European Metals Holdings Ltd A busy year ahead

European Metals Holdings Ltd (ASX and LON:EMH) have today announced the Company’s annual results for the year ended 30 June 2018.

The annual report has been released on the Australian Stock Exchange as required under the listing rules of the ASX.

CHAIRMANS LETTER

Dear Shareholders

It is with pleasure that I introduce the 2018 Annual Report of European Metals Holdings limited.

The year has seen continued improvement to the lithium flowsheet with a goal of improving recoveries and maximising cashflow. This work is now complete, and the year ahead will see locked cycle and pilot scale work undertaken which is an essential step in the finalisation of the Definitive Feasibility Study. With the improved recoveries developed over the year, the project continues to improve and highlight why it is such an exciting development story in the heartland of the electric vehicle revolution.

In parallel, a large amount of work has been invested in the background studies for environmental permits and infrastructure positioning to minimise environmental and social impacts. This work is ongoing and is an essential part of the permitting process on the road to mine development.

The Company continues to actively engage with all stakeholders in the Czech Republic with a view to supporting a Czech initiative whereby the full production chain from primary inputs, through battery and vehicle manufacturing predominantly occurs in the Czech Republic. With car manufacturing accounting for roughly 9% of GDP, this is an obvious route to follow and we look forward to further developments in this area. The manufacturing of large scale stationary storage systems in the Czech Republic is also an emerging area of interest to EMH.

From a Corporate perspective, we welcomed Neil Meadows as Chief Operating Officer to the team. Neil’s experience with projects similar in size and complexity as the Cinovec Project has augmented our existing team, both in Australia and the Czech Republic.

The year ahead will see us into the detailed engineering of the Project and advancing the permitting in tandem. This will be a very busy time for the Company as it locks in the path to mining and production.

I would like to take this opportunity to thank all staff, advisors, contractors and our shareholders who have allowed us to continue this electrifying journey together.

David Reeves

CHAIRMAN

PROJECT REVIEW

European Metals, through its wholly owned Subsidiary, Geomet s.r.o., controls the mineral exploration licenses awarded by the Czech State over the Cinovec Lithium/Tin Project. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 372Mt @ 0.45% Li2O and 0.04% Sn and an Inferred Mineral Resource of 323Mt @ 0.39% Li2O and 0.04% Sn containing a combined 7.22 million tonnes Lithium Carbonate Equivalent and 278kt of tin. An initial Probable Ore Reserve of 34.5Mt @ 0.65% Li2O and 0.09% Sn has been declared to cover the first 20 years mining at an output of 22,500 tpa of lithium carbonate.

This makes Cinovec the largest lithium deposit in Europe, the fourth largest non-brine deposit in the world and a globally significant tin resource.

The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.

EMH has completed a Preliminary Feasibility Study, conducted by specialist independent consultants, which indicated a return post tax NPV of USD540m and an IRR of 21%. It confirmed the deposit is amenable to bulk underground mining. Metallurgical test work has produced both battery grade lithium carbonate and high-grade tin concentrate at excellent recoveries. Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active 22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has strong community support.

The economic viability of Cinovec has been enhanced by the recent strong increase in demand for lithium globally, and within Europe specifically.

Project Development

Project development for the year was centred on a significant drilling program embarked upon by the Company. There were numerous updates to this program released to the market during the period. Overall, results from the program either confirmed or exceeded expectations with respect of both lithium content and width of mineralisation.

On 16 August 2017 the Company announced analytical results for the first drillhole CIS-4 at the Cinovec Lithium-Tin Project (“the project” or “Cinovec”) and reported on its ongoing infill drilling program. Infill drilling was undertaken in the southwest section of the deposit, targeting two ‘gaps’ in the resource model that could potentially be targeted for mining in the initial years. Five out of six planned drillholes were completed during the period, for a total of 2163.1m. Assays were received for the first drillhole CIS-4, which returned a continuous mineralized intercept of 148.30m averaging 0.40% Li2O from 297.7m drill string depth. In addition, the upper section of the main lithium interval contains significant tin and tungsten mineralization with 15.85 meters averaging 0.70% Li2O, 0.29% tin and 0.073% tungsten.

On 2 November 2017 the Company announced the successful completion of its six core-hole infill drilling program at the Cinovec Project. A total of 2,697.1m was completed on time and without loss time accidents. Analytical results for three drillholes in the eastern sector and for two drillholes on the western sector of the of the Cinovec South deposit were reported.

On 28 November 2017 the Company was pleased to announce a further upgrade of its JORC compliant Indicated Mineral Resources at the Cinovec Lithium/Tin Project in the Czech Republic, confirming its status as the largest lithium resource in Europe.

On 28 March 2018, European Metals reported on the preliminary results received from its ongoing metallurgical optimisation and ore variability testwork program. Recent metallurgical testwork has seen further roast recovery improvements on ore sourced from core taken from the area that is intended to be mined and processed in the first years of the project. Subsequently testwork was completed whereby the more cost effective reagent limestone was substituted for lime into the roasting feed mix. A lithium recovery rate of 94.8% was achieved from this test. This finding will support the achievement of significant cost savings in this part of the flowsheet.

On 6 June 2018 the Company announced the commencement of the beneficiation and magnetic separation of a 15 tonne bulk sample which represents the ore that will be mined in the first stages of project development. The beneficiation and magnetic separatation of a lithium rich concentrate will provide pilot plant feed for planned downstream processing through the roast, leach, purification and final product precipitation flowsheet that has been developed. It is intended to ultimately produce up to 200 kg of battery grade lithium carbonate or, lithium hydroxide from this material for marketing and other user acceptance purposes. The program work was carried out by UVR-FIA GmbH in Freiberg who are specialists in beneficiation and magnetic separation testwork.

Developments Post 30 June 2018

On 11 July 2018 the Company reported that it had completed roast optimisation testwork and that improved recoveries have resulted in increased lithium carbonate production from the Cinovec Project to 22,500 tpa. All recent roast/leach tests have reliably achieved lithium extractions in the region of 94% recovery. The significance of these results is that a 7% increase in lithium recovery is predicted over that used in the Preliminary Feasibility Study (PFS) completed last year which in turn leads to an increase to 22,500 tpa of lithium carbonate production from the project. The increased production results in approximately a 10% increase in EBITDA margins for the project which will have obvious positive effects to the project returns which the definitive feasibility will re-model.

Progress of Mining Licence

On 19 December 2017 the Company announced that the Cinovec NorthWest Resource had been added to the Czech State resource register. This followed the addition of the Cinovec South Resource earlier in the year. The addition of Resources to the Czech State register is the first step in the process for the granting of a mining permit.

Other Developments

On 29 November 2017 European Metals announced a capital raising of GBP 2,281,000 (approximately AUD 4 million (before costs)) via subscriptions to predominantly UK based sophisticated investors. The raising was completed via an issue of 6,517,142 CDIs at a price of 35p or 61.5 cents and was placed using the Company’s capacity under Listing Rule 7.1. Shard Capital Partners LLP arranged the majority of the subscriptions.

Mr Neil Meadows was appointed to the position of Chief Operating Officer on 11 April 2018. Neil has previously held the position of Chief Operating Officer at Karara Mining Ltd, Managing Director of IMX Resources Limited and worked with the Australian Premium Iron Ore Joint Venture on mine infrastructure. Prior to that, he was the Chief Operating Officer of Queensland Nickel Pty Ltd, subsequent to the sale of the business by BHP and was previously the General Manager of the Yabulu Refinery site for BHP. Prior to that he was the General Manager at the Murrin Operation for Minara Resources Ltd, a position he held for almost five years.

Mineral Resource and Ore Reserve Statement

Based upon the Preliminary Feasibility Study undertaken for the Cinovec Project, the Company declares a maiden Probable Ore Reserve of 34.5 Mt @ 0.65% Li2O, as detailed below. The Probable Reserves have been declared solely from the Indicated Mineral Resource category and are classified based on a PFS level of study and category of Mineral Resource.

Notes to Reserve Table:

1. Probable Ore Reserves have been prepared by Bara International in accordance with the guidelines of the JORC Code (2012).

2. The effective date of the Probable Ore Reserve is June 2017

3. All figures are rounded to reflect the relative accuracy of the estimate

4. The operator of the project is Geomet S.R.O a wholly-owned subsidiary of EMH. Gross and Net Attributable Probable Ore Reserve are the same.

5. Any apparent inconsistencies are due to rounding errors

The Ore Reserve is based on the Mineral Resource for the Cinovec deposit prepared by Widenbar and Associates and issued in February 2017. The Mineral Resource is reported in the report Cinovec Resource Estimation published by Widenbar and Associates and is reported in accordance with the JORC 2012 guidelines. The table below summarises the Mineral Resource declared.

Notes:

1. Mineral Resources are not Reserves until they have demonstrated economic viability based on a feasibility study or prefeasibility study.

2. Mineral Resources are reported inclusive of any reserves and are prepared by Widenbar in accordance with the guidelines of the JORC Code (2012).

3. The effective date of the Mineral Resource is November 22, 2017.

4. All figures are rounded to reflect the relative accuracy of the estimate.

5. The operator of the project is Geomet s.r.o., a wholly-owned subsidiary of EMH. Gross and Net Attributable resources are the same.

6. Any apparent inconsistencies are due to rounding errors.

7. LCE is Lithium Carbonate Equivalent and is equivalent to Li2CO3