European Minerals Corporation

European Minerals Corporation

March 29, 2005 02:14 ET

European Minerals Corporation Announces 2004 Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: EUROPEAN MINERALS CORPORATION

TSX SYMBOL: EPM
AIM SYMBOL: EUM

MARCH 29, 2005 - 02:14 ET

European Minerals Corporation Announces 2004 Results

LONDON, ENGLAND--(CCNMatthews - March 29, 2005) - Not for Distribution
to U.S. Newswire Services or for Distribution in the United States

European Minerals Corporation ("EMC" or the "Company") -
(TSX:EPM)(AIM:EUM) - a gold-copper exploration and development company,
today reports its results for the twelve months ended December 31, 2004.
All amounts are expressed in U.S. dollars unless otherwise indicated.

HIGHLIGHTS

Financial

- As at December 31, 2004, the Company had assets of $17.2 million,
including cash of approximately $8.1 million.

- Consolidated loss for the year was $2.5 million. The loss included
expenditures totalling $2.7 million offset by interest income of
$120,000. This compares with expenditures totalling $2.5 million offset
by interest income of $12,000, for 2003.

Operational

- During 2004, EMC continued to focus on the optimization of the
bankable feasibility study respecting the Company's 86% owned
Varvarinskoye gold-copper deposit located in northern Kazakhstan (the
"Project" or the "Varvarinskoye Project"). The optimization was
completed in November 2004 and confirmed that the Project was
economically viable.

- During the 2004 field season, stripping of topsoil and overburden from
the central pit and waste dump areas of the Project was commenced and
the Company began the recruitment of staff to manage the construction
and operation of the Project.

- In October 2004, the Company appointed Barclays Capital to provide
advice and services to the Company with respect to the debt financing
portion of the financing required to bring the Project into production.

- In March 2005, the Company filed a long form preliminary prospectus in
certain provinces of Canada relating to an offering of units of the
Company to raise the equity portion of the Project financing.

- In March 2005, the Company appointed Investec Bank Limited and Nedbank
Limited as joint underwriters for a $80 million debt facility (the "Debt
Facility") for the Project.

- Construction work at the Project is planned to commence in the second
quarter of 2005 in order to exploit the spring/summer construction
window. If this construction window is fully exploited, management
expects gold production to commence in the fourth quarter of 2006.

Stock Market

- On September 29, 2004, the Company was admitted to the Alternative
Investment Market ("AIM") on the London Stock Exchange. The Company's
trading symbol on AIM is "EUM".

- In December 2004, the Company changed its trading currency on the TSX
to Canadian dollars and the trading symbol changed to "EPM" (from
"EPM.U", when it traded in US dollars).

FINANCIAL REVIEW

During the past two years, the Company has not generated any operating
revenues and therefore losses have been incurred throughout the period.
In November, 2004, the Company completed the bankable feasibility study
on the Project and is arranging the final project debt and equity
financing required to develop and operate the Project. Pre-stripping had
commenced prior to December 31, 2004, and as such the Company is
considered to be in the development stage.

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

The Company's principal source of income during the year was from
interest on bank deposits which amounted to $120,000 compared to $12,000
in 2003. The higher level of this income reflects the higher level of
average cash balances invested in interest-bearing short term deposits.

The consolidated net loss for 2004 amounted to $2.5 million ($0.04 per
share) compared to $2.5 million ($0.07 per share) for 2003. The
consolidated net loss included expenditures on administration costs of
$1.06 million (2003 - $666,000), legal and professional costs of
$791,000 (2003 - $348,000) and resource projects costs of $377,000 (2003
- $1.3 million).

The higher level of administration expenses is indicative of EMC
developing its corporate administration as well as its project
operations following the favourable results of the technical review of
the Varvarinskoye Project. The Company also incurred costs associated
with its listing on AIM.

Professional fees and other costs also increased as a result of a higher
level of investor relations activity, compared to 2003. Resource project
costs of $377,000 have decreased by approximately $950,000. This
reflects management's decision to capitalize costs related to the
Varvarinskoye Project as of January 1, 2004.

Liquidity and Capital Resources

In management's view, the most meaningful information concerning the
Company relates to its current liquidity and solvency since it is not
currently generating any income from its mineral projects.

As at December 31, 2004, cash balances held by EMC amounted to
approximately $8.1 million (2003 - $15.1 million).

On March 1, 2005, the Company filed a long-form preliminary prospectus
(the "Offering") in certain provinces of Canada relating to an offering
of units of the Company to raise part of the funds required to satisfy
the capital cost of the Varvarinskoye Project. Each unit of the Offering
is comprised of one common share of the Company and one-half of one
common share purchase warrant, with each full share purchase warrant
entitling the holder to acquire one common share of the Company for a
period of 5 years following the closing. The minimum and maximum size of
the Offering as well as the issue price and subsequent purchase warrant
price, are yet to be finalized. Funds raised from the Offering will also
be used for working capital and general corporate purposes.

On March 9, 2005, the Company announced that it had appointed Investec
Bank Limited and Nedbank Limited (collectively, the "Lenders") as joint
underwriters for the Debt Facility to be used to develop the
Varvarinskoye Project. The Lenders will also provide a gold hedging
facility on the basis of a joint term sheet which has been approved by
credit committees of the Lenders.

Working Capital

The Company's working capital amounted to approximately $7.8 million as
at December 31, 2004, compared to approximately $14.7 million as at
December 31, 2003, a 47% decrease. This decrease was attributable to the
increased corporate activity during the year and the costs associated
with the feasibility study on the Varvarinskoye Project. Management
expects that working capital requirements to the end of 2005 will amount
to approximately $6.4 million, comprised of a commitment to spend $3.4
million on the mineral licenses covering the Varvarinskoye Project area
and surrounding land and approximately $3.0 million to cover overhead
expenses.

Management believes that the Company has sufficient cash resources to
meet planned administrative and exploration expenses through to the end
of 2005. However, additional funding will be required to advance the
Project through planned construction and development activities for 2005
and to operate a mine or for any new mining projects that may be
acquired.

The Company currently estimates its expenditures for administrative
costs to be $3.0 million for 2005. Capital expenditures to place the
Project into production are estimated at $115.0 million (including the
purchase of the mining fleet), with approximately $60 million estimated
to be spent in 2005. The funds required for these expenditures are
expected to be raised through the closing of the Offering and the Debt
Facility.

MANAGEMENT'S DISCUSSION AND ANALYSIS

A full Management's Discussions and Analysis document is available on
SEDAR, www.sedar.com. The document can also be obtained on application
from the Company.

Review of Operations

Varvarinskoye Project

During 2004, the Company continued to focus on the optimization of the
Bankable Feasibility Study ("BFS") for the Varvarinskoye Project.

The optimization of the BFS was completed in November 2004. During the
final stages of the BFS, it became clear that the Project was
economically viable. In October 2004, the Company appointed Barclays
Capital as financial advisor in connection with the debt-financing
portion of the financing required to bring the Project into production.
After presentations by Barclays and a due diligence review by Steffen,
Robertson & Kirsten (UK) Ltd. on behalf of the banks, several
international banking groups made proposals regarding project debt
facilities. In March 2005, the Company filed a long form preliminary
prospectus in the provinces of British Columbia, Alberta, Ontario and
Quebec relating to the Offering to raise the funds for the balance of
the capital cost of the Varvarinskoye Project. Funds raised from the
issue will also be used for working capital and general corporate
purposes. On March 9, 2005, the Company appointed the Lenders as joint
underwriters of the Debt Facility.

EMC has placed orders, supported by standby letters of credit, for the
purchase of the mobile mining fleet. The Company is also in final
negotiations with MDM Ferroman (Pty) Limited to secure a lump-sum
turn-key contract for the development of the Project.

During the 2004 field season, the Company contracted a local company to
commence stripping of topsoil and overburden from the central pit and
waste dump areas of the Project. Approximately 1.5 million tonnes of
material was removed and stockpiled.

Construction work at the Project is planned to commence in the second
quarter of 2005 in order to exploit the spring/summer construction
window. Gold production is expected to commence in the fourth quarter of
2006 if the spring/summer construction window of 2005 is fully exploited.

During the year, the Company targeted the recruitment of staff to manage
the construction and operation of the Project. Several key positions
have been filled and recruitment of additional expatriate and Kazakh
staff will continue during the remainder of 2005.

Other Projects

The Company continued to investigate sourcing additional properties in
Eastern Europe. Limited exploration work was undertaken in Macedonia and
a review of projects in Albania was undertaken. It is planned that these
efforts will continue in 2005.

Oil Interest

In 1999, Lisburne Holdings Limited, the Company's 55%-owned subsidiary,
sold Tasbulat Oil Corporation ("Tasbulat") to the National Oil Company
Petrom S.A. (the Romanian national oil company). Tasbulat holds
interests in three oil fields in Kazakhstan (the "Tasbulat Fields"). The
proceeds of sale, excluding anticipated royalties and expenses, amounted
to $6.05 million of which $4.95 million has been received to-date. The
balance of the sale proceeds of $1.1 million will be paid after the sale
from the Tasbulat Fields of a cumulative 2.0 million barrels of oil
equivalent ("MMBOE"), which proceeds are expected to be received in
early 2006. The remaining balance of the Company's net investment in oil
and gas residual interests of approximately $1 million is expected to be
recovered from a 1% gross overriding royalty (based on gross sales
proceeds less certain sales related costs and taxes) which is payable
from all oil sales from the Tasbulat Fields exceeding 2.0 MMBOE.



European Minerals Corporation


Audited Consolidated
Financial Statements
Years Ended
December 31, 2004 and 2003


MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of the Company have
been prepared by management in accordance with accounting principles
generally accepted in Canada and contain estimates based on management's
judgement. Management maintains an appropriate system of internal
controls to provide assurance that transactions are authorised, assets
safeguarded and proper records maintained.

The Audit Committee of the Board of Directors has reviewed with the
Company's independent auditors the scope and results of the annual audit
and the consolidated financial statements and related financial
reporting matters prior to submitting the consolidated financial
statements to the Board for approval.

The Company's independent auditors, PricewaterhouseCoopers LLP, are
appointed by the shareholders to conduct an audit in accordance with
Canadian generally accepted auditing standards and their report follows.



(Signed) (Signed)
W. G. Kennedy S. M. Gledhill
President and Chief Executive Officer Chief Financial Officer


February 25, 2005
(except for note 10, which is as at March 9, 2005)


AUDITORS' REPORT

To the Shareholders of European Minerals Corporation

We have audited the consolidated balance sheets of European Minerals
Corporation as at December 31, 2004 and 2003, and the consolidated
statements of operations and deficit and cash flows for each of the
years in the three year period ended December 31, 2004. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards in Canada. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at
December 31, 2004 and 2003, and the results of its operations and its
cash flows for each of the years in the three year period ended December
31, 2004 in accordance with generally accepted accounting principles in
Canada.



(signed)
Vancouver, B.C "PricewaterhouseCoopers LLP"
February 25, 2005 Chartered Accountants
(except for note 10, which is
as at March 9, 2005)



European Minerals Corporation
Consolidated Balance Sheets
As at December 31
(In thousands of U.S. dollars)
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2004 2003
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ASSETS

Current assets
Cash and cash equivalents (note 3) $8,099 $15,102
Accounts receivable and prepaid expenses 272 17

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$8,371 $15,119

Resource assets (note 4) 7,970 3,184
Deferred financing costs (note 5) 876 -

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$17,217 $18,303

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LIABILITIES

Current liabilities
Accounts payable and accrued liabilities (note 6) $549 $463

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$549 $463

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SHAREHOLDERS' EQUITY

Share capital (note 5) $71,499 $70,908
Stock-based compensation (note 5) 1,887 50
Share purchase warrants (note 5) 780 -
Deficit (57,498) (53,118)

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$16,668 $17,840

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$17,217 $18,303

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Nature of operations and going concern (note 1)

Commitments (notes 4 and 10(d))

Subsequent events (notes 4(b) and 10)

The accompanying notes are an integral part of these consolidated
financial statements

APPROVED BY THE DIRECTORS

(Signed) (Signed)
A J Williams - Director W G Kennedy - Director



European Minerals Corporation
Consolidated Statements of Operations and Deficit
For the Years Ended December 31
(In thousands of U.S. dollars except shares and per share amounts)
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2004 2003 2002
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Income
Interest $120 $12 $27

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$120 $12 $27

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Expenses
Investor relations $320 $138 $70
Administration (note 6) 1,059 666 475
Legal and professional fees (note 6) 791 348 120
Travel 5 22 27
Stock-based compensation (notes 2 & 5) 134 - -
Foreign exchange (gain)/loss (58) 1 (4)
Resource projects 377 1,333 748

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$2,628 $2,508 $1,436

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Net loss for the year $(2,508) $(2,496) $(1,409)
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Deficit - beginning of year as
previously reported $(53,118) $(50,622) $(49,213)
Adjust for stock-based
compensation (note 5) (1,872) - -
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Deficit - beginning of year
as restated $(54,990) $(50,622) $(49,213)
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Deficit - end of year $(57,498) $(53,118) $(50,622)
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Basic and diluted loss per
common share $(0.04) $(0.07) $(0.04)

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Weighted average number
of shares ('000s) 57,872 37,829 32,469

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The accompanying notes are an integral part of these consolidated
financial statements



European Minerals Corporation
Consolidated Statements of Cash Flows
For the Years Ended December 31
(In thousands of U.S. dollars)
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2004 2003 2002
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Cash provided from (used for)
Operating activities
Net loss for the year $(2,508) $(2,496) $(1,409)
Adjustments for:
Investor relations - - 50
Stock-based compensation 134 - -
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(2,374) (2,496) (1,359)
Changes in non cash working capital:
(Increase)/decrease in accounts
receivable and prepaid expenses (255) 25 10
Increase/(decrease) in accounts
payable and accrued liabilities 437 232 96
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Cash flow from operating
activities $(2,192) $(2,239) $(1,253)

Investing activities
Exploration of resource assets $(4,786) $- $-
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Cash flow from investing activities $(4,786) $- $-
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Financing activities
Common shares issued, net of
issue costs $- $11,175 $2,535
Proceeds from exercise of
stock options 71 146 16
Proceeds from exercise
of warrants - 3,065 -
Deferred financing costs (96) - -
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Cash flow from financing activities $(25) $14,386 $2,551
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(Decrease)/increase in cash and
cash equivalents $(7,003) $12,147 $1,298

Cash and cash equivalents at
beginning of year 15,102 2,955 1,657
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Cash and cash equivalents at
end of the year $8,099 $15,102 $2,955
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Significant non-cash operating
& financing activities
Common shares issued for settlement
of accounts payable $350 $- $-
Warrants issued for project
debt finance 780 - -
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$1,130 $- $-
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Cash and Cash Equivalents at
December 31 comprise:
Cash balances on deposit with bank $1,599 $11,952 $205
Short term deposits 6,500 3,150 2,750
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$8,099 $15,102 $2,955
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The accompanying notes are an integral part of these consolidated
financial statements



European Minerals Corporation
Notes to Consolidated Financial Statements
For the years ended December 31, 2004, 2003 and 2002
(In U.S. dollars)


1. Nature of operations and going concern

European Minerals Corporation ("EMC or the "Company") explores for
natural resources and hold interests in various mineral projects in
Kazakhstan and Europe including its key asset, the 86%-owned
Varvarinskoye gold-copper deposit (the "Varvarinskoye Project" or the
"Project") located in northern Kazakhstan. The Company is listed on the
Alternative Investment Market of the London Stock Exchange in London,
England and the Toronto Stock Exchange in Toronto, Canada. To date the
Company has not earned significant revenues. On November 26, 2004, the
Company completed a bankable feasibility study for the Varvarinskoye
Project and is arranging the final project debt and equity financing
required to develop and operate the Varvarinskoye Project. Pre-stripping
had commenced prior to December 31, 2004. Consequently, the Company is
considered to be in the development stage.

The Company is seeking to develop a portfolio of mineral projects, in
addition to the Varvarinskoye Project and it also retains an oil-related
interest in Kazakhstan through its 55%-owned subsidiary, Lisburne
Holdings Limited ("Lisburne") (note 4).

Management believes that the Company has sufficient cash resources to
meet planned administrative costs and property exploration commitments
through 2005. Additional funding will be required for the development
and construction activities of the Varvarinskoye Project planned for
2005 and 2006 or for any new mining projects that may be acquired. While
the Company has been successful in the past in raising additional
finance, there can be no assurance that the Company will be able to
continue to raise such additional funding as may be required for future
operations (note 10).

These consolidated financial statements have been prepared on a going
concern basis, which assumes the Company will be able to realise assets
and discharge liabilities in the normal course of business for the
foreseeable future. These financial statements do not include the
adjustments that would be necessary should the Company be unable to
continue as a going concern.

2. Accounting policies

Accounting convention

The consolidated financial statements are presented in United States
dollars and have been prepared using Canadian generally accepted
accounting policies. As described in note 9, these principles differ in
certain material respects from accounting principals generally accepted
in the United States.

Basis of consolidation

The consolidated financial statements include the accounts of the
Company and its subsidiaries. Intercompany balances and transactions are
eliminated on consolidation.

Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Significant estimates include assessment of the
carrying value of resource assets and asset retirement obligations.
Actual results could differ from those estimates.

Resource assets

a) Mineral Interests

Exploration and associated costs relating to non-specific
projects/properties are expensed in the period incurred. Exploration
costs relating to specific properties for which economically recoverable
reserves are believed to exist, may be deferred until the project to
which they relate is sold, abandoned, placed into production or becomes
impaired.

Senior management periodically reviews the carrying value of mineral
properties and deferred exploration costs to consider whether there are
any conditions that may indicate impairment. Where estimates of future
cash flows are available, a reduction in the carrying value is recorded
to the extent the net book value of the investment exceeds the
discounted value of future cash flows in accordance with Canadian
Institute Chartered Accountants (CICA) Handbook Section 3063,
"Impairment of Long-Lived Assets" which the Company adopted effective
January 1, 2004. Where estimates of future cash flows are not available
and where other conditions suggest impairment, management assesses if
carrying value can be recovered and provides for impairment if so
indicated.

b) Net investment in oil interests

Sales proceeds and royalties received will be recorded as a reduction to
the carrying value of the Company's net investment in oil interests.

Foreign currencies

The Company's subsidiaries are integrated foreign operations. Revenues
and expenses in foreign currencies are translated into United States
dollars at the exchange rates ruling on the dates of the transactions.
Monetary assets and liabilities are translated at the exchange rates
ruling on the date of the balance sheet. Non-monetary items are
translated at historical rates. Differences arising on foreign currency
translations are reflected in the consolidated statement of operations.

Loss per share

Loss per share is calculated based on the weighted average number of
shares issued and outstanding during the year. Diluted loss per common
share is calculated using the treasury stock method, which assumes that
stock options and warrants are only exercised when the exercise price is
below the average market price during the period, and that the Company
will use any proceeds to purchase its common shares at their average
market price during the period. In the years when the Company reports a
net loss, the effect of potential issuances of shares under options and
warrants would be anti-dilutive and, therefore, basic and diluted losses
per share are the same.

Incentive stock option plan

The Company has an incentive stock option plan as described in note 5.
On January 1, 2004, the Company retroactively adopted without
restatement the fair value method of accounting for stock-based
compensation for employees and directors. Previously, the Company did
not record any compensation expense on the granting of stock options to
employees and directors as the exercise price was equal to or greater
than the market price at the date of the grants. Consideration paid for
shares on the exercise of a stock option is credited to capital stock.
Note 5 to these financial statements provides additional disclosures for
options granted.

Income taxes

Income taxes are calculated using the liability method. Temporary
differences arising from the difference between the tax basis of an
asset or liability and its carrying amount on the balance sheet are used
to calculate future income tax liabilities or assets. Future income tax
liabilities or assets are calculated using tax rates anticipated to
apply in the periods that the temporary differences are expected to
reverse. A valuation allowance is applied to the extent that it is more
likely than not that future income tax assets will not be realised.

Asset retirement obligations

Effective January 1, 2004, EMC adopted CICA 3110 - Asset Retirement
Obligations. The new standard was adopted retroactively and did not have
any impact on the current or prior year reported results and balances as
management has determined that, based on the current early status of the
Project, there is no legal obligation requiring remediation of the
property at this time. This new section focuses on the recognition and
measurement of liabilities for statutory, contractual, or legal
obligations associated with the retirement of property, plant and
equipment, when those obligations result from the acquisition,
construction, development, or normal operation of the assets. The
obligations are measured initially at fair value (using present value
methodology), and the resulting costs capitalised into the carrying
amount of the related asset. In subsequent periods, the liability is
adjusted for the accretion of discount and any changes in the amount or
timing of the underlying future cash flows. The related asset is
adjusted only as a result of changes in the amount or timing of the
underlying cash flows. The capitalised asset retirement cost is
depreciated on the same basis as the related asset; discount accretion
is included in determining the results of operations.

Deferred financing costs

Financing costs incurred on the issuance of long-term debt are deferred
and amortised over the term of the related debt.

3. Financial instruments

a) Fair values

At December 31, 2004 and 2003, the carrying values of cash and cash
equivalents, accounts receivable and accounts payable and accrued
liabilities reflected in the balance sheet approximate their fair values
due to the short-term nature of those instruments.

b) Credit risk

Cash and cash equivalents include deposits maturing within 90 days of
the original date of investment. In order to limit its exposure, the
Company deposits its funds with major international banks.

c) Foreign exchange risk

Certain transactions and investments in Kazakhstan and Canada are
exposed to foreign exchange risk on movements of the Kazakh tenge and
Canadian dollar.

d) Cash and cash equivalents

Cash equivalents include short term deposits with a maturity of 90 days
or less from the date of deposit.

4. Resource assets

Balances of the resource assets as at December 31, 2004 and 2003:



2004 2003
$000's $000's
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Varvarinskoye Project - (a) 4,786 -

Net investment in oil & gas residual interests - (b) 3,184 3,184

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7,970 3,184

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a) Mineral interests - Varvarinskoye Project:

The Company, through its 100%-owned subsidiary Three K Exploration and
Mining Limited holds an 86% interest in JSC Varvarinskoye ("JSCV"), a
Kazakh company that holds the Varvarinskoye Project mining licences.

During the year ended December 31, 2003, the Company continued the
re-evaluation of this property and expensed the costs relating to the
re-evaluation incurred during the year. Amounts expensed in the year
ended December 31, 2003, totaled $1,333,000 (2002 - $748,000).
Cumulative costs incurred and expensed on the property to December 31,
2003 totalled $13,890,000.

As of January 1, 2004, management determined that it would pursue the
further exploration and possible development of this project and
accordingly it commenced capitalizing, in line with the Company's
accounting policy, the costs relating to the Project. As a result, the
Company capitalised exploration and development costs totalling
$4,786,000 related to the Project in the year ended December 31, 2004.

JSCV has entered into a Subsoil Use Contract between JSCV and the Kazakh
government that provides that gold and copper production from the
Project will be subject to royalties of (i) in the case of gold, a gross
royalty of 1.2% of the value of the gold produced from the Project based
on the average monthly spot price of gold on the London Metals Exchange
and (ii) in the case of copper, a net smelter return royalty of 1% based
on the average monthly sales proceeds of copper.

JSCV holds two licenses to explore and develop the Varvarinskoye
Project. Under these licenses, JSCV was required to expend a minimum of
$6,000,000 in exploration expenditures (completed). In addition, JSCV
has entered into a 2005 program of works with the Kazakh government
under its licenses, pursuant to which JSCV is required to conduct field
work and lab work totalling $3,400,000 in 2005.

In addition to the exploration commitments noted above, the Company has
also entered into purchase commitments totalling $1,225,000 in
connection with the development of the Varvarinskoye Project.

b) Oil interests:

In 1999, Lisburne sold Tasbulat Oil Corporation ("Tasbulat") to the
National Oil Company Petrom S.A. (the Romanian national oil company).
Tasbulat holds interests in three oil fields in Kazakhstan (the
"Tasbulat Fields").

The proceeds of sale, excluding anticipated royalties and expenses,
amounted to $6,050,000 of which $3,850,000 has been paid. The Company's
remaining net investment in the Tasbulat sale proceeds is payable as
follows:

(i) $1,100,000 to be paid after the sale from the Tasbulat Fields of a
cumulative 1.0 million barrels of oil equivalent ("MMBOE"), which amount
was received on January 28th, 2005; and $1,100,000 to be paid after the
sale from the Tasbulat Fields of a cumulative 2.0 MMBOE.

(ii) The remaining balance of the net investment in oil and gas residual
interests of approximately $1 million is expected to be recovered from a
1% gross overriding royalty (based on gross sales proceeds less certain
sales related costs and taxes) which is payable from all oil sales from
the Tasbulat Fields exceeding 2.0 MMBOE.

c) Other

In 2001, the Company's mineral interest in Hungary was abandoned and
related expenditures of $414,000 were written off. Also, during 2001,
the mineral licence and data owned by the Samarskoye Project was sold
realizing net proceeds of sale of $704,000. The carrying value of this
project had been written off in prior years.



5. Share capital

a) Authorised
Unlimited common shares with no par value.

Issued
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2004 2004 2003 2003 2002 2002
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Number of Number of Number of
Shares Amount Shares Amount Shares Amount
(000's) (000's) (000's) (000's) (000's) (000's)
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As at January 1 57,327 70,908 36,879 56,522 29,771 53,971
Common shares
issued for cash,
net of issue
costs - - 15,000 11,175 7,033 2,535
Exercise of
warrants - - 5,108 3,065 - -
Exercise of
stock options 175 71 340 146 75 16
Common shares
issued for
settlement of
accounts payable 400 350 - - - -
Transfer of fair
value of
stock-based
compensation on
exercise of
stock options - 170 - - - -

---------------------------------------------------------------------

Balance -
December 31 57,902 71,499 57,327 70,908 36,879 56,522

---------------------------------------------------------------------
---------------------------------------------------------------------


During the years ended December 31, 2004, 2003 and 2002, the Company
made the following share and warrant issues:

2004

In January 2004, the Company issued 400,000 common shares at $0.875 per
share in exchange for the settlement of accounts payable balances
totaling $350,000.

During the year ended December 31, 2004, a total of 175,000 (2003 -
340,000; 2002 - 75,000) common shares were issued on the exercise of
options, issued under the Company's incentive stock option plan, at
exercise prices of $0.41 (2003 - between $0.37 and $0.76 per share; 2002
- $0.22 per share) which raised proceeds of approximately $71,000 (2003
- $146,000; 2002 - $16,000).

2003

In December 2003, the Company completed a private placement of
15,000,000 units at $0.80 per unit, which raised gross proceeds of $12
million. Each unit consisted of one common share and one-half of one
common share purchase warrant. Each share purchase warrant is
exercisable until December 23, 2008 and each whole share purchase
warrant entitles the holder to acquire one common share of the Company
at a price of $1.20 per share. In connection with the private placement,
Canaccord Capital (Europe) Limited acted as agent and received, as part
of its remuneration, 750,000 share purchase warrants exercisable until
June 30, 2005 at a price of $0.85 per share. Issue costs incurred in
connection with the financing totaled $826,000.

2002

In October 2002, the Company completed a non-brokered private placement
which raised approximately $1.5 million before expenses. The private
placement comprised 3,333,332 units at a price of $0.45 per unit. Each
unit consisted of one common share and one-half of one share purchase
warrant exercisable until April 11, 2004. Each full share purchase
warrant entitled the holder to acquire one common share at a price of
$0.60 per share. All of these warrants were exercised in December 2003
for proceeds of $1 million.

In June 2002, the Company completed a brokered private placement of
3,699,334 units of $0.30 per unit, which raised gross proceeds of
approximately $1.11 million. Each unit consisted of one common share and
one common share purchase warrant. The share purchase warrant was
exercisable until December 21, 2003 and entitled the holder to acquire
one common share of the Company at a price of $0.60 per share. During
December 2003, 3,441,634 of these warrants were exercised for proceeds
of $2,064,980 and the balance of 257,700 warrants expired.

b) Share purchase warrants

A summary of the changes in the Company's share purchase warrants for
the years ended December 31, 2004, 2003 and 2002 is set out below:



---------------------------------------------------------------------
2004 2004 2003 2003 2002 2002
---------------------------------------------------------------------
Weighted Weighted Weighted
Warrants average Warrants average Warrants average
Out- exercise Out- exercise Out- exercise
standing price standing price standing price
(000's) ($) (000's) ($) (000's) ($)
---------------------------------------------------------------------
As at January 1 8,250 1.17 5,366 0.60 - -
Exercised - - (5,108) 0.60 - -
Granted 1,300 0.77 8,250 1.17 5,366 0.60
Expired - - (258) 0.60 - -
---------------------------------------------------------------------
Balance -
December 31 9,550 1.11 8,250 1.17 5,366 0.60
---------------------------------------------------------------------


The warrants issued in 2004 to advisors were in connection with the
proposed debt financing of the Varvarinskoye Project. The 1.3 million
warrants total is comprised of 1.250 million warrants, exercisable at
$0.77 (Pounds Sterling 0.40), expiring on September 30, 2009 and 50,000
warrants, exercisable at $0.72, expiring on October 5, 2006.

In accordance with Canadian generally accepted accounting principles,
the fair value of the warrants granted was calculated using the
Black-Scholes option pricing model, resulting in a value of $780,000.
This amount has been allocated to warrants value as a separate component
of Shareholders' Equity with a corresponding amount allocated to
long-term deferred financing charges. These deferred charges will be
amortised over the term of the Project's debt financing (note 10(d)).

Significant assumptions used in the Black-Scholes model in determining
the warrant values are as follows:



2004
Risk-free interest rate 2.91%
Expected dividend yield Nil
Expected stock price volatility 140%
Expected warrant life 2-3 years


A summary of the share purchase warrants outstanding and exercisable as
at December 31, 2004, 2003 and 2002 is set out below:

-----------------------------------------------------------------------
2004 2004 2004 2003 2003 2003 2002 2002 2002
-----------------------------------------------------------------------
Exer- Exer- Exer-
cise Number cise Number cise Number
Price Exp. Date (000's) Price Exp. Date (000's) Price Exp. Date (000's)
-----------------------------------------------------------------------
- - - - - - $0.60 21-Dec-03 3,699
- - - - - - $0.60 11-Apr-04 1,667
$0.85 23-Jun-05 750 $0.85 23-Jun-05 750
$1.20 23-Dec-08 7,500 $1.20 23-Dec-08 7,500
$0.72 05-Oct-06 50 - - -
$0.77 30-Sep-09 1,250 - - -
-----------------------------------------------------------------------
Total 9,550 8,250 5,366
-----------------------------------------------------------------------
-----------------------------------------------------------------------


c) Incentive stock options

The Company maintains an incentive stock option plan (the "Plan")
covering directors, officers, employees and consultants of the Company
and its subsidiary companies. The exercise price of an option is
determined by the Board of Directors on the basis of the closing market
price of the Company's shares on the trading day prior to the date of
issue of the option. Options are granted for a period of three years and
the Board of Directors determines the vesting provisions of each option
granted, which may vary. The Plan provides that options may be granted
for a maximum period of ten years and the aggregate number of shares
which may be issued and sold under the Plan may not exceed 6.5 million
shares. At December 31, 2004, a total of 830,000 options remained
available for granting under the Plan.

A summary of the Company's stock options for the years ended December
31, 2004, 2003 and 2002 is set out below:



------------------------------------------------------------------------
2004 2004 2003 2003 2002 2002
------------------------------------------------------------------------
Weighted Weighted Weighted
average average average
Out- exercise Out- exercise Out- exercise
standing price standing price standing price
(000's) ($) (000's) ($) (000's) ($)
------------------------------------------------------------------------
As at January 1 4,930 0.49 1,990 0.55 75 $0.22
Exercised (175) 0.41 (340) 0.43 (75) $0.22
Granted 200 0.86 3,480 0.46 1,990 $0.55
Expired (300) 1.10 - - - -
Forfeited (75) 0.41 (200) 0.52 - -
------------------------------------------------------------------------
Balance
- December 31 4,580 0.48 4,930 0.49 1,990 $0.55
------------------------------------------------------------------------


A summary of the stock options outstanding and exercisable as at
December 31, 2004, 2003 and 2002 is set out below:

------------------------------------------------------------------------
2004 2004 2004 2003 2003 2003 2002 2002 2002
------------------------------------------------------------------------
Exer- Exer- Exer-
cise Expiry Number cise Expiry Number cise Expiry Number
Price Date (000's) Price Date (000's) Price Date (000's)
------------------------------------------------------------------------
$0.70 10-dec-04 0 $0.70 10-Dec-04 75 $0.70 10-Dec-04 75
$1.00 10-Dec-04 0 $1.00 10-Dec-04 75 $1.00 10-Dec-04 75
$1.20 10-Dec-04 0 $1.20 10-Dec-04 75 $1.20 10-Dec-04 75
$1.50 10-Dec-04 0 $1.50 10-Dec-04 75 $1.50 10-Dec-04 75
$0.37 16-May-05 400 $0.37 16-May-05 400 $0.37 16-May-05 600
$0.50 05-Sep-05 835 $0.50 05-Sep-05 835 $0.50 05-Sep-05 1,090
$0.76 23-Jan-06 330 $0.76 23-Jan-06 330 - - -
$0.41 01-Oct-06 565 $0.41 01-Oct-06 815 - - -
$0.425 16-Oct-06 2,250 $0.425 16-Oct-06 2,250 - - -
$0.86 03-Feb-07 200 - - - - - -
------------------------------------------------------------------------
4,580 4,930 1,990
------------------------------------------------------------------------
------------------------------------------------------------------------


d) Stock-based compensation

On January 1, 2004, the Company adopted the fair value method of
accounting for stock-based compensation. Previously, the Company did not
record any compensation expense on the granting of stock options to
employees and directors as the exercise price was equal to or greater
than the market price at the date of the grants. The adoption of the
fair value method resulted in an adjustment to opening deficit of
$1,872,000 at January 1, 2004 and increases of $114,000 and $1,758,000
to share capital and options, respectively, at January 1, 2004.

The fair value of stock options granted for 2004 was $134,323 ($0.67 per
option) which amount has been expensed in the statement of operations.
The pro forma cumulative effect on the loss for the period and basic and
diluted loss per share for the year ended December 31, 2003 and 2002 had
the Company followed the fair value method of accounting for stock-based
compensation for options granted, is as follows:



2003 2002
$000's $000's
---------------------------------------------------------------------

Loss as reported $2,496 $1,409
Fair value of options 1,271 601
---------------------------------------------------------------------

Pro forma loss $3,767 $2,010
---------------------------------------------------------------------
---------------------------------------------------------------------

Pro forma basic and diluted loss per share $0.10 $0.06
---------------------------------------------------------------------
---------------------------------------------------------------------

Average fair value per option $0.37 $0.33
---------------------------------------------------------------------
---------------------------------------------------------------------


The fair value of stock options used to calculate compensation expense
is estimated using the Black-Scholes option pricing model with the
following assumptions:

2004 2003 2002
------------------------------------------------------------------------
Risk free interest rate 2.91% 3.7% to 3.8% 3.9% to 4.9%
Expected dividend yield Nil Nil Nil
Expected stock price volatility 140% 140% to 171% 130% to 140%
Expected option life in years 3 3 3


Option pricing models require the input of highly subjective
assumptions, including the expected price volatility. Changes in the
subjective input assumptions can materially affect the fair value
estimate and, therefore, the existing models do not necessarily provide
a reliable single measure of the fair value of stock options granted by
the Company.

6. Related party transactions

During the years ended December 31, 2004, 2003 and 2002, the Company
entered into the following transactions involving related parties, all
of which have been recorded at the exchange amount:

Dragon Management International Services Limited ("DIS") charged the
Company a total of $227,000 (2003 - $113,000; 2002 - $107,000) in
respect of the provision of office facilities, general office overheads
and re-charged costs incurred on behalf of the Company. The provision of
office facilities operates on a monthly basis. A. J. Williams, Chairman
and a director of the Company, beneficially owns DIS.

Dragon Capital Holdings Limited ("DCH") charged the Company a total of
$370,000 (2003 - $90,000; 2002 - $82,500) in respect of the provision of
the services of A. J. Williams and administrative services. A. J.
Williams, Chairman and a director of the Company, beneficially owns DCH.

Regent Mercantile Bancorp Inc ("RMB") charged the Company a total of
$Nil (2003 - $30,000; 2002 - $15,000) in respect of the provision of the
services of S. R. Dattels which arrangement terminated on June 30, 2003.
S. R. Dattels, a director of the Company for the duration of the
arrangement, has an interest in RMB.

Mining Assets Corp ("MAC") charged the Company a total of $129,000 (2003
- $45,000; 2002 - $1,600) in respect of the provision of the consulting
services and related expenses of B. D. Rayment. B. D. Rayment, a
director of the Company, beneficially owns MAC.

Goodman and Carr LLP ("GC") charged the Company a total of $175,000
(2003 - $96,000; 2002 - $64,000) in respect of the provision of legal
services and related expenses. M. J. Singer, a former director of the
Company, is a partner of GC.

Sutton International Management Services Limited ("SIMS") charged the
Company a total of $194,000 (2003 - $120,000; 2002 - $84,000) in respect
of the provision of geological, mining, management and administration
services as well as the services of W. G. Kennedy to act as President
and Chief Executive Officer of the Company. W. G. Kennedy beneficially
owns SIMS.

Endeavour Financial Corp ("EFC") charged the Company a total of $37,500
(2003 - $90,000; 2002 - $60,000) in respect of the provision of
consulting services and related expenses. A. J. Williams, Chairman and a
director of the Company, is a director and shareholder of EFC.

As at December 31, 2004, a total of $111,000 (2003 - $110,000; 2002 -
$68,000) was due to related parties and is included in accounts payable.

7. Income taxes

a) The income taxes shown in the consolidated statements of operations
and deficit differ from the amount obtained by applying statutory rates
due to the following:



2004 2003 2002

Statutory tax rate 37.12% 39.12% 39.62%
---------------------------------------------------------------------

Loss for the year $(2,508) $(2,496) $(1,409)

Recovery of income taxes based
on statutory rates $(931) $(976) $(558)

Losses for which an income tax
benefit has not been recognised $931 $976 $558
---------------------------------------------------------------------

$ - $ - $ -
---------------------------------------------------------------------
---------------------------------------------------------------------


b) The Company has non-capital losses available to reduce future taxable
income in Canada of approximately $9 million (2003 - $8.75 million). In
2004, $2 million in non-capital losses expired. The remaining losses
expire between 2005 and 2011. The future tax benefits that may arise as
a result of these losses have not been recognised in these consolidated
financial statements.

c) The Company does not have any other significant deductible temporary
differences arising between the accounting and tax carrying values of
its assets and liabilities.

8. Segmented reporting

The Company has one operating segment, the exploration of natural
resource properties. All capital assets of the Company are held in
Kazakhstan. Short-term deposit interest, which is the Company's only
regular source of income, is generally earned in the United Kingdom.

9. Significant differences from United States accounting principles

The United States generally accepted accounting principles ("U.S. GAAP")
reconciliation is included solely for the purpose of the Company's
filing on the Alternative Investment Market (AIM) of the London Stock
Exchange. The Company is currently listed on the Toronto Stock Exchange
and is not a registrant with the United States Securities and Exchange
Commission.

The consolidated financial statements of European Minerals Corporation
have been prepared in accordance with Canadian generally accepted
accounting principles "Canadian GAAP" which differ, in certain material
respects, from U.S. GAAP.

Had the Company prepared the consolidated financial statements in
accordance with U.S. GAAP, certain items on the consolidated balance
sheets, statements of operations and deficit, and statements of cash
flows would have been reported as follows:



12 months ended Dec 31,
2004 2003 2002

Consolidated statements of operations
As reported in accordance with
Canadian GAAP (2,508) (2,496) (1,409)
Exploration expenditures (a) (4,786) - -
---------------------------------------------------------------------
Net and comprehensive loss under
U.S. GAAP (7,294) (2,496) (1,409)
---------------------------------------------------------------------
---------------------------------------------------------------------
Basic and diluted loss per common
share under U.S. GAAP (0.13) (0.07) (0.04)

Cash flows from operating activities
Under Canadian GAAP (2,192) (2,239) (1,253)
Exploration expenditures (a) (4,786) - -
---------------------------------------------------------------------
Under U.S. GAAP (6,978) (2,239) (1,253)
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash flows from investing activities
Under Canadian GAAP (4,786) - -
Exploration expenditures (a) 4,786 - -
---------------------------------------------------------------------
Under U.S. GAAP - - -
---------------------------------------------------------------------
---------------------------------------------------------------------
Dec 31, Dec 31,
2004 2003
Consolidated balance sheet
Resource assets
Under Canadian GAAP 7,970 3,184
Exploration expenditures (a) (4,786) -
-----------------------------------------------------------
Under U.S. GAAP 3,184 3,184
-----------------------------------------------------------
-----------------------------------------------------------

Total shareholders' equity
Under Canadian GAAP 16,668 17,840
Exploration expenditures (a) (4,786) -
-----------------------------------------------------------
Total shareholder's equity under
U.S. GAAP (b) 11,882 17,840
-----------------------------------------------------------
-----------------------------------------------------------


a) Resource Assets

Under Canadian GAAP, exploration and associated costs relating to
non-specific projects / properties are expensed in the period incurred.
Exploration costs relating to specific properties for which economically
recoverable reserves are believed to exist may be deferred until the
project to which they relate is sold, abandoned, placed into production
or becomes impaired. For U.S. GAAP purposes, the Company expenses all
expenditures relating to unproven mineral properties as they are
incurred. When proven and probable reserves are indicated by a bankable
feasibility study for a property, subsequent exploration and development
costs of the property are capitalised. The Company completed a bankable
feasibility study in November 2004. Since the costs incurred in
December, 2004 were not material for U.S. GAAP, the Company has expensed
all exploration expenditures incurred in 2004 and will begin to
capitalize costs for U.S. GAAP purposes effective January 1, 2005. The
capitalised costs of such properties would then be evaluated on a
periodic basis to ensure that the carrying value can be recovered on an
undiscounted cash flow basis. If the carrying value cannot be recovered
on this basis, the mineral properties would be written down to its fair
value. The Company uses future net cash flows, discounted at an
appropriate interest rate, to arrive at an estimate of their fair value.

Under Canadian GAAP, exploration expenditures capitalised in the period
are classified as investing activities on the consolidated statement of
cash flows whereas under U.S. GAAP these expenditures would have been
classified as operating activities.

b) Stock-based compensation

Effective January 1, 2004 for Canadian GAAP, the Company adopted CICA
3870 "Stock-based Compensation and Other Stock-based Payments" which
requires an expense to be recognised in the financial statements for all
forms of employee stock-based compensation. Adoption of CICA 3870 was
applied retroactively, without restatement, as permitted by the
standard. For U.S. GAAP purposes the Company adopted FAS 148 "Accounting
for Stock-based compensation transition and disclosure". FAS 148
provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. For U.S. GAAP, effective January 1, 2004, the Company
applied the modified prospective method of adoption included in SFAS 148
which recognizes stock-based employee compensation for 2004 as if the
fair value based accounting method in this statement had been used to
account for all employee awards granted, modified or settled in fiscal
years beginning after December 14, 1994. Since all stock options granted
from that date to January 1, 2004 vested immediately, application of the
modified prospective method for U.S. GAAP purposes in 2004 did not have
any additional impact on the stock-based compensation charge for 2004 or
on total shareholders' equity under U.S. GAAP.

c) Income tax information

Temporary differences giving rise to significant portions of future
income tax assets as calculated under Canadian GAAP are presented in
Note 7. Under U.S. GAAP, gross future income tax assets would total
$1,436,000 higher than under Canadian GAAP as a result of the expensing
of exploration costs under U.S. GAAP. Net future income tax assets,
however, would remain unchanged as the increase in gross future income
tax assets would be offset by an equivalent increase in the valuation
allowance.

d) Recent accounting pronouncements

In January 2003, the Financial Accounting Standards Board or "FASB"
issued Interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin No. 51 ("FIN
46"). FIN 46 establishes accounting guidance for consolidation of
variable interest entities by the primary beneficiary. FIN 46 applies to
any business enterprise, public or private, that has a controlling
interest, contractual relationship or other business relationship with a
variable interest entity. In December 2003, the FASB issued
Interpretation No. 46R ("FIN 46 R") which supersedes FIN 46 and is
effective for all Variable Interest Entities ("VIEs") created after
February 1, 2003 at the end of the first interim or annual reporting
period ending after December 15, 2003. FIN 46R is applicable to all VIEs
created prior to February 1, 2003 by public entities at the end of the
first interim or annual reporting period ending after March 15, 2004.
The Company has determined that it has no VIEs.

In December 2004, the FASB issued SFAS 153 - Exchanges of Non-Monetary
Assets - an amendment of APB 29. This statement amends APB 29, which is
based on the principle that exchanges of non-monetary assets should be
measured at the fair value of the assets exchanged with certain
exceptions. SFAS 153 eliminates the exception for non-monetary exchanges
of similar productive assets and replaces it with a general exception
for exchanges of non-monetary assets that do not have commercial
substance. A non-monetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as
a result of the exchange. This statement is effective for non-monetary
asset exchanges occurring in fiscal periods beginning on or after June
15, 2005.

In December 2004, the FASB issued SFAS 123R - Accounting for Stock-based
Compensation. This statement supersedes APB 25 and eliminates the option
to use the intrinsic value method for valuing stock-based compensation.
SFAS 123R requires the use of the fair value method of accounting for
stock based compensation. This standard is consistent with the revised
provisions of CICA 3870, which was adopted by the Company for Canadian
GAAP effective January 1, 2004, and the early adoption of the fair value
method under FAS 148 which was adopted by the Company for U.S. GAAP
effective January 1, 2004.

The Emerging Issues Task Force ("EITF") formed a committee to evaluate
certain mining industry accounting issues, including issues arising from
the application of SFAS No. 141, "Business Combinations" ("SFAS No. 141
") and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS
No.142") to business combinations within the mining industry, accounting
for goodwill and other intangibles and the capitalization of costs after
the commencement of production, including deferred stripping. The issues
discussed also included whether mineral interests conveyed by leases
represent tangible or intangible assets and the amortization of such
assets.

The EITF reached a consensus, subject to ratification by the Financial
Accounting Standards Board ("FASB"), that mineral interests conveyed by
leases should be considered tangible assets. The EITF also reached a
consensus, subject to ratification by the FASB, on other mining related
issues involving impairment and business combinations.

The FASB ratified the consensus of the EITF on other mining related
issues involving impairment and business combinations. The FASB also
ratified the consensus of the EITF that mineral interests conveyed by
leases should be considered tangible assets subject to the finalization
of a FASB Staff Position ("FSP") in this regard. These issues did not
have an impact on the Company's financial statements since it did not
change its accounting.

The FASB also issued an FSP amending SFAS No. 141 and SFAS No. 142 to
provide that certain mineral use rights are considered tangible assets
and that mineral use rights should be accounted for based on their
substance. The FSP is effective for the first reporting period beginning
after April 29, 2004, with early adoption permitted. This FSP did not
have an impact on the Company's financial statements.

The Canadian Institute of Chartered Accountants (CICA) issued Accounting
Guideline AcG-15, "Consolidation of Variable Interest Entities", to
provide guidance for applying the principles in Handbook Section 1590,
"Subsidiaries", to certain entities. It is expected to be effective for
the Company's 2005 fiscal year. As noted above, the Company has
determined that it has no VIEs.

10. Subsequent Events

a) On January 5, 2005 the Company granted 100,000 options to purchase
common shares of EMC, exercisable at $0.58 per option (actual exercise
currency is Canadian dollars), expiring on January 4, 2008.

On January 28, 2005 the Company granted 150,000 options to purchase
common shares of EMC, exercisable at $0.59 per option (actual exercise
currency is Canadian dollars), expiring on January 27, 2008.

b) On March 1, 2005, the Company filed a long-form preliminary
prospectus (the "Offering") in Canada relating to an offering of units
of the Company to raise the funds for the balance of the capital cost of
the Varvarinskoye Project. Each unit of the Offering is comprised of one
common share of the Company and one-half of one common share purchase
warrant, with each full share purchase warrant entitling the holder to
acquire one common share of the Company for a period of 18 months
following the closing. The minimum and maximum distribution of the
Offering as well as the issue price and subsequent purchase warrant
price, are yet to be finalised. Funds raised from the final issue will
also be used for working capital and general corporate purposes. The
Company expects to file the final prospectus qualifying the offering on
or about March 31, 2005.

c) The Company has called a special meeting of the shareholders to be
held on April 8, 2005 for the purpose of obtaining shareholder approval
for the proposed continuance of the Company from the Yukon Territory,
Canada, to the British Virgin Islands (the "Continuance"). It is a
condition of the completion of the Continuance and of the Offering that
shareholders holding more than 5% of the total number of issued and
outstanding common shares of the Company shall not have dissented in
respect of the Continuance. This condition may be waived by the Company
in its sole discretion at any time. The Offering's agents may also waive
this condition pursuant to the terms of the agency agreement. If this
condition is not satisfied and is waived by the Company and such agents,
the Company will be required to pay a higher amount to dissenting
shareholders which amount could be material.

Holders of common shares of the Company who duly exercise their dissent
rights will be entitled to be paid the fair value for such common shares
by the Company and such amount may be material. Assuming all of the
required shareholder, regulatory and stock exchange approvals are
obtained and all other formalities and requirements are met, the Company
anticipates that the Continuance will become effective on or before
April 11, 2005.

As a result of the Continuance, the Company will cease to be a resident
of Canada for purposes of the Income Tax Act (Canada), including the
Regulations (the "Tax Act"). A corporation that ceases to be a resident
of Canada for Canadian tax purposes may be liable to pay certain
"departure" taxes under the Tax Act and applicable provincial or
territorial legislation. Departure taxes will be payable in the event
that the fair market value of the Company's property is greater than the
cost of the property for purposes of the Tax Act or the fair value of
the Company's property exceeds the total of the paid-up capital of the
Company's shares and debts and other amounts owing by the Company. The
Company is still in the process of making its final determination as to
whether any departure taxes are payable; however, based on a preliminary
assessment completed as of December 31, 2004, the Company believes that
no such taxes will be payable having regard to the fair market value and
tax cost of its property and the paid-up capital of the common shares.

d) On March 9, 2005, the Company announced it had appointed Investec
Bank Limited ("Investec") and Nedbank Limited ("Nedbank") as joint
underwriters for an $80 million debt facility to be used to develop the
Varvarinskoye Project. As lead arranger, Investec Bank Limited will be
paid an arranging fee (the "Arranging Fee") of 0.5% of the amount of the
arranged debt facility, a total of $400,000, payable at $40,000 per
month with the balance being paid on the earlier of the first drawdown
date under the debt facility or June 9, 2005. The Arranging Fee is
considered a deferred financing charge and as such will be capitalised
on the balance sheet and amortised over the term of the debt facility.
During the year ended December 31, 2004, the Company entered into
agreements with two financial advisors under which EMC will pay a total
of $1.2 million in the event that the Company enters into a Project debt
agreement. These fees are considered deferred financing charges and as
such will be capitalised on the balance sheet and amortised over the
term of the debt facility.



Investor Information:

European Minerals Corporation
Trading Symbols: EPM - TSX EUM - LSE (AIM)


Readers are cautioned that the preceding statements and information may
include certain estimates, assumptions and other forward-looking
information. The actual future performance, developments and/or results
of the Company may differ materially from any or all of the
forward-looking statements, which include current expectations,
estimates and projections in all or part attributable to general
economic conditions and other risks, uncertainties and circumstances
partly or totally outside the control of the Company, including
imprecision of reserve estimates, rates of inflation, changes in future
costs and expenses related to the exploration and extraction of gold or
copper, future market prices of gold or copper, financing availability
and other risks related to financial activities, and environmental and
geopolitical risks. Discussion of the various factors that may affect
future results is contained in the Company's recent filings with the
Canadian securities regulatory authorities. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. This news release
does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities of the Company in the United States. The
securities of the Company have not been and will not be registered under
the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and may not be offered or
sold within the United States or to U.S. persons unless registered under
the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    European Minerals Corporation (UK)
    Anthony J Williams/Bert Kennedy
    Chairman/President and CEO
    +44 (0) 20 7529 7508
    or
    Gresham PR Ltd.
    Neil Boom/Jenny Leahy
    +44 (0) 20 7404 9000
    or
    Vanguard Shareholder Solutions, Inc. (North America)
    Keith Schaefer
    1-866-448-0780 North America
    ir@vanguardsolutions.ca
    No stock exchange, securities commission or other regulatory authority
    has approved or disapproved the information contained herein.