EMH raises $3M from Largest Shareholder

For immediate release

3 October 2016

EUROPEAN METALS HOLDINGS LIMITED

EUROPEAN METALS RAISES $3 MILLION FROM LARGEST SHAREHOLDER

European Metals Holdings Limited ("European Metals" or "the Company") is pleased to announce that it has today conditionally raised A$2.6 million from its largest shareholder, Rare Earth Minerals Plc ("REM") via the issue of 5 million ordinary shares (represented by Chess Depositary interests or "CDI's") in the Company ("Placing Shares") at an issue price of A$0.52 per CDI ("Placing Price"). The Placing Price is the same as the closing price of the Company's securities on ASX on Friday 30 September 2016 and represents a premium over both the 5 and 10 day volume weighted average price of the Company's securities.

The placement is subject to shareholder approval which will be sought at the Company's Annual General Meeting later this month. Application will be made for the placement shares to be admitted to trading on AIM with admission expected to take place on or around 31 October 2016. The Placing Shares will, when issued, rank pari passu in all respects with the existing ordinary shares in EMH.

In addition, REM has notified the Company of its intention to exercise 2 million unlisted options which were otherwise due to expire on 19 October 2016. The option exercise price is A$0.2 and on exercise will result in a further A$400,000 being raised by the Company. The issuance of the placement CDI's and the option conversion will take REM's relevant interest in European Metals to 20.92%.

The placement and option exercise funds, which in aggregate amount to A$3.0 million will be utilised to further develop the Cinovec Project, complete the Company's Preliminary Feasibility Study ("PFS"), and for additional working capital. As previously reported to ASX and AIM, all aspects of the PFS are progressing positively, as is the current drilling program. The Company looks forward to reporting further developments and updates shortly.

Rare Earth Minerals is a London listed investment company focused on creating a diverse portfolio of direct and indirect interests in Lithium and Rare Earth Element deposits. REM has been the largest shareholder of European Metals since July 2015, and has steadily increased its shareholding via placements and on market purchases. REM's current market capitalisation is approximately £ 55 million.

As REM is currently a 16.4% per cent shareholder in the Company, REM is a related party for the purposes of the AIM Rules. The Directors of EMH, excluding Kiran Morzaria who is a director of REM, consider, having consulted with its nominated adviser, that the terms of the placing are fair and reasonable insofar as EMH's shareholders are concerned.

European Metals Managing Director, Keith Coughlan commented on the capital raising :

"It is very pleasing to have Rare Earth Minerals' ongoing support from both financial and technical perspectives. Having strong major shareholders with aligned vision of Cinovec's potential enables us to keep our issued capital under check. It has also allowed European Metals to assert itself strategically within the lithium industry. We look forward to the future growth this will bring. This funding ensures that the Company will remain in a strong financial position beyond the PFS."

 

BACKGROUND INFORMATION ON CINOVEC

Cinovec Lithium/Tin Project

European Metals owns 100% of the Cinovec lithium-tin deposit in the Czech Republic. 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 49.1Mt @ 0.43% Li2O and an Inferred Mineral Resource of 482Mt @ 0.43% Li₂O containing a combined 5.7 million tonnes Lithium Carbonate Equivalent.

This makes Cinovec the largest lithium deposit in Europe and the fourth largest non-brine deposit in the world.

Within this resource lies one of the largest undeveloped tin deposits in the world, with total Indicated Mineral Resource of 15.7Mt @ 0.26% Sn and an Inferred Mineral Resources of 59.7 Mt grading 0.21% Sn for a combined total of 178kt of contained tin. The Mineral Resource Estimates have been previously released on 18 May 2016. The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.

A Scoping Study conducted by specialist independent consultants indicates the deposit could be amenable to bulk underground mining. Metallurgical test work has produced both battery grade lithium carbonate and high-grade tin concentrate at excellent recoveries with the Scoping Study. 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.

 

OTHER INFORMATION

Competent Person

Information in this release that relates to 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 release 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.

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.

To convert the Li Inferred Mineral Resource of 532Mt @ 0.20% Li grade (as per the Competent Persons Report dated May 2016) to Li₂O, the reported Li grade of 0.20% is multiplied by the standard conversion factor of 2.153 which results in an equivalent Li₂O grade of 0.43%.

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

Table: Conversion Factors for Lithium Compounds and Minerals

Convert from		Convert to Li	Convert to Li2O	Convert to Li2CO3
Lithium	Li	1.000	2.153	5.323
Lithium Oxide	Li2O	0.464	1.000	2.473
Lithium Carbonate	Li2CO3	0.188	0.404	1.000

 

WEBSITE

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

 

TECHNICAL GLOSSARY

The following is a summary of technical terms:

"ball and rod indices"	Indicies that provide an assessment of the energy required to grind one tonne of material in a ball or rod mill
"carbonate"	refers to a carbonate mineral such as calcite, CaCO3
"comminution"	The crushing and/or grinding of material to a smaller scale
"cut-off grade"	lowest grade of mineralised material considered economic, used in the calculation of Mineral Resources
"deposit"	coherent geological body such as a mineralised body
"exploration"	method by which ore deposits are evaluated
"flotation"	selectively separating hydrophobic materials from hydrophilic materials to upgrade the concentration of valuable minerals
"g/t"	gram per metric tonne
"grade"	relative quantity or the percentage of ore mineral or metal content in an ore body
"heavy liquid separation"	is based on the fact that different minerals have different densities. Thus, if a mixture of minerals with different densities can be placed in a liquid with an intermediate density, the grains with densities less than that of the liquid will float and grains with densities greater than the liquid will sink
"Indicated" or "Indicated Mineral Resource"	as defined in the JORC and SAMREC Codes, is that part of a Mineral Resource which has been sampled by drill holes, underground openings or other sampling procedures at locations that are too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable degree of reliability. An Indicated Mineral Resource will be based on more data and therefore will be more reliable than an Inferred Mineral Resource estimate
"Inferred" or "Inferred Mineral Resource"	as defined in the JORC and SAMREC Codes, is that part of a Mineral Resource for which the tonnage and grade and mineral content can be estimated with a low level of confidence. It is inferred from the geological evidence and has assumed but not verified geological and/or grade continuity. It is based on information gathered through the appropriate techniques from locations such as outcrops, trenches, pits, working and drill holes which may be limited or of uncertain quality and reliability
"JORC Code"	Joint Ore Reserve Committee Code; the Committee is convened under the auspices of the Australasian Institute of Mining and Metallurgy
"kt"	thousand tonnes
"LCE"	the total equivalent amount of lithium carbonate (see explanation above entitled Explanation of Lithium Classification and Conversion Factors)
"lithium"	a soft, silvery-white metallic element of the alkali group, the lightest of all metals
"lithium carbonate"	the lithium salt of carbonate with the formula Li2CO3
"magnetic separation"	is a process in which magnetically susceptible material is extracted from a mixture using a magnetic force
"metallurgical"	describing the science concerned with the production, purification and properties of metals and their applications
"Mineral Resource"	a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such a form that there are reasonable prospects for the eventual economic extraction; the location, quantity, grade geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge; mineral resources are sub-divided into Inferred, Indicated and Measured categories
"mineralisation"	process of formation and concentration of elements and their chemical compounds within a mass or body of rock
"Mt"	million tonnes
"optical microscopy"	the determination of minerals by observation through an optical microscope
"ppm"	parts per million
"recovery"	proportion of valuable material obtained in the processing of an ore, stated as a percentage of the material recovered compared with the total material present
"resources"	Measured: a mineral resource intersected and tested by drill holes, underground openings or other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data are reliably known; a measured mineral resource estimate will be based on a substantial amount of reliable data, interpretation and evaluation which allows a clear determination to be made of shapes, sizes, densities and grades. Indicated: a mineral resource sampled by drill holes, underground openings or other sampling procedures at locations too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable degree of reliability; an indicated resource will be based on more data, and therefore will be more reliable than an inferred resource estimate. Inferred: a mineral resource inferred from geoscientific evidence, underground openings or other sampling procedures where the lack of data is such that continuity cannot be predicted with confidence and where geoscientific data may not be known with a reasonable level of reliability
"SAGability"	testing material to investigate its performance in a semi-autonomous grinding mill
"spiral concentration"	a process that utilises the differential density of materials to concentrate valuable minerals
"stope"	underground excavation within the orebody where the main production takes place
"t"	a metric tonne
"tin"	A tetragonal mineral, rare; soft; malleable: bluish white, found chiefly in cassiterite, SnO2
"treatment"	Physical or chemical treatment to extract the valuable metals/minerals
"tungsten"	hard, brittle, white or grey metallic element. Chemical symbol, W; also known as wolfram
"W"	chemical symbol for tungsten

 

ADDITIONAL GEOLOGICAL TERMS

"apical"	relating to, or denoting an apex
"cassiterite"	A mineral, tin dioxide, SnO2. Ore of tin with specific gravity 7
"cupola"	A dome-shaped projection at the top of an igneous intrusion
"dip"	the true dip of a plane is the angle it makes with the horizontal plane
"granite"	coarse-grained intrusive igneous rock dominated by light-coloured minerals, consisting of about 50% orthoclase, 25% quartz and balance of plagioclase feldspars and ferromagnesian silicates
"greisen"	A pneumatolitically altered granitic rock composed largely of quartz, mica, and topaz. The mica is usually muscovite or lepidolite. Tourmaline, fluorite, rutile, cassiterite, and wolframite are common accessory minerals
"igneous"	said of a rock or mineral that solidified from molten or partly molten material, i.e., from a magma
"muscovite"	also known as potash mica; formula: KAl2(AlSi3O10)(F,OH)2.
"quartz"	a mineral composed of silicon dioxide, SiO2
"rhyolite"	An igneous, volcanic rock of felsic (silica rich) composition.  Typically >69% SiO2
"vein"	a tabular deposit of minerals occupying a fracture, in which particles may grow away from the walls towards the middle
"wolframite"	A mineral, (Fe,Mn)WO4; within the huebnerite-ferberite series
"zinnwaldite"	A mineral, KLiFeAl(AlSi3)O10 (F,OH)2; mica group; basal cleavage; pale violet, yellowish or greyish brown; in granites, pegmatites, and greisens

 

 

ENQUIRIES

European Metals Holdings Limited Keith Coughlan, Chief Executive Officer     Kiran Morzaria, Non-Executive Director   Julia Beckett, Company Secretary	Tel: +61 (0) 419 996 333 Email: [email protected]   Tel: +44 (0) 20 7440 0647   Tel: +61 (0) 6141 3504 Email: [email protected]
Beaumont Cornish (Nomad & Broker) Michael Cornish Roland Cornish	Tel: +44 (0) 20 7628 3396

 

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.