TIDMEUZ
RNS Number : 7799Q
Europa Metals Ltd
29 October 2021
29 October 2021
Europa Metals Ltd
("Europa Metals", the "Company" or the "Group") (AIM, AltX:
EUZ)
Final Results for the Year Ended 30 June 2021
Europa Metals, the European focused lead-zinc and silver
developer, is pleased to announce its final results for the year
ended 30 June 2021.
A pdf copy of the full Annual Report and Accounts is available
at the following link:
http://www.rns-pdf.londonstockexchange.com/rns/7799Q_1-2021-10-29.pdf
and is being posted to shareholders who have requested
hardcopies.
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, CEO (UK)
T: +44 (0)20 3289 9923
Linkedin: Europa Metals ltd
Twitter: @ltdeuropa
Vox: Europametals
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
WH Ireland Limited (Joint Broker)
Harry Ansell/Katy Mitchell/Sarah Mather
T: +44 (0)20 7 220 1666
Turner Pope Investments (TPI) Limited (Joint Broker)
Andy Thacker/James Pope
T: +44 (0) 20 3657 0050
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 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018.
Key Extracts from the Company's audited Report and Accounts are
set out below :
Chairman's Statement
As a responsible natural resource development company, workforce
and stakeholder safety are of principal importance to us as a Board
of Directors. During the reporting period full health security
measures, based on Spanish, UK and Australian best practice, were
maintained and monitored as the Coronavirus (COVID-19) pandemic
continued.
I think it is a reflection of the Europa Metals team's
professionalism and capability that not a single case of COVID-19
infection was reported within the Group during the period whilst a
series of significant operational and corporate milestones were
delivered. We have continued to advance our understanding of our
wholly owned Toral lead, zinc and silver project (the "Toral
Project" or "Toral") as a potential future low capex, high margin
lead, zinc and silver mine located within the EU.
During 2020, a clear strategy was pursued to complete all the
requisite work for a revised (from the 2018 Scoping Study),
independent preliminary economic study to be commissioned and its
findings published. Such report, compiled by Bara Consulting and
Addison Mining Services Limited ("AMS") and published on schedule
in November 2020, encompassed an indicated resource estimate for
the first time, the results of a series of metallurgical test work
programmes including an initial ore sorting analysis, and both
geotechnical and hydrogeological studies. The report's findings
were significant with a substantial increase in run-of-mine ("ROM")
tonnes to 700,000 tonnes per annum ("tpa") with an all-in cost of
US$63.56/t, US$79m upfront capex to production and project payback
in year four realising an NPV of US$156m at an 8% discount rate
with a 31.3% IRR. Importantly, the study identified that the 12
year mine life "ends" in the highest zinc grades for production
consequently highlighting the expansion potential at depth and to
the east once Toral achieves future production, thereby affording
the possibility for a longer term and larger mining operation than
originally envisaged and outlined.
For the last four years, Europa Metals has progressed Toral,
situated in the province of Castilla y León, north west Spain, as a
realisable project, with potential for robust margins in a safe
jurisdiction. The abovementioned updated economic study, enables us
to seek to progress our corporate objectives to secure a pathway
forward for the Company that delivers equity value through project
development, including partnerships or a potential substantial
transaction. In support of our corporate objectives, the Company
proposed a series of resolutions to shareholders at a general
meeting held in July 2020 in order to, inter alia, strengthen
Europa Metals' capital structure and governance. All such
resolutions were duly passed including a 500:1 share consolidation,
the implementation of more UK market standard pre-emption rights
and approval of an options package to align the directors'
incentivisation with equity value growth. Subsequently, Europa
Metals secured GBP2m (before expenses) via a market fundraising at
a premium to the six month pre-consolidation volume weighted
average shareprice ("VWAP").
At the time of writing, Europa Metals has recently succesfully
concluded its upper zone drilling campaign and announced a
significant resource upgrade.
Corporately, we continue to progress and are actively involved
in a number of initiatives that we believe could ultimately lead to
a potential major value event for all Europa Metals' shareholders
in due course. Further updates will be made as and when
appropriate.
Myles Campion
Executive Chairman
29 October 2021
Chief Executive Officer's Operational and Financial Review
First of all, I would like to add to our Chairman's comments
regarding Europa Metals' operations during the ongoing Coronavirus
(COVID-19) pandemic. Safety always sits at the heart of our
decision-making process and I am pleased to confirm no incidents of
COVID-19 amongst our workforce during the reporting period and to
date. The diligence of our Spanish team on the ground is to be
commended in terms of both implementing and communicating best
practice protocols regarding social distancing, hygiene and all
other guidance from the relevant authorities during this global
health crisis. In light of our prioritisation of worker and
stakeholder safety, we continue to be mindful of not providing any
guidance to the market on workflow timing as we wish to avoid
setting any metrics that could lead to inappropriate decisions
being made at any level within the Company. What is very evident
though is the significant amount of operational and development
work achieved during the financial year and to date.
Following the appropriate governance and share capital related
changes being approved by Europa Metals' shareholders in July 2020,
the Company signed a product marketing agreement with Conrad
Partners ("Conrad"), a leading Hong Kong based concentrate agent
within the industrial metals space. Conrad's review of the Toral
Project's dataroom contributed to the marketing section of the
updated independent preliminary economic study undertaken by Bara
Consulting and AMS, the key findings of which were announced on
schedule in November 2020, and the Group has begun actively
marketing the project to potential future customers.
During August 2020, the Company announced a 40% increase in the
project's indicted resource at an average grade of 8.3% zinc
equivalent (including Pb credits) and 30g/t Ag; a significant
average grade above cut-off. The Phase III metallurgical and ore
sorting results were also announced, further to work undertaken by
Wardell Armstrong International, which showed significant grade and
recoveries including the following from hole TOD-025H: 83.9% Pb
recovery to a 79.2% Pb concentrate; 87.7% Ag recovery to 512ppm Ag
within Pb concentrate; and 87.7% Zn recovery to a 60.0% Zn
concentrate. The ore sorting results were incorporated into the
independent economic study and contributed to an uplift in the
potential margins and scale outlined within the new financial
model.
Europa Metals also secured a EUR466,801.50 interest free loan by
way of a grant (the "Grant") from the Spanish Governmental agency,
CDTI. Such interest free loan is an innovation grant further to our
established partnership with the University of Salamanca (Air
Institute), SPI drilling and Soluciones Generales de Ingenieria
S.L. ("SGI"), with the funds drawn down to be allocated towards the
development of R&D technologies relating to the recording and
correction of drillhole deviation at the Toral Project. The Grant
comprises up to three tranches, drawable with the prior agreement
of the CDTI, with the initial tranche, comprising an amount of
EUR163,380, duly received by the Company. The second and third
tranches are scheduled to be drawn down over a period of
approximately 18 months subject to certain, defined, operational
milestones being achieved. In addition to being able to secure
asset level funding, the importance of partnering with such key
regional stakeholders cannot be over emphasised.
Following the CDTI Grant, Europa Metals secured a new,
three-year Investigation Permit for Toral, until 15 November 2023,
from the Junta of Castilla y Leo n. The application was made
further to consultation with, and feedback from, the Junta and the
Company will continue to work towards fulfilling all the requisite
criteria in preparation for a formal mining licence application in
due course. One of the benefits of working within the region is
that, due to its long history of mining activity, the processes to
be undertaken and completed towards a mine development decision are
clear, well informed and well established. With increasing focus on
supply chain transparency, stakeholder engagement and environmental
best practice, we believe that the robust regulatory structure
within Castilla y Leo n stands us in good stead against a changing
investment and commodity markets' backdrop.
At the time of writing, our latest 2021 drill campaign has been
successfully concluded with eight new parent exploration drill
holes, TOD-028 to TOD-035, and six successful new daughter drill
holes completed. The results were significantly in advance of our
initial expectations with the drilling focused in the upper zone
area of Toral typically characterised as having lower grade ore.
Following this campaign, a new independent JORC (2012) resource
estimate was commissioned showing a 55% increase in the indicated
category to 5.9Mt @ 7.1% Zn Equivalent (including Pb credits) and
27g/t Ag. This represents a meaningful increase in metal within the
indicated resource with a 55% increase in the indicated tonnes, 39%
increase in contained zinc, 30% increase in contained lead and a
40% increase in contained silver ouces. The overall resource has
now reached approximately 20Mt @ 6.3% Zn Equivalent (including Pb
credits), 3.9% Zn, 2.7% Pb and 22g/t Ag, giving a metals content of
790,000 tonnes of zinc, 550,000 tonnes of lead and 14 million
ounces of silver.
Copper was also repeatedly reported within the assays but is not
currently at a significant enough level to be brought into the
resource. Our operational focus will therefore remain on derisking
the lead, zinc and silver mining profile within the established
resource as the current area looks to be highly economic with a ten
year plus mine life. The Company is assessing various avenues,
including potential technical partnerships, to look further at the
copper content and for expansion possibilities. With the last 12
months of the mining schedule (Year 12) set out by Bara Consulting
showing the highest grade of zinc recovery, we believe that Toral
has significant potential to be expanded at depth and to the
East.
The grade level of intersections encountered during the 2021
drill campaign enabled us to commence a series of metallurgical
daughter holes which have provided us with a high level of material
for use in processing and production testwork. Following the recent
completion of the resource update, we are now commencing a new
stage of metallurgical testwork with Wardell Armstrong
International, to look at increasing efficiencies and earlier
payback options within the upper zone of Toral. Such work will
include further ore sorting analysis for the upper zones as well as
waste processing testing for a dry stack/backfill storage process
that utilises low levels of water.
A hydrogeological testing campaign was also undertaken during
the financial year and we await the independent report from the
borehole and tracer programme in order to assess both potential
water conditions within the planned future mining area and to
benchmark the local area.
Group Highlights
Corporate
-- The Company has diligently followed all instructions and best
practice guidance issued by the relevant authorities with regards
to maintaining the safety of its work force in Spain, the UK and
Australia with a series of operational procedures and monitoring
initiatives being implemented. Europa Metals puts the safety of its
workforce ahead of all other considerations and continues to
operate strictly within the parameters of social distancing and
adhere to guidelines.
-- Following receipt of shareholder approval at last year's AGM,
a series of measures to strengthen shareholder rights and align
Europa Metals with AIM best practice were implemented. A 500 to 1
share consolidation was also effected thereby significantly
reducing the number of ordinary shares in issue.
-- Myles Campion appointed as Executive Chairman and Laurence
Read as CEO following the resignation of Colin Bird as Chairman in
August 2020.
-- GBP2,000,000 (gross) fundraising completed via the issue of,
in aggregate, 15,686,274 new ordinary shares of no par value at an
issue price of 12.75 pence per share in order to undertake the key
components of a pre-feasibility study ("PFS") for the Toral Project
including resource/geotechnical and metallurgical drilling and
testing work, a hydrogeological campaign and metallurgical/waste
assessment work.
-- Adam Habib appointed as corporate adviser to the Board in
January 2021. The appointment has subsequently been terminated with
effect from 1 November 2021.
Operational - Toral Pb, Zn & Ag Project, Spain
-- Environmental studies continued throughout the reporting
period; Company undertaking long term baseline studies and
monitoring to requisite PFS and Mining Licence application
levels.
-- Resource update in August 2020; 40% increase in the project's
indicted resource at an average grade of 8.3% zinc equivalent
(including Pb credits) and 30g/t Ag; a significant average grade
above cut-off.
-- Metallurgical and ore sorting results from work undertaken by
Wardell Armstrong International - significant grade and recoveries
including the following from hole TOD-025H: 83.9% Pb recovery to a
79.2% Pb concentrate; 87.7% Ag recovery to 512ppm Ag within Pb
concentrate; and 87.7% Zn recovery to a 60.0% Zn concentrate.
-- Toral's Investigation Permit renewed by the Junta of Castilla
y León until November 2023 in November 2020.
-- Non-exclusive concentrate marketing agreement signed with Conrad in August 2020.
-- In October 2020, EUR466,801.50 innovation grant awarded by
the CDTI towards exploration work assessing a correctional
algorithm for drilling deviation at Toral with its partners. The
CDTI is a Public Business Entity in Spain, under the auspices of
the Ministry of Science and Innovation, which fosters the
technological development and innovation of Spanish companies.
-- In November 2020, updated independent preliminary economic
study for Toral demonstrated a US$156m NPV and 31.3% IRR with a 49%
operating margin.
-- Drilling campaign commenced in January 2021:
o Focused on assessing upper material zone that would
potentially host the early years of future production.
o Targeted gaps within the project's JORC (2012) resource model
in order to enhance understanding of the block model, retrieve
geotechnical information for mine design and identify opportunities
to gather further metallurgical samples from within the substantive
intersections encountered.
o Collating of data to inform development plans for the early
years of Toral's future production and refine the economic model
within a 4-year payback period.
-- Drilling data provided to the abovementioned innovation
partnership with the University of Salamanca (Air Institute), SPI
and SGI. Milestone I work successfully completed and submitted to
CDTI post the reporting period end.
-- Hydrogeological bore holes and testing commenced in order to
test water levels/conditions within the proposed future mining area
and piezometer work to monitor local water conditions. Operations
concluded, post the reporting period end, and independent
results/report awaited.
-- In June 2021, Wardell Armstrong International appointed as PFS Manager.
Post period end
-- 2021 upper zone drilling campaign successfully concluded;
high grade Zn, Pb & Ag intersections consistently intersected.
Copper assays also returned.
o 8 new parent exploration drill holes, TOD-028 to TOD-035, and
six successful new daughter drill holes (for
metallurgical/geotechnical data).
o Intersections/assays considerably ahead of management's
expectations.
o Development of fault models.
o Development of new lithological facies domain models.
-- Further independent updated Mineral Resource Estimate
commissioned and findings reported in October 2021:
- Indicated resource estimate of approximately 5.9Mt @ 7.1% Zn
Equivalent (including Pb credits) and 27g/t Ag, representing an
approximate:
o 55% increase in Indicated resource tonnes;
o 39% increase in Indicated contained tonnes of zinc to
approximately 251,000 tonnes;
o 30% increase in Indicated contained tonnes of lead to
approximately 196,000 tonnes; and
o 40% increase in Indicated contained ounces of silver to
approximately 5.2 million ounces.
- A total resource of approximately 20Mt @ 6.3% Zn Equivalent
(including Pb credits), 3.9% Zn, 2.7% Pb and 22 g/t Ag,
including:
o 790,000 tonnes of zinc, 550,000 tonnes of lead and 14 million
ounces of silver.
- Outlook: Company seeking to make further operational progress
with additional metallurgical and waste analysis to de-risk the
project's future production and processing design, especially
within the early years of mining. Continuing to persue and assess a
number of initiatives and opportunities with discussions aimed at
delivering a potential value accretive event.
Toral Project Summary
As of 30 June 2021
-- US$156m NPV at an 8% discount rate
-- 31.3% IRR
-- 17Mt @ 6.7% ZnEq (including Pb credits) resource (JORC 2012)
including indicated resource of 3.8Mt @ 8.1% ZnEq (including Pb and
Ag credits) - 4% cut off grade
-- Sub-Level Longhole Stoping ("SLOS") mining method selected
-- 700k tonnes per annum operation with a 7.6% ZnEq mined grade:
o SLOS with ramp/raise-bore shaft access;
o 10% dilution;
o 3.5m average mined mineralised widths.
-- Processing comprises an ore sorting front-end using X-ray
Transmission ("XRT") followed by grinding and flotation
-- Grade/recovery: 3.3% Pb/87%; 4.2% Zn/86%; 26.7g/t Ag/85%
-- US$79m upfront Capex
-- 3-year trailing average metals prices of US$2,668/t for zinc,
US$2,099/t for lead and US$16.5/oz for silver
-- US$963m Revenue over Life of Mine ("LOM")
-- US$477m Opex over LOM
-- US$471m EBITDA over LOM
-- 49% Operating Margin (US$63.56/t all-in cost)
-- 12-year LOM scenario
-- Conceptual LOM production schedule incorporates 100% of the
Indicated resource in the early years, ending with elevated zinc
grades in the deep Inferred zones
-- Deposit open to the east and at depth for potential
production expansion during the mine's life
-- Project's 3-year Investigation Permit renewed until 15 November 2023
Post the period end, the mineral resource estimate was updated
to, at the time of writing:
-- Indicated resource estimate of approximately 5.9Mt @ 7.1% Zn
Equivalent* (including Pb credits) and 27g/t Ag, representing an
approximate:
o 55% increase in Indicated resource tonnes;
o 39% increase in Indicated contained tonnes of zinc to
approximately 251,000 tonnes;
o 30% increase in Indicated contained tonnes of lead to
approximately 196,000 tonnes; and
o 40% increase in Indicated contained ounces of silver to
approximately 5.2 million ounces.
-- A total resource of approximately 20Mt @ 6.3% Zn Equivalent
(including Pb credits), 3.9% Zn, 2.7% Pb and 22 g/t Ag,
including:
o 790,000 tonnes of zinc, 550,000 tonnes of lead and 14 million
ounces of silver.
* Zn price of US$2,516/t, Pb price of US$1,961/t and Ag price of
US$19.4/Oz
** RNS Announcement 1.10.21, AMS Consulting
Laurence Read
CEO
29 October 2021
Consolidated Statement of Profit and Loss and Other
Comprehensive Income
For the year ended 30 June 2021
2021 2020
$ $
----------------------------------------- ------------ ------------
Revenue - 3
Other income 147,537 -
Administration expenses (1,357,427) (1,000,227)
Occupancy expenses - (2,824)
Exploration expenditure (2,044,095) (1,375,442)
Foreign exchange gain/(loss) (4,679) 15,830
Loss before taxation (3,258,664) (2,362,660)
Income tax benefit / (expense) - -
Loss after income tax for the
year from continuing operations (3,258,664) (2,362,660)
------------ ------------
Net loss for the year (3,258,664) (2,362,660)
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss
Net exchange (loss)/gain on translation
of foreign operation (383,469) 171,072
Other comprehensive income for
the year, net of tax (383,469) 171,072
Total comprehensive loss for the
year (3,642,133) (2,191,588)
Net loss for the year attributable
to:
Equity holders of the Parent (3,642,133) (2,191,588)
------------ ------------
(3,642,133) (2,191,588)
============ ============
Total comprehensive loss for the
year attributable to:
============ ============
Equity holders of the Parent (3,642,133) (2,191,588)
------------ ------------
(3,642,133) (2,191,588)
============ ============
Cents per Cents per
Loss per share share share
Basic loss for the year attributable
to ordinary equity holders of
the Parent (7.03) (7.67)
Diluted loss for the year attributable
to ordinary equity holders of
the Parent (7.03) (7.67)
The above Consolidated Statement of Profit or Loss and Other
Comprehensive Income should be read in conjunction with the
accompanying notes in the full Annual Report and Accounts.
Consolidated Statement of Financial Position
As at 30 June 2021
2021 2020
$ $
------------- -------------
Assets
Current assets
Cash and short term deposits 1,180,768 700,642
Trade and other receivables 84,720 210,866
Total current assets 1,265,488 911,508
------------- -------------
Non-current assets
Plant and equipment 66,718 24,073
Other receivables 190,523 193,096
Right of use assets 29,277 39,035
Capitalised exploration expenditure 1,276,964 1,577,953
Total non-current assets 1,563,482 1,834,157
------------- -------------
Total assets 2,828,970 2,745,665
------------- -------------
Liabilities and equity
Current liabilities
Trade and other payables 261,886 207,462
Lease liability 16,505 22,328
Total current liabilities 278,391 229,790
------------- -------------
Non-current liabilities
Lease liability - 16,505
Borrowings 121,727 -
Total non-current liabilities 121,727 16.505
------------- -------------
Total liabilities 400,118 246,295
------------- -------------
Net assets 2,428,852 2,499,370
------------- -------------
Equity
Contributed equity 45,695,303 42,489,962
Accumulated losses (46,380,604) (43,121,940)
Reserves 3,114,153 3,131,348
Total equity 2,428,852 2,499,370
------------- -------------
The above Consolidated Statement of Financial Position should be
read in conjunction with the accompanying notes in the full Annual
Report and Accounts.
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
2021 2020
$ $
------------ ------------
Cash flows used in operating activities
Interest received - 3
Exploration and evaluation expenditure (1,959,132) (1,507,897)
Payments to suppliers and employees (1,135,162) (828,272)
Net cash flows used in operating
activities (3,094,294) (2,336,166)
------------ ------------
Cash flows used in investing activities
Payments for plant and equipment (28,056) (5,953)
Net cash flows used in investing
activities (28,056) (5,953)
------------ ------------
Cash flows from financing activities
Lease principal repayments (25,879) (49,096)
Proceeds from issue of shares 3,633,082 2,212,254
Transaction costs on issue of shares (253,101) (183,506)
Proceeds of borrowings 258,513 -
------------ ------------
Net cash flows from financing activities 3,612,615 1,979,652
------------ ------------
Net (decrease)/increase in cash
and cash equivalents held 490,265 (362,468)
Net foreign exchange difference (10,139) 10,699
Cash and cash equivalents at 1 July 700,642 1,052,411
Cash and cash equivalents at 30
June 1,180,768 700,642
------------ ------------
The above Consolidated Statement of Cash Flows should be read in
conjunction with the accompanying notes in the full Annual Report
and Accounts which can be accessed via the following link:
http://www.europametals.com/site/news-announcements/annual-reports-archive
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