EUROPA METALS LIMITED - Results for the half-year ended 31 December 2018

Release Date: 15/03/2019 09:00
Code(s): EUZ
 
Wrap Text
Results for the half-year ended 31 December 2018

Europa Metals Ltd
(“Europa Metals”, the “Company” or the “Group”) (AIM / AltX: EUZ)
(ISIN AU0000014342)

                  Results for the Half-Year Ended 31 December 2018

Europa Metals, the European lead-zinc explorer, is pleased to announce its unaudited results for the
half year ended 31 December 2018 (the “Half-Year Report”).

Please see below extracts from the Half Year Report, being the:

    -   Directors’ Report
    -   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

A copy of the full Half-Year Report is available on the Company’s website at www.europametals.com


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: +61 417 978 955
Laurence Read, Executive Director (UK)
T: +44 (0)20 3289 9923

Strand Hanson Limited (Nominated Adviser)
Rory Murphy / Matthew Chandler
T: +44 (0)20 7409 3494

Turner Pope Investments (TPI) Limited (Broker)
Andy Thacker
T: +44 (0)20 3621 4120

Sasfin Capital Proprietary Limited (a member of the Sasfin group)
Sharon Owens
T (direct): +27 11 809 7762

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.


15 March 2019
Directors’ Report

The directors present their report on Europa Metals Ltd (“Europa Metals”, the “Company” or,
together with its controlled entities, the “Group”) for the half-year from 1 July 2018 to 31
December 2018.

Directors

The names of the Company’s directors in office during the half-year and until the date of this
report are set out below. Directors were in office for the entire period unless otherwise stated.

Evan Kirby
Laurence Read
Myles Campion
Colin Bird
Daniel Smith


Review and results of operations

Operating Results

During the half-year from 1 July 2018 to 31 December 2018, the Group recorded a net loss
after tax of AUD 1,534,312 (1 July 2017 to 31 December 2017: net loss of AUD 712,548).

Toral Lead-Zinc-Silver Project, Spain

The Company announced on 16 July 2018 that it had secured a combined Reverse Circulation
(“RC”) and Diamond drilling rig (the “Combination rig”) for mobilisation to its wholly owned
Toral lead-zinc-silver project located in the Province of Le?n, northern Spain (“Toral” or the
“Toral Project”), during August 2018. The Combination rig and associated operating crew was
supplied by Sondeos y Perforaciones Industriales de Bierzo SA and has been overseen by
the Company’s on-site exploration team. The Combination rig is one of only a few of its type
in Spain and has been deployed on a series of recent, successful drilling programmes.

The Combination rig was successfully mobilised to site in late August 2018 to commence a
Phase 1 drilling campaign. Drilling was undertaken to initially ascertain the potential
continuation of the mineralised structure outside of the current defined JORC (2012) resource
area at Toral. With a significant inferred resource estimate already established for the main
Toral project area, the extension drilling to the East sought to identify the presence of further
mineralisation/hosting structures. On 28 August 2018, the Company also announced that it
had successfully completed the relogging of certain priority historical drill core from Toral
stored at the National Litoteca in Andalucía, Spain.

On 20 September 2018, the Company announced that the re-logging of the historical drill core
held at the National Litoteca had resulted in significantly higher bulk density measurements
than those used for the maiden JORC (2012) resource estimate completed by Addison Mining
Services Limited (“AMS”) between November 2017 and January 2018, as announced by the
Company on 6 February 2018. The increase in bulk density values applied to samples and
their spatial distribution resulted in a material change to the estimation of the resource. Ore
tonnages are calculated by volume estimated from solid models developed from mapping and
drilling information multiplied by rock density.
On 4 October 2018, the Company announced that, further to its announcement of 28 August
2018, all of the planned Phase I RC drilling at the Toral Project had been completed with
samples being sent to external laboratories for independent assay. As noted above, the RC
extension drilling was designed to identify new areas of mineralisation stepping out from the
existing defined JORC (2012) resource area. A diamond drilling programme subsequently
commenced targeting key areas situated within the existing resource area.

The objective of the Phase II diamond infill drilling programme was to increase and enhance
the Company’s understanding and confidence in the existing resource in areas that currently
contain Inferred mineralisation as defined under the JORC (2012) code. On 20 December
2018, the Company announced the results of the Phase II diamond drilling programme
conducted at Toral.

The diamond drilling provided the following information for Europa Metals’ geological team:
   o   confirmation of block model grade and thickness;
   o   progress with regard to drilling strategy to remove ‘gaps’ within the known resource (all
       within 300m of topographic surface); and
   o   further information on geotechnical characteristics and structural controls.

Significant results from the diamond drilling included:
   o   Drill hole TOD-018 which returned 3.8m @ 5.87% Zn Equivalent (Zn, Pb); and
   o   reportable copper mineralisation intercepted within 280 metres of surface (drill hole
       TOD-020) - further investigation ongoing following 0.68% Cu @ 3m, including 1m @
       1.34% Cu.

In 2019, subject to funding, the Company plans to complete an infill drilling campaign to target
the high-grade core of the Toral deposit, with the aim of increasing confidence in the resource
estimate to the JORC (2012) Indicated category, which will be the subject of further
investigation as part of the planned pre-feasibility and feasibility studies in due course.

On 31 October 2018, the Company announced that it had relinquished all rights to the permits
the Group previously held in respect of its Lago lead-zinc exploration project (Lago II 6.056
and Lago III 6.058) in the province of Galicia, Spain. Whilst the Company continues to believe
that the area is highly prospective for lead-zinc, both the size and location of the Lago permit
areas did not justify and support incurring further maintenance and exploration expenditure.

Scoping Study

On 10 December 2018, the Company announced the results of an independent scoping study
completed by AMS in accordance with JORC (2012) for the Toral Project (the “Scoping Study”
or “Study”). The findings of the Study were positive with a recommendation that the Toral
Project should be progressed towards a feasibility study to determine full economics, technical
and environmental parameters for an underground mining operation focused on near-term
recovery of the higher-grade mineralised zones.

The Scoping Study considered three conceptual underground mining development and
production scenarios. The conceptual scenario selected (being Conceptual Scenario 2a)
progresses decline access ramp with a high grade focus; a proposed Mechanised Cut and Fill
(MCAF) mining method; entry to the mine via a principal decline reaching various levels; and
a series of internal mining inclined ramps constructed to access levels.
Further key elements of the Scoping Study include:
   o 4x4 metre mine standard development size
   o Mining method and production schedule over estimated mine life
   o Efficient mining block sequence identified
   o Identification of optimum plant locations (see Figure 1)
   o Key Recommendations: Infill drilling campaign to convert resources to the Indicated
       category (JORC 2012), metallurgical and geotechnical test work and progression to a
       full feasibility study.




Figure 1: Conceptual Plant Layout for Chantin and Peon Sites, and conceptual tailings sites

Economic Analysis

Europa Metals commissioned AMS to undertake a financial modelling exercise for the Toral
Project, based on a number of different processing scenarios and mining methods. The results
of this exercise, as well as the overall positive outcomes of the Scoping Study, support the
commencement of a full feasibility study. However, since 100% of the Mineral Resources at
Toral are currently in the Inferred resource category, in accordance with Section 8.5 of ASX
Guidance Note 31, the Company was not able to publish a production target or forecast
financial information in December 2018.

Following the Company’s removal from the official list of the ASX Limited (“ASX”) (“Official
List”) on 8 March 2019, the Company announced the economics of the Scoping Study on 11
March 2019.

Updated Mineral Resource

As part of the Scoping Study’s licence tenure and permitting investigative work and verification
checks, an identified permit location shift prompted the requirement to revise the previously
reported mineral resource estimate for the Toral Project within Europa Metals’ licence 15.199
and update the input mineral resource block model used for the purposes of the Scoping
Study.

The issue arose due to a legacy discrepancy between the historical and current coordinate
systems used in the mining and permitting industry in Spain. The Mineral Resource estimate
was consequently updated due to a coordinate discrepancy and, as such, the block model
was also updated to reflect this change. The reduction in the reported resource through the
tenement shift in no way affected the Scoping Study and economic potential of the project.
The portion of the deposit affected by the boundary issue, containing approximately 3 million
tonnes of mineralisation, is in the north-western extension of the deposit, a very narrow area
not currently considered to be of interest in terms of future mining. The adjustment to the input
block model in no way affects the technical and economic findings of the Scoping Study at this
stage.

Under Spanish mining law the area concerned can be secured by Europa Metals at the point
the Company converts its exploration licence to a mining licence, as it cannot be claimed by
third parties, except for the very far western extension, due to the presence of a limestone
quarry that operates at surface. It is envisaged that the quarry will attract little interest due to
the elements on surface including a national road and a river; accordingly, the quarry area can
only be mined by underground methods for high value minerals, if determined economically
viable.
      
Apart from the area under the limestone quarry, which will require direct negotiation with its
owner, the other areas are subject to a defined procedure set out under Spanish mining law
and it is currently anticipated that such areas will be incorporated into Europa Metals’ Toral
property upon the future grant of a mining licence. The Board believes that there are no
competitors in relation to securing this further acreage.

The above mentioned reduction in the licence area led to a temporary loss of approximately 3
million tonnes of resource as set out in Table 1 below.

      Table 1: Comparison Between the September 2018 and December 2018 Reduced Licence Area

                                        Zn Eq                                Contained   Contained
4%    Zn   Eq     Tonnes      Density             Zn Eq          Pb    Ag                            Ag Troy Oz
                                         (Pb)             Zn %               Zn Tonnes   Pb Tonnes
(PbAg)%          (Millions)    g/cm3            (PbAg)%          %     g/t                           (Millions)
                                          %                                    (000s)      (000s)
September 2018
                    19          2.8      6.9      7.4     3.9    3.1   24       720         570         14
Resource
December 2018
                    16          2.8       7       7.5     3.9    3.1   24       640         510         13
Resource


      Competent person’s statement

      The information above that relates to Exploration Results is based on information compiled by
      Mr J.N. Hogg, MSc. MAIG Principal Geologist for AMS, an independent Competent Person
      within the meaning of the JORC (2012) code and qualified person under the AIM guidance
      note for mining and oil & gas companies. Mr Hogg has reviewed and verified the technical
      information that forms the basis of, and has been used in the preparation of, the significant
      intercepts in this announcement, 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 of the matters based on the information, in the form and context
      in which it appears. Mr Hogg has also reviewed and approved the technical information in his
      capacity as a Competent person under the AIM Rules for Companies.

      Corporate

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

      On 10 August 2018, the Company announced that it had completed a fundraising of £563,516
      (approximately A$0.98m) before expenses through a placing arranged by the Company’s
      broker, Turner Pope Investments (TPI) Limited (“Turner Pope”), of 727,118,650 new ordinary
      shares of no par value each in the capital of the Company (the “Placing Shares”) at a price of
      0.0775 pence per new ordinary share (the “Placing”). The Placing Shares were issued to
      certain new and existing investors utilising the remainder of the Company’s existing placement
      capacity under ASX Listing Rule 7.1.

      The net proceeds from the Placing were utilised towards funding the Phase II work programme
      at the Toral Project, as well as providing additional general working capital for the Group.

      On 24 September 2018, the Company announced a change to its registered office and
      principal place of business to c/o Minerva Corporate, Level 8, 99 St Georges Terrace, Perth
      WA, 6000.

      On 31 October 2018, the Company announced that Turner Pope had assumed the role of sole
      broker to the Company with immediate effect.

Events subsequent to the reporting date

On 25 January 2019, the Company announced that it had submitted a formal application to
the ASX requesting the removal of the Company from the Official List pursuant to ASX Listing
Rule 17.11, which became effective on 8 March 2019. In addition, the Company successfully
applied to move from the Main Board of the Johannesburg Stock Exchange (“JSE”) to the
AltX. The Company’s securities commenced trading on the AltX with effect from 1 March 2019.
Accordingly, Europa Metals’ primary listing became the AIM market operated by London Stock
Exchange plc (“AIM”) with a secondary listing on the AltX.

On 11 March 2019, the Company announced the economics of the Scoping Study.

No other matters or circumstances have occurred subsequent to the reporting date that would
have a material impact on the consolidated financial statements.
   
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the half-
year ended 31 December 2018

                                                                   6 months to      6 months to
                                                                  31 December      31 December
                                                                         2018             2017
                                                                         AUD              AUD

Revenue from continuing operations
Revenue                                                                       32              8
Other Income                                                               7,187         71,294
                                                                           7,219         71,302
Exploration expenditure                                                (958,396)      (180,019)
Foreign exchange gain                                                      4,369         25,787
Other expenses                                                         (587,504)      (629,618)
Loss before income tax                                               (1,534,312)      (712,548)
Income tax (expense)/benefit                                                   -              -

Net loss after income tax                                            (1,534,312)      (712,548)

Other comprehensive income
Items that may be reclassified subsequently to profit
or loss:
Net exchange gain / (loss) on translation of foreign operation           58,707          71,813
Other comprehensive (loss) for the period, net of
tax                                                                      58,707          71,813

Total comprehensive (loss) for the period                            (1,475,605)      (640,735)


Net (loss) for the period attributable to shareholders
of the Company:                                                      (1,534,312)      (712,548)
                                                                     (1,534,312)      (712,548)

Total comprehensive (loss) for the period attributable
to shareholders of the Company:                                      (1,475,605)      (640,735)
                                                                     (1,475,605)      (640,735)

(Loss) per share attributable to the ordinary equity holders of the Company
                                                                  Cents   per Cents            per
Loss per share                                                    share       share

- basic (loss) per share                                                 (0.028)         (0.026)

- diluted (loss) per share                                               (0.028)         (0.026)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should
be read in conjunction with the accompanying notes
    
Consolidated Statement of Financial Position as at 31 December 2018

                                                              31 December                30 June
                                                                     2018                   2018
                                                                     AUD                    AUD
Current Assets
Cash and cash equivalents                                          361,615             1,272,327
Trade and other receivables                                        198,536                77,510
Total Current Assets                                               560,151             1,349,837

Non-current Assets
Plant and equipment                                                 67,347                20,192
Capitalised exploration                                          1,395,398             1,344,013
Total Non-current Assets                                         1,462,745             1,364,205

Total Assets                                                     2,022,896             2,714,042

Current Liabilities
Trade and other payables                                            85,944               229,671
Total Current Liabilities                                           85,944               229,671

Total Liabilities                                                   85,944               229,671

NET ASSETS                                                       1,936,952             2,484,371

Equity
Contributed equity                                               39,007,685            38,079,499
Reserves                                                          2,830,689             2,771,982
Accumulated losses                                             (39,901,422)          (38,367,110)
TOTAL EQUITY                                                      1,936,952             2,484,371

The above Consolidated Statement of Financial Position should be read in conjunction with
the accompanying notes
    
Consolidated Statement of Changes in Equity for the half-year ended 31 December 2018

                                                                                  Employee
                                                                                      Share                     Foreign
                                               Contributed      Accumulated        Incentive        Option    Exchange          Total
                                                    Equity            Losses        Reserve       Reserve      Reserve         Equity
                                                      AUD               AUD             AUD           AUD          AUD           AUD
At 1 July 2017                                  35,931,732       (36,483,664)        491,577     1,609,070       21,678     1,570,393
(Loss) for the period                                    -          (712,548)              -             -            -     (712,548)
Other comprehensive income (net of tax)                  -                  -              -             -       71,813        71,813
Total comprehensive loss (net of tax)                    -          (712,548)              -             -       71,813     (640,735)
Transaction with owners in their capacity
as owners
Shares issued net of transaction costs              596,104                 -              -             -             -      596,104
At 31 December 2017                              36,527,836      (37,196,212)        491,577     1,609,070        93,491    1,525,762


At 1 July 2018                                   38,079,499      (38,367,110)        491,577     2,028,253      252,152      2,484,371
(Loss) for the period                                     -       (1,534,312)              -             -            -    (1,534,312)
Other comprehensive income (net of tax)                   -                 -              -             -       58,707         58,707
Total comprehensive loss (net of tax)                     -       (1,534,312)              -             -       58,707    (1,475,605)
Transaction with owners in their capacity
as owners
Shares issued net of transaction costs              928,186                 -              -             -            -       928,186
At 31 December 2018                              39,007,685      (39,901,422)        491,577     2,028,253      310,859     1,936,952

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes

Consolidated Statement of Cash Flows for the half-year ended 31 December 2018

                                                                6 months to     6 months to
                                                               31 December     31 December
                                                                      2018            2017
                                                                      AUD             AUD
 Cash flows from operating activities
 Interest received                                                       286               8
 Payments to suppliers and employees                               (814,514)       (598,894)
 Payment for exploration and evaluation costs                    (1,034,671)       (122,484)
 Net cash flows used in operating activities                     (1,848,899)       (721,370)

 Cash flows from investing activities
 Payments for plant and equipment                                          -        (22,186)
 Net cash flows from / (used in) investing activities                      -        (22,186)

 Cash flows from financing activities
 Proceeds from issue of shares                                      987,491         638,777
 Costs of capital raising                                           (59,305)        (42,672)
 Net cash flows from financing activities                           928,186         596,105
 Net increase / (decrease) in cash and cash
 equivalents                                                      (920,713)        (147,452)
 Cash and cash equivalents at beginning of period                 1,272,327          503,891
 Effect of foreign exchange on cash and cash
 equivalents                                                         10,001             7,965
 Cash and cash equivalents at end of period                         361,615         364,404


The above Consolidated Statement of Cash Flows should be read in conjunction with the
accompanying notes

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