Resource Upgrade at Cinovec Lithium Project

13 October 2021

RESOURCE UPGRADE AT CINOVEC LITHIUM PROJECT TO 708MT INCLUDING 53.3 MT OF NEW MEASURED RESOURCE

European Metals Holdings Limited (EMH, Company) (ASX & AIM: EMH, Nasdaq ADS: EMHXY) is pleased to announce final drill results and an upgraded mineral resource estimate for the lithium and tin resources in the Cinovec Lithium-Tin deposit in the Czech Republic.

The Company has recently completed a drilling campaign at Cinovec South, comprising 22 diamond drill core holes for 6,622 metres, with the goal of increasing resource certainty in the existing resource model in and around the initial planned mining areas and upgrading part of the resource from the Indicated category to the higher confidence Measured category.

 Highlights

·      Re-classification of 53.3 million tonnes (MT) into Measured resource category grading 0.47% Li₂O and 0.08% Sn.

·      28.5 MT of Inferred resource upgraded to Indicated resource category

·      The Measured and Indicated resource has increased from 372.4 to 413.4 MT @ 0.47% Li₂O and 0.05%Sn.

·      The total Measured, Indicated and Inferred resources have increased by 12.3MT to 708.2MT @ 0.43% Li₂O and 0.05% Sn (0.1% Li (0.2153% Li₂O) Cut-off).

·      Increase in overall resource to 7.39 MT LCE

·      Analysis received for final 10 diamond core holes in the Geomet s.r.o. drilling program including:

o  Hole CIS-16 returned 101.7m averaging 0.59% Li₂O, incl. 11.35m @ 0.85% Li₂O

o  Hole CIS-32 returned 61m averaging 0.66% Li₂O and 0.17% Sn, incl. 30.5m @ 0.30% Sn

o  Hole CIS-33 returned 113.3m averaging 0.54% Li₂O, incl. 14.7m @ 0.60% Li₂O

o  Hole CIS-34 returned 111.4m averaging 0.54% Li₂O and 0.13% Sn, incl. 21.15m @ 0.71% Li₂O and 0.57% Sn

European Metals Executive Chairman Keith Coughlan said, "The primary stated aim of this drilling program was to convert a larger portion of the resource to the measured category to provide greater certainty of the financial model and security to financiers. The results clearly indicate that the program has been successful and the robustness and consistency of the Cinovec resource further demonstrated. As we move closer to ultimate financing and offtake discussions, this higher degree of certainty provides more funding options for the project. Results from the final drill holes of the program have been in line with or better than expected.

"As we have reported previously, because zinnwaldite is paramagnetic, wet magnetic separation,

the first stage of the ore processing has the effect of greatly increasing the grade of lithium oxide in the concentrate to approximately 2.85%. The zinnwaldite concentrate produced from Cinovec requires only roasting, compared to the calcination and roasting required of processing spodumene. This not only improves the economics, it will also have the effect of considerably reducing greenhouse gas emissions of the Project when compared to spodumene projects."

MINERAL RESOURCE UPGRADE

Independent expert Lynn Widenbar of Widenbar and Associates updated the Mineral Resource Estimate, which has been prepared and reported in accordance with the 2012 Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code (2012)). Mr Widenbar has compiled all mineral resource estimates at Cinovec to date.

The resource was last updated based on data available in November 2017, using almost 800 historic underground and surface drill holes, historic underground channel sampling plus data from an additional 32 new diamond drill holes drilled by EMH (refer to the Company's ASX release dated 28 November 2017).

An additional five holes have been drilled and assayed subsequently in 2018 (ASX releases dated 29 January 2019 and 28 February 2019) and have been incorporated in this new resource update together with the recently completed program of 22 diamond core holes (refer to the Company's ASX releases dated 22 February 2021 and 6 May 2021for previously reported results and to this announcement for further details on holes CIS-15 to17, CIS-27 and CIS-31 to 36 .

The resource classification has also been revised on the basis of the new data, interpretations and methodologies.

The Cinovec Project remains a potential low operating cost, hard rock lithium hydroxide producer, due to a number of key advantages:

• By-product credits from the recovery of tin, tungsten, potash and sodium sulphate;

• The ore is amenable to single-stage crushing and single-stage coarse SAG milling, reducing capital and operating costs and complexity;

• Paramagnetic properties of zinnwaldite allow the use of low cost wet magnetic processing to produce a lithium concentrate for further processing at relatively high recoveries;

• Relatively low temperature roasting at atmospheric pressure utilizing conventional technologies, reagent recycling and the use of waste gypsum; and

• Low cost access to extensive existing infrastructure and grid power.

A summary of the updated Lithium Resource Estimate is presented in Table 1 below. The November 2017 estimate is presented in Table 2 for comparison. The increased drilling density in the southern area has allowed re-classification of 53.3 MTs of Indicated material to the Measured category. In addition, there has been an overall increase of 14.3 MT, almost all contained within Cinovec South. Inferred resources have decreased by 28.5Mt due to being reclassified to the higher confidence Indicated category as a result of tighter infill drill spacing.  

Table 1: Cinovec Project Mineral Resource September 2021 (0.1% Li (0.2153% Li₂O) Cut-off)

Notes:

1.          Mineral Resources are not Reserves until they have demonstrated economic viability based on a feasibility study or prefeasibility study. 

2.          Mineral Resources are reported inclusive of any reserves and are prepared by Widenbar in accordance with the guidelines of the JORC Code (2012). 

3.          The effective date of the Mineral Resource is September 20, 2021.

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

5.          The operator of the project is Geomet s.r.o., 49% owned by EMH and 51% owned by CEZ a.s. Gross and Net resources attributable to EMH. are the same.

6.          Any apparent inconsistencies are due to rounding errors.

7.          MT is million tonnes.

8.          LCE is Lithium Carbonate Equivalent and is equivalent to Li₂CO₃.

Table 2: Cinovec Project Mineral Resource November 2017 (0.1% Li (0.2153% Li₂O) Cut-off)

Notes:

1.          The previous Mineral Resource estimate is provided for comparison purposes only - the Mineral Resource estimate has been updated to the estimate provided in Table 1.

2.          Refer to the Company's ASX release dated 28 November 2017 for more information.

3.          Mineral Resources are not Reserves until they have demonstrated economic viability based on a feasibility study or prefeasibility study. 

4.          Mineral Resources are reported inclusive of any reserves and are prepared by Widenbar in accordance with the guidelines of the JORC Code (2012). 

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

6.          Any apparent inconsistencies are due to rounding errors.

7.          MT is million tonnes.

8.          LCE is Lithium Carbonate Equivalent and is equivalent to Li₂CO₃.

Drilling

Between 1952 and 1989, the Cinovec deposit was sampled in two ways: in drill core and underground channel samples. Only core drilling was employed, either from surface or from underground. 

Surface drilling comprised 80 holes, totalling 30,340 meters; holes were vertical or inclined, with a typical maximum depth of 400m, though one structural hole was drilled to 1,596m. Core diameters from 220mm near surface to 110 mm at depth. Average core recovery was 89.3%.

Underground drilling used Craelius XC42 or DIAMEC drills, with 766 holes for 53,126m; both horizontal and inclined holes were drilled. Core diameter was 46mm.

Channel samples, from drift ribs and faces, were collected during detailed exploration between 1952 and 1989 by Geoindustria n.p. and Rudne Doly n.p., both Czechoslovak State companies. Drill sample length was 1 m, channel samples were 10cm x 5cm with a sample mass of about 15kg. Up to 1966, samples were collected using hammer and chisel; from 1966 a small drill (Holman Hammer) was used. 14,179 samples were collected and transported to a crushing facility.

EMH carried out diamond drilling between 2014 and 2021 which is summarised below

Table 3 EMH Drilling Programs

Collar Location and Survey

Historically, drill hole collars were surveyed with a great degree of precision by the mine survey crew. Hole locations are recorded in the local S-JTSK Krovak grid.

In 2014-21, drill collar locations were surveyed by a registered surveyor and downhole surveys were recorded by a contractor.

Topographic control in the area is excellent.

Drill Hole and Channel Sampling

Historically, core and channel samples were crushed in two steps: to -5mm, then to -0.5mm. 100g splits were obtained and pulverised to -0.045mm for analysis.

During EMH's 2014 to 2021 drilling campaigns, sample intervals vary between 50cm and 2m and honour geological or visible mineralisation boundaries. The majority of samples were 1m in length. Samples are half or quarter of core, with the latter applied for large diameter core.

Sample Preparation and Assaying

Historically, core was either split or consumed entirely for analyses.

In 2014-15, core was washed, geologically logged, sample intervals determined and marked then the core was cut in half. In 2016-21, larger core was cut in half and one-half was cut again to obtain a quarter core sample.  One-half or one-quarter samples were delivered to ALS Global in Romania for assaying after duplicates, blanks and standards were inserted into the sample stream. The remaining drill core is stored on site for reference.

Sample preparation was carried out by ALS Global in Romania, using industry standard techniques appropriate for the style of mineralisation represented at Cinovec.

Historic analytical methods included XRF and wet chemical techniques; samples collected from the new holes were analysed by fusion or 4 acid digest with ICP finish.

The following analytical methods were chosen: ME-MS81 (lithium borate fusion or 4 acid digest, ICP-MS finish) for a suite of elements including Sn and W and ME-4ACD81 (4 acid digest, ICP-AES finish) additional elements including lithium.

About 40% of samples were analysed by ME-MS81d (ME-MS81 plus whole rock package). Samples with over 1% tin are analysed by XRF. Samples over 1% lithium were analysed by Li-OG63 (four acid and ICP finish).

QAQC Summary

Historically, tin content was measured by XRF and using wet chemical methods. W and Li were analysed by spectral methods.

Analytical QA was internal and external.  The former subjected 5% of the sample to repeat analysis in the same facility.  10% of samples were analysed in another laboratory, also located in Czechoslovakia. The QA/QC procedures were set to the State norms and are considered adequate. It is unknown whether external standards or sample duplicates were used.

Overall accuracy of sampling and assaying was proved later by test mining and reconciliation of mined and analysed grades.

A comprehensive report on QAQC carried out during the Geomet drilling programs has been prepared by Dr V Sesulka et al ("QUALITY ASSURANCE AND QUALITY CONTROL PROGRAM FOR EXPLORATION DRILLING CAMPAIGNS 2014-2021 AT THE CINOVEC LI-SN-W DEPOSIT", September 2021).

During six drilling campaigns between 2014 and 2021, a total of 12,790 samples from 59 drill holes have been sampled and sent to the ALS Laboratory, Romania for multi-element and/or whole rock analyses. 2,093 of them were submitted as standards, blanks or duplicates for check the lab procedures, with an average insertion frequency of 16.4%.

A summary breakdown of QAQC samples is shown below:

Table 4 QAQC Sample Breakdown

The updated database incorporates a number of updates to drill collar locations, downhole survey and assay data. There is a total of 1,250 holes (including 59 surface diamond holes drilled to date by Geomet) and 78,086 assay intervals. This includes underground sampling (from adits, development drives and stopes from the former tin mine) which are entered as pseudo-drill holes in the database. Raw assay data has been composited to 1m intervals prior to analysis and estimation. 

All data has been imported into Micromine 2021.5 software for further analysis and estimation, including:

·      Checks for duplicate collars;

·      Checks for missing samples;

·      Checks for down hole from-to interval consistency;

·      Checks for overlapping samples;

·      Checks for samples beyond hole depth;

·      Checks for missing assays;

·      Checks for down-hole information beyond hole depth;

·      Checks for missing down-hole information;

·      Checks for missing or erroneous collar survey.

Regional and Local Geology

The Cinovec Deposit is located in the Krusne Hory/Erzgebirge metallogenic province at the northern border of the Bohemian Massif, in the Saxothuringian Zone of European Variscides (Štemprok 1989). Krusne Hory/Erzgebirge is one of the major metamorphic crystalline complexes of the European Variscan Belt, and is formed by partially concealed Late Palaeozoic multiphase granitic batholiths intruding amphibolite facies Neoproterozoic to Carboniferous age metamorphic complex (Seltmann and Štemprok 1995).

The Krusne Hory/Erzgebirge NE-SW trending anticlinorium extends over 120km in length and 45km in width, and plunges slightly to the south-west. The Erzgebirge crystalline complex exposes a seemingly coherent sequence of migmatite, para-and orthogneiss, mica schist containing intercalations of metabasalt, metarhyolite and marble, and by phyllite (Klominsky et al. 2010), and magmatic rocks.

Neoproterozoic basement rocks are represented by migmatitic gneiss and mica schist with abundant intercalated metamorphosed marl, dolomite, calc-silicate rock, quartzite, ultramafic and granulitic rocks which were migmatised and granitised during the Variscan orogeny. The overlying Lower Paleozoic sequence comprises marine clastic (mainly pelitic) and granitic rocks, which are transgressively overlain by Lower Devonian clastic rocks. Middle Devonian clastic rocks and carbonate with interbedded submarine spilite¬keratophyre volcanics are followed by the Carboniferous Culm facies (Seltmann and Štemprok 1995)

The Sn-W-Li mineralisation is hosted in an alkalic granite cupola of late Variscan age. Tin and tungsten occur mainly in oxide minerals (cassiterite and wolframite). Lithium occurs mainly in zinnwaldite, a Li-rich muscovite. Quartz veining and greisenisation are associated with the mineralisation.  Typically, highest grade lithium mineralisation is associated with the greisen but large portions of the lithium resource are also hosted in the greisenised granite or other types of altered granite.

Geological Logging

Core was logged in detail historically in a facility 6 km from the mine site.  The following features were logged and recorded in paper logs: lithology, alteration (including intensity divided into weak, medium and strong/pervasive), and occurrence of ore minerals expressed in %, and a macroscopic description of congruous intervals and structures and core recovery.

In 2014-2021, core descriptions were recorded into paper logging forms by hand and later entered into an Excel database.

Geological Interpretation and Modelling

The detailed geological logging was simplified into codes to represent greisen, granite, greisenised granite, quartz veins, the overlying barren rhyolite and overburden zones and the basal low-mica granite domain.

A geological domain model was constructed using Leapfrog software with solid wireframes representing greisen, granite, greisenised granite and the overlying barren rhyolite. In addition, a thin overburden layer is modelled near surface and a low-mica granite is modelled to form the lower limit of the mineralisation. This was used to both control interpolation and to assign density to the model.

Statistics and Variography

Analysis of sample lengths indicated that compositing to 1m was necessary. Statistics and variography have been carried out on the 1m composited drill hole data, which has been coded according to the geological wireframes. Note that variography has been carried out using unfolded coordinates to follow the variable strike and dip orientation of the mineralised domains.

Distribution analysis of Li%, Sn% and W% by geological domain showed that there were sufficient differences to justify separate interpolation of each unit.

Although the full suite of minor elements were included in the modelling process, a group of seven variables was selected (in addition to Li%, Sn% and W%) to be included in the final model to reduce its size.  These were reviewed by geological domain, and log probability plots are shown below. These additional variables are:

Cs_ppm, Ga_ppm, Nb_ppm, Rb_ppm, Ta_ppm, Sc_ppm and Zn_ppm.

Correlation analyses between Li%, Sn% and W% were reviewed for each geological domain. There appears to be no significant correlation between any of these variables, supporting the use of differing variograms for each variable and rock type.

Li%, Sn% and W% variograms showed some isotropy for some of the geological units in the plane of the mineralisation, and variogram model parameters were generate for each variable and domain. Nugget effects for Li% were 30 to 35%, with ranges up to 179m in granite, 228m in greisen and 154m in greisenised granite.

Resource Estimation

Initially, a block model representing the geology domains is generated using the geological domain wireframes. Block sizes were 10m (E-W) by 10m (N-S) by 5m (Vertical). Block sizes were chosen as between ¼ and ½ the typical drill spacing in reasonably well-drilled areas of the deposit. Subcells down to a minimum 1m x 1m x 0.5m were used to honour geological boundaries.

In addition, underground development, including drives, crosscuts and stopes (both open and filled) were generated as blocks and sub-blocks within the rock model.

Kriging Neighbourhood Analysis (KNA) has been carried out to establish optimum search and minimum/maximum composite parameters. Goodness-of-fit statistics were generated to assess the efficiency of the various parameters. The primary statistics used were kriging variance, kriging efficiency and the slope of regression.

Densities applied for Mineral Resource tonnage calculations are based on historical bulk density measurements which were reviewed by EMH staff in Czech; a dry bulk density of 2.57 t/m³ was assigned for granite and greisenised granite, and 2.70 t/m³ for greisen. Rhyolite and other materials were assigned a density of 2.60 t/m³.

Resource estimation was carried out separately for each geological domain, using only the data within each domain.

Ordinary Kriging was used as the estimation methodology, using variogram parameters derived from the variogram modelling and search parameters derived from the Kriging Neighbourhood Analysis, variogram modelling and drill hole spacing considerations. An "unfolding" search strategy was used which allowed the search ellipse orientation to vary with the locally changing dip and strike.

The primary search ellipse was 150m along strike, 150m down dip and 7.5m across the mineralisation. A minimum of 4 composites and a maximum of 8 composites were required. A second interpolation with search ellipse of 300m x 300m x 12.5m was carried out to inform blocks to be used as the basis for an Exploration Target. Block size was 10m (E-W) by 10m (N-S) by 5m.

Validation of the final resource model has been carried out in a number of ways including section comparison of data versus model, average grade comparison by domain, swathe plots and production reconciliation.

All methods of validation have produced acceptable results.

Mining and Metallurgical Assumptions

Previous mining studies and the updated Preliminary Feasibility Study established that it was feasible and economic to use large-scale, long-hole open stop mining (refer to the Company's ASX release dated 17 June 2019 for more information on the updated Preliminary Feasibility Study).

Successful locked-cycle tests ("LCT") results carried out in 2021 further support the Cinovec project's credentials to initially produce battery-grade lithium carbonate (refer to the Company's ASX release dated 19 May 2021). European Metals has demonstrated that Cinovec battery grade lithium carbonate can be easily converted into lithium hydroxide monohydrate with a commonly utilised liming plant process.

A calculation of breakeven cut-off grade for overall use in resource reporting used a total processing cost of $40/t, a recovery of 75% for Li₂CO₃ and Li₂CO₃ price of $10,000 gives a cut-off of 0.0987% Li. A value of 0.1% Li has been used for reporting; at this stage no credit has been allowed for SN, W or other minor by-products.

The Cinovec Project remains a potential low operating cost, hard rock lithium hydroxide producer, due to a number of key advantages:

• By-product credits from the recovery of tin, tungsten, potash and sodium sulphate;

• The ore is amenable to single-stage crushing and single-stage coarse SAG milling, reducing capital and operating costs and complexity;

• Paramagnetic properties of zinnwaldite allow the use of low cost wet magnetic processing to produce a lithium concentrate for further processing at relatively high recoveries;

• Relatively low temperature roasting at atmospheric pressure utilizing conventional technologies, reagent recycling and the use of waste gypsum; and

• Low cost access to extensive existing infrastructure and grid power.

Resource Classification

The Mineral Resource has been classified in the Measured, Indicated and Inferred categories, in accordance with the JORC Code (2012). A range of criteria was considered for determining the resource classification such as:

·      Geological continuity;

·      Data quality;

·      Drill hole spacing;

·      Modelling technique;

·      Estimation properties including search strategy, number of informing data and average distance of data from blocks plus output from the kriging process.

The resource classification methodology incorporated a number of parameters derived from the kriging algorithms in combination with drill hole spacing and continuity and size of mineralised domains.

Geological Continuity

Geological continuity in the main geological units is generally well-understood, particularly in areas of dense underground drilling and sampling. The classification has been designed to reflect these levels of confidence.

Data Quality

Resource classification is based on information and data provided from the EMH database.  Descriptions of drilling techniques, survey, sampling/sample preparation and analytical techniques used to generate the historical Czech database have been reviewed and generally comply with the quite rigorous standards employed by the Government agencies of the time. This historical data has been confirmed by recent drilling undertaken by EMH, which is of industry standard quality. Widenbar considers that both the historical and EMH databases represent reasonable records of the drilling undertaken at the project.

Drilling Spacing

Drill hole location plots have been used to ensure that local drill spacing conforms to the minimum expected for the resource classification. Measured material is generally confined to areas where resource definition drilling has been carried out by EMH to 50m x 50m or closer and confirms historical data. Indicated material is generally confined to areas where resource definition drilling has been carried out by EMH up to 100m x 100m and also contains significant historical data. Inferred material outside these areas is confined to having an average distance to data used in interpolation of less than 100m. Spacing in these areas is often closer than 50m x 50m (with underground drilling and sampling), but has generally been sampled only for Sn and W, with small numbers of Li samples.

Modelling Technique

The resource model was generated using an Ordinary Kriging interpolation method, with a two-pass search approach and using geological control and an unfolding methodology.

The search pass used, the number of samples used, the kriging variance and the average distance of samples from each block, were all stored in the block model.

In general the kriging variance, search pass and average distance are all broadly correlated with a combination of drill hole spacing and domain thickness.

Final Classification

The above parameters were used as a guide in combination with drill spacing and confirmation by EMH drilling to arrive at a final resource classification. The methodology used was to digitise area strings to define the Measured, Indicated and Inferred categories by referring to underlying displays of drill hole data, kriging variance, number of samples used etc.

The impact of the new EMH drill holes on the geological model and the block model have been reviewed. Globally the geology and resource model are similar to the previous models produced between 2016 and 2017, with only relatively minor local changes to grade distributions. The increase in confidence resulting from the new drill data has allowed additional areas of the block model to be upgraded in classification from Indicated to Measured, and from Inferred to Indicated.

Sample spacing used for lithium Mineral Resource estimation is wider, as development samples were not assayed for lithium; sample spacing typically ranges from 25m to 200m. Measured material is located in the area of infill drilling to approximately 50m x 50m spacing or closer covered by the recent of the EMH drilling. Estimated blocks outside the areas defined as Measured, Indicated or Inferred are considered to form part of an Exploration Target.

Sample spacing used in Mineral Resource estimation for tin ranges from continuous channel sampling up to approximately 100m. The range reflects the density of historical work with samples very closely spaced in areas of underground development and trial mining, less so in areas sampled only by surface or underground drill holes.

DRILLING RESULTS 

The Company has recently completed a drilling campaign at Cinovec South, comprising 22 diamond drill core holes for 6,622 metres. The analysis has been received from the final 10 holes, which is summarised below. The drill hole results have been prepared and reported by Dr Vojtech Sesulka in accordance with the JORC Code (2012).

·    Hole CIS-15 returned 14.4m averaging 0.83% Li₂O and 5.3m averaging 1.06% Li₂O

·    Hole CIS-16 returned 101.7m averaging 0.59% Li₂O, incl. 11.35m @ 0.85% Li₂O

·    Hole CIS-17 returned 66.3m averaging 0.46% Li₂O, incl. 12.15m @ 1.00% Li₂O, 0.26% Sn and 4.25m @ 1.55% Li₂O and 0.48% Sn

·    Hole CIS-27 returned 147m averaging 0.46% Li₂O

·    Hole CIS-31 returned 129.5m averaging 0.44% Li₂O, incl. 16m @ 0.17% Sn and 7.05m @ 0.26% Sn

·    Hole CIS-32 returned 61m averaging 0.66% Li₂O and 0.17% Sn, incl. 30.5m @ 0.30% Sn

·    Hole CIS-33 returned 113.3m averaging 0.54% Li₂O, incl. 14.7m @ 0.60% Li₂O

·    Hole CIS-34 returned 111.4m averaging 0.54% Li₂O and 0.13% Sn, incl. 21.15m @ 0.71% Li₂O and 0.57% Sn

·    Hole CIS-35 returned 124.75m averaging 0.49% Li₂O and 0.11% Sn, incl. 46.95m @ 0.60% Li₂O and 0.25% Sn

·    Hole CIS-36 returned 112.45m averaging 0.46% Li₂O

Mineralized Intercepts and Lithology

Rhyolite/granite contact in hole CIS-15 was hit in a depth of 166.0m. Minor Li interval of 17.3m averaging 0.23% Li₂O is followed by a barren zone of microgranite, hematite granite and albite granite. The major Li-Sn mineralization is hosted in greisen zone below a depth of 206.6m. Regrettably, the hole hit a stope (219.4-223.0m), and failed shortly after in a dept of 228.3m. The Li intervals in this zone are 14.4m averaging 0.83% Li₂O and 0.38% Sn in a hanging wall and 5.3m averaging 1.06% Li₂O and 0.67% Sn in a foot wall of the stope.

In hole CIS-16, the rhyolite/granite contact was intersected in 185.9m depth. The minor Li intercept of 12.1m at 0.53% Li₂O and 0.27% Sn hosts Sn high grade interval of 5m @ 0.59% Sn, incl. 2m @ 1.10% Sn. The major Li interval of 101.7m averaging 0.59% Li₂O comprises several Li high grade zones of 11.35m @ 0.85% Li₂O, 2.2m @ 1.13% Li₂O and 2.7m @ 0.93% Li₂O.

In hole CIS-17, the Li mineralization starts immediately below the rhyolite/granite contact in a depth of 84.1m. The whole portion of granite is Li mineralized, however several gaps of various thickness and Li grades slightly below the cut-off grade break up the ore zone into several discrete intervals, such as 29m at 0.24% Li₂O, 16m at 0.21% Li₂O and 35.5m at 0.38% Li₂O, incl. 3.75m @ 1.25% Li₂O in the upper section. In the deeper part of the hole, major interval of 66.3m averaging 0.46% Li₂O and 0.09% Sn hosts several Li high grade zones of 12.15m @ 1.00% Li₂O and 0.26% Sn, 4.25m @ 1.55% Li₂O, 1.7m @ 1.29% Li₂O and 1.77m @ 1.00% Li₂O, and notable 16m thick Sn intersect grading 0.22% Sn and 0.80% Li₂O.

Rhyolite/Granite contact in hole CIS-27 was reached in a depth of 177.0m. The Li mineralization begins straight below the contact with a minor interval of 30.5m averaging 0.30% Li₂O. The major Li intercept of 147.0m averaging 0.46% Li₂O runs from the dept of 213m till the bottom of the hole, and includes several Li high grade zones of 4.9m @ 0.86% Li₂O, 2.4m @ 0.89% Li₂O, 6.9m @ 0.84% Li₂O, 1m @ 1.56% Li₂O or 2.1m @ 1.20% Li₂O.

Hole CIS-31 intersected the rhyolite/granite contact in a depth of 215.5m. The Li intercept of 129.5m averaging 0.44% Li₂O is hosted in greisenized granite and greisen, with high grade Li intercepts of 6m @ 0.83% Li₂O, 3m @ 0.91% Li₂O and 3m @ 0.86% Li₂O. Additionally, several Sn zones were hit in the hole: 16m @ 0.17% Sn, 7.05m @ 0.26% Sn and 5.5m @ 0.13% Sn.

In hole CIS-32, the rhyolite/granite contact was intersected in a depth of 187.6m. The Li mineralization start immediately beneath the contact with grades slightly below the Li cut-of. The major Li interval of 61.0m averaging 0.66% Li₂O and 0.17% Sn starts in a depts of 209m, with two Li high grade zones of 6.4m @ 1.01% Li₂O and 5.0m @ 1.11% Li₂O in a lower section of the drill hole. The hole CIS-32 is mineralized in Sn, with 30.5m interval averaging 0.30% Sn, containing high grade intervals 1m @ 2.21% Sn and 6.0m @ 0.69% Sn and 0.189% W. The hole was terminated in a depth of 274.0 in a fault zone with no recovery in the last 4 meters.

In hole CIS-33, the granite contact was intersected in a depth of 180.95m. The major Li interval of 113.3m averaging 0.54% Li₂O begins some 14 m below the contact, with several Li high grade zones: 4m @ 0.86% Li₂O, 3.25m @ 0.87% Li₂O and 2m @ 1.39% Li₂O. Upper portion of the interval is mineralized in Sn with 14.7m @ 0.26% Sn.

Hole CIS-34, granite started in a depth of 167.4m, with intensive greisenization from 192m. The whole Li intercept of 111.4m averaging 0.54% Li₂O is mineralized in Sn grading 0.13% Sn. The highest Sn content is in the upper portion of the mineralized body: 21.15m averaging 0.57% Sn, incl. 2.15m @ 1.77% Sn, 1m @ 4.1% Sn and 1m @ 1.04% Sn.

In hole CIS-35, the whole granite section immediately below the contact with rhyolite in a depth of 195.25m is mineralized with 124.75m averaging 0.49% Li₂O and 0.11% Sn. Two larger Sn intervals of 12m @ 0.1% Sn and 46.95m @ 0.25% Sn take place in the upper part of the granite.

The rhyolite/granite contact in hole CIS-36 was intersected in a depth of 191.5m. Two Li intervals returned: minor interval 5.15m averaging 0.44% Li₂O, incl. 0.9m @ 1.11% Li₂O, and major interval of 112.45m averaging 0.46% Li₂O, incl. 2m @ 1.29% Li₂O, 1m @ 1.24% Li₂O and 2m @ 1.44% Li₂O. The upper portion of the ore body is mineralized in Sn with 55.85m @ 0.13% Sn (considering no Sn cut-off).

All the drill holes have been terminated in ore and not in the underlaying low-mica granite, which is considered to be the footwall of the Li-granite.

Table 5: Completed drill hole data.

Notes:

1.          Reported for the first time in this announcement

2.          Refer to the Company's ASX release dated 2 February 2021

3.          Refer to the Company's ASX release dated 6 May 2021

Table 6: Mineralized intercepts in hole CIS-15.

Table 7: Mineralized intercepts in hole CIS-16.

Table 8: Mineralized intercepts in hole CIS-17.

Table 9: Mineralized intercepts in hole CIS-27.

Table 10: Mineralized intercepts in hole CIS-31.

Table 11: Mineralized intercepts in hole CIS-32.

Table 12: Mineralized intercepts in hole CIS-33.

Table 13: Mineralized intercepts in hole CIS-34.

Table 14: Mineralized intercepts in hole CIS-35.

Table 15: Mineralized intercepts in hole CIS-36.

BACKGROUND INFORMATION ON CINOVEC

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

Geomet s.r.o. controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Geomet has been granted a preliminary mining permit by the Ministry of Environment and the Ministry of Industry. The company is owned 49% by European Metals and 51% by CEZ a.s. through its wholly owned subsidiary, SDAS..

An initial Probable Ore Reserve of 34.5MT at 0.65% Li₂O and 0.09% Sn reported 4 July 2017(Cinovec Maiden Ore Reserve - Further Information) has been declared based on stope optimizing model to cover the first 20 years mining at an output of 22,500tpa of lithium carbonate reported 11 July 2018 (Cinovec Production Modelled to Increase to 22,500tpa of Lithium Carbonate).

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

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

In June 2019 EMH completed an updated Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD1.108B and an IRR of 28.8% and confirmed that the Cinovec Project is a potential low operating cost, producer of battery grade lithium hydroxide or battery grade lithium carbonate as markets demand (refer Company's ASX release dated 17 June 2019). It confirmed the deposit is amenable to bulk underground mining. Metallurgical test-work has produced both battery grade lithium hydroxide and battery grade lithium carbonate in addition to high-grade tin concentrate at excellent recoveries. Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active 22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has strong community support.

The economic viability of Cinovec has been enhanced by the recent strong increase in demand for lithium globally, and within Europe specifically.

There are no other material changes to the original information and all the material assumptions continue to apply to the forecasts.

CONTACT

For further information on this update or the Company generally, please visit our website at www.europeanmet.com or see full contact details at the end of this release.

WEBSITE

A copy of this announcement is available from the Company's website at www.europeanmet.com.

ENQUIRIES:

The information contained within this announcement is considered to be inside information, for the purposes of Article 7 of EU Regulation 596/2014, prior to its release.  The person who authorised for the release of this announcement on behalf of the Company was Keith Coughlan, Executive Chairman.

CAUTION REGARDING FORWARD LOOKING STATEMENTS

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

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

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

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

LITHIUM CLASSIFICATION AND CONVERSION FACTORS

Lithium grades are normally presented in percentages or parts per million (ppm). Grades of deposits are also expressed as lithium compounds in percentages, for example as a percent lithium oxide (Li₂O) content or percent lithium carbonate (Li₂CO₃) content.

Lithium carbonate equivalent ("LCE") is the industry standard terminology for, and is equivalent to, Li₂CO₃. Use of LCE is to provide data comparable with industry reports and is the total equivalent amount of lithium carbonate, assuming the lithium content in the deposit is converted to lithium carbonate, using the conversion rates in the table included below to get an equivalent Li₂CO₃ value in percent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li₂CO₃ from the deposit.

Lithium resources and reserves are usually presented in tonnes of LCE or Li.

The standard conversion factors are set out in the table below:

Table: Conversion Factors for Lithium Compounds and Minerals

COMPETENT PERSON'S STATEMENT 

Information in this report that relates to exploration results for CIS-15 to17, CIS-27 and CIS-31 to 36 is based on, and fairly reflects, information and supporting documentation prepared by European Metals Competent Person Dr Vojtech Sesulka. Dr Sesulka is a Certified Professional Geologist (certified by the European Federation of Geologists), a member of the Czech Association of Economic Geologist, and a Competent Person as defined in the JORC Code 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Sesulka has provided his prior written consent to the inclusion in this report of the matters based on his information in the form and context in which it appears. Dr Sesulka is an independent consultant with more than 10 years working for the EMH or Geomet companies. Dr Sesulka does not own any shares in the Company and is not a participant in any short or long term incentive plans of the Company.

The information in this release that relates to Mineral Resources and Exploration Targets is based on, and fairly reflects, information and supporting documentation prepared by Mr Lynn Widenbar. Mr Widenbar, who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australasian Institute of Geoscientists, 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 has provided his prior written consent to the inclusion in this report of the matters based on his information in the form and context that the information appears. Mr Widenbar does not own any shares in the Company and is not a participant in any short or long term incentive plans of the Company.

PREVIOUSLY REPORTED INFORMATION

The information in this report relating to Exploration Results, Ore Reserves, production targets and forecast financial information derived from a production target (other than information being reported for the first time in this report) is extracted from the Company's ASX releases referred to in the body of the report and are available to view on the Company's ASX announcements platform (ASX: EMH). The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

The information in this report relating to the Mineral Resources reported in November 2017 is extracted from the Company's ASX release dated 28 November 2017. The information has been provided for comparison only, as the mineral resource estimate has been updated by this report.
 

European Metals Ltd - Cinovec Deposit - September 2021

JORC Code, 2012 Edition - Table 1

Section 1 Sampling Techniques and Data

Section 2 Reporting of Exploration Results

(Criteria listed in section 1 also apply to this section.)

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)