NOTE 18: SHARE BASED PAYMENT EXPENSE
During the year, the Group incurred a share-based payments expense
for a total of $1,933,518 resulting from the transactions detailed
below.
(i) Share based payment arrangements granted in previous years/periods
and existing during the year ended 30 June 2023:
-- On 17 December 2020, the shareholders approved the grant of
2,400,000 Performance Rights to Mr Keith Coughlan and 1,200,000
Performance Rights to Mr Richard Pavlik. The 3,600,000 Performance
Rights were issued on 2 March 2022. The Performance Rights were
valued at $3,132,000 at grant date and are being expensed over the
vesting period noted below. For the year ended 30 June 2023,
management assessed the probability of achieving the finance
hurdles to be over 50%, as a result of which, a share-based expense
of $302,040 was recognised in the consolidated statement of profit
or loss and other comprehensive income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
17 Dec 31 Dec
Class A 1,200,000 20 2023 $0.87 $0.87 $1,044,000 0%
17 Dec 30 Sep
Class B 1,200,000 20 2024 $0.87 $0.87 $1,044,000 0%
17 Dec 1 March
Class C 1,200,000 20 2025 $0.87 $0.87 $1,044,000 0%
-- On 24 November 2021, 100,000 Performance Rights were issued
to a consultant. The Performance Rights were valued at $76,750 at
grant date and are being expensed over the vesting period noted
below. A reversal of share-based payment expense of $1,829 was
recognised in the consolidated statement of profit or loss and
other comprehensive in income for the year, to account for the new
estimated longer vesting period. The group notes that Class C is
estimated to vest on 31 March 2025. As the consultant performance
rights expire on 30 November 2024, management assessed the
probability of aching the hurdle to be less than 50%, as a result
of which, no expense was recognised with respect to Class C noted
below.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
24 Nov 31 Dec
Class A 10,000 21 2023 $1.535 $1.535 $15,350 0%
24 Nov 30 Sep
Class B 20,000 21 2024 $1.535 $1.535 $30,700 0%
24 Nov 1 March
Class C 20,000 21 2025 $1.535 $1.535 $30,700 0%
-- On 22 February 2022, 900,000 Performance Rights were issued
to a consultant. The Performance Rights were valued at $1,044,000
at grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $318,305 was recognised
in the statement of profit or loss and other comprehensive in
income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
22 Feb 31 Dec
Class A 300,000 22 2023 $1.16 $1.16 $348,000 0%
22 Feb 30 Sep
Class B 300,000 22 2024 $1.16 $1.16 $348,000 0%
22 Feb 1 March
Class C 300,000 22 2025 $1.16 $1.16 $348,000 0%
-- On 27 February 2022, 1,200,000 Performance Rights were issued
to an employee. The Performance Rights were valued at $1,368,000 at
grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $424,235 was recognised
in the consolidated statement of profit or loss and other
comprehensive in income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
27 Feb 31 Dec
Class A 400,000 22 2023 $1.14 $1.14 $456,000 0%
27 Feb 30 Sep
Class B 400,000 22 2024 $1.14 $1.14 $456,000 0%
27 Feb 1 March
Class C 400,000 22 2025 $1.14 $1.14 $ 456,000 0%
-- On 29 August 2022, 750,000 Performance Rights were issued to
an employee. The Performance Rights were valued at $547,500 at
grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $247,614 was recognised
in the consolidated statement of profit or loss and other
comprehensive in income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
Tranche 29 Aug 31 Dec
1 250,000 22 2023 $0.73 $0.73 $182,500 0%
Tranche 29 Aug 30 Sep
2 250,000 22 2024 $0.73 $0.73 $182,500 0%
Tranche 29 Aug 1 March
3 250,000 22 2025 $0.73 $0.73 $182,500 0%
-- On 12 December 2022, 450,000 Performance Rights were issued
to an employee. The Performance Rights were valued at $301,500 at
grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $107,705 was recognized
in the consolidated statement of profit or loss and other
comprehensive in income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
Tranche 12 Dec 31 Dec
1 150,000 22 2023 $0.67 $0.67 $100,500 0%
Tranche 12 Dec 30 Sep
2 150,000 22 2024 $0.67 $0.67 $100,500 0%
Tranche 12 Dec 1 March
3 150,000 22 2025 $0.67 $0.67 $100,500 0%
-- On 13 December 2022, 300,000 Performance Rights were issued
to an employee. The Performance Rights were valued at $201,000 at
grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $71,587 was recognised in
the consolidated statement of profit or loss and other
comprehensive in income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
Tranche 13 Dec 31 Dec
1 100,000 22 2023 $0.67 $0.67 $67,000 0%
Tranche 13 Dec 30 Sep
2 100,000 22 2024 $0.67 $0.67 $67,000 0%
Tranche 13 Dec 1 March
3 100,000 22 2025 $0.67 $0.67 $67,000 0%
-- On 14 December 2022, 170,000 Performance Rights were issued
to an employee. The Performance Rights were valued at $117,300 at
grant date and are being expensed over the vesting period noted
below. The share-based payment expense of $45,861 was recognised in
the consolidated statement of profit or loss and other
comprehensive in income for the year.
Number Grant Estimated Share Value Total % vested
granted date Vesting price per right fair value
Date on grant
date
Tranche 14 Dec 31 Dec
1 70,000 22 2023 $0.69 $0.69 $48,300 0%
Tranche 14 Dec 30 Sep
2 100,000 22 2024 $0.69 $0.69 $69,000 0%
Loan CDIs/shares granted in prior years and existed during the
financial year ended 30 June 2023:
Number
30 June Repaid during Number
2022 the year 30 June 2023
Director Loan CDIs/shares 1,350,000 - 1,350,000
1,350,000 - 1,350,000
========= ============= ==============
No loan CDIs/shares were granted/repaid during the financial
year.
The total fair value of the Loan CDIs/shares was fully expensed
in the consolidated statement of profit or loss and other
comprehensive income in the 2019 financial year.
A summary of the outstanding Director Loan CDIs/shares at 30
June 2023 and the inputs used in the valuation of the loan
CDIs/shares issued to Directors are as follows:
Loan CDIs/shares Keith Coughlan Richard Pavlik Kiran Morzaria
Issue price $0.725 $0.725 $0.725
Share price at date
of issue $0.70 $0.70 $0.70
Grant date 30 November 30 November 30 November
2017 2017 2017
Expected volatility 143.41% 143.41% 143.41%
Expiry date 30 November 30 November 30 November
2032 2032 2032
Expected dividends Nil Nil Nil
Risk free interest
rate 2.47% 2.47% 2.47%
Value per loan CDI $0.69676 $0.69676 $0.69676
Number of loan CDIs/shares 850,000 300,000 200,000
Total value $592,245 $209,028 $139,352
NOTE 19: CASH FLOW INFORMATION 2023 2022
$ $
Reconciliation of cash flow from operating activities
with (loss) after tax:
(Loss) after income tax (5,928,441) (6,802,895)
Adjustments for :
Share based payments 1,933,518 2,884,447
Finance costs 25,962 5,141
Foreign exchange loss 362,201 16,544
Depreciation and amortisation expenses 48,873 40,412
Equity accounted of investment
in Geomet s.r.o. 1,845,158 1,367,744
Derecognition of foreign currency
reserve - (16,709)
Lease modification - 28,572
Interest in assets and liabilities net of deemed disposal of
subsidiary
Decrease/(Increase) in trade and
other receivables and other assets 40,302 (647,462)
(Decrease)/Increase in trade and
other payables (120,845) 500,024
(Decrease)/increase in provisions (46,427) 47,198
--------------- -----------
Cash flow used in operating activities (1,839,699) (2,576,984)
=============== ===========
(b) Credit standby facilities
The Company had no credit standby facilities as at 30 June 2023
and 2022.
(c) Investing and Financing Activities - Non-Cash
There were no non-cash investing or financing activities during
the year, apart from the shares issued to a consultant, as per Note
16.
NOTE 20: 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.
Effective 28 April 2020, the Group has a 49% interest in Geomet
s.r.o. which is accounted for in accordance with AASB 128
Investment in Associates and Joint Venture. Therefore, the Group
has only one operating segment based on geographical location. The
Australian segment incorporates the services provided to Geomet
s.r.o. in relation to the Cinovec project development along with
head office and treasury function. Consequently, the financial
information for the sole operating segment is identical to the
information presented in these financial reports.
NOTE 21: 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:
2023 2022
$ $
Financial assets
Cash and cash equivalents 8,892,951 19,055,509
Other receivables 8,619,578 782,518
Other assets 82,851 47,392
---------- ----------
Total financial assets 17,595,380 19,885,419
========== ==========
Trade and other payables 818,977 939,822
Lease liability 40,775 86,482
---------- ----------
Total financial liabilities 859,752 1,026,304
========== ==========
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.
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 EUR.
At 30 June 2023, the Group has financial assets and liabilities
denominated in the foreign currencies detailed below:
2023 2022
Amount in Amount in Amount in Amount in Amount in Amount in Amount in Amount in
EUR GBP USD AUD EUR GBP USD AUD
Cash and
cash
equivalents
in EMHL 2,018,189 48,287 - - 3,054 25,287 - -
Trade and
other
payables in
EMHL 6,300 12,909 3,901 - 9,450 105,593 600 -
Total per
foreign
currency 2,024,489 61,196 3,901 - 12,504 130,880 600 -
=========== =========== =========== =========== =========== ============ =========== ===========
5% effect in
foreign
exchange
rates 101,224 3,060 195 - 625 6,544 30 -
Other than intercompany balances there were no financial assets
and liabilities denominated in foreign currencies for EMH UK.
(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. 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 Consolidated Statement of Financial
Position and notes to the consolidated 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:
2023 2022
Financial assets Credit Quality $ $
Cash and cash equivalents held at Westpac
Bank High 2,045,240 131,265
Cash and cash equivalents held at ANZ
bank High 6,847,711 18,924,244
Bank guarantee held at ANZ bank High 48,154 47,392
Other receivables High 8,619,578 782,518
17,560,683 19,885,419
========== ==========
(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. The
Group aims at maintaining flexibility in funding by maintaining
adequate reserves of liquidity.
The following are the contractual maturities of financial assets
and financial liabilities, including estimated interest receipts
and payments and excluding the impact of netting arrangements.
Carrying Contractual <3 months 6-24
As at 30 June Amount Cash flows 3-6 months months
2023 $ $ $ $ $
Financial assets
Cash and cash
equivalents 8,892,951 8,892,951 8,892,951 - -
Other receivables 8,619,578 8,619,578 8,619,578 - -
Other assets 82,851 82,851 34,697 - 48,154
----------------- ------------------ ----------------- ----------------- --------------
Cash inflows 17,595,380 17,595,380 17,547,226 - 48,154
================= ================== ================= ================= ==============
Financial
liabilities
Trade and other
payables 818,977 818,977 818,977 - -
Lease liabilities 40,775 40,775 12,047 12,201 16,527
----------------- ------------------ ----------------- ----------------- --------------
Cash outflows 859,752 859,752 831,024 12,201 16,527
================= ================== ================= ================= ==============
Carrying Contractual <3 months 6-24
As at 30 June Amount Cash flows 3-6 months months
2022 $ $ $ $ $
Financial assets - -
Cash and cash
equivalents 19,055,509 19,055,509 19,055,509 - -
Other receivables 782,518 782,518 782,518 - -
Other assets 47,392 47,392 - - 47,392
----------------- ------------------ ----------------- ----------------- --------------
Cash inflows 19,885,419 19,885,419 19,838,027 - 47,392
================= ================== ================= ================= ==============
Carrying Contractual <3 months 6-24
As at 30 June Amount Cash flows 3-6 months months
2022 $ $ $ $ $
Financial
liabilities
Trade and other
payables 939,822 939,822 939,822 - -
Lease liabilities 86,482 86,482 11,155 11,297 64,030
----------------- ------------------ ----------------- ----------------- --------------
Cash outflows 1,026,304 1,026,304 950,977 11,297 64,030
================= ================== ================= ================= ==============
(iv) 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 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 rate for each class of financial assets and
financial liabilities comprises:
Weighted Average Floating Fixed Non-interest Total
As at 30 June 2023 Interest Rate Interest Interest bearing
Rate
Financial assets % $ $ $ $
Cash and cash equivalents 1.05% - 2,134,526 6,758,425 8,892,951
Other receivables - - 8,619,578 8,619,578
Bank guarantee - 48,154 34,697 82,851
- 2,182,680 15,412,700 17,595,380
========= ========= ============ ==========
Financial liabilities
Trade and other payables - - 818,977 818,977
Lease liabilities - - 40,775 40,775
--------- --------- ------------ ----------
- - 859,752 859,752
========= ========= ============ ==========
Weighted Average Floating Fixed Non-interest Total
As at 30 June 2022 Interest Rate Interest Interest bearing
Rate
Financial assets % $ $ $ $
Cash and cash equivalents 1.62% - 18,029,343 1,026,166 19,055,509
Other receivables - - 721,710 721,710
Bank guarantee - 47,392 - 47,392
- 18,076,735 1,747,876 19,824,611
========= ========== ============ ==========
Financial liabilities
Trade and other payables - - 918,029 918,029
Lease liabilities - - 86,482 86,482
--------- ---------- ------------ ----------
- - 1,004,511 1,004,511
========= ========== ============ ==========
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 $21,345 (2022: $180,767).
(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 22: CONTROLLED ENTITIES
Subsidiaries of European Metals Holdi ngs Limited
Controlled entity Country of Incorporation Class of Percentage Owned
Shares
2023 2022
Equamineral Group Limited British Virgin
(EGL) Islands Ordinary 0% 0%
Equamineral SA (ESA Congo) Republic of Congo Ordinary 0% 0%
European Metals UK Limited
(EMH UK) United Kingdom Ordinary 100% 100%
EMH (Australia) Pty Ltd Australia Ordinary 100% 100%
NOTE 23: PARENT ENTITY DISCLOSURE
The following information has been extracted from the books and
records of the parent, European Metals Holdings Limited, and has
been prepared in accordance with Australian Accounting
Standards.
Statement of Financial Position 2023 2022
$ $
ASSETS
Current assets 9,366,264 19,889,522
Non-current assets 8,511,087 135,422
---------- ----------
TOTAL ASSETS 17,877,351 20,024,944
---------- ----------
LIABILITIES
Current liabilities 1,186,524 1,132,577
Non-current liabilities - 40,775
TOTAL LIABILITIES 1,186,524 1,173,352
---------- ----------
NET ASSETS 16,690,827 18,851,592
========== ==========
EQUITY
Issued capital 47,881,352 47,881,352
Reserves 13,837,650 11,904,132
Accumulated losses (45,028,175) (40,933,892)
------------ ------------
TOTAL EQUITY/(DEFICIT) 16,690,827 18,851,592
============ ============
Profit or Loss and Other Comprehensive Income
Loss for the year (4,094,183) (5,441,368)
Total comprehensive loss (4,094,183) (5,441,368)
=========== ===========
Guarantees
There are no guarantees entered into by European Metals Holdings
Limited for the debts of its subsidiaries as at 30 June 2023.
Contingent liabilities
There are no contingent liabilities of the parent as at 30 June
2023 and 30 June 2022.
Commitments
There were no commitments for the parent as at 30 June 2023 and
30 June 2022.
NOTE 24: CAPITAL COMMITMENTS
There are no capital commitments for the Group as at 30 June
2023 and 30 June 2022.
NOTE 25: CONTINGENT LIABILITIES
There are no contingent liabilities for the Group as at 30 June
2023 and 30 June 2022.
NOTE 26: SIGNIFICANT EVENTS AFTER THE REPORTING DATE
Subsequent to 30 June 2023, the following significant events
were undertaken by the Group:
- On 18 July 2023 a mortgage in favour of the joint venture
partners (Severoceske Doly and the Company) was granted over the
Deskform Property in the Czech Republic. Additional information is
disclosed in the Operations Report (refer to "Land Secured for
Cinovec Lithium Plant" section) and ASX Announcement dated 9 June
2023.
- As announced on 21 July 2023, the EBRD has invested EUR 6
,000,000 to support the Group's development of the Cinovec Project
in the Czech Republic. The investment was implemented by way of a
private placement of 12,315,213 shares of the Group to EBRD at a
price of $0.803 per share.
- On 7 September 2023, 400,000 shares were issued on the
exercise of unlisted options which were granted on 23 October 2020
for an exercise price of $0.45.
DIRECTORS' DECLARATION
The Directors of the Company declare that:
1. the consolidated financial statements, notes and the additional
disclosures are in accordance with the Corporations Act 2001
including:
(a) complying 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 2023 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 consolidated financial statements and notes for the
financial year comply with the Accounting Standards; and
(c) the consolidated 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
EXECUTIVE CHAIRMAN
Dated at Perth on 29 September 2023
INDEPENT AUDIT REPORT TO THE MEMBERS OF EUROPEAN METALS HOLDINGS
LIMITED
additional information
The following additional information is required by the Australian
Securities Exchange in respect of listed public companies only.
1 Shareholding as at 13 September 2023
(a) Distribution of Shareholders
Number
Category (size of holding) of Shareholders
1 - 1,000 684
1,001 - 5,000 890
5,001 - 10,000 408
10,001 - 100,000 525
100,001 - and over 159
2,666
----------------------------------------------
(b) The number of shareholdings held in less than marketable parcels
is 475.
(c) Voting Rights
The voting rights attached to each class of equity security
are as follows:
205,100,705 CDIs/shares
- Each CDI/share 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.
20 Largest Shareholders - CDIs/ shares as at 13 September
(d) 2023
Rank Shareholder Number of CDIs Percentage
/shares held of capital
held
--------------------------------- --------------------------------- ---------------- ------------------------------
1. BNP Paribas Nominees Pty Ltd ACF 19,115,755 9.32
Clearstream
2. Armco Barriers Pty Ltd 13,660,000 6.66
Euroclear Nominees Limited
3. <EOC01> 12,371,555 6.03
J P Morgan Nominees Australia Pty
4. Limited 10,189,919 4.97
European Energy & Infrastructure
Group
5. Limited 6,343,007 3.09
6. Vidacos Nominees Limited <CLRLUX> 6,164,615 3.01
7. BNP Paribas Noms Pty Ltd <DRP> 5,844,204 2.85
Hargreaves Lansdown (Nominees)
Limited
8. <15942> 5,774,580 2.82
9. Inswinger Holdings Pty Ltd 4,900,000 2.39
10. Citicorp Nominees Pty Limited 4,718,623 2.30
Interactive Investor Services
Nominees
11. Limited <SMKTISAS> 4,396,569 2.14
Barclays Direct Investing
Nominees
12. Limited <Client1> 4,185,941 2.04
Hargreaves Lansdown (Nominees)
Limited
13. <VRA> 3,737,709 1.82
14. Lawshare Nominees Limited <SIPP> 3,317,052 1.62
15. HSDL Nominees Limited <Maxi> 2,540,192 1.24
Interactive Investor Services
Nominees
16. Limited <SMKTNOMS> 2,350,141 1.15
17. Wilgus Investments Pty Ltd 2,210,000 1.08
Mr Richard Keller <Est Anna E
Keller
18. A/C> 2,180,000 1.06
19. Lawshare Nominees Limited <ISA> 2,147,419 1.05
BNP Paribas Nominees Pty Ltd <IB
AU
20. NOMS RetailClient DRP> 2,057,350 1.00
--------------------------------- --------------------------------- ---------------- ------------------------------
Total Top 20 Shareholders 118,204,631 57.63
-------------------------------------------------------------------- ---------------- ------------------------------
2 The name of the Company Secretary is Ms Shannon Robinson .
3 The address of the principal registered office in Australia
is Level 3, 35 Outram Street, West Perth WA 6005. Telephone
+61 8 6245 2050.
4 Registers of securities are held at the following addresses
Computershare Investor Services Limited
Level 17
221 St Georges Terrace
Perth, Western Australia, 6000
5 Securities Exchange Listing
Quotation has been granted for all the CDIs / shares of the
Company on all Member Exchanges of the Australian Securities
Exchange Limited.
6 Unquoted Securities
A total of 4,224,000 options over unissued CDIs / shares are
on issue.
A total of 7,470,000 performance shares are on issue.
7 Use of Funds
The Company has used its funds in accordance with its 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
Mining Cinovec
Permit II Cinovec South 100% N/A 100%
--------- ------------------- -------------- ------------ -----------
Cinovec
III Cinovec East 100% N/A 100%
--------- --------------------------------- -------------- ------------ -----------
Cinovec
IV Cinovec NorthWest 100% N/A 100%
--------- --------------------------------- -------------- ------------ -----------
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END
ACSSESFDUEDSEEU
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September 29, 2023 10:03 ET (14:03 GMT)
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