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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