Annual Financial Report

RNS Number : 4240C

Europa Metals Ltd

01 October 2018

 

1 October 2018

Europa Metals Ltd

("Europa Metals", the "Company" or the "Group")(ASX, AIM, JSE: EUZ)

Final Results for the Year Ended 30 June 2018

Europa Metals, the European lead-zinc explorer, announces its final results for the year ended 30 June 2018.

A pdf copy of the full Annual Report and Accounts is available at the following link: http://www.rns-pdf.londonstockexchange.com/rns/4240C_1-2018-9-28.pdf  and will be posted to shareholders in due course.

For further information on the Company, please visit www.europametals.com or contact:

Europa Metals Ltd

Dan Smith, Non-Executive Director and Company Secretary (Australia)

T: [phone]

Laurence Read, Executive Director (UK)

T: [phone]

Strand Hanson Limited (Nominated Adviser)

Rory Murphy/Matthew Chandler

T: [phone]

Turner Pope Investments (TPI) Limited (Joint Broker)

Andy Thacker

T: [phone]

Sasfin Capital Proprietary Limited (a member of the Sasfin group)(JSE Sponsor)

Sharon Owens
T (direct): [phone]

Peterhouse Corporate Finance Limited (Joint Broker)

Lucy Williams/Duncan Vasey/Heena Karani

T: [phone] 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

Extracts from the Company's audited Report and Accounts are set out below:

Introduction to the Group

Europa Metals Ltd ("Europa Metals", "EUZ" or the "Company") is an Australian company listed on the Australian Securities Exchange (ASX: EUZ) and on the JSE Limited (JSE: EUZ) and quoted on the AIM market of the London Stock Exchange plc (AIM: EUZ). During the year, the Company undertook operational restructuring which, led to the divestment of its South African iron ore operations, such that the Company is now solely focused on its Spanish lead-zinc-silver operations.

In carrying out its operations during the reporting period, the Group incurred a loss after income tax for the period from 1 July 2017 to 30 June 2018 of $1,883,446 (2017: loss of $11,286,803). The Group had net assets of $2,484,371 (2017: $1,570,393) as set out in the Statement of Financial Position.

Review of operations and activities

On 3 July 2017, the Company announced that it had disposed of Batavia Ltd, its wholly-owned Mauritian subsidiary which held all of the Group's South African assets, including the Moonlight Iron Ore Project in Limpopo Province, northern South Africa. The disposal effectively ended the Group's exposure to all of the costs and commitments associated with maintaining the Moonlight Project in good standing and enabled the Company to focus its resources on its portfolio of European lead-zinc-silver exploration assets.

Lead-Zinc-Silver Exploration Projects, Spain

On 28 July 2017, the Company announced the initial results from its drilling programme at the Toral Project, Spain. The near surface drilling campaign at the project, designed to determine the presence of near surface mineralisation, returned core containing visible lead-zinc from every one of the 6 drill holes completed.  The Company announced the results of the drill programme assays on 7 September 2017, which confirmed the presence of lead-zinc intersections in all six holes with significant high grade lead-zinc intersections in all of the six holes. Highlights included:

·   All of the 1,046.9m drilled occurred within 200 metres of the surface.

·   Intersection of lead-zinc anomalies in all six drill holes.

·   Key intersections encountered (all widths given along the core):

o    Hole TOR17009 1 metre grading at 1.22%Pb, 9.77%Zn (10.99% combined Pb/Zn);

o    Hole TOR17012 3 metres grading at 0.64%Pb, 6.46%Zn (7.10% combined Pb/Zn);

o    Hole TOR17012 1 metre grading at 0.67%Pb, 16.10%Zn (16.77% combined Pb/Zn);

o    Hole TOR17013 1 metre grading at 6.51%Pb, 6.50%Zn (13.01% combined Pb/Zn); and

o    Hole TOR17013 3 metres grading at 6.03%Pb, 5.49%Zn (11.52% combined Pb/Zn).

On 22 November 2017, the Company announced that, following a formal application to the Director General of Mines of the Province of Leόn, the exploration licence in respect of the Group's Toral lead-zinc-silver project had been renewed for a further 3 year term to November 2020.

On 11 December 2017, the Company provided an update on its work programme to define a maiden JORC (2012) compliant resource estimate for Toral. As part of this programme, Addison Mining Services Limited ("AMS") had successfully undertaken a site visit, including data location checks, data collection and analytical review procedures, including check sampling for the purpose of verification and validation of the project's database for use in JORC 2012 compliant modelling and estimation. The maiden JORC (2012) compliant resource estimate was expected to be received in early 2018.

On 6 February 2018, the Company announced a Maiden independent Inferred Mineral Resource estimate completed in accordance with JORC (2012) in respect of the Toral Project, Spain. A new block model combined with an initial digital geological model had increased the level of understanding of the mineralogical and geological controls at Toral, and the Company expressed confidence in being able to enhance and potentially expand the resource going forwards, subject to undertaking additional drilling and exploration activities.

Maiden JORC (2012) Independent Resource Estimate, Toral Project

The Inferred resource for the Toral Pb-Zn-Ag mineralisation located on the Toral property had been estimated at various cut-offs (see Table below). The Company had reviewed the new model with AMS, and concluded that a 4% cut-off was appropriate utilising estimated mining parameters typical for similar types of projects and mineralogy, and a historical three-year trailing average for metal prices.

Zn Price Used:            US$2,400/t                  US$c/lb1.09
Pb Price Used:            US$2,000/t                  US$c/lb0.91
Ag Price Used:                                                US$17/oz

The maiden resource successfully identified potentially economic mineralisation ranging from surface to approximately 1,100m below surface. The block model currently extends for a strike length of 3,300m and is still open to the east long strike and also at depth where it has not yet been closed off.

Cut-Off Zn Eq (PbAg)%	Tonnes (Millions)	Density	Zn_Eq (Pb)%	Zn Eq (PbAg)%	Zn %	Pb %	Ag g/t	Zn Tonnes (000's)	Pb Tonnes (000's)	Ag Troy Oz (Millions)
6.0	9	2.65	8.8	9.5	5.0	4.3	31	470	400	9
5.0	12	2.57	7.8	8.4	4.6	3.7	28	580	470	11
4.0	16	2.52	6.9	7.5	4.0	3.3	25	670	540	13
3.0	20	2.50	6.2	6.7	3.7	2.9	23	750	600	15

Table: Summary of Inferred mineral resources for the Toral property reported at a 4.0% Zn equivalent cut-off grade and estimated grade and tonnages at the various cut off grades. 

On 19 June 2018, the Company announced that it had engaged the services of UK based AMS with immediate effect, to commence an initial Scoping Study (the "Study") on the Company's 100% owned Toral lead, zinc and silver project. The principal objective of the Study is to determine first economics on the Toral Project, reported on by a fully accredited and independent mining consultancy group. The findings of the Study will be disclosed to the market following completion, which is currently anticipated during Q4 2018.

AMS' Principal Geologist, James Hogg, and Associate Principal Mining Engineer, Julian Bennett, will lead the Study project team dedicated to the Toral Project. The dedicated Study team is working alongside the Company's existing in-country management, under the direction of Myles Campion, Technical Director, and Jesus Montero, principal Mining Engineer from Mining Sense. 

Competent Person's Statement 

The Toral maiden and updated resource estimates were prepared by Mr J.N. Hogg, MSc. MAIG Principal Geologist for AMS, who is an independent Competent Person within the meaning of the JORC (2012) code and a qualified person under the AIM guidance note for Mining and Oil & Gas companies. The maiden and updated resource estimates were aided by Mr R. J. Siddle, MSc, MAIG Senior Resource Geologist for AMS under the guidance of the competent person. Mr Hogg has reviewed and verified the technical information that forms the basis of, and has been used in the preparation of, the mineral resource estimates, including all analytical data, diamond drill hole logs, QA/QC data, density measurements, and sampling, diamond drilling and analytical techniques. Mr Hogg consents to the inclusion in this report of the matters based on the information, in the form and context in which it appears. Mr Hogg has also received and approved the technical information in his capacity as a qualified person under the AIM Rules for Companies.

Corporate

Board Changes

On 26 September 2017, the Company announced that Mr Justin Tooth, Executive Chairman had resigned from the Board of Directors of the Company with immediate effect, in order to pursue his other business interests. Additionally, Mr Laurence Read, previously a Non-executive Director, became an Executive Director.

On 17 October 2017, the Company announced the appointment of Mr Myles Campion as an Executive Director. Mr Campion has a comprehensive background in all technical and financial facets of the resources sector, specialising internationally in resource evaluation and project assessment. This follows a 10-year career as an exploration and mine site geologist in Australia covering base metals and gold. He holds a BSc (Hons) in Geology from University of Wales College, Cardiff and an MSc (MinEx) from the Royal School of Mines in London, and also holds a Graduate Diploma of Business (Finance).

On 12 January 2018, the Company announced the appointment of Mr Colin Bird as a Non-Executive Director and Chairman of the Company. Mr Bird is a chartered mining engineer with extensive multi-commodity mine management experience in Africa, Europe, Latin America and the Middle East. Mr Bird's operational and corporate experience, includes the development of the Jubilee Metals Group production portfolio, concentrating on Platinum Group Metals in South Africa, in addition to the successful sale of Kiwara plc.

On 16 January 2018, the Company announced the resignation of Mr Grant Button as Company Secretary and the appointment of Mr Daniel Smith as a Non-Executive Director and Company Secretary. Mr Smith is a member of the Australian Institute of Company Directors and the Governance Institute of Australia and has over 10 years' primary and secondary capital markets expertise. On 1 February 2018, the Company announced the resignation of Mr Grant Button as a Non-Executive Director.

Name Change

On 4 June 2018, the Company announced that the Australian Securities and Investments Commission had approved the change of the Company's name to Europa Metals Ltd. Coinciding with the change of company name, the ticker code for the Company was changed to EUZ on the ASX, AIM and JSE.

Capital Raisings

On 8 September 2017, the Company announced that it had conditionally raised in aggregate, £193,304 (approximately A$321,590) before expenses through a placement via Peterhouse Corporate Finance Limited, as agent to the Company, of 214,782,526 new ordinary shares of no par value each in the capital of the Company at a price of 0.09 pence per new ordinary share. The placement was completed on 14 September 2017.

On 2 November 2017, the Company announced that it had conditionally raised £185,250 before expenses through a placement via Beaufort Securities Limited of 370,499,858 new ordinary shares of no par value each in the capital of the Company at a price of 0.05 pence per new ordinary share together with the issue of 185,249,929 options exercisable at a price of 0.075 pence per new ordinary share for a period of thirty months from their date of issue. The placing was completed on 8 November 2017.

On 9 February 2018 the Company announced the expiry of 2,000,000 unlisted options exercisable at GBP0.0075 and 3,000,000 unlisted options exercisable at GBP0.02 on or before 2 February 2018, which had lapsed unexercised.

On 22 May 2018, and further to its previous announcement of 21 March 2018, the Company announced that following shareholder approval it had issued 1,739,130,435 new ordinary shares of no par value each in the capital of the Company at a price of 0.0575 pence per share, raising approximately £1m (before expenses). The proceeds of the fundraising provided necessary financing and general working capital to enable the Company to progress the resource delineation and commissioning of an initial scoping study in respect its wholly owned Toral lead-zinc-silver project.

Shareholder Meetings

At a General Meeting of the Company held on 18 October 2017, shareholders ratified the Company's previous capital raising of £225,521 completed on 23 June 2017.

At the Annual General Meeting of the Company held on 30 November 2017, shareholders approved, inter alia, the re-election of Messrs Button, Read and Campion.

At a General Meeting of the Company held on 21 May 2018, shareholders approved, amongst other things, the issue of shares relating to a capital raising as well as the ratification of a previous fundraising, the issue of placing options to brokers and advisers of the Company, incentive options to Directors of the Company, the conversion of outstanding Director's fees into shares, and the change of the Company's name from Ferrum Crescent Limited to Europa Metals Ltd.

Sponsor and Broker

On 8 September 2017, the Company announced the appointment of Peterhouse Corporate Finance Limited as an AIM broker to the Company.

On 21 March 2018, the Company announced the appointment of Turner Pope Investments (TPI) Limited as the Company's joint broker on AIM.

On 2 May 2018, the Company announced that in accordance with paragraph 2.6 of the JSE Limited Listings Requirements, Sasfin Capital Proprietary Limited had been appointed as the Company's JSE sponsor with effect from 1 May 2018.

Significant events after the reporting date

There are subsequent events to report, as follows:

On 16 July 2018, the Company announced that it had contracted a combination drill rig for mobilisation to its Toral lead-zinc-silver project located in the Province of Leόn, northern Spain, during August 2018. The Combination rig and associated operating crew was to be supplied by Sondeos y Perforaciones Industriales de Bierzo SA ("SPI") and overseen by the Company's on-site exploration team. The combination rig is one of only a few of its type in Spain and had been deployed on a series of recent, successful drilling programmes. Such rigs are used extensively on Australian drilling programmes.

On 30 July 2018, the Company announced the expiry of 205,949,134 unlisted options exercisable at £0.003 per share on or before 29 July 2018.

On 10 August 2018, and further to its previous announcement of 27 July 2018, the Company announced that it had raised approximately £563,516 (approximately A$0.98m) (before expenses), through the issue of 727,118,650 new ordinary shares of no par value each in the capital of the Company at an issue price of 0.0775 pence per share. The new ordinary shares were issued under the Company's existing placement capacity under ASX Listing Rule 7.1. The net proceeds from the fundraising are to be utilised towards funding a planned phase 2 work programme at the Company's Toral lead-zinc-silver project, as well as providing additional general working capital for the Group.

On 28 August 2018, the Company announced that the abovementioned combination drill rig had been successfully mobilised at the Toral lead-zinc-silver project. Further to the mobilisation and arrival on site of the combination rig, drilling will initially ascertain the potential continuation of the mineralised structure outside of the current defined JORC (2012) resource area. With a significant inferred resource estimate already established for the main Toral project area, the extension drilling to the East will seek to identify the presence of further mineralisation/hosting structures. Subsequent to completion of the extension drilling, the Company will concentrate on drilling within the upper zone of the identified JORC (2012) resource area, before moving on to a Phase II programme, targeting key areas within the high grade zone of the inferred resource in order to increase resource confidence levels. In addition, the Company announced that further to an intensive 6 week process, its new geological team had successfully relogged all priority intersections from the historical drill core from the Toral project stored at the National Litoteca, located in Andalucia, Spain.

On 13 September 2018, the Company announced that the Board had decided to initiate the Change of Land Use processes needed for the potential full future development of a mine at its Toral project and had engaged a specialist consultancy, MAGMA Soluciones Ambientales SL, to progress the requisite applications across the three distinct municipalities overlapping the project's licence area. The process is currently estimated to take approximately 18 months.

On 20 September 2018, the Company announced an updated JORC (2012) mineral resource estimate for its Toral project.  The abovementioned re-logging of historic drill core held at the National Litoteca from the Toral project had resulted in significantly higher bulk density measurements than those used for the Maiden resource estimate completed by AMS between November 2017 and January 2018, as announced by the Company on 6 February 2018.

Accordingly, the updated mineral resource estimate for the Toral lead-zinc-silver deposit comprised:

·     19Mt @ 6.9% Zn Equivalent (including Pb credits) and 24g/t Ag

·     720,000 tonnes of Zinc, 570,000 tonnes of Lead and 14 million ounces of Silver

On 24 September 2018, the Company announced a further change in its registered office address.

Likely developments and expected results

The Group will continue to carry out its business plans, by:

·        Conducting its ongoing phase 1 extension drilling programme and thereafter proceed on to its planned phase 2 activities at its wholly owned Toral lead-zinc-silver project in Spain;

·        Finalising an intial scoping study for the Toral Project, which will provide the Company with the level of confidence and understanding of the technical and commercial characteristics of the project to justify and drive further exploration and development;

·        Seeking and evaluating further strategic acquisition opportunities within the exploration and mining industry to potentially enter into additional advanced projects that will add value to the Group; and

·        Continuing to meet its statutory commitments relating to its exploration tenements and carrying out exploration activities in accordance with its stated strategy, whilst carefully conserving the Group's cash reserves in order to be able to take advantage of potential value adding opportunities.

There can be no guarantee either that further exploration of the Group's projects will result in exploration success or that any potential additional strategic acquisitions considered by the Directors to be likely to add value to the Group will become available to the Group. 

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the year ended 30 June 2018

		2018	2017
		$	$
Revenue from continuing operations
Revenue		9	17,956
Other income		71,310	175,851
Administration expenses		(1,296,517)	(1,595,427)
Occupancy expenses		(27,655)	(60,139)
Exploration expenditure		(413,393)	(514,439)
Foreign exchange gain/(loss)		121,513	(37,064)
Share based payments		(338,713)	(11,057)
Loss from sale of subsidiaries		-	(9,262,484)
Loss before taxation		(1,883,446)	(11,286,803)
Income tax benefit / (expense)		-	-
Loss after income tax for the year from continuing operations		(1,883,446)	(11,286,803)
Net loss for the year		(1,883,446)	(11,286,803)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net exchange gain/ (loss) on translation of foreign operation		230,474	(930,007)
Other comprehensive income/ (loss) for the year, net of tax		230,474	(930,007)
Total comprehensive loss for the year		(1,652,972)	(12,216,810)
Net loss for the year attributable to:
Equity holders of the Parent		(1,652,972)	(11,286,803)
		(1,652,972)	(11,286,803)
Total comprehensive loss for the period attributable to:
Equity holders of the Parent		(1,652,972)	(12,216,810)
		(1,652,972)	(12,216,810)
Loss per share		Cents per share	Cents per share
Basic loss for the year attributable to ordinary equity holders of the Parent		(0.06)	(0.91)
Diluted loss for the year attributable to ordinary equity holders of the Parent		(0.06)	(0.91)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes in the full Report and Accounts.

Consolidated Statement of Financial Position

As at 30 June 2018

		2018	2017
		$	$
Assets
Current assets
Cash and short term deposits		1,272,327	503,891
Trade and other receivables		77,510	96,147
Other current financial assets		-	14,344
Total current assets		1,349,837	614,382
Non-current assets
Plant and equipment		20,192	21,865
Capitalised exploration expenditure		1,344,013	1,180,488
Total non-current assets		1,364,205	1,202,353
Total assets		2,714,042	1,816,735
Liabilities and equity
Current liabilities
Trade and other payables		229,671	242,804
Provisions		-	3,538
Total current liabilities		229,671	246,342
Total liabilities		229,671	246,342
Net assets		2,484,371	1,570,393
Equity
Contributed equity		38,079,499	35,931,732
Accumulated losses		(38,367,110)	(36,483,664)
Reserves		2,771,982	2,122,325
Total equity		2,484,371	1,570,393

This Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes in the full Report and Accounts.

Consolidated Statement of Cash Flows

For the year ended 30 June 2018

		2018	2017
	Note	$	$
Cash flows used in operating activities
Interest received		9	8,653
Exploration and evaluation expenditure		(404,017)	(463,585)
Receipts from customers		-	9,303
Payments to suppliers and employees		(1,031,775)	(1,695,759)
Net cash flows used in operating activities		(1,435,783)	(2,141,388)
Cash flows used in investing activities
Payments for plant and equipment		(22,008)	(17,679)
Sale of plant and equipment		-	2,588
Payment for acquisition of GoldQuest asset		-	(519,821)
Cash acquired on acquisition of GoldQuest asset		-	8,923
Proceeds from sale of subsidiaries		-	1,000
Net cash flows used in investing activities		(22,008)	(524,989)
Cash flows from financing activities
Proceeds from issue of shares		2,294,676	2,821,053
Transaction costs on issue of shares		(135,819)	(330,305)
Net cash flows from financing activities		2,158,857	2,490,748
Net increase / (decrease) in cash and cash equivalents held		701,066	(175,629)
Net foreign exchange difference		67,370	(63,744)
Cash and cash equivalents at 1 July		503,891	743,264
Cash and cash equivalents at 30 June		1,272,327	503,891

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes in the full Report and Accounts which can be accessed via the following link: 

http://www.rns-pdf.londonstockexchange.com/rns/4240C_1-2018-9-28.pdf  

 

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