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Company Announcements

Annual Financial Report

By LSE RNS

RNS Number : 2418S
European Metals Holdings Limited
29 September 2017
 

For immediate release

29 September 2017

EUROPEAN METALS HOLDINGS LIMITED

Annual Results

The Directors of European Metals Holdings Limited ("European Metals" or "the Company") (ASX and AIM: EMH) are pleased to announce the Company's annual results for the year ended 30 June 2017.

The annual report has been released on the Australian Stock 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.

A copy of the Corporate Governance Statement is available on the Company's website www.europeanmet.com.

 

Enquiries:

European Metals Holdings Limited

Keith Coughlan, Chief Executive Officer

 

 

Julia Beckett, Company Secretary

 

Tel: +61 (0) 419 996 333

Email: keith@europeanmet.com

 

Tel: +61 (0) 6141 3500

Email: julia@europeanmet.com

 

Beaumont Cornish (Nomad & Broker)

Michael Cornish

Roland Cornish

Tel: +44 (0) 20 7628 3396

 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

EUROPEAN METALS HOLDINGS LIMITED

ARBN 154 618 989

ANNUAL Report

30 JUNE 2016

 

Directors

Mr David Reeves

Mr Keith Coughlan

Dr Pavel Reichl (resigned 27 June 2017)

Mr Kiran Morzaria

Mr Richard Pavlik (appointed 27 June 2017)

 

Company Secretary

Ms Julia Beckett

 

Non-Executive Chairman

Managing Director and Chief Executive Officer

Non-Executive Director

Non-Executive Director

Executive Director

 

 

Registered Office in Australia

Suite 12, Level 1

11 Ventnor Avenue

WEST PERTH  WA  6005

Telephone  08 6141 3500

Facsimile    08 6141 3599

Email           www.europeanmet.com

 

 

Nominated Advisor & Broker

Beaumont Cornish Limited

2nd Floor, Bowman House

29 Wilson Street

LONDON  EC2M 2SJ

UNITED KINGDOM

 

Registered Office in Czech Republic

Jaselska 193/10, Veveri
602 00 Brno
Czech Republic
Tel: +420 732 671 666

 

Registered Address and Place of Incorporation - BVI

Rawlinson & Hunter

Woodbourne Hall

PO Box 3162

Road Town

Tortola  VG1 110

British Virgin Islands

 

Share Register - Australia

Computershare Investor Services Limited

Level 11

172 St Georges Terrace

Perth WA 6000

Telephone          1300 850 505 (within Australia)

Telephone          +61 3 9415 4000 (outside Australia)

Facsimile   1800 783 447 (within Australia) 

Facsimile     +61 3 9473 2555 (outside Australia)  

 

UK Depository

Computershare Investor Services plc

The Pavilions

Bridgewater Road

BRISTOL  BS99 6ZZ

UNITED KINGDOM 

Auditor

Stantons International Audit and Consulting Pty Ltd

Level 2, 1 Walker Avenue

West Perth WA 6005

Telephone          +61 8 9481 3188

Facsimile   +61 8 9321 1204  

 

Reporting Accountants (UK)

Chapman Davis LLP

2 Chapel Court

LONDON  SE1 1HH

UNITED KINGDOM

Securities Exchange Listing - Australia

ASX Limited

Level 40, Central Park

152-158 St Georges Terrace

PERTH  WA  6000

ASX Code: EMH

Securities Exchange Listing - United Kingdom

London Stock Exchange plc

10 Paternoster Square

LONDON  EC4M 7LS

UNITED KINGDOM

AIM Code: EMH

 

 

CONTENTS

 

Chairman's Letter Report

 

Auditor's Independence Declaration

 

 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

 

Consolidated Statement of Financial Position

 

Consolidated Statement of Changes in Equity

 

Consolidated Statement of Cash Flows

 

Notes to the Financial Statements

 

Directors' Declaration

 

 

Independent Audit Report to the members of European Metals Holdings Limited

 

Corporate Governance Statement

 

Additional Information

 

Tenement Schedule

 

 

 

 

 

 

 

CHAIRMAN'S LETTER

 

Dear Shareholders

It is with pleasure that I introduce the 2017 Annual Report of European Metals Holdings limited ("European Metals" or "the Company").

European Metals has made considerable progress throughout the 2017 Financial Year in its goal to develop the Cinovec Project and bring the project into production.

The highlight of the year has been the successful completion of the Company's Preliminary Feasibility Study ("PFS"), the highlights of which were announced in April. The PFS confirmed that Cinovec has the very real potential to be a low cost producer of lithium products.

The demand for lithium is at an all-time high and the consensus amongst all major sector commentators is that this demand is set to continue due to the dramatic growth in the Electric Vehicle market. The proximity of Cinovec to the major European vehicle manufacturers, along with the size of the deposit and its low cost nature, provide us with the confidence that the future of the project is very bright.

Other significant developments for the year have included the dramatic increase in the size of the JORC resource at Cinovec, and the declaration of the maiden ore reserve shortly after the date of this report. We have secured a number of important permits for the project and taken significant steps towards the grant of the mining license.

Work done as part of the PFS lead to significant developments throughout the year such as the production of battery grade lithium carbonate and considerable improvements in lithium recoveries and process cost savings.

From a Corporate perspective, we welcomed our Country Manager, Richard Pavlik to the Board. Richard is a very experienced Czech mining executive and his knowledge of the industry has already proven invaluable to the Company. Coinciding with Richard's appointment, Pavel Reichl stepped down for the Board to pursue other interests. Pavel was instrumental in securing the licenses over Cinovec in 2010 and the Board would like to thank him for his exceptional service.

The next year looms as a very busy one for European Metals as we enter our Definitive Feasibility Study against a very positive backdrop of the market for battery supply chain metals, and therefore lithium. We have made very strong appointments in our DFS study team in Craig Reimer and Grant Harman and look forward to delivering a positive study to our shareholders towards the end of next year. The contribution of the entire European Metals team has been much appreciated by the Board in bringing the Company to this stage.

Finally, I would like to thank our shareholders for their ongoing support as we enter the next stage of project development. We look forward to sharing further successes in the future.

 

David Reeves

CHAIRMAN

 

PROJECT REVIEW

 

Cinovec Lithium/Tin Project

European Metals owns 100% of the Cinovec lithium-tin project in the Czech Republic, through its wholly owned subsidiary Geomet s.r.o. Cinovec is an historic mine incorporating a significant undeveloped lithium-tin resource with by-product potential including tungsten, rubidium, scandium, niobium and tantalum and potash. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 348Mt @ 0.45% Li20 and 0.04% Sn and an Inferred Mineral Resource of 309Mt @ Li20 and 0.04% Sn containing a combined 7.0 million tonnes Lithium Carbonate Equivalent and 263kt of tin.

 

An initial Probable Ore Reserve of 34.5Mt @ 0.65% Li20 and 0.09% Sn has been declared to cover the first 20 years mining at an output of 20,800tpa of lithium carbonate.

 

This makes Cinovec the largest lithium deposit in Europe, the fourth largest non-brine deposit in the world and a globally significant tin resource.

 

The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.

 

The recently completed Preliminary Feasibility Study, conducted by specialist independent consultants, returned a post-tax NPV of USD540m and an IRR of 21% and confirmed that it had the potential to be a low cost producer of battery grade lithium carbonate.  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. The project lies in close proximity to a number of potentially significant end users, notably automobile manufacturers. The recent increase in demand for lithium globally has emanated from the automobile industry as demand for electric vehicles rises. Recent research from a number of global commentators predicts that this increase in demand will continue.

 

Project Development

 

Drilling and Resource Delineation

 

·      Project development for the year was centered on a significant drilling program embarked upon by the Company. There were numerous updates to this program released to the market during the period. Overall, results from the program either confirmed or exceeded expectations with respect of both lithium content and width of mineralisation.

·      In November 2016, the Company announced a significant increase in the indicated resource at Cinovec. This upgrade was a result of the drilling program to that point and increased the indicated resource by approximately 420%.

·      The Company announced a further substantial upgrade of its Resource in February 2017.

·      The extensive seven-month drilling campaign at Cinovec was completed early in 2017 and consisted of 17 holes for 6,081 meters. The program was designed to increase the confidence in the resource base and to upgrade a significant part of the resource from the Inferred category to the higher confidence Indicated category. The program was successful in achieving this.

·      The Company commenced a focused infill drilling program at Cinovec South in May to test a gap in the geological model.

 

Preliminary Feasibility Study

 

·      This drilling program provided important data to the Company's Preliminary Feasibility Study ("PFS") which was ongoing throughout the period. The Company released various updates with regards to this study throughout the year, and the completion at the end of March 2017.

·      Highlights of the work program for the PFS included a significant reduction of pre-production capital costs and outstanding recoveries, and the successful manufacture of >99.5% pure lithium carbonate using an industry proven, sodium sulphate roast-based flow-sheet.

·      In April, the Company successfully completed the PFS highlighting that Cinovec could be a very low cost lithium carbonate producer with attractive economic returns.

 

Other Developments 

 

·      Mr Richard Pavlik was appointed to the position of Country Manager in early January and appointed to the board of European Metals Holdings Limited in June.

·      The Cinovec South Resource was added to the Czech State resource register in early January 2017. This is the first step in the process for the granting of a mining permit.

·      The Company was granted a new exploration license, Cinovec III. The license covers a small area above the Cinovec deposit itself along the Czech-German border, and also grants exclusive rights to explore for potential deep-seated lithium ore East of the Cinovec deposit.

 

All the developments indicate significant enhancements to the economics of Cinovec Project which have now been reflected in the Preliminary Feasibility Study. The Company will move directly into a definitive feasibility study to accelerate the project towards development.

 

Mineral Resource and Ore Reserve Statement

 

Based upon the Preliminary Feasibility Study undertaken for the Cinovec Project, the Company declares a maiden Probable Ore Reserve of 34.5 Mt @ 0.65% Li2O, as detailed below. The Probable Reserve has been declared solely from the Indicated Mineral Resource category and are classified based on a PFS level of study and category of Mineral Resource.

 

CINOVEC ORE RESERVES SUMMARY

Category

Tonnes

Li

Li20

Sn

W

(Millions)

%

%

%

%

Proven Ore Reserves

0

0

0

0

0

Probable Ore Reserves

34.5

0.30

0.65

0.09

0.03

Total Ore Reserves

34.5

0.30

0.65

0.09

0.03

Notes to Reserve Table:

1.        Probable Ore Reserves have been prepared by Bara International in accordance with the guidelines of the JORC Code (2012).

2.        The effective date of the Probable Ore Reserve is June 2017

3.        All figures are rounded to reflect the relative accuracy of the estimate

4.        The operator of the project is Geomet S.R.O a wholly-owned subsidiary of EMH. Gross and Net Attributable Probable Ore Reserve are the same.

5.        Any apparent inconsistencies are due to rounding errors

 

The Ore Reserve is based on the Mineral Resource for the Cinovec deposit prepared by Widenbar and Associates and issued in February 2017. The Mineral Resource is reported in the report Cinovec Resource Estimation published by Widenbar and Associates and is reported in accordance with the JORC 2012 guidelines. The table below summarises the Mineral Resource declared.

 

CINOVEC 2017 RESOURCE


Cutoff

Tonnes

Li

Li20

Sn

W

%

(Millions)

%

%

%

%

Indicated

0.1%

347.7

0.21

0.45

0.04

0.015

Inferred

0.1%

308.80

0.18

0.39

0.04

0.014

Total

0.1%

656.50

0.20

0.43

0.04

0.014

 

 

Competent Person

 

Information in this statement that relates to the exploration results is based on information compiled by European Metals Director Dr Pavel Reichl, Dr Reichl is a Certified Professional Geologist (certified by the American Institute of Professional Geologists),  a member of the American Institute of Professional Geologists, a Fellow of the Society of Economic Geologists and is a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a Qualified Person for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009. Dr Reichl consents to the inclusion in the release of the matters based on his information in the form and context in which it appears. Dr Reichl holds CDIs in European Metals.

 

The information in this statement that relates to Mineral Resources and Exploration Targets has been compiled by Mr Lynn Widenbar. Mr Widenbar, who is a Member of the Australasian Institute of Mining and Metallurgy, is a full time employee of Widenbar and Associates and produced the estimate based on data and geological information supplied by European Metals. Mr Widenbar has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2012 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Widenbar consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.

 

The information in this statement that relates to Mineral Reserves is based on, and fairly represents, information and supporting documentation prepared by Mr Jim Pooley. Mr Pooley, who is a Fellow of the Southern African Institute of Mining and Metallurgy, is a full time employee of Bara International Ltd and produced the estimate based on the Mineral Resource supplied by European Metals. Mr Pooley has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2012 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Pooley consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.                                                                 

Your Directors' present their report, together with the financial statements of the Group, being the Company and its controlled entities, for the year ended 30 June 2017.

 

 

DIRECTORS' REPORT

 

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 David Reeves

Non-Executive Chairman

Appointed 6 March 2014

Mr Keith Coughlan

Managing Director

Appointed 6 September 2013

Dr Pavel Reichl

Non-Executive Director

Resigned 27 June 2017

Mr Kiran Morzaria

Non-Executive Director

Appointed 10 December 2015

Mr Richard Pavlik

Executive Director

Appointed 27 June 2017

 

Company Secretary

 

The following person held the position of Company Secretary at the end of the financial year:

 

Ms Julia Beckett holds a Certificate in Governance Practice and Administration and is a Certificated Member of Chartered Secretaries Australia.  Julia is a Corporate Governance professional, having worked in corporate administration and compliance for the past 10 years.  She has been involved in business acquisitions, mergers, initial public offerings, capital raisings as well as statutory and financial reporting.  Julia is also Company Secretary of Blina Minerals Limited, Drake Resources Limited and Southern Hemisphere Mining Limited, and Joint Company Secretary of Holista CollTech Limited. 

 

Principal Activities

 

The Company is primarily involved in the development of a lithium and tin project in the Czech Republic.

 

Review of Operations

 

The 2017 Financial Year has been one of significant growth and development for the Company. For further information refer to the Project Review on page 4 to 6.

 

Results of Operations

 

The consolidated loss for year ended 30 June 2017 amounted to $4,145,872 (2016 loss: $1,591,637).

 

Financial Position

 

The net assets of the Group have increased by $2,536,541 to $10,495,030 at 30 June 2017.

 

Significant Changes in the State of Affairs

 

The following significant changes in the state of affairs of the parent entity occurred during the financial year:

 

·        On 7 October 2016, 500,000 warrants were exercised at the price of $0.14 per CDI to raise $70,000.

·        On 17 October 2016, 2,000,000 listed options were exercised and the Company received a total of $400,000.

·        On 31 October 2016, pursuant to the terms and conditions, 5,000,000 Class B Performance Shares in the Company have been automatically redeemed by the Company for a sum of $0.000001 per Class B Performance Share. These performance shares were issued by the Company on 12 March 2014 as part of the consideration for the acquisition of European Metals (UK) Ltd as approved by Shareholders at the General Meeting held on 20 February 2014.  These performance shares are automatically redeemed due to the required milestone not being achieved.

·        On 22 November 2016, 500,000 were exercised at the price of $0.14 per CDI to raise $70,000.

·        On 24 November 2016, the Company issued 5,000,000 CDIs to Cadence Minerals Plc (previously named Rare Earth Minerals Plc) at an issue price of $0.52 per CDI to raise $2,600,000 and 5,000,000 Class B performance shares were issued to the original vendors of the Cinovec Project in replacement of the Class B performance shares issued to them in 2014 as approved by Shareholders at Annual General Meeting held 18 November 2016.

·        On 17 May 2017, the Company issued 500,000 options exercisable at $0.28 expiring on 30 April 2018 to independent consultants as per consultancy agreements and 400,000 options exercisable at $0.58 expiring on 3 January 2020 to General Manager (Czech Republic) as per contract of employment.

·        On 1 June 2017, 250,000 options were exercised at the price of $0.28 per CDI to raise $70,000.

·        On 6 June 2017, 250,000 options were exercised at the price of $0.28 per CDI to raise $70,000.

·        On 27 June 2017, the Company announced it had entered into a Funding Facility Agreement with 6466 Investments Pty Ltd an Australian based sophisticated investors and allows the company to draw down up to AUD $2 million in tranches as required over 12 months. Any funds drawn down will convert to CDI's in the Company at a 10% discount to the 10-day VWAP in the Company's securities. The funds will be used in the preparation of the Company's Definitive Feasibility Study, for further drilling and general working capital.

·        On 30 June 2017, the Company issued 416,783 ordinary shares at $0.7138 per share to 6466 Investments Pty Ltd in respect to the first advance of AUD$250,000 under the Funding Facility Agreement in settlement for the facility establishment fee of 2% (AUD$40,000) and the draw down fee of 3% (AUD$7,500) on the first advance.

 

Dividends Paid or Recommended

No dividends were declared or paid during the year and the Directors do not recommend the payment of a dividend.

 

Information on Directors






David Reeves


Non-Executive Chairman - Appointed 6 March 2014

Qualifications


Mining Engineer

Experience


Mr Reeves is a qualified mining engineer with 25 years' experience globally.  Mr Reeves holds a First Class Honours Degree in Mining Engineering from the University of New South Wales, a Graduate Diploma in Applied Finance and Investment from the Securities Institute of Australia and a First Class Mine Managers Certificate of Competency. 

Interest in CDIs and Options


3,720,244 CDIs

1,000,000 Options, 16.6 cents, expire 17 August 2020

542,651 Class B Performance Shares

Special Responsibilities


Member of all the Committees

Directorships held in other listed entities


Director of Keras Resources Plc (AIM)

Managing Director of Calidus Resources Limited (ASX)




Keith Coughlan


Managing Director (CEO) - Appointed 6 September 2013

Qualifications


BA

Experience


Mr Coughlan has 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 and Options


8,500,000 CDIs

2,000,000 Options, 16.6 cents, expire 17 August 2020

Special Responsibilities


Member of Audit and Risk Committee

Member of Nomination Committee

Directorships held in other listed entities


Non-Executive Chairman of Calidus Resources Limited

Non-Executive Director of Southern Hemisphere Mining Limited




Pavel Reichl


Non-Executive Director - Resigned 27 June 2017

Qualifications


PhD from University of Montana

Experience


Dr Reichl has over 15 years' experience in precious, base and PGE metals exploration and production and has a PhD from University of Montana.  He was formerly Business Unit Manager of a Canadian listed minerals exploration company responsible for Europe and Central Asia.  Dr Reichl was the former head of the Newmont acquisition program in Eastern Europe and exploration manager for Kyrgyzstan and Uzbekistan.  He is fluent in English, Czech and Russian.

Interest in CDIs and Options


2,778,672 CDIs

750,000 Options, 16.6 cents, expire 17 August 2020

793,906 Class B Performance Shares

(As at resignation date 27 June 2017)

Special Responsibilities


Nil

Directorships held in other listed entities


Nil




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 and Options


Mr Morzaria is a director and chief executive of Cadence Minerals Plc (previously named Rare Earth Minerals Plc) which owns 26,860,756 CDIs.  Mr Morzaria has no direct interest in CDIs.

Special Responsibilities


Member of Audit and Risk Committee

Member of Remuneration Committee

Directorships held in other listed entities


Chief Executive Officer and Director of Cadence Minerals plc

 




Richard Pavlik


Executive Director - Appointed 27 June 2017

Qualifications


Masters Degree in Mining Engineer

Experience


Mr Pavlik is the General Manager of Geomet sro, the Company's wholly owned Czech subsidiary, and is a highly experienced Czech mining executive. Mr Pavlik holds a Masters Degree in Mining Engineer from the Technical University of Ostrava in 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 and Options


400,000 Options, 58 cents, expire 3 June 2020

Special Responsibilities


Nil

Directorships held in other listed entities


Nil

 

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

Name

Number attended

Number eligible to attend

David Reeves

2

2

Keith Coughlan

2

2

Pavel Reichl

2

2

Kiran Morzaria

2

2

Richard Pavlik

-

-

 

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 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 has been paid to auditors.

 

CDIs under option

Unissued CDIs of European Metals Holdings Limited under option at the date of this report is as follows:

 

          Expiry date    

Exercise Price

Number under option

17 August 2020

16.6 cents

3,750,000

3 January 2020

58.0 cents

400,000

 

No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of any other body corporate. As of the date of this report, 2,500,000 listed options were exercised and the Company received a total of $540,000 (2016: $2,136,536).

 

Warrants in issue

No warrants were on issue as at the date of this report.

 

No person entitled to exercise the warrant has or has any right by virtue of the option to participate in any share issue of any other body corporate. As of the date of this report, 1,000,000 warrants were exercised and the Company received a total of $140,000.

 

Performance Shares

As at the date of this report, 5,000,000 Class B Performance Shares were issued to the original vendors of the Cinovec Project in replacement of the Class B performance shares issued to them in 2014 as approved by Shareholders at Annual General Meeting held 18 November 2016.

 

Environmental Regulations

The Group's operations are subject to the environmental risks inherent in the mining industry.

 

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 International has not provided any non-audit services during the year.

 

Significant events after the reporting date

 

On 1 August 2017, the Company issued 364,679 ordinary shares at $0.7061 per share to 6466 Investments Pty Ltd in respect to the second advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the second advance.

 

On 10 August 2017, the Company issued 351,448 ordinary shares at $0.7327 per share to 6466 Investments Pty Ltd in respect to the third advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the third advance.

 

On 1 September 2017, the Company issued 375,905 ordinary shares at $0.685 per share to 6466 Investments Pty Ltd in respect to the fourth advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the fourth advance. 

 

Except for the matters noted above there have been no other significant events arising after the reporting date.

 

Auditor's Independence Declaration

The auditor's independence declaration for the year ended 30 June 2017 has been received and can be found on page 21 of the financial report.

 

 

REMUNERATION REPORT (AUDITED)

 

This report details the nature and amount of remuneration for each Director of the Company, and Key Management Personnel. 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 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, 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 2017 and 30 June 2016 are set out in the following tables:

 

 

2017







Group Key Management Personnel

Short-term benefits

Post-

employment

benefits

Long-term benefits

Equity-settled share-based payments

Total

% of remuneration as share based payments


Salary, fees and leave

Profit share and bonuses

Non-monetary

Other1

Super-
annuation

Other

Equity

Options2



Directors:

$

$

$

$

$

$

$

$

$


David Reeves

36,000

-

-

60,000

-

-

-

-

96,000

0%

Keith Coughlan

230,000

-

-

-

21,850

-

-

-

251,850

0%

Pavel Reichl

24,000

-

-

120,251

-

-

-

-

144,251

0%

Kiran Morzaria

24,000

-

-

-

-

-

-

-

24,000

0%

Richard Pavlik4

73,675

-

-

-

-

-

-

29,559

103,234

29%


387,675

-

-

180,251

21,850

-

-

29,559

619,335


 

2016







Group Key Management Personnel

Short-term benefits

Post-

employment

benefits

Long-term benefits

Equity-settled share-based payments

Total

% of remuneration as share based payments


Salary, fees and leave

Profit share and bonuses

Non-monetary

Other3

Super-
annuation

Other

Equity

Options



Directors:

$

$

$

$

$

$

$

$

$


David Reeves

36,000

-

-

60,000

-

-

-

103,146

199,146

52%

Keith Coughlan

200,000

-

-

-

19,000

-

-

206,292

425,292

49%

Pavel Reichl

43,508

-

-

50,157

-

-

-

77,360

171,025

45%

Kiran Morzaria5

13,355

-

-

-

-

-

-

-

13,355

-


292,863

-

-

110,157

19,000

-

-

386,798

808,818


 

 

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 to receive a salary of $200,000 per annum plus SGC of 9.5% for the period 1 July 2016 to 31 March 2017 and a salary of $240,000 per annum plus SGC of 9.5% for the period 1 April 2017 to 30 June 2017.

Mr. Kiran Morazaria to receive a standard non-executive director fee of $24,000 per annum which exclude statutory superannuation effectively from 10 December 2015.

 

D. Options issued as part of remuneration for the year ended 30 June 2017.

 

On 3 January 2017, 400,000 options with an exercise price of 0.58 on or before the 3 January 2020 was granted to Richard Pavlik who was the general manager of Geomet S.R.O at that date.. The options were valued under Black and Scholes and were recognised as a share based payment in the profit and loss. 

 

30 June 2017

Grant Details

Exercised

Lapsed



Grant Date

No.

Value 

No.

Value

No.

Value

Balance at End of Year




$


$


$










No.

Value

Group KMP









$

David Reeves

-

-

-

-

-

-

-

-

-

Keith Coughlan

-

-

-

-

-

-

-

-

-

Pavel Reichl

-

-

-

-

-

-

-

-

-

Kiran Morzaria

-

-

-

-

-

-

-

-

-

Richard Pavlik

3 January 2017

400,000

177,352





400,000

177,352



400,000

177,352

-

-

-

-

400,000

177,352

 

1.        Consulting services of Company Non-Executive Director (David Reeves) and the Company which he controls, Wilgus Investments Pty Ltd. The amounts billed related to this consulting service amounted to $60,000 (2016: $60,000) based on normal market rates and the amount outstanding at reporting date was $nil (2016: $Nil).

2.        Consulting services of Company Non-Executive Director (Pavel Reichl) and the Company which he controls, Orex consultant S.R.O. The amounts billed related to this consulting service amounted to $120,251 (2016: $50,157) based on normal market rates and the amount outstanding at reporting date was $nil (2016: $21,528).

3.        The value of the options granted to key management personnel as part of their remuneration is calculated as at the grant date using the Black and Scholes. The amount disclosed as part of remuneration for the financial year is the amount expensed over the vesting period.

4.        Balance at the end of year represents Non-Executive Director and Key Management Personnel remuneration from 3 January 2017.

5.        Consulting services of Company Non-Executive Director (David Reeves) and the Company which he controls. The amounts billed related to this consulting service amounted to $60,000 based on normal market rates and the amount outstanding at reporting date was $nil.

6.        Consulting services of Company Non-Executive Director (Pavel Reichl) and the Company which he controls, Orex consultant S.R.O. The amounts billed related to this consulting service amounted to $50,157 based on normal market rates and the amount outstanding at reporting date was $21,528.

7.        Balance at the end of year represents Non-Executive Director remuneration from 10 December 2015.

 

 

E. Options issued as part of remuneration for the year ended 30 June 2016.

 

On 31 July 2015, 3,750,000 options with an exercise price 16.6 cents on or before the 17 August 2020 were granted to Directors. The issue was approved by shareholders at a General Meeting held on the 31 July 2015. The options were valued under Black and Scholes and were recognised as a share based payment in the profit and loss. 

 

30 June 2016

Grant Details

Exercised

Lapsed



Grant Date

No.

Value1 

No.

Value

No.

Value

Balance at End of Year




$


$


$










No.

Value

Group KMP









$

David Reeves

31 July 2015

1,000,000

103,146

-

-

-

-

1,000,000

103,146

Keith Coughlan

31 July 2015

2,000,000

206,292

-

-

-

-

2,000,000

206,292

Pavel Reichl

31 July 2015

750,000

77,360

-

-

-

-

750,000

77,360

Kiran Morzaria

-

-

-

-

-

-

-

-

-



3,750,000

386,798

-

-

-

-

3,750,000

386,798

 

1.        The value of the options granted to key management personnel as part of their remuneration is calculated as at the grant date using the Black and Scholes. The expense for these options have been recognised in full in the current year given there is no applicable service period. The options vested on grant date and are all exercisable at 30 June 2016.

 

F. 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.

 

G. Loans to Directors and Executives

 

No loans have been made to Directors or Executives of the Company during, or since, the year ended 30 June 2017 (2016: nil).

 

H. 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.

 

I. Other information

Options held by Key Management Personnel

The number of options to acquire CDIs in the Company held during the 2017 and 2016 reporting period by each of the Key Management Personnel of the Group; including their related parties are set out below.

 

30 June 2017

Balance at the start of the year

Granted during the year

Exercised during the year

Other changes during the year

Balance at the1  end of the year

Vested and exercisable

Unvested

David Reeves

1,000,000

-

-

-

1,000,000

1,000,000

-

Keith Coughlan

2,000,000

-

-

-

2,000,000

2,000,000

-

Pavel Reichl

750,000

-

-

-

750,000

750,000

-

Kiran Morzaria

-

-

-

-

-

-

-

Richard Pavlik

-

400,000

-

-

400,000

-

400,000

Total

3,750,000

400,000

-

-

4,150,000

3,750,000

400,000

 

30 June 2016

Balance at the start of the year

Granted during the year

Exercised during the year

Other changesduring the year

Balance at the  end of the year

Vested and exercisable

Unvested

David Reeves

658,372

1,000,000

658,372

-

1,000,000

1,000,000

-

Keith Coughlan

4,000,000

2,000,000

4,000,000

-

2,000,000

2,000,000

-

Pavel Reichl

-

750,000

-

-

750,000

750,000

-

Kiran Morzaria

-

-

-

-

-

-

-

Total

4,658,372

3,750,000

4,658,372

-

3,750,000

3,750,000

-

 

1.        Balance at resignation date of 27 June 2017, for those directors (Mr Reichl) who retired during the year.

 

Chess Depositary Interests ('CDIs') held by Key Management Personnel

The number of ordinary CDIs held in the Company during the 2017 and 2016 reporting period held by each of the Key Management Personnel of the Group; including their related parties are set out below.

 

2017

Name

Balance at Start of year

Granted as remuneration during the year

Issued on exercise of options

Other Changes during the year

Balance at end of year1

David Reeves

-

-

-

-

-

      Indirect

3,720,244

-

-

-

3,720,244

Keith Coughlan

-

-

-

-

-

      Indirect

8,500,000

-

-

-

8,500,000

Pavel Reichl

2,778,672

-

-

-

2,778,672

Kiran Morzaria2

-

-

-

-

-

Indirect

19,860,756

-

-

7,000,000

26,860,756

Richard Pavlik

-

-

-

-

-

Total

34,859,672

-

-

7,000,000

41,859,672

 

2016

Name

Balance at Start of year

Granted as remuneration during the year

Issued on exercise of options

Other Changes during the year

Balance at end of year

David Reeves

-

-

-

-

-

      Indirect

2,565,147

-

658,372

496,725 3

3,720,244

Keith Coughlan

-

-

-

-

-

      Indirect

4,500,000

-

4,000,000

-

8,500,000

Pavel Reichl

2,778,672

-

-

-

2,778,672

Kiran Morzaria4

-

-

-

-

-

Indirect

-

-

-

19,860,756

19,860,756

Total

9,843,819

-

4,658,372

20,357,481

34,859,672

 

[1] Balance at resignation date of 27 June 2017, for those directors (Mr Reichl) who retired during the year.

[1] Mr Morzaria is a director and chief executive of Cadence Minerals Plc (previously named Rare Earth Minerals plc). One 24 November 2016, Cadence Minerals Plc acquired a further 5,000,000 CDIs as part of a CDI placement to raise $2,600,000. On 17 October 2016, Cadence Minerals Plc exercised 2,000,000 listed options at 20 cents.

[1] During the year, 496,725 CDI's at $0.06 per share were issued to Mr.Reeves related party in lieu of payment of outstanding 2015  Director & consultancy fees amounting to $30,000 approved by Shareholders at the General Meeting held on 31 July 2015.

[1] Mr Morzaria is a director and chief executive of Cadence Minerals Plc. As at the date of Mr Morzaria becoming a director of the Company, Cadence Minerals Plc had 10,334,830 CDIs. On 18 March 2016, Cadence Minerals Plc c acquired a further 9,525,926 CDIs as part of a CDI placement.

 

Performance Shares granted to Key Management Personnel

The number of performance shares held in the Company during the 2017 and 2016 reporting period held by each of the Key Management Personnel of the Group;

30 June 2017

Grant Details

Exercised

Lapsed



Grant Date

No.

Value   

No.

Value

No.

Value

Balance at End of Year




$


$


$










No.

Value

Group KMP









$

David Reeves

24 Nov 2016

542,651

289,932

-

-

-

-

542,651

289,932

Keith Coughlan

-

-

-

-

-

-

-

-

-

Pavel Reichl

24 Nov 2016

793,906

424,175

-

-

-

-

793,906

424,174

Kiran Morzaria

-

-

-

-

-

-

-

-

-



1,336,557

714,106

-

-

-

-

1,336,557

714,106

 

 

30 June 2016

Grant Details

Exercised

Lapsed



Grant Date

No.

Value   

No.

Value

No.

Value

Balance at End of Year




$


$


$










No.

Value

Group KMP









$

David Reeves

20 Feb 2014

542,651

-

-

-

(542,651)

-

-

-

Keith Coughlan

-

-

-

-

-

-

-

-

-

Pavel Reichl

20 Feb 2014

793,906

-

-

-

(793,906)

-

-

-

Kiran Morzaria

-

-

-

-

-

-

-

-

-



1,336,557

-

-

-

(1,336,557)

-

-

-

 

Description of Performance Shares

The terms of the B Class Performance Shares are as follows:

The 5,000,000 B Class Performance Shares will convert in accordance with the below:

(i)         1,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the Company's Mineral Resource at Cinovec South and Cinovec Main being entered in the State Balance. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the Mineral Resource is entered. (Explanatory Note: Under Czech law a mineral resource must be registered and henceforth treated as a resource by the Czech Government before mining licenses can be granted. A mineral resource has to be calculated according to the Czech regulations, and defended in front of a committee of state certified experts);

(ii)       1,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the issuance of the preliminary mining licenses relating to the Cinovec Project. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the final preliminary mining license is issued; and

(iii)      3,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax net present value of not less than US$250,000,000. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS,

           (together the Milestones and each a Milestone).  For the avoidance of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the B Class Performance Shares will not exceed a ratio of 1 for 1.

(iv)       If the Milestone is not achieved or the Change of Control Event does not occur by the required date, then each B Class Performance Share held by a Holder will be automatically redeemed by the Company for the sum of $0.000001 within 10 ASX trading days of non-satisfaction of the Milestone.

 

Loans to Key Management Personnel

There were no loans to Key Management Personnel during the financial year.

 

Other transactions with Key Management Personnel

Purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. The Group acquired the following services from entities that are controlled by members of the Group's KMP:

Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they control or significantly influence the financial or operating policies of those entities. During the year, the following entities provided corporate services and rental to the Group. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Entity

Nature of transactions

Key Management Personnel

Total Transactions

Payable Balance

2017

$

2016

$

2017

$

2016

$

-

Reimbursement

David Reeves

-

5,615

-

-

Wilgus Investments Pty Ltd

Rental

David Reeves

32,300

31,000

-

-

 

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

MANAGING DIRECTOR

Dated at 29 September 2017

 

AUDITOR'S INDEPENDENCE DECLARATION

 

29 September 2017

 

 

Board of Directors

European Metals Holdings Limited

Suite 12, Level 1

11 Ventnor Avenue

WEST PERTH WA 6005

 

 

Dear Directors

 

RE:       european metals holdings limited

 

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of European Metals Holdings Limited.

 

As the Audit Director for the audit of the financial statements of European Metals Holdings Limited for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of:

 

(i)       the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

 

(ii)      any applicable code of professional conduct in relation to the audit.

 

Yours sincerely

 

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD

(Trading as Stantons International)

(An Authorised Audit Company)

 

Samir R Tirodkar

Director

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2017


Note

30 June 2017

30 June 2016



$

$

Revenue - interest income


12,622

12,647

Other income


174,305

140,236

Professional fees


(237,065)

(405,248)

Audit fees

6

(31,266)

(29,911)

Directors' fees


(62,645)

(49,355)

Share based payments

16

(3,077,218)

(557,246)

Employees' benefits


(300,914)

(219,100)

Travel and accommodation


(99,464)

(27,717)

Office and rent expense


(58,738)

(59,005)

Insurance expense


(14,923)

(11,372)

Impairment expense


(55)

(56)

Share registry expense


(115,611)

(325,307)

Depreciation expense


(242)

(942)

Other expenses 


(334,658)

(59,261)

Loss before income tax


(4,145,872)

(1,591,637)

Income tax expense

3

-

-

Loss for the year


(4,145,872)

(1,591,637)

Other comprehensive income




Items that may be reclassified subsequently to profit or loss - exchange differences on translating foreign operations


238,343

(37,900)

Other comprehensive income/(loss) for the year, net of tax


238,343

(37,900)

Total comprehensive loss for the year


(3,907,529)

(1,629,537)





Net Loss attributable to:




members of the parent entity


(4,145,872)

(1,591,637)



(4,145,872)

(1,591,637)

Total Comprehensive loss attributable to:




members of the parent entity


(3,907,529)

(1,629,537)



(3,907,529)

(1,629,537)





Basic and diluted loss per CDI (cents)

7

(3.28)

(1.78)

 

The above statement should be read in conjunction with the accompanying notes.

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

 


 

Note

2017

$

2016

$

CURRENT ASSETS




 

Cash and cash equivalents

8

446,112

3,134,661

 

Other receivables

9

236,103

94,591

 

Other assets

10

37,605

79,915

 

TOTAL CURRENT ASSETS


719,820

3,309,167

 





 

NON-CURRENT ASSETS




 

Property, plant and equipment

11

349,024

-

 

Exploration and evaluation expenditure

12

9,752,757

4,940,613

 

Intangible assets


5,679

2,599

 

TOTAL NON-CURRENT ASSETS


10,107,460

4,943,212

 





 

TOTAL ASSETS


10,827,280

8,252,379

 





 

CURRENT LIABILITIES




 

Trade and other payables

13

332,250

293,890

 

TOTAL CURRENT LIABILITIES


332,250

293,890

 





 

TOTAL LIABILITIES


332,250

293,890

 





 

NET ASSETS


10,495,030

7,958,489

 





 

EQUITY




 

Issued capital

14

15,587,656

11,674,141

 

Reserves

15

3,413,445

644,547

 

Accumulated losses


(8,506,071)

(4,360,199)

 

TOTAL EQUITY


10,495,030

7,958,489

 

 

The above statement should be read in conjunction with the accompanying notes.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

 


Issued   Capital

Share Based Payment Reserve

Foreign Currency Translation Reserve

Accumulated

Losses

 

Total


$

$

$

$

$







Balance at 1 July 2015

6,788,183

97,560

125,201

(2,866,122)

4,144,822

Loss attributable to members of the Company

-

-

-

(1,591,637)

(1,591,637)

Other comprehensive loss

-

-

(37,900)

-

(37,900)

Total comprehensive loss for the year

-

-

(37,900)

(1,591,637)

(1,629,537)







Transactions with owners, recognised directly in equity






CDIs issued during the year, net of costs

4,855,958

-

-

-

4,855,958

Options lapsed

-

(97,560)

-

97,560

-

Equity based payments

30,000

557,246

-

-

587,246

Balance at 30 June 2016

11,674,141

557,246

87,301

(4,360,199)

7,958,489













Balance at 1 July 2016

11,674,141

557,246

87,301

(4,360,199)

7,958,489

Loss attributable to members of the Company




(4,145,872)

(4,145,872)

Other comprehensive loss



238,343


238,343

Total comprehensive loss for the year

-

-

238,343

(4,145,872)

(3,907,529)







Transactions with owners, recognised directly in equity






CDIs issued during the year, net of costs

3,913,515

(546,663)

-

-

3,366,852

Options lapsed





-

Equity based payments


3,077,218



3,077,219

Balance at 30 June 2017

15,587,656

3,087,801

325,644

(8,506,071)

10,495,030







 

The above statement should be read in conjunction with the accompanying notes.

 

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017

 


Note

30 June 2017

$

30 June 2016

$

CASH FLOWS FROM OPERATING ACTIVITIES




Payments to suppliers and employees


(1,085,804)

(1,072,664)

Interest received


12,622

12,647

Interest paid


-

(23)

UK listing cost


-

(242,392)

R&D Rebate


-

128,024

Net cash (used in) operating activities

17

(1,073,182)

(1,174,408)

 

CASH FLOWS FROM INVESTING ACTIVITIES




Payments for exploration and evaluation expenditure


(4,641,232)

(1,507,146)

Payments for property, plant and equipment


(352,361)


Net cash (used in)/ from investing activities


(4,993,593)

(1,507,146)

 

CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from issue of CDIs


3,530,000

5,004,382

Capital raising costs paid


(163,150)

(77,375)

Net cash from financing activities


3,366,850

4,927,007





Net increase/(decrease) in cash and cash equivalents


(2,699,925)

2,245,453

Cash and cash equivalents at the beginning of the financial year


3,134,661

 

889,208

Change in foreign currency held


11,376

-

Cash and cash equivalents at the end of financial year


446,112

3,134,661

 

The above statement should be read in conjunction with the accompanying notes.

 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017

NOTE 1:  STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

 

(a)

Basis of preparation

 


These consolidated financial statements and notes represent those of European Metals Holdings Limited ("the Company") and Controlled Entities (the "Consolidated Group" or "Group"). The separate financial statements of the parent entity, European Metals Holdings Limited, have not been presented within this financial report as is permitted by Corporations Act 2001.

The 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 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 Group is a listed public company, incorporated in the British Virgin Islands and registered in Australia.

 

(i)

Accounting policies

 


The Group has consistently applied the following accounting policies to all periods presented in the financial statements. The Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after 1 January 2017 but determined that their application to the financial statements is either not relevant or not material.

 

(ii)

Statement of Compliance


The financial report was authorised for issue on 29 September 2017.

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)

Going Concern


The directors have prepared the 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 2017, the consolidated entity comprising the Company and its subsidiaries has incurred a loss for the year amounting to $4,145,872. The Consolidated entity has a net working capital of $387,570, current liabilities of $332,250 and cash and cash equivalents of $446,112.

The directors consider these funds, combined with additional funds from any capital raising to be sufficient for planned expenditure on the mineral project for the ensuing 12 months as well as for corporate and administrative overhead costs. The directors also believe that they have the capacity to raise additional capital should that become necessary. For these reasons, the directors believe 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 by reference to the fair value of the equity instruments at the date at which they are granted.

 

 

NOTE 1:  STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

(iv)

Critical accounting estimates and judgements (continued)

 


Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.

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.

 

(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 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 includes 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 revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

 

(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)

Finance Income and Finance Costs

 


Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

 

(i)

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 statement of profit or loss when received or when the amount to be received can be reliably estimated.

 

(j)

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.

 

(k)

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:

(a)  The expenditures are expected to be recouped through successful development and exploitation of the area of interest, or

(b)   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:

(i)    Sufficient data exists to determine technical feasibility and commercial viability, and

(ii)   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.

 

(l)

Financial Instruments

 


Initial recognition and measurement

 


Financial instruments, incorporating financial assets and financial liabilities, are recognised when the Group becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention.

Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.

 


Financial assets at fair value through profit and loss

 


Financial assets are classified at "fair value through profit or loss" when they are held for trading for the purpose of short term profit taking, derivatives not held for hedging purposes, or when the are designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in profit or loss.

 


Loans and receivables

 


Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.  Such assets are recognised initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. All other loans and receivables are classified as non-current assets.

 

 (l)

Financial Instruments (continued)

 


Held-to-maturity investments

 


Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments and it is the Group's intention to hold these investments to maturity.  Such assets are recognised initially at fair value plus any directly attributable transaction costs.  They are subsequently measured at amortised cost using the effective interest rate method, less any impairment losses.

Held-to-maturity investments are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. All other investments are classified as current assets.

If during the period the Group sold or reclassified more than an insignificant amount of the held-to-maturity investments before maturity, the entire held-to-maturity investments category would be tainted and reclassified as available-for-sale.

 


Available-for-sale financial assets

 


Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary items, are recognised as a separate component of equity.  When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit and loss. Available-for-sale financial assets are included in non-current assets, except for those which are expected to mature within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as current assets.

 


Financial liabilities

 


Non-derivative financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.  Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest rate method.

 


Fair value

 


Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

 


Derecognition

 


Financial assets are derecognised where the contractual rights to cash flow expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.  Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired.  The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

 

(m)

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.

 

 (n)

Earnings Per CDI

 


Basic earnings per CDI

 


Basic earnings per CDI is determined by dividing the profit or loss attributable to ordinary shareholders of the Company, by the weighted average number of CDIs outstanding during the period, adjusted for bonus elements in CDIs issued during the period.

 


Diluted earnings per CDI

 


Diluted earnings per CDI adjusts the figure used in the determination of basic earnings per CDI to take into account the after income tax effect of interest and other financial costs associated with dilutive potential CDIs and the weighted average number of CDIs assumed to have been issued for no consideration in relation to dilutive potential CDIs, which comprise convertible notes and CDI options granted.

 

(o)

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 in income in the period in which they are incurred.

 

(p)

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.

 

(q)

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 Managing Director to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

 

(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.

 

 (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 are classified as equity. Incremental costs directly attributable to the issue of new CDIs 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 or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration. 

 

(u)

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 20.

 

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.

 

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.

 

CDI-based payment transactions

The fair value of the employee CDI options and the share appreciation right 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 fair value.

 

 

 

Note 3: INCOME TAX


30 June 2017

30 June 2016

 



$

$

 

(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


-

-

 





 

 (b) Reconciliation of income tax expense to prima facie tax payable




 

Net loss before tax


(4,145,872)

(1,591,637)

 

Prima facie tax on operating loss at 27.5% (2016: 28.5%)


(1,140,115)

(453,617)

 

Add / (Less): Non-deductible items




 

-Impairments



-

 

-Legal fees


36,315

160,692

 

-Share-based payments


846,235

158,815

 

-Other


146,455

90,351

 

Current year tax loss not recognised


111,110

43,759

 

Income tax attributable to operating loss


-

-

 

The applicable weighted average effective tax rates are as follows:


Nil%

Nil%

 

Balance of franking account at year end


Nil

Nil

 





 

a.      Deferred tax assets




 

Tax losses


174,490

137,932

 

Accruals


4,538

4,702

 

Capital raising costs


92,336

25,884

 

Unrecognised deferred tax asset


271,364

168,518

 

Set-off deferred tax liabilities


-

-

 

Net deferred tax assets


271,364

168,518

 





 

Deferred tax liabilities




 

Exploration expenditure


-

-

 



-

-

 

Set-off deferred tax assets


-

-

 

Net deferred tax liabilities


-

-

 

Tax losses




 

Unused tax losses for which no deferred tax asset has been recognised


634,510

483,972

 

Note 3: INCOME TAX (continued)

 

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 the taxation regulations of the Czech Republic where it currently holds mining license via Geomet S.R.O, and also to UK taxation regulations in respect of European Metals (UK) Limited.

 

NOTE 4:  RELATED PARTY TRANSCTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

 

Other than transactions with Key Management Personnel and their related entities (refer Note 5), there were no other related party transactions during the 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 2017 and  30 June 2016.

 

The totals of remuneration paid to KMP during the year are as follows:


2017

$

2016

$

Short-term benefits

387,675

292,863

Post-employment benefits

21,850

19,000

Equity settled

29,559

386,798

Other payments

180,251

110,157


619,335

808,818

Loans to Key Management Personnel

There were no loans to Key Management Personnel during the financial year.

 

Other transactions with Key Management Personnel

Purchases from related parties are made on terms equivalent to those that prevail in arm's length transactions. The Group acquired the following services from entities that are controlled by members of the Group's KMP:

Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they control or significantly influence the financial or operating policies of those entities. During the year, the following entities provided corporate services and rental to the Group. Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

 

Entity

Nature of transactions

Key Management Personnel

Total Transactions

Payable Balance

2017

$

2016

$

2017

$

2016

$

-

Reimbursement

David Reeves

-

5,615

-

-

Wilgus Investments Pty Ltd

Rental

David Reeves

32,300

31,000

-

-

There were no other transactions with Key Management Personnel during the financial year.

 

NOTE 6: AUDITOR'S REMUNERATION


2017

$

2016

$

Details of the amounts paid to the auditor of the Group, Stantons International Audit and Consulting Pty Ltd for audit and non-audit services provided during the year are set out below:

Auditor's services




Audit and review of financial report


31,266

29,911

 

NOTE 7: BASIC AND DILUTED LOSS PER CDI

2017

2016

Basic and diluted loss per CDI (cents)

(3.28)

(1.78)

Loss attributable to members of European Metals Holdings Limited

(4,145,872)

(1,591,637)

Weighted average number of CDI outstanding during the year

126,508,202

89,471,195

The Group is in a loss making position and it is unlikely that the conversion to, calling of, or subscription for, CDI capital in respect of potential CDIs would lead to diluted earnings per CDI that shows an inferior view of the earnings per CDI. For this reason, the diluted losses per CDI for the year ended 30 June 2017 are the same as basic loss per CDI.

 

NOTE 8: CASH AND CASH EQUIVALENTS

2017

$

2016

$

Cash at bank

446,112

3,134,661

Total cash and cash equivalents in the Statement of Cash Flows

446,112

3,134,661

 

2017

$

2016

$



58,932

40,107

177,171

54,484

236,103

94,591

 

2017

$

2016

$



37,605

79,915

37,605

79,915

 

NOTE 11: PROPERTY, PLANT AND EQUIPMENT


2017

$

2016

$

Non-current:




Land at cost


330,554

-









Buildings at cost


5,481

-

Less accumulated depreciation


(118)

-



5,363

-





Plant and equipment at cost                                                      


17,812

-

Less accumulated depreciation


(4,705)

-



13,107

-





Total Property, Plant and Equipment


349,024

-





 

NOTE 12: EXPLORATION  AND EVALUATION EXPENDITURE


2017

$

2016

$

Exploration at cost




Balance at the beginning of the year                                        


4,940,613

3,414,934

Acquisition of tenements


-

-

Exploration of tenements


4,688,558

1,502,819

Foreign exchange movement


123,586

22,860



9,752,757

4,940,613

 

NOTE 13: TRADE AND OTHER PAYABLES

2017

$

2016

$

CURRENT



Trade payables

295,619

225,842

Accrued expenses

36,631

68,048


332,250

293,890

Payables are normally due for payment within 30 days.



 

NOTE 14: ISSUED CAPITAL

 



Number

$

(a) Issued and paid up capital





130,333,909 (30 June 2016: 121,417,126 CDIs)



130,333,909

15,587,656

Total issued capital




15,587,656

 






 

(b) Movements in CDIs





 



Date

Number

$

 

Balance at the beginning of the year


1 July 2015


75,144,459


6,788,183

 

CDI capital raising


13 August 2015

9,410,578

752,846

 

Issued in lieu of director fees


17 August 2015


496,725

30,000

 

CDI capital raising


19 October 2015


2,000,000

360,000

 

CDI capital raising


18 March 2016

      13,000,000

     
1,755,000

 

CDI - exercise of options


20 April 2016

                 3,525

                353

 

CDI - exercise of options


9 May 2016

              300,000

           30,000

 

CDI - exercise of options


19 May 2016

              688,514

           68,851

 

CDI - exercise of options


1 June 2016

          1,279,372

        127,937

 

CDI - exercise of options


8 June 2016

          1,223,446

        122,345

 

CDI - exercise of options


16 June 2016

          6,045,366

        604,537

 

CDI - exercise of options


30 June 2016

        11,825,141

     1,182,514

 

Capital raising cost



-

(148,425)

 

Balance at the end of the year


30 June 2016


121,417,126


11,674,141

 






 



Date


Number

$

 

Balance at the beginning of the year


1 July 2016


121,417,126


11,674,141

 

CDI - exercise of warrants


7 October 2016

500,000

155,225

 

CDI - exercise of options


17 October 2016

2,000,000

400,000

 

CDI - exercise of warrants


22 November 2016

500,000

155,225

 

CDI capital raising


24 November 2016

5,000,000

     2,600,000

 

CDI - exercise of options


1 June 2017

250,000

258,108 

 

CDI - exercise of options


6 June 2017

250,000

258,107

 

CDI capital raising


30 June 2017

416,783

           297,500

 

Capital raising cost



-

(210,650)

 

Balance at the end of the year


30 June 2017


130,333,909


15,587,656

 

 

CDIs 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 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.

 

European Metals Holdings limited is a company limited by shares incorporated in the British Virgin Islands with an authorised share capital of 200,000,000 no par value shares of a single class. Pursuant to the prospectus dated 26 April 2012, the company issued CDIs in July 2012. The holder of the CDIs has beneficial ownership in the underlying shares instead of legal title. Legal title and the underlying shares is held by Chess Depository Nominees Pty Ltd.

 

Holders of CDIs 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.

 

(c) Movements B Class Performance Shares







Date

Number

$

Balance at the beginning of the year


1 July 2015

5,000,000

-

Performance Shares lapsed


20 February 2016

(5,000,000)

-

Balance at the end of the year


30 June 2016

-

-






Balance at the beginning of the year


1 July 2016

-

-

Performance Shares issued


24 November 2016

5,000,000

2,671,444

Balance at the end of the year



30 June 2017


5,000,000

2,671,444






The terms of the B Class Performance Shares are as follows:

The 5,000,000 B Class Performance Shares will convert in accordance with the below:

(i)         1,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the Company's Mineral Resource at Cinovec South and Cinovec Main being entered in the State Balance. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the Mineral Resource is entered. (Explanatory Note: Under Czech law a mineral resource must be registered and henceforth treated as a resource by the Czech Government before mining licenses can be granted. A mineral resource has to be calculated according to the Czech regulations, and defended in front of a committee of state certified experts);

(ii)       1,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the issuance of the preliminary mining licenses relating to the Cinovec Project. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 1,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to the date the final preliminary mining license is issued; and

(iii)      3,000,000 B Class Performance Shares will convert into Shares and an equivalent number of CDIs upon the completing of a definitive feasibility study (DFS). For clarity, the DFS must be: (i) of a standard suitable to be submitted to a financial institution as the basis for lending of funds for the development and operation of mining activities contemplated in the study; (ii) capable of supporting a decision to mine on the Permits; and (iii) completed to an accuracy of +/- 15% with respect to operating and capital costs and display a pre-tax net present value of not less than US$250,000,000. The B Class Performance Shares shall convert into the number of Shares and equivalent number of CDIs equal to 3,000,000 multiplied by 0.5 and divided by the greater of: (A) $0.50 per CDI; and (B) the volume weighted average price of CDIs (expressed as a decimal of $1.00) as calculated over the 5 ASX trading days prior to date of receipt of the completed DFS,

           (together the Milestones and each a Milestone).  For the avoidance of doubt, the number of Shares and equivalent number of CDIs which will be issued on conversion of the B Class Performance Shares will not exceed a ratio of 1 for 1.

(iv)       If the Milestone is not achieved or the Change of Control Event does not occur by the required date, then each B Class Performance Share held by a Holder will be automatically redeemed by the Company for the sum of $0.000001 within 10 ASX trading days of non-satisfaction of the Milestone.

$2,671,444 has been attributed to the Performance Shares.

 

(e) 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.

Due to the nature of the Group's activities, being mineral exploration, 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:



2017

2016


$

$

Cash and cash equivalents


446,112

3,134,661

Other receivables


236,103

94,591

Trade and other payables


(332,250)

(293,890)



349,965

2,935,362

The Group is not subject to any externally imposed capital requirements.

 

NOTE 15: RESERVES

2017

2016


$

$

Option Reserve

416,357

557,246

Performance Shares Reserve

2,671,444

-

Foreign Currency Translation Reserve

325,644

87,301

Total Reserves

3,413,445

644,547

 

Option Reserve

2017

2016


$

$

Balance at the beginning of the financial year

557,246

97,560

Options lapsed


(97,560)

Reverse of exercised Options transferred to issued capital

(546,663)

-

Equity based payments

405,774

557,246

Balance at the end of the financial year                                                                        

416,357

557,246

The options reserve is used to recognise the fair value of all options and warrants on issue but not yet exercised.

 

At 30 June 2017 the following options and warrants are outstanding:

 

·      3,750,000 unlisted options exercisable at 16.6 cents on or before 17 August 2020 were issued to key management personnel.

·      400,000 unlisted options were issued on 3 January 2017 to Richard Ravlik a director of the Company with an exercise price of 58 cents and expiry date of 3 January 2020. 250,000 of these options will vest at the completion of the Definitive Feasibility Study and the balance will vest 12 months thereafter.

 

On 7 October 2016, 500,000 warrants with an exercise price of 14 cents were exercised. The balance in the option reserve relating to the options of $85,225 has been transferred to issued capital.

 

On 22 November 2016, 500,000 warrants with an exercise price of 14 cents were exercised. The balance in the option reserve relating to the options of $85,225 has been transferred to issued capital.

 

On 1 June 2017, 250,000 options with an exercise price of 28 cents were exercised. The balance in the option reserve relating to the options of $188,108 has been transferred to issued capital.

 

On 6 June 2017, 250,000 options with an exercise price of 28 cents were exercised. The balance in the option reserve relating to the options of $188,108 has been transferred to issued capital

 

Performance Share Reserve

The Performance Share reserve records the fair value of the Performance Shares issued.  


2017

2016


$

$

Balance at the beginning of the financial year

-

-

Equity based payment

2,671,444

-

Balance at the end of the financial year

2,671,444

-

On 24 November 2016, 5,000,000 B Class Performance Shares were issued to the original vendors of the Cinovec Project in replacement of the Class B Performance shares issued in 2014. 

 

Foreign Currency Translation Reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled subsidiaries.


2017

2016


$

$

Balance at the beginning of the financial year

87,301

125,201

Movement during the year

238,343

(37,900)

Balance at the end of the financial year

325,644

87,301

 

NOTE 16: SHARE BASED PAYMENTS

 




 

The following option share-based payment arrangements existed at 30 June 2017:

On 2 May 2016, 500,000 options with an exercise price of 28 cents and exercisable on or before the 30 April 2018 were granted to the consultants of the Company as consideration for the preparation of preliminary feasibility study. The options were valued under Black and Scholes and a fair value adjustment of $376,215 were recognised as a share based payment in the profit and loss.

 

On 3 January 2017, 400,000 options with an exercise price of 58 cents and exercisable on or before the 3 January 2020 were granted to a Director of the Company. 250,000 of these options will vest at the completion of the Definitive Feasibility Study and the balance will vest 12 months thereafter. The options were valued under the Black and Scholes at $177,352. The value of the options has been pro-rated over the vesting period.  Therefore, a fair value adjustment of $29,559 was recognised as a share based payment in the profit and loss.

 

On 1 June 2017, 250,000 options were exercised for 28 cents. On 6 June 2017, 250,000 options were exercised for 28 cents.

 


Options granted to are as follows:

Grant Date

Number

$

2 May 2016

500,000

376,215

3 January 20171

400,000

29,559

Total

900,000

407,774


 

The following option share-based payment arrangements existed at 30 June 2016:

On 31 July 2015, 3,750,000 options with an exercise price 16.6 cents on or before the 17 August 2020 were granted to Directors. The issue was approved by shareholders at a General Meeting held on the 31 July 2015. The options were valued under Black and Scholes and a fair value adjustment of $386,798 and were recognised as a share based payment in the profit and loss.

 

Further details of these options are provided in the directors' report. The options hold no voting or dividend right and are unlisted.

 

A summary of the movements of all company options issued is as follows:

Options granted to are as follows:



Grant Date

Number

$

31 July 2015

3,750,000

386,798





Number

Weighted Average Exercise Price

Options outstanding as at 1 July 2015

1,200,000

$0.300

Granted

3,750,000

$0.166

Expired

(1,200,000)

$0.300

Options outstanding as at 30 June 2016

3,750,000

$0.166

Options outstanding as at 1 July 2016

3,750,000

$0.166

Granted

900,000

$0.413

Exercised

(500,000)

$0.280

Options outstanding as at 30 June 2017

4,150,000

$0.206




Options exercisable as at 30 June 2016

3,750,000

$0.166

Options exercisable as at 30 June 2017

4,150,000

$0.206

 

The following warrant share-based payments existed at 30 June 2017:

The Company made no warrant share-based payment in the financial year ended 30 June 2017.

 

On 7 October 2016, 500,000 warrants were exercised for 14 cents each. On 22 November 2016, 500,000 warrants were exercised for 14 cents each.


The following warrant share-based payments existed as at 30 June 2016:

On 10 December 2015, 1,000,000 warrants with an exercise price of 14 cents on or before the 11 November 2018 were granted to the Company's Nominated Advisor. The warrants were valued under Black and Scholes and a fair value adjustment of $170,448 was recognised as a share based payment in the profit and loss.

 

Further details of these warrants are provided in the directors' report. The warrants hold no voting or dividend rights and are unlisted.

 

A summary of the movements of all company warrants issued is as follows:



Number

Weighted Average Exercise Price

Warrants outstanding as at 1 July 2015


-

-

Granted


1,000,000

$0.14

Warrants outstanding as at 30 June 2016


1,000,000

$0.14





Warrants outstanding as at 1 July 2016


1,000,000

$0.14

Exercised


(1,000,000)

($0.14)

Warrants outstanding as at 30 June 2017


-

-





These instruments vest immediately except for the 400,000 Options issued to Richard Pavlik. The instruments hold no voting or dividend rights. The options and warrants are unlisted. All options and warrants were issued. The 400,000 options issued to Richard Pavlik during the year have vesting conditions attached which have not been met during the current year. All other options have vested. In respect of the above warrants and options issued for services provided it was determined that no fair value of the services was able to be determined, as such the fair value of the instruments was used as the fair value recorded.

 

A summary of the inputs used in the valuation of the options and warrants is as follows:

Descriptions

Options

Options

Options

Warrants

Exercise price

$0.166

$0.98

$0.58

$0.14

Share price at date of issue

$0.12

$0.28

$0.60

$0.20

Grant date

31 July 2015

19 April 2017

3 January 2017

10 December 2015

Expected volatility (i)

136.83%

126.44%

126.44%

153.46%

Expiry date

31 July 2020

30 April 2018

3 January 2020

10 December 2018

Expected dividends

-

-

-

-

Risk free interest rate

2.12%

1.62%

1.97%

2.16%

Value per option/warrant

$0.10315

$0.75243

$0.44338

$0.17045

Number of options/warrants

3,750,000

500,000

400,000

1,000,000

Total value of options

$386,798

$376,215

$177,352

$170,448

 

The following performance share-based payment arrangements existed at 30 June 2017:

Instruments granted are as follows:

B Class Performance Shares granted are as follow:

Grant Date

Number

$

18 November 2016 (related parties)

1,336,557

714,107

18 November 2016 (non-related parties)

3,663,443

1,957,337

Total

5,000,000

2,671,444


$2,671,444 has been attributed to the Performance Shares.

 

NOTE 17: CASH FLOW INFORMATION




2017

2016


$

$

(a) Reconciliation of cash flow from operating activities with the loss after tax



Loss after income tax 




(4,145,872)

(1,591,637)

Adjustments for:






Impairment of receivable




-

56

Share based payments




3,077,218

557,246

Unrealised foreign exchange loss/ (gain)




103,397

(37,556)

Depreciation expense




242

942

Changes in assets and liabilities






Decrease/ (Increase)  in other receivables




(134,580)

(65,887)

(Increase)/ Decrease in other assets




(1,856)

(46,997)

 (Decrease)/ Increase in trade and other payables




28,269

9,425

Cash flow (used in)/from operating activities




(1,073,182)

(1,174,408)

 

(b) Credit standby facilities

The Company had no credit standby facilities as at 30 June 2017 and 2016.

 

(c) Investing and Financing Activities - Non-Cash

There were no non-cash movements during the year.

 

NOTE 18: 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.

 

The Group currently has one project which takes into account each of the above mentioned aspects. The principal activity for the project is exploration of Lithium. This is expected to be the same for future projects. Accordingly, management has identified one operating segment based on the location of the project, that being the Czech Republic and two geographical segments.

 


Australia

Congo

Czech

Total

$

$

$

$

30 June 2017





REVENUE





Interest revenue

12,622

-

-

12,622

Other Revenue

174,305

-

-

174,305

Total segment revenue

186,927

-

-

186,927

Net expenditure

(4,200,411)

-

(132,388)

(4,332,799)

Loss before income tax

(4,013,484)

-

(132,388)

(4,145,872)






Segment assets

652,866

-

10,174,414

10,827,280






Segment liabilities

119,140

-

213,110

332,250






30 June 2016





REVENUE





Interest revenue

12,624

-

-

12,624

Total segment revenue

12,624

-

-

12,624

Net expenditure

(1,554,911)

-

(49,350)

(1,604,261)

Loss before income tax




(1,591,637)






Segment assets

2,835,802

-

5,416,577

8,252,379






Segment liabilities

254,630

-

39,260

293,890
















 

NOTE 19: 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:



2017

$

2016

$

Financial assets




Cash and cash equivalents


446,112

3,134,661

Other receivables               


236,103

94,591

Total financial assets


682,215

3,229,252





Trade and other payables


332,250

293,890

Total financial liabilities


332,250

293,890

 

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. The Group is not exposed to securities price risk as it does not hold any investments.

 

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 Czech Koruna..

 

At 30 June 2017, the group has financial assets and liabilities denominated in the foreign currencies detailed below:

 

Geomet   S.R.O                      


2017

2016


Amount in CZK

Amount in GBP

Amount in AUD

Amount in CZK

Amount in GBP

Amount in AUD

Cash and cash equivalents

-

-

-

-

-

-

Intercompany payables

-

31,000

3,567,245

-

31,000

1,112,243


-

31,000

3,567,245

-

31,000

1,112,243

5% effect in foreign exchange rates


1,550

 

178,362

-

1,550

 

55,612

 

There were no financial assets and liabilities denominated in foreign currencies for EMH UK and the Company.

 

(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. Although revenue from operations is minimal, 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 Statement of Financial Position and notes to the 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:



2017

2016

Financial assets

Credit Quality

$

$

Cash and cash equivalents held at BGFI Bank

High

-

-

Cash and cash equivalents held at Komercni Bank

High

31,128

365,399

Cash and cash equivalents held at Westpac Bank




·      Interest-bearing deposit

High

401,368

2,769,262

Cash and cash equivalents held at ANZ bank

High

13,616

-

Other receivables and deposits

High

236,103

94,591



682,215

3,229,252

 

Impairment losses

$55 amount due from other debtor was past due and impaired for during the year.

 

(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. Due to the lack of material revenue, the Group aims at maintaining flexibility in funding by maintaining adequate reserves of liquidity.

 

The Group did not have access to any undrawn borrowing facilities at the reporting date. In June 2017, the Company entered into an interim funding facility. This facility has been provided by an Australian based sophisticated investor, 6466 Investments Pty Ltd, and allows for the drawdown of up to AUD 2 million in tranches as required over 12 months. Any funds drawn down will convert to CDI's in the Company at a 10% discount to the 10 day VWAP in the Company's securities. The funds will be used in the preparation of the Company's Definitive Feasibility Study, for further drilling and general working capital. The issue of shares pursuant to draw downs does not require shareholder approval.

 

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting arrangements.

 

 

 

As at 30 June 2017

Carrying Amount

$

Contractual Cash flows

$

<3 months

 

$

3-6 months

$

6-24 months

$

Trade and other payables

332,250

332,250

332,250

-

-


332,250

332,250

332,250

-

-

 

 

 

As at 30 June 2016

Carrying Amount

$

Contractual Cash flows

$

<3 months

 

$

3-6 months

$

6-24 months

$

Trade and other payables

293,890

293,890

293,890

-

-


293,890

293,890

293,890

-

-

 

(iv)          Cash flow and fair value 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 income and operating cash flows are not expected to be materially exposed to changes in market interest rates in the future and the exposure to interest rates is limited to the cash and cash equivalents balances. 

 

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 rates on classes of financial assets and financial liabilities:

 

 

Floating Interest    Rate

Non-interest bearing

 2017

Total

Floating Interest    Rate

Non-interest bearing

2016

Total


$

$

$

$

$

$

Financial assets







- Within one year







Cash and cash equivalents

446,112

-

446,112

3,134,661

-

3,134,661

Other receivables

-

236,103

236,103

-

94,591

94,591

Total financial assets

446,112

236,103

682,215

3,134,661

94,591

3,229,252

   Weighted average interest rate

0.69%



1.12%



Financial Liabilities







- Within one year







Trade and other Payables

-

332,250

332,250

-

293,890

293,890

Total financial liabilities

-

332,250

332,250

-

293,890

293,890

Net financial assets/ (liabilities)

446,112

(96,147)

349,965

3,134,661

(199,299)

2,935,362

 

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 $4,461 (2016: $31,347).

 

(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 20: CONTROLLED ENTITIES

 

Subsidiaries of European Metals Holdings Limited

Controlled entity

Country of Incorporation

Class of Shares

Percentage Owned


2017

2016

Equamineral Group Limited (EGL)*

British Virgin Islands

Ordinary

100%

100%

Equamineral SA (ESA Congo)

Republic of Congo

Ordinary

100%

100%

European Metals UK Limited **

United Kingdom

Ordinary

100%

100%

Geomet S.R.O

Czech Republic

Ordinary

100%

100%

 

*EGL was incorporated on 8 December 2010 and domiciled in the British Virgin Islands. EGL is the parent company for Equamineral SA (ESA Congo) located in the Republic of Congo. EGL is the beneficial holder of 100% of the issued share capital in Equamineral SA. This company is currently in the process of being deregistered.

**EMH UK Limited is the parent company for Geomet S.R.O

 

NOTE 21: PARENT ENTITY DISCLOSURE

The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards.

 

Statement of Financial Position


2017

2016


$

$

ASSETS



Current assets

652,868

2,835,802

Non-current assets

-

-

TOTAL ASSETS

652,868

2,835,802




LIABILITIES



Current liabilities

119,140

254,630

TOTAL LIABILITIES

119,140

254,630




NET ASSETS

533,728

2,581,172

 

EQUITY

2017

2016


$

$

Issued capital

15,587,656

11,674,141

Reserves

3,087,801

557,246

Accumulated losses

(18,141,729)

(9,650,215)

TOTAL EQUITY

533,728

2,581,172

 

Profit or Loss and Other Comprehensive Income

Loss for the year


(8,491,514)

(7,088,531)

Total comprehensive loss


(8,491,514)

(7,088,531)

 

Guarantees

There are no guarantees entered into by European Metals Holdings Limited for the debts of its subsidiary as at 30 June 2017.

 

Contingent liabilities

There are no contingent liabilities as at 30 June 2017.

 

Commitments

There were no commitments as at 30 June 2017.

 

NOTE 22:  CAPITAL COMMITMENTS

 

There are no capital commitments as at 30 June 2017.

 

NOTE 23: CONTINGENT LIABILITIES

 

There are no contingent liabilities as at 30 June 2017.

 

NOTE 24: SIGNIFICANT EVENTS AFTER THE REPORTING DATE

 

On 1 August 2017, the Company issued 364,679 ordinary shares at $0.7061 per share to 6466 Investments Pty Ltd in respect to the second advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the second advance.

 

On 10 August 2017, the Company issued 351,448 ordinary shares at $0.7327 per share to 6466 Investments Pty Ltd in respect to the third advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the third advance.

 

On 1 September 2017, the Company issued 375,905 ordinary shares at $0.685 per share to 6466 Investments Pty Ltd in respect to the fourth advance of AUD$250,000 under the Funding Facility Agreement and the draw down fee of 3% (AUD$7,500) on the fourth advance. 

 

Except for the matters noted above there have been no other significant events arising after the reporting date.

 

NOTE 25:  NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS

 

Accounting Standards issued by the AASB that are not yet mandatory applicable to the Group, together with an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, as discussed below:

 

AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing 1 January 2018)

 

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.

Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group's financial instruments it is impractical at this stage to provide a reasonable estimate of such impact.

AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018).

 

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.

The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

- identify the contract(s) with a customer;

- identify the performance obligations in the contract(s);

- determine the transaction price;

- allocate the transaction price to the performance obligations in the contract(s); and

This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue.

Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019).

 

When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as either operating leases or finance leases. Lessor accounting remains similar to current practice.

The main changes introduced by the new Standard are as follows:

- recognition of the right-to-use asset and liability for all leases (excluding short term leases with less than 12 months of tenure and leases relating to low value assets);

- depreciating the right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;

- inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at the commencement date;

- application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components as a lease; and

- additional disclosure requirements.

 

The transitional provisions of AASB 16 allow a lease to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity at the date of initial application.  

Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

AASB 2014-10: Amendments to Australian Accounting Standards - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (applicable to annual reporting periods commencing on or after 1 January 2018).

 

This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over a subsidiary that is not a "business" as defined in AASB 3: Business Combinations to an associate or joint venture and requires that:

- a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised only to the extent of the unrelated investor's interest in that associate or joint venture;

- the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint venture; and

Although the directors anticipate that the adoption of AASB 2014-10 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

 

DIRECTORS' DECLARATION


 

The Directors of the Company declare that:

 

1.

The financial statements and notes, as set out on pages 22 to 56, are in accordance with the Corporations Act 2001 and:

 


(a)

comply 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 2017 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 financial statements and notes for the financial year comply with the Accounting Standards; and

 


(c)

the 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

MANAGING DIRECTOR

Dated at Perth on 29 September 2017

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF

EUROPEAN METALS HOLDINGS LIMITED

 

Report on the Audit of the Financial Report

 

Opinion

 

We have audited the financial report of European Metals Holdings Limited (the Company), and its subsidiaries (the Group), which comprises the statement of the consolidated  financial position as at 30 June 2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies, and the directors' declaration

 

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

 

(i)            giving a true and fair view of the Group's financial position as at 30 June 2017 and of its financial performance for the year then ended; and

 

(ii)           complying with Australian Accounting Standards and the Corporations Regulations 2001.

 

Basis for Opinion

 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110: Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material Uncertainty related to Going Concern

 

Without modifying our audit opinion expressed above, attention is drawn to the following matter.

 

As referred to in Note 1 to the financial statements, the consolidated financial statements have been prepared on the going concern basis.  At 30 June 2017, the Group comprising the Company and its subsidiaries had a net working capital of $387,570, cash and cash equivalents of $446,112 and current liabilities of $332,250. The consolidated entity has incurred a loss for the year amounting to $4,145,872.

 

The ability of the Group to continue as a going concern and meet its planned exploration, administration and other commitments is dependent upon the Group raising further working capital and/or successfully exploiting its mineral assets. In the event that the Group is not successful in raising further equity or successfully exploiting its mineral assets, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the Group's current and non-current assets may be significantly less than book values.

 

Key Audit Matters

 

In addition to the matter described in the material uncertainty related to going concern, we have determined the matter described below to be a key audit matter to be communicated in the report.

 

We have defined the matter described below to be key audit matter to be communicated in our report. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. This matter was addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

 

Key Audit Matters

How the matter was addressed in the audit

 

Carrying Value of Exploration and Evaluation Expenditure

 

The Company has capitalised exploration and evaluation expenditure totalling $9,752,757 (refer to Note 12) in terms of the application of the Company's accounting policy for exploration and evaluation expenditure, as set out in Note 1(k).

 

The carrying value of Capitalised Exploration and Evaluation expenditure is a key audit matter due to:

 

·        The significance of the total balance (90% of total assets);

·        The necessity to assess management's application of the requirements of the accounting standard Exploration for and Evaluation of Mineral Resources ("AASB 6"), in light of any indicators of impairment that may be present; and

·        The assessment of significant judgements made by management in relation to the Capitalised Exploration and Evaluation Expenditure.

 

 

 

 

Inter alia, our audit procedures included the following:

 

i.      Assessing the Group's right to tenure over exploration assets by corroborating the ownership of the relevant licences for mineral resources to government registries and relevant third party documentation;

 

ii.     Reviewing the directors' assessment of the carrying value of the exploration and evaluation expenditure, ensuring the veracity of the data presented and that management has considered the effect of potential impairment indicators, commodity prices and the stage of the Group's projects against AASB 6;

 

iii.    Evaluation of Group documents for consistency with the intentions for the continuing of exploration and evaluation activities in certain areas of interest, and corroborated with enquiries of management. Inter alia, the documents we evaluated included:

 

§ Minutes of meetings of the board and management;

§ Announcements made by the Group to the Australian Securities Exchange;

§ NPV Model of the Cinovec Project; and

§ Cash forecasts; and

 

iv.    Consideration of the requirements of accounting standard AASB 6.  We assessed the financial statements in relation to AASB 6 to ensure appropriate disclosures are made.

 

Other Information

 

The directors are responsible for the other information. The other information comprises the information included in the Company's annual report for the year ended 30 June 2017, but does not include the financial report and our auditor's report thereon.

 

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance opinion thereon.

 

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

Responsibilities of the Directors for the Financial Report

 

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

 

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

 

Auditor's Responsibilities for the Audit of the Financial Report

 

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

 

As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional skepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.

 

The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

 

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

 

We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

 

We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report.

 

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit.

 

The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

Report on the Remuneration Report

 

We have audited the Remuneration Report included in pages 12 to 20 of the directors' report for the year ended 30 June 2017. The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards

 

Opinion on the Remuneration Report

 

In our opinion, the Remuneration Report of European Metals Holdings Limited for the year ended 30 June 2017 complies with section 300A of the Corporations Act 2001.

 

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD

(Trading as Stantons International)

(An Authorised Audit Company)

 

 

Samir Tirodkar

Director

West Perth, Western Australia

29 September 2017

 

 

CORPORATE GOVERNANCE STATEMENT

 

This Corporate Governance summary discloses the extent to which the Company will follow the recommendations set by the ASX Corporate Governance Council in its publication 'Corporate Governance Principles and Recommendations (3rd Edition)' (Recommendations).  The Recommendations are not mandatory, however, the Recommendations that will not be followed have been identified and reasons have been provided for not following them.

The Company's Corporate Governance Plan has been posted on the Company's website at www.europeanmet.com.

PRINCIPLES AND RECOMMENDATIONS

COMPLY

EXPLANATION

Principle 1: Lay solid foundations for management and oversight

Recommendation 1.1

A listed entity should have and disclose a charter which:

(a)        sets out the respective roles and responsibilities of the board, the chair and management; and

(b)        includes a description of those matters expressly reserved to the board and those delegated to management.

Complying

The Company has adopted a Board Charter.

The Board Charter sets out the specific responsibilities of the Board, requirements as to the Boards composition, the roles and responsibilities of the Chairman and Company Secretary, the establishment, operation and management of Board Committees, Directors access to company records and information, details of the Board's relationship with management, details of the Board's performance review and details of the Board's disclosure policy.

A copy of the Company's Board Charter is stated in Schedule 1 of the Corporate Governance Plan which is available on the Company's website.

Recommendation 1.2

A listed entity should:

(a)   undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and

(b)   provide security holders with all material information relevant to a decision on whether or not to elect or re-elect a director.

Complying

(a)   The Company has detailed guidelines for the appointment and selection of the Board. The Company's Corporate Governance Plan requires the Board to undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director.

(b)   Material information relevant to any decision on whether or not to elect or re-elect a Director will be provided to security holders in the notice of meeting holding the resolution to elect or re-elect the Director.

Recommendation 1.3

A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.

Complying

The Company's Corporate Governance Plan requires the Board to ensure that each Director and senior executive is a party to a written agreement with the Company which sets out the terms of that Director's or senior executive's appointment.  

 

Recommendation 1.4

The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

Complying

The Board Charter outlines the roles, responsibility and accountability of the Company Secretary. The Company Secretary is accountable directly to the Board, through the chair, on all matters to do with the proper functioning of the Board.

Recommendation 1.5

A listed entity should:

(a)   have a diversity policy which includes requirements for the board:

(i)    to set measurable objectives for achieving gender diversity; and

(ii)  to assess annually both the objectives and the entity's progress in achieving them;

(b)   disclose that policy or a summary or it; and

(c)    disclose as at the end of each reporting period:

(i)  the measurable objectives for achieving gender diversity set by the board in accordance with the entity's diversity policy and its progress towards achieving them; and

(ii) either:

(A)     the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined "senior executive" for these purposes); or

(B)     the entity's "Gender Equality Indicators", as defined in the Workplace Gender Equality Act 2012.

 

Complying

(a)   The Company has adopted a Diversity Policy.

(i)    The Diversity Policy provides a framework for the Company to achieve a list of 6 measurable objectives that encompass gender equality.

(ii)   The Diversity Policy provides for the monitoring and evaluation of the scope and currency of the Diversity Policy. The company is responsible for implementing, monitoring and reporting on the measurable objectives.  

(b)   The Diversity Policy is stated in Schedule 10 of the Corporate Governance Plan which is available on the company website.

(c)   

(i)    The measurable objectives set by the Board will be included in the annual key performance indicators for the CEO, MD and senior executives. In addition the Board will review progress against the objectives in its annual performance assessment.

(ii)   The Company currently has no employees and utilizes external consultants and contractors as and when required.

The Board will review this position on an annual basis and will implement measurable objectives as and when they deem the Company to require them.

Recommendation 1.6

A listed entity should:

(a)   have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and

(b)   disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

Complying

(a)   The Board is responsible for evaluating the performance of the Board and individual directors on an annual basis. It may do so with the aid of an independent advisor. The process for this can be found in Schedule 6 of the Company's Corporate Governance Plan.

(b)   The Company's Corporate Governance Plan requires the Board to disclosure whether or not performance evaluations were conducted during the relevant reporting period.

Due to the size of the Board and the nature of the business, it has not been deemed necessary to institute a formal documented performance review program of individuals.  However, the Chairman intends to conduct formal reviews each financial year whereby the performance of the Board as a whole and the individual contributions of each director are disclosed.  The Board considers that at this stage of the Company's development an informal process is appropriate.

The review will assist to indicate if the Board's performance is appropriate and efficient with respect to the Board Charter.

The Board regularly reviews its skill base and whether it remains appropriate for the Company's operational, legal and financial requirements.  New Directors are obliged to participate in the Company's induction process, which provides a comprehensive understanding of the Company, its objectives and the market in which the Company operates.

Directors are encourages to avail themselves of resources required to fulfil the performance of their duties.

Recommendation 1.7

A listed entity should:

(a)   have and disclose a process for periodically evaluating the performance of its senior executives; and

(b)   disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process.

Complying

(a)   The Board is responsible for evaluating the performance of senior executives. The Board is to arrange an annual performance evaluation of the senior executives.

(b)   The Company's Corporate Governance Plan requires the Board to conduct annual performance of the senior executives. Schedule 6 'Performance Evaluation' requires the Board to disclose whether or not performance evaluations were conducted during the relevant reporting period.

During the financial year an evaluation of performance of the individuals was not formally carried out.  However, a general review of the individuals occurs on an on-going basis to ensure that structures suitable to the Company's status as a listed entity are in place.

Principle 2: Structure the board to add value

Recommendation 2.1

The board of a listed entity should:

(a)   have a nomination committee which:

(i)       has at least three members, a majority of whom are independent directors; and

(ii)      is chaired by an independent director,

and disclose:

(iii)    the charter of the committee;

(iv)     the members of the committee; and

(v)       as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)   if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, experience, independence and knowledge of the entity to enable it to discharge its duties and responsibilities effectively.

Part -Complying

(a)   The Nomination Committee was formed on 26 August 2015.  There are currently two members of the Committee being Mr Reeves (Chairman) and Mr Coughlan.   Given the Company's present size and scope of the Company's operations, no efficiencies or benefits would be gained by having a third member. The Board intends to re-evaluate the requirement for another member as the Company's operations increase in size and scale.

The role and responsibilities of the Nomination Committee are outlined in Nomination Committee Charter available online on the Company's website.

The Board devotes time at board meetings to discuss board succession issues. All members of the Board are involved in the Company's nomination process, to the maximum extent permitted under the Corporations Act and ASX Listing Rules. 

The Board regularly updates the Company's board skills matrix (in accordance with recommendation 2.2) to assess the appropriate balance of skills, experience, independence and knowledge of the entity.

Recommendation 2.2

A listed entity should have and disclose a board skill matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

Complying

 

Board Skills Matrix

Number of Directors that Meet the Skill

Executive & Non- Executive experience

4

Industry experience & knowledge

4

Leadership

4

Corporate governance & risk management

4

Strategic thinking

4

Desired behavioural competencies

4

Geographic experience

4

Capital Markets experience

4

Subject matter expertise:


- accounting

2

- capital management

4

- corporate financing

3

- industry taxation 1

0

- risk management

4

- legal

2

- IT expertise 2

0

(1)    Skill gap noticed however an external taxation firm is employed to maintain taxation requirements.

(2)    Skill gap noticed however an external IT firm is employed on an adhoc basis to maintain IT requirements.

Recommendation 2.3

A listed entity should disclose:

(a)   the names of the directors considered by the board to be independent directors;

(b)   if a director has an interest, position, association or relationship of the type described in Box 2.3 of the ASX Corporate Governance Principles and Recommendation (3rd Edition), but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and

(c)    the length of service of each director

 Complying

(a)   The Board Charter provides for the disclosure of the names of Directors considered by the Board to be independent. None of the directors are independent directors.  The details of the directors are disclosed in the Annual Report and Company website.

(b)   The Board Charter requires Directors to disclose their interest, positions, associations and relationships and requires that the independence of Directors is regularly assessed by the Board in light of the interests disclosed by Directors. Details of the Directors interests, positions associations and relationships are provided in the Annual Reports and Company website.

(c)    The Board Charter provides for the determination of the Directors' terms and requires the length of service of each Director to be disclosed. The length of service of each Director is provided in the Annual Reports and Company website.

Recommendation 2.4

A majority of the board of a listed entity should be independent directors.

Not-complying

The Board Charter requires that where practical the majority of the Board will be independent.

Given the Company's present size and scope it is currently not Company policy to have a majority of Independent Directors.

Details of each Director's independence are provided in the Annual Reports and Company website.

Recommendation 2.5

The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity.

Not-complying

The Board Charter provides that where practical, the Chairman of the Board will be a non-executive director.

Mr David Reeves is the Chairman of the Board and is not an independent director.

Keith Coughlan is the Managing Director of the Company and is not an independent director.

If the Chairman resigns the Board will consider appointing a lead independent Director.

Recommendation 2.6

A listed entity should have a program for inducting new directors and providing appropriate professional development opportunities for continuing directors to develop and maintain the skills and knowledge needed to perform their role as a director effectively.

Complying

The Board Charter states that a specific responsibility of the Board is to procure appropriate professional development opportunities for Directors. The Board is responsible for the approval and review of induction and continuing professional development programs and procedures for Directors to ensure that they can effectively discharge their responsibilities. 

Principle 3: Act ethically and responsibly

Recommendation 3.1

A listed entity should:

(a)   have a code of conduct for its directors, senior executives and employees; and

(b)   disclose that code or a summary of it.

Complying

(a)   The Corporate Code of Conduct applies to the Company's directors, senior executives and employees.

(b)   The Company's Corporate Code of Conduct is in Schedule 2 of the Corporate Governance Plan which is on the Company's website.

Principle 4: Safeguard integrity in financial reporting

Recommendation 4.1

The board of a listed entity should:

(a)   have an audit committee which:

(i)       has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and

(ii)      is chaired by an independent director, who is not the chair of the board,

and disclose:

(iii)    the charter of the committee;

(iv)     the relevant qualifications and experience of the members of the committee; and

(v)       in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)   if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its financial reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner.

Part-Complying

(a)   The Audit and Risk Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Kiran Morzaria (Chairman), Mr Reeves and Mr Coughlan. Given the Company's present size and scope of the Company's operations, no efficiencies or benefits would be gained by having a third member. The Board intends to re-evaluate the requirement for another member as the Company's operations increase in size and scale.

The role and responsibilities of the Audit and Risk Committee are outlined in Audit and Risk Committee Charter available online on the Company's website.

The Board devote time at annual board meetings to fulfilling the roles and responsibilities associated with maintaining the Company's internal audit function and arrangements with external auditors. All members of the Board are involved in the Company's audit function to ensure the proper maintenance of the entity and the integrity of all financial reporting.

Recommendation 4.2

The board of a listed entity should, before it approves the entity's financial statements for a financial period, receive from its CEO and CFO a declaration that the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

Complying

The Company's Corporate Governance Plan states that a duty and responsibility of the Board is to ensure that before approving the entity's financial statements for a financial period, the CEO and CFO have declared that in their opinion the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

Recommendation 4.3

A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

Complying

The Company's Corporate Governance Plan provides that the Board must ensure the Company's external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.

Principle 5: Make timely and balanced disclosure

Recommendation 5.1

A listed entity should:

(a)   have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and

(b)   disclose that policy or a summary of it.

Complying

(a)   The Board Charter provides details of the Company's disclosure policy. In addition, Schedule 7 of the Corporate Governance Plan is entitled 'Disclosure - Continuous Disclosure' and details the Company's disclosure requirements as required by the ASX Listing Rules and other relevant legislation.

(b)   The Board Charter and Schedule 7 of the Corporate Governance Plan are available on the Company website.

Principle 6: Respect the rights of security holders

Recommendation 6.1

A listed entity should provide information about itself and its governance to investors via its website.

Complying

Information about the Company and its governance is available in the Corporate Governance Plan which can be found on the Company's website.

Information about the Company and its governance is available in the Corporate Governance Plan which can be found on the Company website.

Recommendation 6.2

A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.

Complying

The Company has adopted a Shareholder Communications Strategy which aims to promote and facilitate effective two-way communication with investors. The Shareholder Communications Strategy outlines a range of ways in which information is communicated to shareholders.

The Shareholder Communications Strategy can be found in Schedule 11 of the Board Charter which is available on the Company website.

Recommendation 6.3

A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders.

Complying

The Shareholder Communications Strategy states that as a part of the Company's developing investor relations program, Shareholders can register with the Company Secretary to receive email notifications of when an announcement is made by the Company to the ASX, including the release of the Annual Report, half yearly reports and quarterly reports.  Links are made available to the Company's website on which all information provided to the ASX is immediately posted.

Shareholders are encouraged to participate at all EGMs and AGMs of the Company. Upon the despatch of any notice of meeting to Shareholders, the Company Secretary shall send out material with that notice of meeting stating that all Shareholders are encouraged to participate at the meeting.

Recommendation 6.4

A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.

Complying

Security holders can register with the Company to receive email notifications when an announcement is made by the Company to the ASX.

Shareholders queries should be referred to the Company Secretary at first instance.

Principle 7:  Recognise and manage risk

Recommendation 7.1

The board of a listed entity should:

(a)   have a committee or committees to oversee risk, each of which:

(i)      has at least three members, a majority of whom are independent directors; and

(ii)    is chaired by an independent director,

and disclose:

(iii)   the charter of the committee;

(iv)    the members of the committee; and

(v)     as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)   if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the process it employs for overseeing the entity's risk management framework.  

Complying

(a)   The Audit and Risk Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Kiran Morzaria (appointed Chairman on 5 September 2017), Mr Reeves and Mr Coughlan.

The role and responsibilities of the Audit and Risk Committee are outlined in Schedule 3 of the Company's Corporate Governance Plan available online on the Company's website.

The Board devote time at annual board meeting to fulfilling the roles and responsibilities associated with overseeing risk and maintaining the entity's risk management framework and associated internal compliance and control procedures.

Recommendation 7.2

The board or a committee of the board should:

(a)   review the entity's risk management framework with management at least annually to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business risks the entity faces and to ensure that they remain within the risk appetite set by the board; and

(b)   disclose in relation to each reporting period, whether such a review has taken place.

Complying

(a)     The Company process for risk management and internal compliance includes a requirement to identify and measure risk, monitor the environment for emerging factors and trends that affect these risks, formulate risk management strategies and monitor the performance of risk management systems.  Schedule 8 of the Corporate Governance Plan is entitled 'Disclosure - Risk Management' and details the Company's disclosure requirements with respect to the risk management review procedure and internal compliance and controls.

(b)     The Board Charter requires the Board to disclose the number of times the Board met throughout the relevant reporting period, and the individual attendances of the members at those meetings. Details of the meetings will be provided in the Company's Annual Report. 

Recommendation 7.3

A listed entity should disclose:

(a)   if it has an internal audit function, how the function is structured and what role it performs; or

(b)   if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes.

Complying

Schedule 3 of the Company's Corporate Plan provides for the internal audit function of the Company. The Board Charter outlines the monitoring, review and assessment of a range of internal audit functions and procedures.

Recommendation 7.4

A listed entity should disclose whether, and if so how, it has regard to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.

Complying

Schedule 3 of the Company's Corporate Plan details the Company's risk management systems which assist in identifying and managing potential or apparent business, economic, environmental and social sustainability risks (if appropriate). Review of the Company's risk management framework is conducted at least annually and reports are continually created by management on the efficiency and effectiveness of the Company's risk management framework and associated internal compliance and control procedures.

Principle 8: Remunerate fairly and responsibly

Recommendation 8.1

The board of a listed entity should:

(a)   have a remuneration committee which:

(i)       has at least three members, a majority of whom are independent directors; and

(ii)      is chaired by an independent director,

and disclose:

(iii)    the charter of the committee;

(iv)     the members of the committee; and

(v)       as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or

(b)   if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

Complying

The Remuneration Committee was formed on 26 August 2015, with directors appointed as members of the Committee, being Mr Reeves (Chairman) and Mr Coughlan.  Given the Company's present size and scope of the Company's operations, no efficiencies or benefits would be gained by having a third member. The Board intends to re-evaluate the requirement for another member as the Company's operations increase in size and scale.

The role and responsibilities of the Remuneration Committee are outlined in Remuneration Committee Charter available online on the Company's website.

The Board devote time at annual board meetings to fulfilling the roles and responsibilities associated with setting the level and composition of remuneration for Directors and senior executives and ensuring that such remuneration is appropriate and not excessive.

 

Recommendation 8.2

A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives and ensure that the different roles and responsibilities of non-executive directors compared to executive directors and other senior executives are reflected in the level and composition of their remuneration.

Complying

The Company's Corporate Governance Plan requires the Board to disclose its policies and practices regarding the remuneration of non-executive, executive and other senior directors.

Recommendation 8.3

A listed entity which has an equity-based remuneration scheme should:

(a)   have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and

(b)   disclose that policy or a summary of it.

Complying

(a)   Company's Corporate Governance Plan states that the Board is required to review, manage and disclose the policy (if any) on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme. The Board must review and approve any equity based plans.

(b)   A copy of the Company's Corporate Governance Plan is available on the Company's website.

 

ADDITIONAL INFORMATION

The following additional information is required by the Australian Securities Exchange Ltd in respect of listed public companies only.

 

1   

Shareholding as at  25 September 2017

 

(a) 

Distribution of Shareholders

 



Number

 


Category (size of holding)

of Shareholders

 


1 - 1,000

85

 


1,001 - 5,000

172

 


5,001 - 10,000

142

 


10,001 - 100,000

190

 


100,001 - and over

68

 



657

 

(b) 

The number of shareholdings held in less than marketable parcels is 53.

 





 

(c) 

Voting Rights

 


The voting rights attached to each class of equity security are as follows:

 


131,425,941 CDIs

 


-

Each CDI 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.

 


 

(d) 

20 Largest Shareholders - CDIs as at  25 September 2017

 


Name


Number of

CDIs Held

% Held of

 Issued Ordinary Capital

1.

Computershare Company Nominees Ltd

34,681,499

26.39


2.

HSBC Custody Nominees (Australia) Limited

27,052,644

20.58


3.

Armco Barriers Pty Ltd

12,794,750

9.74


4.

Inswinger Holdings Pty Ltd

8,500,000

6.47


5.

J P Morgan Nominees Australia Limited

8,102,937

6.17


6.

Mrs Eleanor Jean Reeves <Elanwi A/C>

3,720,244

2.83


7.

Merrill Lynch (Australia) Nominees Pty Limited

3,184,730

2.42


8.

Court Securities Pty Ltd

1,736,027

1.32


9.

Mr Neil Thacker MacLachlan

1,735,000

1.32


10.

Hereford Group Limited

1,571,429

1.20


11.

Lichter Services Pty Ltd <Lichter Family S/F A/C>

1,368,000

1.04


12.

Dr Jonathan Lloyd Lichter

1,015,000

0.77


13.

Hana Vanova

928,672

0.71


14.

Mr Thomas Masaichi Coveney

841,650

0.64


15.

Ms Durdica Bahoric

835,000

0.64


16.

Road & Construction Supplies of Australia Pty Ltd <Keller Super Fund A/C>

704,000

0.54


17.

Mr Craig Bartle

702,000

0.53


18.

M & K Korkidas Pty Ltd <M&K Korkidas  P/L S/Fund A/C>

685,000

0.52


19.

Citicorp Nominees Pty Limited

626,312

0.48


20.

Mr George Ronald Wilson

550,000

0.42




111,334,894

84.73




 

2   

The name of the Company Secretary is Ms Julia Beckett.

 



 

3   

The address of the principal registered office in Australia is Suite 12, Level 1, 11 Ventnor Avenue, West Perth WA 6005. Telephone +61 8 6141-3500.

 



 

4   

Registers of securities are held at the following addresses

Computershare Investor Services Limited

Level 11

172 St Georges Terrace

Perth, Western Australia 6000

 




 

5   

Securities Exchange Listing

 


Quotation has been granted for all the CDIs of the Company on all Member Exchanges of the Australian Securities Exchange Limited.

 


 

6   

Unquoted Securities

 


A total of 4,150,000 options over unissued CDIs are on issue.

 


A total of 5,000,000 B Class Performance Shares

 



 

7   

Use of Funds

The Company has used its funds in accordance with its initial business objectives.

 

 

TENEMENT SCHEDULE


Deposit

Project

Ownership

Exploration Area

Cinovec

n.a.

Czech Republic

100%

Cinovec II

Cinovec III

Cinovec IV

Preliminary mining permit

Cinovec II

Cinovec East

Cinovec III

Cinovec South

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR SESSUUFWSEEU

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