Communicators

European Metals Holdings: Outstanding Lithium Recoveries at a Coarse Grind

21 October 2016

European Metals Holdings Limited (“European Metals” or “the Company”) (ASX and AIM: EMH) is pleased to announce the completion of the concentration testwork for lithium as part of the on-going pre-feasibility study (“PFS”). The testwork has improved recoveries significantly from those used in the scoping study which when combined with the lower operating costs of wet magnetic separation versus flotation will significantly boost the economics of the project.

Key Points:

- Wet magnetic separation (“WMS”) achieved a near pure lithium mica concentrate grading 2.85% Li2O with a lithium recovery of 92%

- Lithium recoveries are 10-15% higher than those achieved via floation in the scoping study

- Coarse grind of p100 passing 250 micron reduces milling power consumption substantially

- Wet magnetic separation plant has a smaller footprint and water demand than flotation

- Reduced operating cost and lower environmental impact as no need to import expensive reagents

- The ore is suitable for a single stage jaw crush and SAG mill which further decreases operating and capital costs

- PFS metallurgy work will now focus on the lithium carbonate processing plant with the aim of maxmisng both lithium and tin recoveries. Results from this work are expected by the end of the year.

Managing Director Keith Coughlan said “I am very pleased to report that we have successfully demonstrated that wet magnetic separation of the Cinovec ore offers an inexpensive and very effective technique for separating lithium mica. The process has the additional advantage of improving environmental performance and lowering operating costs compared to previously considered flotation.

The unique characteristics of the Cinovec mineralogy provide a major beneficiation advantage over competing hard rock lithium deposits. The presence of iron in the Zinnwaldite allows magnetic separation to be the most efficient separation technique at a very coarse grind. Compared to competitors’ flowsheets that generally rely on fine milling and flotation often with a de-sliming step, magnetic separation is a simpler technique with a lower operating cost and higher metallurgical recovery without large scale use of float reagents and acids which can contaminate tailings.

In addition, as a result of the ability to use a coarse grind, we have also demonstrated that Cinovec ore is a good candidate for single stage jaw crushing followed by SAG milling, which further decreases the capital and operating cost of the project.

The combination of these factors will result in not only industry leading recoveries, but lower capital and operating costs which will be incorporated in the on-going pre-feasibility study.”

Test Work Results

Table 1 – Wet Magnetic Results

Sample prepared using lock cycle milling with a closing screen of 250µm

Note: The WMS stage upgrades or concentrates the lithium bearing mica ahead of the lithium carbonate processing plant.

Magnetic separation had previously been demonstrated for Cinovec Ore, however, previously only particles larger than 75µm could be treated, with the -75um material sent to tailings. With the application of WMS, these finer fractions can be successfully recovered.

This removes the requirement for desliming and enables the full particle size range to be treated maximizing recovery. By not being concerned with the generation of super fines, a simple single stage Jaw-Sag comminution circuit may be deployed.

To ensure good represent of Run-of-Mine material for the test work program, the samples were collected from drill core from hole CIW11 and were composited from various depths to reflect a high and low grade feeds.

Lithium Extraction Test Work

European Metals has continued to work on the L-max technology in partnership with Lepidico as well conducting Traditional roasting test work at Anzaplan in Germany. Both processing techniques have given excellent lithium extraction based on the WMS feed. EMH will report the results of the Lithium extraction test work by the end of the year.

Analytical Assays QA/QC

The analytical assays were performed at Nagrom Laboratories using ICP-OES and 4-acids digestion for sample preparation. Nagrom is located at 49 Owen Road, Kelmscott  WA  6111.

The analytical assays are performed in conjunction with a stringent QA/QC program, which includes the insertion of certified reference material (“CRM”), blanks and duplicate samples.

CRMs representing two grades types were manufactured at Geostats Pty Ltd, 20 Hines Road, O'Connor, 6163, WA, Australia.

Both Nagrom and Geostate are ISO SO9001:2008 accredited.

PROJECT OVERVIEW

Cinovec Lithium/Tin Project

European Metals owns 100% of the Cinovec lithium-tin deposit in the Czech Republic. Cinovec is an historic mine incorporating a significant undeveloped lithium-tin resource with by-product potential including tungsten, rubidium, scandium, niobium and tantalum and potash. Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 49.1Mt @ 0.43% Li2O and an Inferred Mineral Resource of 482Mt @ 0.43% Li2O containing a combined 5.7 million tonnes Lithium Carbonate Equivalent.

This makes Cinovec the largest lithium deposit in Europe and the fourth largest non-brine deposit in the world.

Within this resource lies one of the largest undeveloped tin deposits in the world, with total Indicated Mineral Resource of 15.7Mt @ 0.26% Sn and an Inferred Mineral Resources of 59.7 Mt grading 0.21% Sn for a combined total of 178kt of contained tin. The Mineral Resource Estimates have been previously released on 18 May 2016. The deposit has previously had over 400,000 tonnes of ore mined as a trial sub-level open stope underground mining operation.

A scoping study conducted by specialist independent consultants indicates the deposit could be amenable to bulk underground mining. Metallurgical test work has produced both battery grade lithium carbonate and high-grade tin concentrate at excellent recoveries with the scoping study. 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.

COMPETENT PERSON

Information in this release that relates to exploration results is based on information compiled by European Metals Director Dr Pavel Reichl. Dr Reichl is a Certified Professional Geologist (certified by the American Institute of Professional Geologists), a member of the American Institute of Professional Geologists, a Fellow of the Society of Economic Geologists and is a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and a Qualified Person for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009. Dr Reichl consents to the inclusion in the release of the matters based on his information in the form and context in which it appears. Dr Reichl holds CDIs in European Metals.

The information in this release that relates to Mineral Resources and Exploration Targets has been compiled by Mr Lynn Widenbar. Mr Widenbar, who is a Member of the Australasian Institute of Mining and Metallurgy, is a full time employee of Widenbar and Associates and produced the estimate based on data and geological information supplied by European Metals. Mr Widenbar has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking to qualify as a Competent Person as defined in the JORC Code 2012 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Widenbar consents to the inclusion in this report of the matters based on his information in the form and context that the information appears.

CAUTION REGARDING FORWARD LOOKING STATEMENTS

Information included in this release constitutes forward-looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company’s business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company’s control.

Although the company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

LITHIUM CLASSIFICATION AND CONVERSION FACTORS

Lithium grades are normally presented in percentages or parts per million (ppm). Grades of deposits are also expressed as lithium compounds in percentages, for example as a percent lithium oxide (Li2O) content or percent lithium carbonate (Li2CO3) content.

Lithium carbonate equivalent (“LCE”) is the industry standard terminology for, and is equivalent to, Li2CO3. Use of LCE is to provide data comparable with industry reports and is the total equivalent amount of lithium carbonate, assuming the lithium content in the deposit is converted to lithium carbonate, using the conversion rates in the table included below to get an equivalent Li2CO3 value in percent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li2CO3 from the deposit.

Lithium resources and reserves are usually presented in tonnes of LCE or Li.

To convert the Li Inferred Mineral Resource of 532Mt @ 0.20% Li grade (as per the Competent Persons Report dated May 2016) to Li2O, the reported Li grade of 0.20% is multiplied by the standard conversion factor of 2.153 which results in an equivalent Li2O grade of 0.43%.

The standard conversion factors are set out in the table below:

Table: Conversion Factors for Lithium Compounds and Minerals

European Metals Holdings Limited

ARBN 154 618 989

Suite 12, Level 1

11 Ventnor Avenue

West Perth WA 6005

PO Box 52

West Perth WA 6872

Tel + 61 8 6141 3500

Fax + 61 6141 3599

Website: www.europeanmet.com

To view the entire press release please follow the link: http://europeanmet.com/assets/AIM_-_21_October_2016_-_Outstanding_Lithium_Recoveries.pdf