Avrupa Minerals Ltd. - Form 20-F SEC filing

METRIC EQUIVALENTS

For ease of reference, the following factors for converting metric measurements into imperial equivalents are provided:

To Convert from Metric	To Imperial	Multiply by

Hectares	Acres	2.471
Meters	Feet (ft.)	3.281
Kilometers (km)	Miles	0.621
Tonnes	Tons (2000 pounds)	1.102
Grams/tonne	Ounces (troy/ton)	0.029

INTRODUCTION

Avrupa Minerals Ltd. (Avrupa or the “Company”) was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia under the name Everclear Capital Ltd. The Company became a Capital Pool Corporation ("CPC") on September 2, 2008. On July 7, 2010, the Company changed its name and on July 13, 2010, the Company completed its qualifying transaction.

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act. The Company will continue to qualify as an emerging growth company until such time as the Company produces more than US$1 billion in gross revenue, the Company issues more than US$1 billion in non-convertible debt within a three-year period, the Company’s market capitalization exceeds US $700 million, or more than five years elapse from the time of its initial public offering in the United States. As an emerging growth company, the Company is exempt from the requirements of section 404(b) of the Sarbanes-Oxley Act, meaning that the Company is exempt from the requirement to obtain an external audit of its internal controls over financial reporting.

BUSINESS OF AVRUPA MINERALS LTD.

Avrupa is a mineral company engaged in the acquisition and exploration of mineral properties.

There are no known proven reserves of minerals on Avrupa’s properties. All of the Company's properties are currently at the exploration stage. The Company does not have any commercially producing mines or sites, nor is the Company in the process of developing any commercial mines or sites. The Company has not reported any revenue from operations since incorporation. As such, Avrupa is defined as an “exploration-stage company”.

FINANCIAL AND OTHER INFORMATION

In this Registration Statement, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (“CDN$” or “$”). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

Table of Contents

FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute “forward-looking statements”. Some, but not all, forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” statements that an action or event “may,” “might,” “could,” “should,” or “will” be taken or occur, or other similar expressions. Although the Company has attempted to identify important factors that could cause actual results to differ materially from expected results, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Registrant, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the risks associated with outstanding litigation, if any, risks associated with project development; the need for additional financing; operational risks associated with mining and mineral processing; fluctuations in metal prices; title matters; uncertainties and risks related to carrying on business in foreign countries; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters of the Registrant with certain other projects; the absence of dividends; currency fluctuations; competition; dilution; the volatility of the Registrant’s common share price and volume; and tax consequences to U.S. Shareholders. We are not obligated to keep our information current and revise any forward-looking statements because of new information, future events or otherwise.

Table of Contents

Part I

Item 1. Identity of Directors, Senior Management and Advisors

Not Applicable

Item 2. Offer Statistics and Expected Timetable

Not Applicable

Item 3. Key Information

As used within this Annual Report, the terms “Avrupa”, “the Company”, “Issuer” and “Registrant” refer collectively to Avrupa Minerals Ltd., its predecessors, subsidiaries and affiliates.

SELECTED FINANCIAL DATA

The following tables set forth and summarize selected consolidated financial data for the Company, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

The selected financial data of the Company for the Years Ended December 31, 2017, 2016 and 2015, were audited by DeVisser Gray LLP, Chartered Accountants, as indicated in its audit report which is included elsewhere in this Annual Report. The selected financial data for the Years Ended December 31, 2014 and 2013 were derived from the financial statements of the Company which have been also audited by DeVisser Gray LLP, Chartered Accountants, but are not included herein.

The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in this Annual Report.

The Company has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.

Table No. 2 is derived from the financial statements of the Company, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Table No. 2

Selected Financial Data

(CDN$ in 000, except per share data)

	Year Ended December 31, 2017	Year Ended December 31, 2016	Year Ended December 31, 2015	Year Ended December 31, 2014	Year Ended December 31, 2013

Total Revenues	$0	$0	$0	$0	$0
Net Loss	$1,906	$1,872	$1,549	$1,251	$1,883
Comprehensive Loss	$1,880	$1,900	$1,543	$1,266	$1,842
Loss Per Share	$0.02	$0.03	$0.03	$0.03	$0.06
Dividends Per Share	$0	$0	$0	$0	$0
Wtg. Avg. Shares	80,788	63,766	49,642	40,495	31,070
Working Capital	$27	$484	$11	$433	$319
Exploration and Evaluation Assets	$1,408	$1,479	$1,479	$1,479	$1,479
Long-Term Debt	$24	$0	$0	$0	$0

Table of Contents

Shareholder’s Equity	$1,645	$2,230	$1,830	$2,126	$2,044
Total Assets	$2,130	$2,482	$2,654	$3,236	$3,092

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).

Table No. 3 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent annual periods December 31st, the average rates for the period, and the range of high and low rates for the period.

For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of Canadian dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates on the last day of each month during the period.

Table No. 3

Canadian Dollar/U.S. Dollar

	Average	High	Low	Close
Year Ended 12/31/17	$ 1.30	$ 1.37	$ 1.21	$ 1.25
Year Ended 12/31/16	1.32	1.46	1.25	1.34
Year Ended 12/31/15	1.29	1.40	1.17	1.38
Year Ended 12/31/14	1.11	1.16	1.06	1.16
Year Ended 12/31/13	1.04	1.07	0.98	0.16

Three Months Ended 3/31/18	$ 1.27	$ 1.31	$ 1.23	$ 1.29
Three Months Ended 12/31/17	1.28	1.29	1.25	1.25
Three Months Ended 9/30/17	1.25	1.30	1.21	1.25
Three Months Ended 6/30/17	1.34	1.37	1.30	1.30

Three Months Ended 3/31/17	$ 1.32	$ 1.35	$1.30	$ 1.33
Three Months Ended 12/31/16	1.34	1.36	1.31	1.34
Three Months Ended 9/30/16	1.31	1.32	1.28	1.31
Three Months Ended 6/30/16	1.29	1.32	1.25	1.30

Three Months Ended 3/31/16	$ 1.35	$ 1.46	$ 1.30	$ 1.30
Three Months Ended 12/31/15	1.34	1.40	1.29	1.38
Three Months Ended 9/30/15	1.32	1.34	1.26	1.34
Three Months Ended 6/30/15	1.24	1.26	1.20	1.22

Three Months Ended 3/31/15	$ 1.26	$ 1.28	$ 1.17	$ 1.27
Three Months Ended 12/31/14	1.14	1.16	1.11	1.13
Three Months Ended 9/30/14	1.11	1.12	1.06	1.12
Three Months Ended 6/30/14	1.08	1.10	1.07	1.07

March 2018		$ 1.31	$ 1.28	$ 1.29
February 2018		1.28	1.23	1.28
January 2018		1.25	1.23	1.23
December 2017		1.29	1.25	1.25
November 2017		1.29	1.27	1.29
October 2017		1.29	1.25	1.29

The exchange rate was $1.29 on March 31, 2018.

Table of Contents

Statement of Capitalization and Indebtedness

Not applicable.

Reasons for the offer and use of proceeds

Not applicable.

Risk Factors

An investment in the Common Shares of the Company must be considered speculative due to the nature of the Company’s business and the present stage of exploration and development of its non producing mineral properties. In particular, the following risk factors apply:

Risks Associated with Mineral Exploration

The Company is engaged in the mineral exploration business, which is highly speculative and has certain inherent risks which could have a negative effect on the Company

Mineral exploration is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environment protection, the combination of which factors may result in the Company not receiving an adequate return on investment capital.

All of the Company's mineral properties are at the exploration stage and all of the Company's exploration expenditures may be lost

The Company is at the exploration stage on all of its properties and substantial additional work and expenditures will be required in order to determine if any economic deposits occur on the Company’s properties. Mineral exploration is highly risky, and most exploration properties do not contain any economic deposits of minerals. If a property is determined to not contain any economic reserves of minerals, the entire amount spent on exploration will be lost.

The mineral industry is highly competitive

The Company will be required to compete in the future directly with other corporations that may have greater resources. Such corporations could outbid the Company for potential projects or produce minerals at lower costs which would have a negative effect on the Company’s operations.

Commodity prices may not support corporate profit

The resource industry in general is intensely competitive and there is no assurance that, even if commercial quantities of minerals are discovered and developed, a profitable market will exist for the sale of same. Factors beyond the control of the Company may affect the marketability of any minerals discovered. The price of natural resources are volatile over short periods of time, and is affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production. If the Company is unable to economically produce minerals from its projects, it would have a negative effect on the Company’s financial condition or require the Company to cease operations altogether.

Table of Contents

The Company's mineral exploration activities are subject to substantial government regulatory requirements

The mineral projects in which the Company has an interest are located in Portugal, Kosovo and Germany. The process for acquiring an interest in mineral concessions in these three countries is different from procedures for acquiring mining claims in Canada or the United States and involves certain risks not applicable in those jurisdictions.

These countries are politically stable European jurisdictions governed by democratically-elected leaders. In each of these countries, the legal, tax, and administrative institutions for business activities are in place, and processes and procedures are established and understood. In Kosovo, the legal and administrative framework for the mining industry has been established over the past ten years, first by the United Nations Mission in Kosovo and followed-up and further developed by the Kosovo government. Specifically, a new mining law, established in 2010, exists, and the independent regulator and oversight mechanism is functioning properly.

In Portugal, the rights and obligations associated with mining concession are governed by Direcção-Geral de Energia e Geologia (“DGEG”). A complete application, including detail work plans to be carried out, minimum planned amount of investment, the means of financing, financial standing and ability of the applicant, detailed measurements to be used for environmental protection and evidence of advertising such in a county newspaper and the official gazette, is submitted to the DGEG. Before a decision is made by the DGEG, the DGEG might request clarification of the proposal and further supporting documents and information about the application as well as having a hearing of the consultation office. Once the application is approved, the DGEG will sign the administrative contract (mining concession) with the applicant as well as publishing an abstract in the official gazette. In order to keep a mining concession valid and in effect, it is necessary to pay an annual license fee as well as putting up bonds for the claims.

In Kosovo, Independent Commission of Mines and Minerals (“ICMM”) oversees the exploration license application process. Under Official Gazette of the Republic of Kosova/Pristina, No. 80/27, Law No 08/L – 163, Article 21, an exploration license can be applied for a parcel of land no greater than 100 square kilometers, with a three-year term. Extension periods can be granted upon reducing the parcel of land by 50%; each extension is for an additional two years and can be done three times. To maintain the licenses, the company is required to report by the end of a calendar year all work performed and provide ICMM the financial report. Environmental safety regulations are followed in accordance to the European standards.

In Germany, Sächsisches Oberbergamt (Saxonian High Mining Authority, the “MA”) overseas the exploration license application. Any individual or company (domestic or foreign) can apply for such. Each license, once granted, will be valid for up to five years, with the possibility of extending. The company must provide proof of activities; otherwise, the license can be cancelled. If there are competing licenses, the MA will decide on the basis of the capabilities of the competing applicants. The process of license granting can be daunting and long. Annual reports must be submitted to retain its interest in the licenses.

Mineral exploration and mining activities in Portugal, Kosovo and Germany may be affected in varying degrees by political instability and government regulations relating to the mining industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Future operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriations of property, environmental legislation and mine safety.

Changes in these regulations or in their application are beyond the control of the Company and may adversely affect its operations, business and results of operations. The requirements to comply with these regulations may result in increased costs, as well as delays in obtaining the permits required to conduct operations. Failure to comply with the conditions set out in any permit or failure to comply with the applicable statutes and regulations may result in orders to cease or curtail operations or to install additional equipment. The Company may be required to compensate those suffering loss or damage by reason of its operating or exploration activities.

Table of Contents

On the Federal, Provincial/Territorial and State level, the Company must comply with exploration permitting requirements which require sound operating and reclamation plans to be approved by the applicable government body prior to the start of exploration. Depending upon the type and extent of the exploration activities, the Company may be required to post reclamation bonds and/or assurances that the affected areas will be reclaimed. If the reclamation requires funds in addition to those already allocated, the Company could be forced to pay for the extra work and it could have a significant negative effect upon the Company’s financial position and operations.

As the Company’s operations are primarily related to the exploration of our properties in these jurisdictions, many governmental regulations relating to mining activities are not yet application to the Company.

Our potential mining processing operations and exploration activities in these jurisdictions are subject to various laws governing land use, the protection of environment, prospecting, development, production, exports, taxes, labor standards, occupational health, mine safety and other matters. Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies. The Company believes that it is in substantial compliance with all material laws and regulations which currently apply to the Company’s activities. There can be no assurance, however, that all permits which the Company may require for future operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any mining project which the Company might undertake.

Failure to comply with laws and regulations may result in orders being issued thereunder which may cause operations to cease or be curtailed or may require installation of additional equipment. Violators may be required to compensate those suffering loss or damage by reason of their mining activities and may be subject to fines or penal sanctions if convicted of an offense under such legislation.

Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a material adverse impact on the Company or prevent development of the Company’s mining properties.

The jurisdictions that the Company has operations in have environmental legislation that requires that the mining concessionaire to obtain the authorization from the applicable environmental authorities to initiate any exploration or exploitation activity. Environmental legislation in these jurisdictions imposes potential liability on owners and/or operators of mining facilities which release hazardous substances into the environment and are required to carry out their operations using methods and techniques not liable to cause damage to the environment or the land-owner.

The Company’s title to its properties may be disputed by third parties which could result in the loss of title to its properties

The Company has only done a preliminary title survey of its exploration properties in accordance with industry standards. These procedures do not guarantee the Company’s title and therefore, in accordance with the laws of the jurisdictions in which these properties are situated, their existence and area could be in doubt. Unregistered agreements or transfers, or native land claims, may affect title. If title is disputed, the Company will have to defend its ownership through the courts, which would likely be an expensive and protracted process and have a negative effect on the Company’s operations and financial condition. In the event of an adverse judgment, the Company would lose its property rights.

Risks Relating to the Financing of the Company

The Company’s auditors have Expressed a “Going Concern” Opinion.

The Company’s auditor has included a “going concern” opinion in its auditors’ report to the Company's consolidated financial statements for the fiscal year ended December 31, 2017. The qualification was included as a result of the Company's need to obtain additional financing. If the Company is unable to meet its obligations, it will not be able to fulfill its business plan and be forced to reduce certain operations or cease operations altogether.

The Company will require additional financing which could result in substantial dilution to existing shareholders

Table of Contents

The Company, while engaged in the business of mineral exploration, is dependent on additional financing for planned exploration programs as outlined herein. Management anticipates being able to raise the necessary funds by means of equity financing. The ongoing exploration of the Company’s properties is dependent upon the Company’s ability to obtain financing through the joint venturing of projects, debt financing, equity financing or other means. Such sources of financing may not be available on acceptable terms, if at all. Failure to obtain such financing may result in delay or indefinite postponement of exploration work on the Company’s exploration properties, as well as the possible loss of its interest in such properties. Any transaction involving the issuance of previously authorized but unissued shares of common stock, or securities convertible into common stock, could result in dilution, possibly substantial, to present and prospective holders of common stock. These financings may be on terms less favorable to the Company than those obtained previously.

The Company has a history of net losses and no operational cash flow to sustain operations and does not expect to begin receiving operating revenue in the foreseeable future

None of the Company’s properties have advanced to the commercial production stage and the Company has no history of earnings or cash flow from operations. The Company has paid no dividends on its shares since incorporation and does not anticipate doing so in the foreseeable future. Historically, the only source of funds available to the Company has been through the sale of its common shares. Any future additional equity financing would cause dilution to current stockholders. If the Company does not have sufficient capital for its operations, management would be forced to reduce or discontinue its activities which would likely have a negative effect on the stock price.

Risks Relating to an Investment in the Securities of the Company

The market for the Company’s common stock has been subject to volume and price volatility which could negatively effect a shareholder’s ability to buy or sell the Company’s shares

The market for the common shares of the Company may be highly volatile for reasons both related to the performance of the Company or events pertaining to the industry (e.g. mineral price fluctuation/high production costs/accidents) as well as factors unrelated to the Company or its industry. Market demand for products incorporating resource commodities fluctuate from one business cycle to the next. The Company’s common shares can be expected to be subject to volatility in both price and volume arising from market expectations, announcements and press releases regarding the Company’s business, and changes in estimates and evaluations by securities analysts or other events or factors. In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many companies, particularly small-capitalization companies such as the Company, have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values, or prospects of such companies. For these reasons, the price of the Company’s common shares can also be expected to be subject to volatility resulting from purely market forces over which the Company will have no control. Further, despite the existence of a market for trading the Company’s common shares in Canada, stockholders of the Company may be unable to sell significant quantities of common shares in the public trading markets without a significant reduction in the price of the stock.

The Company has a dependence upon key management employees, the loss or absence of which could have a negative effect on the Company’s operations

The Company strongly depends on the business and technical expertise of its management and key personnel, including Chief Executive Officer and President Paul Kuhn and Chief Financial Officer Winnie Wong. There is little possibility that this dependence will decrease in the near term. As the Company’s operations expand, additional general management resources will be required. The Company may not be able to attract and retain additional qualified personnel and this would have a negative effect on the Company’s operations.

Certain officers and directors may have conflicts of interest

Certain of the directors and officers of the Company are also directors and/or officers and/or shareholders of other natural resource companies. While the Company is engaged in the business of acquiring and exploring mineral properties, such associations may give rise to conflicts of interest from time to time. The Directors of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of

Table of Contents

the board of directors, any director in a conflict must disclose his interest and abstain from voting on such matter. In determining whether or not the Company will participate in any project or opportunity, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at the time.

The Company could be deemed a passive foreign investment company which could have negative consequences for U.S. investors

The Company could be classified as a Passive Foreign Investment Company (“PFIC”) under the United States tax code. If the Company is declared a PFIC, then owners of the Company’s Common Stock who are U.S. taxpayers generally will be required to treat any so-called "excess distribution" received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Company’s shares. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of the Company’s net capital gain and ordinary earnings for any year in which the Company is classified as a PFIC, whether or not the Company distributes any amounts to its shareholders.

U.S. investors may not be able to enforce their civil liabilities against the Company or its directors, controlling persons and officers

It may be difficult to bring and enforce suits against the Company. The Company is a corporation incorporated in Canada under the laws of British Columbia. Three of the Company’s directors and officers are residents outside of the United States and all of the Company’s assets and its subsidiaries are located outside of the United States. Consequently, it may be difficult for United States investors to effect service of process in the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under United States securities laws. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities under the U.S. Securities Act.

Broker-Dealers may be discouraged from effecting transactions in our common shares because they are considered "Penny Stocks" and are subject to the Penny Stock Rules

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on FINRA broker-dealers who make a market in "a penny stock". A penny stock generally includes any equity security that has a market price of less than US$5.00 per share that is not registered on certain national securities exchanges or quoted on the NASDAQ system. The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000 in each of the last two years, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.

In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the US Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.

Table of Contents

As a “Foreign Private Issuer”, the Company is exempt from the Section 14 Proxy Rules and Section 16 of the 1934 Securities Act

The submission of proxy and annual meeting of shareholder information (prepared to Canadian standards) on Form 6-K may result is shareholders having less complete and timely data. The exemption from Section 16 rules regarding sales of common shares by insiders may result in shareholders having less data.

Item 4. Information on the Company

DESCRIPTION OF BUSINESS

Introduction

Avrupa’s executive office is located at:

325 Howe Street, Suite 410, Vancouver, British Columbia, Canada V6C 1Z7

Telephone: (604) 687-3520

Facsimile: 1-888-889-4874

E-Mail: info@avrupaminerals.com

Website: www.avrupaminerals.com

The contact person in Vancouver is Winnie Wong, CFO.

The Company's common shares trade on the TSX Venture Exchange under the symbol "AVU".

The authorized share capital of the Company consists of an unlimited number common shares. As of April 20, 2018, there were 93,793,797 common shares outstanding.

The Company is a growth-oriented junior exploration and development company focused on aggressive exploration, using a prospect generator model, for valuable mineral deposits in politically stable and prospective regions of Europe, including Portugal, Kosovo, and Germany. 8 exploration licenses are currently held by the Company in the three countries, including 5 in Portugal, 2 in Kosovo, and 1 in Germany.

The Company is the operator of 1 joint-venture in Portugal, and a joint-venture partner operates 1 project in Kosovo. The Company also has a preliminary agreement with an international mining company for joint-ventures on 3 of the Company’s properties in Portugal. The Company is currently working to upgrade precious and base metal targets on its other licenses to joint-venture ready status in order to attract potential partners to project-specific and/or regional exploration programs.

Corporate Background

The Company was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia under the name Everclear Capital Ltd. On July 7, 2010, the Company changed its name to Avrupa Minerals Ltd.

As of April 20, 2018, the Company has the following subsidiaries:

	% of ownership	Jurisdiction	Nature of operations
MAEPA Empreendimentos Mineiros e Participacoes Lda	100%	Portugal	Exploration
Innomatik Exploration Kosovo LLC	100%	Kosovo	Exploration
Peshter Mining J S C	10.94%	Kosovo	Exploration
Avrupa Holdings Ltd.	100%	Barbados	Holding
Avrupa Portugal Holdings Ltd.	100%	Barbados	Holding
Avrupa Kosovo Holdings Ltd.	100%	Barbados	Holding

Table of Contents

Currently, the Company conducts mineral exploration in Portugal, Kosovo and Germany.

History and Development of the Business

Avrupa was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia. The Company became a “Capital Pool Company” as defined in the Exchange’s Listing Policy 2.4 and its common shares began trading on the TSX Venture Exchange (the "Exchange") on September 2, 2008.

As a Capital Pool Company, the principal business of the Company was to identify and evaluate opportunities for the acquisition of an interest in an asset or business and, once identified and evaluated, to negotiate an acquisition or participation subject to receipt of shareholder approval and acceptance for filing by the Exchange. Until the completion of such a Qualifying Transaction (“QT”), as defined under Exchange Listing Policy 2.4, the Company did not carry on any business other than the identification and evaluation of assets or businesses in this connection.

The Company completed its QT on July 13, 2010 to acquire 90% of the issued and outstanding shares in MAEPA Empreendimentos Mineiros e Participacoes Lda., a private Portugese company (“MAEPA”) and (b) 92.5% of the issued and outstanding shares of Innomatik Exploration Kosovo LLC, a private Kosovo company (“Innomatik”). The Company received the final approval from the Exchange for its QT and its common shares resumed trading under its current name and trading symbol “AVU” on the Exchange as of July 14, 2010. In April 2012, the Company acquired the remaining 10% of MAEPA to own 100% by paying $150,000 cash and issuing 500,000 common shares. In August 2013, the Company acquired the remaining 7.5% of Innomatik to own 100% by issuing 450,000 common shares and paying €100,000.

The Company, through its holding in MAEPA, holds five exploration licenses in Portugal, spread from the north to the south in the country. The licenses have been issued to MAEPA by the government of Portugal, and are as follows:

Alvalade

Covas

Marateca

Alvito

Mertola

Licenses have varying work commitments, as approved by the government of Portugal, and all licenses carry a 3% net smelter royalty (“NSR”), payable to the government of Portugal.

In Kosovo, the Company, through its 100% holding in Innomatik, holds the Metovit exploration license. The original Kamenica license was dropped but replaced by the fully-overlapping new Metovit license. It also has a 10.94% ownership interest in Peshter Mining JSC., which has a 100% interest in the Slivovo property, subject to a NSR payable to the government of Kosovo.

In Germany, the Company currently has an 85% interest in the Oelsnitz Exploration License, a gold and tin exploration project located in the Free State of Saxony in Eastern Germany. Under the terms of the original Memorandum of Understanding with Beak Consultants GmbH ("Beak"), once the Company has earned an 85% interest in the property, the Company and Beak will form a joint-venture to further explore the property. The Company earned its 85% interest through meeting its minimum exploration expenditure requirement of €140,000 during 2012 and is currently working with Beak to establish the joint-venture entity.

Business Overview

The Company currently has interests in mineral exploration projects located in Portugal, Germany and Kosovo. The Company and all of its properties are at the exploration stage. There is no assurance that a commercially viable resource deposit is present on any of the Company’s properties, and additional exploration is required before it is determined if any property is economically and legally viable.

Table of Contents

Operations in certain areas are seasonal as the Company cannot conduct certain exploration activities on its properties year-round. The Company is not currently dependent upon market prices for its operations, nor is it dependent upon any patents, licenses or manufacturing processes. The Company’s operations are dependent upon exploration rights and claims as well as the terms of option and/or joint venture agreements on those properties. Please see the individual property descriptions below for the details of each of the Company’s current exploration projects.

Mineral Properties

The Company currently has interests in 8 mineral exploration properties, including 5 properties in Portugal, 2 properties in Kosovo, and 1 property in Germany. All of the Company's properties are currently at the exploration stage.

Table of Contents

Portugal

The Company through its subsidiary MAEPA, is currently focused in the Portuguese portion of the Iberian Pyrite Belt, a district with over 2,000 years of mining history from at least Roman times.

The licenses in southern Portugal are all exploration contracts with exploration commitments but not environmental liabilities attached to any of the contracts. These licenses typically have duration of 2+1+1+1 years. In addition, all the licenses have a 3% NSR attached which may be negotiated downwards in certain instances.

Table of Contents

The governing body for Portugal is the Direcao-Geral de Energia e Geologia (“DGEG”). Typically, from application to issuance of licenses, it takes anywhere from 6-12 months, depending on the government’s ability and efficiency to check the application area for competitive application bids, various liabilities (local or regional, political, and/or technical), and anything that might obstruct exploration progress. Often the wait for issuance depends on the prior activities and obligations of the responsible government officials, and the desire to make a public showing of the signing ceremony which advertises investment into Portugal. The Company has experienced a couple of delays due to the change of the political party in power where the Company had to wait for a new minister to be selected, and therefore his/her involvement in the signing ceremony

Despite some exploration properties located on sites with historical operations, the Company does not have any potential environmental liabilities associated these properties.

Alvito

The Alvito IOCG (Iron Oxide Copper Gold) exploration license covers 303.1 square kilometers of prospectable land in the Ossa Morena zone of southern Portugal. The current license agreement with the Government for the Alvito license has been extended for an additional 30 months to September 2019. The Company currently has a 100% interest in the property, subject to an option agreement with OZ Exploration Pty. Ltd, who can earn up to a 75% interest in the property.

There has been a moderate amount of previous work, which has been documented and archived by the Portuguese geological survey ("LNEG"). A partial historical data set from LNEG has been obtained that includes copper and zinc sample results from a total of 66,500 soil samples previously collected within the boundaries of the license area. Review of the results indicates a NW-trending zone of copper anomalies that stretches across the license for more than 20 kilometers, with a width of 3-4 kilometers, and covers not only the prospects visited, but also other areas not previously recognized as definitively prospective.

In April 2013, the Company announced positive results from first-pass exploration work on the property. 144 rock chip samples were collected, centering around 16 separate prospect areas. A total of 14 of these samples contain greater than 0.4 g/t gold, up to 3.95 g/t gold. 27 of the samples contain greater than 5 g/t silver up to a high value of 160 g/t silver. 42 of the samples contain greater than 0.25% copper, including 26 with greater than 1% copper. Others carry strongly anomalous lead, zinc and molybdenum values, as well. The Company completed additional exploration which has identified eight separate copper and copper-gold targets in the Alcaçovas copper belt and another 14 poly-metallic targets of various types around the license.

On June 17, 2015, the Company signed an agreement to option out the Alvito IOCG Project to Lowell Copper Ltd. On November 16, 2015, the Company announced that Lowell decided to terminate its option on Alvito to focus work on its Warintza project in Ecuador.

Prior to Lowell dropping its option on Alvito, the team advanced the Alcaçovas iron oxide copper-gold target within the license area. The Company will utilize the results of the work to continue to upgrade Alcaçovas as well as upgrade several other important targets around the license.

During the third quarter of 2015, the Company completed further geological mapping, in-fill soil sampling, and sub-surface rock sampling at Alcaçovas, utilizing a portable drill rig to access down to a maximum of approximately 20 meters depth. The Company drilled 29 short holes, totaling 356 meters, at eight targets located along two sub-parallel trends of strong copper-in-soil anomalism. Each trend is approximately three kilometers long. Twenty-two of these holes intercepted visible copper mineralization beneath the shallow cover to a depth of <20 meters below the surface. The best results of these holes include 10.5 meters of 0.43% copper in Hole 23 and 5.5 meters of 0.49% copper in Hole 28. Single sample values reached 0.89% copper and 0.53 g/t gold. With this limited work, the Company has defined an initial target area along the west zone, 1,000 meters long and 200 meters wide, open at both the north and south ends. Other IOCG target areas occur along the Alcaçovas trend but have not been explored to date.

Table of Contents

On April 5, 2017, the Company signed an earn-in option agreement on the Alvito project with Australia-based OZ Exploration Pty. Ltd, (“OZE”), a wholly-owned subsidiary of OZ Minerals Ltd. The agreement allows for OZE to earn up to a total 75% interest in the property from the Company by spending AUS$4,000,000 over approximately 2 ½ years under the following terms;

Fund AUS$1,000,000 in exploration expenditures in the first year to earn a 51% interest;

Fund an additional AUS$3,000,000 in exploration expenditures by September 30, 2019 to earn an additional 24% interest (75% interest in total)

The Company will be the operator of the project during the first earn-in stage with active technical support and oversight from OZE’s experienced IOCG team.

A new exploration program funded by OZE commenced in June 2017. The program was focused on an area containing a large copper-in-soil anomaly with a strike extent of 24 kilometers, and consisted of ground magnetics, gravity geophysical surveys, geological mapping, rock chip sampling, and drill targeting. Exploration discovered new copper targets within the license area.

Exploration targets are summarized in the following table. Most exploration at Alvito has concentrated on the southern half of the license where numerous copper prospects along two sub-parallel, 10-km long, NNW-trending structures highlight the potential for copper-gold mineralization. However, the latest work also suggests the potential for copper mineralization in the northern portion of the license.

Target Name	Target Type	Target Name	Target Type
Entre Matinhas Central	Magnetite breccia	Monte da Agua	Quartz vein/fault
Entre Matinhas North	Magnetite breccia	Monte do Outeiro (North)	Dikes and fault
Manisela South	Fault (gossan)	Monte do Outeiro (South)	Fault and gossan
Cova Das Minas	Quartz vein and fault zone	Albardeiros	Fault and dikes
Manisela North	Fault, quartz vein and gossan	Pego do Coito	Fault and dikes
Entre Matinhas South	Fault	Poço Malhada	Mafic dykes and contacts
Ribeira	Dikes and faults	Machoqueira	Contact
Manisela East	Fault, breccia and gossan	Poço dos Eucaliptos	Contact and fault
Defesa Grande	Contact and faults	Area 1440	Faults?
Mata	Contact and fault intersection; magnetite breccia and quartz vein	Vale da Rata	Contacts?
Entre As Matas (North)	Fault	Entre Matinhas East	visit necessary
Vale Nogueira	Quartz vein and fault	Entre as Matas South	visit necessary
Entre As Matas (South)	Fault	Defesa Grande East	visit necessary
Nogueira	Fault and quartz vein

Recent rock chip sampling and mapping suggest new targets in several areas, particularly around the Mata and Monte de Outeiro targets where geochemical anomalies in gold, copper, bismuth, molybdenum, tungsten, lead and zinc suggest the presence of a previously unsuspected, potentially mineralized, buried felsic intrusion. Gold and copper anomalism associated with magnetite breccias and gossans at the Entre Matinhas, Entre as Matas, and Manisela target areas are also high on the targeting list for the planned drill program. A number of copper-bearing quartz vein occurrences in the Nogueira and Vale Nogueira areas suggest further target possibilities in larger, less-explored parts of the Alvito license.

The Company and OZE plan to begin a drill program on the property during the second quarter of 2018. Originally, a 1500-meter drilling program was slated to be completed during the end of 2017, but the success identification of drill targets suggests that there may be reason to increase the proposed amount of drilling to 2000-2500 meters.

Table of Contents

Alvalade Project

The Alvalade joint-venture project is located in southern Portugal in the Portuguese Pyrite Belt. The project consists of one exploration license and covers approximately 902 square kilometers. The Company currently has a 100% interest in the project as it recovered the interest held by a former JV partner during 2017, but it is currently finalizing an agreement with a new funding partner who could earn a 51% interest in the project from the Company over 3 years.

Location and Access

The project is located on the Northwest extension of the Portuguese Pyrite Belt in the southwest portion of the country. The Alvalade Joint Venture is easily accessed by both paved and unpaved roads. Regional two to four lane paved roads cross the license block east to west and north to south. Secondary and Tertiary roads form a network that allows access to much of the JV area. A railroad line, which is used to transport copper and zinc concentrates from the Neves Corvo Mine to the port of Setubal passes through the Alvalade license. Several large towns, including Grandola, Ferreira do Alentejo, Castro Verde, and Aljustrel lie within or just outside of the borders of the license block. Electric power lines are ubiquitous, and a number of year-round rivers cross the license area, the main one being the Sado River.

As the Alvalade JV license block is considered to be a pure exploration play, there are no development types of facilities or plants at this time. The Company uses two warehouses for core storage and detailed review of the core, as well as for a small field office.

Regional and Property Geology

Rocks in the area include Devonian sediments, volcanic sediments, felsic sub-volcanic domes, and mafic diabase-like rocks form the package of target rocks in the area that potentially host copper- and zinc-bearing massive sulfide deposits. These are often covered by younger Carboniferous clastic sediments and turbidites. About 75% of the license block is covered by Tertiary sediments and/or Quarternary gravels. The Devonian target rocks, form a unit that is traceable from south of Lisbon, Portugal to near Seville, Spain, which is the Iberian Pyrite Belt (IPB). The IPB is host to many massive sulfide and stockwork sulfide deposits, which have a history of mining that dates back to Roman times.

The Alvalade JV encompasses the Portuguese part of the IPB that lies just north of the regional Messajana Fault. The giant Aljustrel massive sulfide body lies just to the south of the fault. Two formerly producing mines, Lousal and Caveira, lie within the property boundaries. Previous explorers have drilled upwards of 300 holes within the JV area. However, many of the holes did not penetrate more than a few 10’s of meters into bedrock. The Company’s compilation and review of the geology and structure of the Alvalade JV licenses indicates the strong possibility of new interpretations for the stratigraphy and the structural framework of the region, allowing for potential discoveries in previously drilled parts of the property block.

Acquisition Details

The Company originally acquired its interest in the property through its acquisition of 90% of MAEPA in July 2010 and increased its interest to 100% (subject to a 3% NSR to the government of Portugal) upon the acquisition of the remaining 10% of MAEPA in April 2012.

The Alvalade JV formerly covered 3 licenses (Ferreira do Alentejo, Lousal Alvalade and Canal Caveira). In October 2013, the government of Portugal approved the amalgamation of the three exploration licenses into a single exploration license. The new license was issued on October 31, 2013 and expires on December 31, 2016. No land reductions are required during the period, and the license may be renewed for up to two one-year periods, with a 50% land reduction upon each renewal. The license has been renewed for the second one-year period until December 31, 2018 The license has a 3% NSR attached which may be negotiated downwards in certain instances.

Table of Contents

Former Joint-Venture Agreements

On June 6, 2011, the Company announced that it signed a Memorandum of Understanding (“MOU”) with Antofagasta Minerals S.A. (“Antofagasta”) to undertake exploration for copper-zinc massive sulfide deposits on the Alvalade project.

The agreement covered the three original Avrupa licenses: Alvalade, Canal Caveira, and Ferriera do Alentejo. The formerly operating Lousal and Caveira copper mines are located within the project area. Antofagasta completed a US$300,000 Initial Study of the project, which included acquisition of much of the remaining historic data, re-logging of selected drill holes, systematic sampling, and integrated geological and geophysical interpretation of the targeted areas

Under the original agreement, Antofagasta had the option to acquire an undivided 51% interest in the project, which can be exercised by Antofagasta funding or incurring expenditures of an additional US$4 million over three years. After exercise of the first option, Antofagasta would be granted a further option to acquire an additional 24% interest in the project for an aggregate 75% undivided interest, by completing and delivering a Feasibility Study on the project to the Company within five years. The Company was the operator of the joint-venture through the first option period. In February 2014, Antofagasta completed the expenditure of the required US$4 million and earned a 51% interest in the joint-venture.

On February 25, 2014, the Company and Antofagasta signed an amended Joint Venture Agreement. On January 27, 2015, the Company and Antofagasta signed a second amended Joint Venture Agreement which allowed for more interim funding by Antofagasta, an expanded time frame in which to get a feasibility study decision, and a means for Avrupa to be carried to production, if there is a production decision to be made on the project. Antofagasta subsequently earned an additional 9% in the project (60% total) by funding an additional US$2,000,000 on exploration for a total of US$6,300,000.

On August 31, 2015, the Company signed an agreement with Colt Resources Inc. (“Colt”) and Antofagasta, whereby Colt will purchase Antofagasta’s 60% interest in the property for a total of US$7.1 million in incremental payments and a 1% NSR to Antofagasta. With the purchase, Colt became the optionee partner with the Company operating the project. Under the revised joint-venture agreement, Colt could earn up to 80% of the Joint-venture through a combination of exploration expenditures, completion of a feasibility study, and generation of a mine development decision by the end of the year 2023.

Colt subsequently defaulted on its joint-venture obligations. In order to regain a 100% interest in the property, Avrupa entered into an agreement with Colt and Antofagasta. Under the agreement, the Company agreed to forgive approximately €160,000 in debts, assume a deposit on the project of €75,000, and make the following payments to the initial partner on the project in return for increasing its interest in the project from 40% back to 100%:

Cash payment of US$250,000 on the filing of an initial NI 43-101 compliant resource estimate meeting certain minimum criteria;

Staged cash payments totaling US$1,000,000 on the completion of a NI 43-101 compliant feasibility study meeting certain minimum criteria; and

Staged cash payments totaling US$3,000,000 on the commencement of commercial production from the project.

Exploration History

At the start of the Initial Study, first-pass review of re-processed regional gravity and magnetics covering the Alvalade license led to the identification of up to ten target areas on the potential Alvalade JV property. The Company has upgraded three of these areas – Aldeia dos Elvas, Monte da Bela Vista, and Azinheira dos Barros – and has defined drill targets in all three areas for the Alvalade Joint Venture. Four more of the target districts need further detailed examination, while the other four areas have been temporarily downgraded, though will be re-visited at a later date.

Table of Contents

Further first-pass review of recently completed re-processing of regional geophysics, covering the entire three-license block (Canal Caveira, Ferreira do Alentejo, and Alvalade licenses), is continuing.

On October 19, 2011, the Company announced that work completed to date included re-logging of an additional 31 historic drill holes, collection of approximately 250 more samples from the drill core, re-processing of regional gravity and magnetics data, first-pass selection of specific target areas, including the Azinheira dos Barros and Aldeia dos Elvas locations, detailed re-processing of gravity data for the Aldeia area, and 1:10,000-scale geologic mapping and rock chip sampling at Aldeia and Azinheira. Integration of geophysical data, geochemical data, and the results of recent surface work in these two districts suggests the potential for multiple drilling targets in both places.

On February 2, 2012, the Company announced the commencement of exploration work in the Portuguese Pyrite Belt under the Alvalade Joint Venture. The budget for work in 2012 was increased to US$2.5 million and approved by Antofagasta. Company geologists re-logged and selectively sampled over 50,000 meters of historic drill core from 194 drill holes completed in the JV area by other companies prior to the Company's acquisition of the property. A Phase 1 exploratory core drilling program was completed by the Company in three separate target areas. The initial program consisted of 8 holes totaling 3,269.8 meters and was designed to test targets located within two windows of exposed Paleozoic volcano-sedimentary rocks that host massive sulfide deposits elsewhere in the Iberian Pyrite Belt. 7 of the 8 holes drilled encountered alteration characteristic of massive sulphide systems in the Iberian Pyrite Belt. These same 7 holes crossed numerous zones of pyritic material, and 1 of the holes, MBV01, contained significant intervals of low-grade copper that may have been transported from a nearby potentially larger zone of copper mineralization.

Results of the re-logging and sampling, combined with the Phase 1 drill results, were used to plan Phase 2 drilling, which commenced in October 2012. The program consisted of 8 drill holes totaling 3,491 meters. 7 of the holes tested new targets along four separate trends of potentially mineralized host rocks. The 8th hole was drilled in the Monte a Bela Vista target area as a follow-up to hole MBV01 drilled in Phase 1, approximately two kilometers north of the past-producing Lousal Mine. The best results were obtained from the follow-up hole, MBV02, which was drilled to 653.1 meters and intercepted long intervals of probable feeder zone-style mineralized stockwork quartz veining, which may be indicative of the presence of a nearby massive sulfide system. Copper results from MBV02 included 45.90 meters (from 7.30 to 53.20 m) grading 0.24% Cu, including 8.05 meters (from 11.80 to 19.85 m) grading 0.39% Cu and 15.80 meters (from 23.70 to 39.50 m) grading 0.44% Cu; and 24.15 meters (from 146.30 to 170.45 m) grading 0.24% Cu, including 1.50 meters (from 154.15 to 155.65 m) grading 1.64% Cu and 7.50 meters (from 159.60 to 167.10 m) grading 0.44% copper. Gold results included 23.70 meters (from 154.15 to 177.85 m) assaying 1.35 g/t Au, including 1.50 meters (154.15 to 155.65 m) of 5.11 g/t gold and 7.45 meters (161.75 to 169.20 m) of 2.16 g/t gold; and 97.50 meters (279.50 to 377.00 m) of 0.40 g/t Au, including 7.00 meters (293.00 to 300.00) of 1.08 g/t Au and 9.50 meters (310.80 to 320.30 m) of 2.30 g/t Au. The hole also included numerous intervals of greater than 0.1% lead and/or zinc.

In March 2013, the Company commenced the Phase 3 drill program. The program was planned for up to 10 drill holes totaling approximately 4,500 to 5,000 meters. Drilling was planned for several areas along the Neves Corvo and Aljustrel target trends, as the Company developed a total of 23 targets of new, high quality targets. The first part of the program targeted the Monte da Bela Vista area where Phase 1 and Phase 2 drill holes MBV01 and MBV02 intersected copper and gold vein mineralization, and around the formerly producing mines at Canal Caveira and Lousal. Drill results continue to show positive potential at Monte da Bela Vista. Drill hole MBV03 intersected several zones of stockwork quartz-sulfide mineralization, including a 65-meter wide zone at a depth of 426 to 491 meters.

Phase 4 drilling commenced in January 2014. One hole was planned for the Monte da Bela Vista West target, located approximately 400 meters to the west of the Monte da Bela Vista mineralization drilled in Phase 3. An additional 6 holes were planned around two new, previously undrilled target areas. These holes will be collared in young cover sediments which may be as thick as 200 meters which completely obscure visual sighting of the target rocks. The holes will be drilled through the sediments and then 30-40 meters into the target basement rocks with the intention of using the information collected from the short drilling in the basement rocks to target vectoring towards true deep

Table of Contents

massive sulfide targets. The final 3 holes of Phase 4 will be follow-up deep tests from locations indicated from the blind vectoring drilling.

Massive sulfide mineralization was discovered in the second drill hole at the Sesmarias South target area, approximately 7 kilometers south of the past producing Lousal Mine. The area is covered by approximately 100 meters of cover sediment, which completely obscures the target rocks. The mineralized intercept in SES002 totals 16.85 meters. The intercept includes a zone of massive sulfide mineralization, then underlain by a zone of semi-massive sulfides and strong stockwork sulfide veining. There follows a narrow shear zone, which is, in turn, underlain by a further zone of strong alteration with anomalous disseminated and stockwork sulfide mineralization. The analytical results for the Massive and Semi-massive zones are included in the table below:

SULFIDE TYPE	FROM	TO	TOTAL	Cu %	Pb %	Zn %	Sn %	Co %
Massive	151.65	159.60	7.95	2.21	3.05	4.82	0.15	0.084
Semi-massive/stockwork	159.60	162.50	2.90	0.71	1.27	3.17	0.092	0.051
TOTAL			10.85	1.81	2.57	4.38	0.13	0.075

Six additional holes were drilled in this initial Sesmarias program in the immediate vicinity of the initial Sesmarias massive sulfide intersection (SES002). A total of 1,961 meters were drilled in the general target area. Highlights from the 6 additional holes include:

SES008, a 650-meter step-out NW from discovery SES002, intersects 5.5 meters of massive sulfide mineralization with positive gold and silver results, and including 5.0 meters @ 0.64% Copper, 0.94% Lead, and 1.54% Zinc.

SES006, a 50-meter step-out NW from SES002, intersects 1.5 meters of VMS mineralization @ 1.66% Copper, 2.3% Lead, and 3.66% Zinc.

A further five holes were then drilled to follow-up on the prior eight-hole program. The highlight of this follow-up program is a thick massive sulfide intercept in drill hole SES010, which started at a depth of 228.40 meters, and continued for 57.85 meters to 286.25 meters depth. Average grades for the entire massive sulfide intercept are: 0.32% copper, 0.61% lead, 1.95% zinc, 0.45 g/t gold, and 25.1 g/t silver. True thickness of the intercept is estimated to be approximately 35 to 40 meters. The joint-venture partners completed 13 holes, over a total strike length of 1,700 meters, at Sesmarias, for a total of 3,807 meters in the general target area. The Sesmarias target zone is heavily faulted, and the rocks are strongly contorted and displaced, which makes exploration extremely difficult. Despite these difficulties, the results from the drill programs continue to clearly indicate the potential for a large-scale mineralized system.

Drilling at the Alvalade project resumed on October 28, 2015 with funding by the new joint-venture partner Colt. In the new phase of drilling, the partners planned to drill 5,000 to 6,000 meters, mostly in the immediate area of the Sesmarias copper-zinc discovery.

On February 3, 2016, the Company announced results from the drilling. Analytical results from four diamond drill holes completed in late 2015 in the area of previously-drilled SES010 (58 meters @ 0.32% Cu, 0.61% Pb, 1.95% Zn, 0.45 g/t Au, 25 g/t Ag) confirm and extend the massive sulfide lens to a present length of 300 meters with a 35-40 meter thickness. The lens is open to the northwest and down dip to the northeast. Following are the results from the recent drilling.

Table of Contents

Drill hole ID	From (m)	To (m)	Intercept (m)	Cu (%)	Pb (%)	Zn (%)	Au (g/t)	Ag (g/t)
SES019	263.50	315.20	51.70	0.44	0.75	2.71	0.40	17.35
including	264.15	299.05	34.90	0.40	0.99	3.46	0.38	20.67
and including	280.45	290.95	10.50	0.36	1.71	5.18	0.37	21.71
SES020	277.85	287.55	9.70	0.25	0.57	0.99	0.47	24.70
	297.70	319.95	22.25	0.55	0.59	0.66	0.53	20.54
	325.00	334.10	9.10	0.32	0.14	0.52	0.68	11.31
	337.85	356.65	18.80	0.33	0.14	0.64	0.26	6.40
SES021	262.85	277.65	14.80	0.36	0.29	0.40	0.43	9.82
SES022	323.90	376.00	52.10	0.43	0.49	0.98	0.62	17.31

Results from recently-completed downhole geophysics, utilizing the “mise-a-la-masse” (MALM) method, combined with historic ground magnetics data, suggest that the sulfide lens may continue another 300 meters or more to the northwest from SES022. Future drilling will test this target area.

The drill core was transported by Company personnel from the drill sites to a nearby secure storage facility for logging and sampling. The sample intervals were one meter, unless visual inspection of the core indicated that a slightly different interval was necessary to preserve continuity of mineralization and rock type for analysis. One half of the core was collected and sent to the geochemical laboratory, while the remaining half of the core was retained in the core boxes for future reference. All samples were sent by courier or transported by Company personnel to the ALS Minerals sample preparation facility in Seville, Spain. ALS shipped the prepped material to their main European analytical laboratory located in Loughrea, Ireland. The samples were analyzed by ICP methods for copper, lead, zinc, and silver, and by fire assay with an AAS finish for gold. In addition to ALS Minerals quality assurance/quality control (QA/QC) of all work orders, the Joint Venture conducted its own standard, internal QA/QC from results generated by the systematic inclusion of certified reference materials, blank samples, and field duplicate samples. The analytical results from the quality control samples in the Sesmarias work orders have been evaluated, and conform to industry best-practice standards.

Current and Anticipated Exploration

For the year ended December 31, 2016, Colt had forwarded a total of $250,519 (€170,422) and issued 2,425,500 common shares of Colt to the Company at a deemed value of $0.08 per share ($194,040) for the Alvalade property. The Company incurred an additional $131,722 (€93,000) which was to be reimbursed by Colt. Colt, however, defaulted on its joint venture obligations. In June 2017, the Company regained a 100% interest in the property by agreeing to forgive approximately €160,000 euros owed by Colt, assume a deposit on the project of €75,000 and make certain milestone payments to the initial partner Antofagasta of up to US$4,250,000 from the initial filing of an NI 43-101 compliant resource estimate to commencement of commercial production.

In March 2018, the Company announced it had signed a non-binding letter of intent with the subsidiary of a major international mining company as a funding partner (the “Funding Partner”) to have the Funding Partner provide funding over the next three years to earn an initial 51% in each of three of Avrupa’s Portugal properties, including Alvalade. The terms for the proposed agreement for Alvalade are:

oFor 51% of the license, spend €10 million on exploration over the next 3 years (including 30,000 meters of drilling);

oFor an additional 24%, for a total of 75%, produce a feasibility study on any one particular project within the license area by the end of the pre-exploitation license period, or by the end of 2023, whichever is earliest.

Table of Contents

is anticipated that the next phase of exploration on the property will commence in mid-2018 with the funding and technical assistance from the Funding Partner.

Marateca

The Marateca property covers approximately 923.2 square kilometers and is located in south-central Portugal in the Portuguese Pyrite Belt, approximately 40 kilometers north of the Company’s Alvalade Joint-Venture project. The Company currently has a 100% interest in the project.

On July 26, 2013, the Mining Bureau of Portugal issued a new Marateca license. The new license covers a portion of the Company’s former license by the same name. The current property surrounds the northernmost known volcanic center on the Neves Corvo trend in the Iberian Pyrite Belt. Targets within the license area are potential copper- and zinc-bearing massive sulfide deposits, hosted in a similar geological setting to that of the Alvalade Project.

With only a moderate amount of exploration, prospecting and research work, on a small portion of the Marateca license area, the Company has identified at least 13 potential, and separate, copper-zinc, volcanogenic massive sulfide-style target areas. Several of the target areas have outcropping mineralization including iron, manganese, and silica at Serrinha and copper, lead, manganese and silica at Cordoeira. Previous work in the area by the Company included exploratory core drilling at three different targets: Serrinha, São Martinho, and Monte de Volta. The two holes at Serrinha intercepted zones of stockwork sulfide-quartz veining with anomalous base metal values and silver. Subsequent geological work around the Serrinha target area produced several new drill targets. The holes at São Martinho and Monte de Volta were lost due to difficult drilling conditions before reaching the target zones.

In December 2013, the Company announced the Company discovered an outcropping gossan zone in volcanic-sedimentary rock units that are known to host massive sulfide mineralization in other parts of the Pyrite Belt. Follow-up mapping has extended the Pego do altar gossan zone to nearly 1,000 meters in strike length with a possible thickness of up to 50 meters. Limited rock chip sampling along strike (11 samples) returned copper values up to 0.12% and lead values to 0.08%. Anomalous bismuth, molybdenum, and gold values further indicate the hydrothermal nature of the metals’ presence, thus providing early support for further geological mapping, sampling, and drill targeting. In addition, the Company discovered a second gossan zone in the Pego do Altar target area, with visible copper oxide staining at several locations. The Company drilled two shallow stratigraphic test holes at the end of 2016, totaling 175 meters. Both holes confirmed downdip from the gossan sulfide mineralization in the proper stratigraphic section of VS sediments. The first hole cut 35 meters of mixed stockwork and semi-massive pyritic mineralization, and the second hole cut 20 meters of similar pyritic mineralization.

In March 2018, the Company announced it had signed a non-binding letter of intent with the subsidiary of a major international mining company as a funding partner (the “Funding Partner”) to have the Funding Partner provide funding over the next three years to earn an initial 51% in each of three of Avrupa’s Portugal properties, including Marateca. The terms for the proposed agreement for Marateca are:

oFor 51% of the license, spend €2 million over the next 2 years, including 10,000 meters of drilling;

oFor an additional 9%, for a total of 60%, spend €4 million over the following 2 years, including a minimum of 10,000 meters of drilling;

oFor a further 10%, for a total of 70%, produce a pre-feasibility study on any one particular project within the license area by the end of 2023.

The Company and the Funding Partner are currently working to convert the Letter of Intent to a definitive agreement. There is no assurance that a definitive agreement will be completed. However, if a formal agreement is finalized, it is anticipated that the next phase of exploration on the property will commence in mid-2018 with the funding and technical assistance from the Funding Partner.

Table of Contents

Mertola

In June 2014, the Company received a new license for the Mertola project, which is located in the Pyrite belt of southern Portugal. It is east of Neves Corvo, and covers the eastern Portuguese portion of the Sao Domingos VMS target belt. The past-producing Sao Domingos Mine is located close to the east end of the license, and is central to an area of copper and zinc-bearing massive sulfide targets. Core from over 35 holes of historic drilling is available for re-logging and re-sampling. This core has been collected by the Company which has begun to re-log the material. The new information gathered from the re-logging suggests that there will be new targets defined through re-interpretation of the geology.

During 2017, the Company conducted limited exploration at Mertola. The Company began preparing and updated study of the historic Sao Domingos mine on the eastern end of the license. New information suggests additional brownfields exploration possibilities within sight of the mine complex, with several drill-ready targets identified at the historic Chanca mine located less than 10 kilometers away from Sao Domingos.

In March 2018, the Company announced it had signed a non-binding letter of intent with the subsidiary of a major international mining company as a funding partner (the “Funding Partner”) to have the Funding Partner provide funding over the next three years to earn an initial 51% in each of three of Avrupa’s Portugal properties, including Mertola. The terms for the proposed agreement for Mertola are:

oFor 51% of the license, spend €1 million by the end of the exploration license period in 2019, including at least 2,000 meters of drilling;

oFor an additional 9%, for a total of 60%, spend €2 million within two years of the start of the pre-exploitation license, including a minimum of 6,000 meters of drilling;

oFor a further 10%, for a total of 70%, produce a pre-feasibility study, within three years of the 60% earn-in, or by the end of the pre-exploitation license period, on any one particular project within the license area.

Other Portugal Properties

Covas

The Covas property is a tungsten-gold exploration project located in the northwestern portion of Portugal. The property consists of a single exploration license and is 1,949 hectares in size. The Company currently has a 25% interest in the property, with 75% owned by Blackheath Resources Inc. through a JV agreement.

In October 2017, Blackheath funded a single 225-meter drill hole to partially test for the possibility of a large-tonnage, close-to-the-surface, bulkmineable, disseminated tungsten deposit directly related to or hosted in the presumed porphyritic granitic Covas intrusive body. Surface and close-to-surface indications for potential mineralization included strong alteration affiliated with an intense linear, negative magnetics anomaly, multi-element geochemical anomalism contained in soil samples covering the linear magnetics anomaly and supporting IP/chargeability anomalism. The single drill hole partially tested the target idea. Alteration was present throughout the hole, particularly strong silicification through the bottom half of the hole. Porphyritic intrusive rocks were present in the hole in the form of cross-cutting dikes.

In March 2018, Blackheath terminated the joint-venture agreement on the property and the license for the property is expected to be cancelled by the Portuguese DGEG in 2018. The Company wrote-off its capitalized acquisition costs of $71,289 as of December 31, 2017.

Table of Contents

Santa Margarida do Sado

In June 2014, the Company received a new license in the Pyrite Belt of southern Portugal. The Santa Margarida do Sado license covered potential northward extensions of mineralization from the historic Canal Caveira Mine which is located on the Company’s Alvalade Joint Venture license located immediately adjacent to the south.

While the Company had identified VMS target potential within the license boundaries, the Company dropped the Santa Margarida license which became official in fiscal 2017

Generative work

The Company is continuing prospecting for additional properties in other parts of Portugal, using its experience-amassed database to review old prospects and districts from new angles and to develop wholly new generative ideas. The Company maintains excellent relations with both the Mining Bureau and the Geological Survey in Portugal.

Kosovo

The Company has been advancing its property interests in Kosovo though its 100% owned subsidiary Innomatik Exploration Kosovo (IEK). The Company initially purchased a 92.5% interest in IEK in July 2010. During the year ended December 31, 2013, the Company acquired the remaining 7.5% interest in IEK.

Table of Contents

The Company’s senior Kosovo management has long-term experience with the democratically-elected Kosovo government, with the United Nations and European Union administrators of the pre-independent country, and with the metallogeny and mineral deposits of the region. The Company is currently the most active metals’ exploration group in Kosovo. There has been little modern, systematic exploration performed in Kosovo to date, leaving an opportunity for successful prospect and project generation. The Company optioned one exploration license to a partner (Slivovo), while continuing to upgrade its other project at Metovit exploration license to JV ready status.

Both of the Company’s Kosovo properties have outcropping base metal mineralization and/or significant alteration zones. Most of the targets have not been previously drilled and have old workings of perhaps Roman and certainly Saxon age, to possibly early 20th century age in a number of locales.

Table of Contents

The Company’s licenses in Kosovo all have work expenditure commitments and are valid for three years, with a two-year renewal possible (which coincides with a 50% reduction in size of the license). Licenses have a variable 4.5-5% NSR. There is a lobbying effort to change this level, in order to attract further investment into the country. The Company has no environmental liabilities attached to its licenses there. The governing body for licensing is the Independent Commission for Mines and Minerals (“ICMM”). Once an application is made and all required documents are attached, ICMM is required to respond (positively or negatively) within 3 months of the date of application. The Company has experienced only one exception to this, in the granting of the Slivovo license, but through all proper channels, the Company received the license after about 5 months of delay.

Despite some exploration properties located on sites with historical operations, the Company does not have any potential environmental liabilities associated these properties.

Slivovo

The Slivovo license, located approximately 15 km southeast of Prishtine, the capital city of Kosovo, and covering 15.2 km2, was issued to the Company on June 27, 2012. The Company currently has a 15% interest in the project with joint-venture partner Byrnecut International, who has an 85% interest in the project through a completed earn-in agreement.

On April 10, 2014, the Company signed an earn-in and shareholders agreement (“Earn-In Agreement”) to option out the Slivovo property to Byrnecut International Limited (“Byrnecut”). Under the Earn-In Agreement, Byrnecut could earn a 51% interest in the Slivovo property by spending €1,000,000 in exploration on the project by April 10, 2015. Byrnecut can then earn a further 24% by spending an additional €1,000,000 for a total interest of 75% with total expenditures of €2,000,000, by April 10, 2016. Byrnecut can further earn an additional 10% by completing a Preliminary Feasibility Study on the Slivovo Project for a total interest of 85% by April 10, 2017. Byrnecut completed all of the required conditions under the agreement and reached the 85% ownership level in February 2017.

The Company and Byrnecut have transferred the Slivovo license to Peshter Mining J.S.C, which is currently owned 89.06% by Byrnecut and 10.94% by the Company.

Table of Contents

Early rock chip sampling of the Peshter gossan zone (22 samples) returned strongly anomalous lead, zinc, silver, and gold results. Subsequent, wide-scale geological mapping of the area indicated potential for gold-bearing, massive sulfide mineralization of the style common in the Vardar Zone, which extends through east-central Europe. Following the discovery of the Peshter gossan zone, the Company then discovered several gold-bearing rock units in the Peshter area. First-pass soil and rock chip sampling outlined two separate areas with anomalous gold results. One area surrounds the Peshter gossan zone, measures approximately 500 x 150 meters in size, and is potentially open along strike. The other, more important anomalous gold-bearing zone, located approximately 1,000 meters from the Peshter gossan, is related to beds of a strongly altered, calcareous sandstone unit, intruded by a mineralized felsic dike(s).

Avrupa started targeting work at Slivovo in April 2014, upon receipt of the first tranche of funding from Byrnecut. Work focused around two primary targets on the property, including a gold/silver/lead/zinc-bearing gossan, and an epithermal gold-polymetallic target located about one kilometer away. In addition, work in the field identified several new zones of interest, all requiring further follow-up. In total, nearly 1,300 rock and soil samples have been collected, and 1,615 meters of trenches excavated for sampling and geological mapping purposes. Of greatest interest is the average gold value in a northeast-trending zone, of which the 39 samples collected there returned 2.9 g/t gold, with a top cut of 10 g/t gold. Five of these samples contained >10 g/t gold, ranging from 12.25 g/t to 389 g/t.

New targets around the Peshter gossan zone have been identified. The gossan zone has been extended to the southwest by over 300 meters, and the so-called epithermal zone, located further to the west, has been extended northwards by several hundred meters. Mapping and sampling indicate that the entire Peshter mineral target area is likely related to a buried porphyritic intrusion. The mineralization zone runs for over 1,000 meters along an ENE-trending corridor from the epithermal target (olive) to the sandstone gossan (orange) to the sulfide-oxide gossan (black). The epithermal zone now runs for over 800 meters, north-south. Following well known models of mineral deposits related to porphyry systems, the various targets at Peshter fall into a generalized model that hypothesizes the presence of a buried porphyry system, which has been long-suspected for the area.

Table of Contents

A drill program commenced in September 2014 to test all three target zones. The program was planned for at least eight drill holes totaling 2,000 meters.

Holes SLV004, SLV005 and SLV006 were drilled in the main Peshter Gossan zone and contained the following gold and silver assay intervals:

Drill Hole #	From (m)	To (m)	Intercept (m)	Gold (g/t)	Silver (g/t)	Copper (%)	Zinc (%)
SLV004	0	126.5	126.5	6.2	15.0	0.092	0.45

SLV005	27.40	39.40	12.00	12.2	8.02
incl.	32.00	39.40	7.40	19.3	9.32
incl.	36.40	39.40	3.00	38.3	6.12

	0.20	39.40	39.20			0.115	0.61

SLV006	50.00	55.55	5.55	1.1	12.8
incl.	53.60	55.55	1.95	2.1	15.4

	74.90	85.70	10.80	1.25	15.1
	90.50	93.90	3.40	3.1	20.8

	0	93.90	93.90			0.083	0.51

Holes SLV007 and SLV008 were drilled in the southwest extension of the Peshter Gossan, located about 200 meters south of hole SLV004. SLV007 was drilled to a depth of 97.4 meters at a dip angle of -55 degrees through sediments to 70 meters depth and then through intrusive rocks (possibly a parallel-to-sedimentary-bedding sill) to the final 97.4-meter depth. SLV008 was drilled to a depth of 183.6 meters at a dip angle of -85 degrees (nearly vertical). Much of the rock in this hole was intrusive sill material, as in the bottom of SLV007. The follow-up detailed review of the drill core now indicates that both drill holes were drilled more or less along the strike of the sedimentary rocks and intrusive sill material.

SLV007 contained an intercept of 13.05 meters (from 16.00 to 29.05 meters) with an average gold value of 1.78 g/t Au, within a longer intercept of 53.6 meters (from 16.00 to 69.6 meters) with an average gold value of 0.91 g/t Au. Further sampling of this hole is in process, as the core contained anomalous gold all the way down to the bottom of the sampling interval.

SLV008 contained narrow intervals of strongly anomalous gold, including 2.65 meters (from 75.00 to 77.65 meters) with an average gold value of 1.06 g/t, within a much wider zone of gold anomalism. This hole will be re-sampled, as well, given the information obtained from the assays. Sampling of the intrusive sill rocks (from 89.60 to 183.60 meters) indicated low-moderate anomalism in gold values throughout the sill.

Drill Hole #	From (m)	To (m)	Intercept (m)	Gold (g/t)	Silver (g/t)	Comment
SLV007	16.00	29.05	13.05	1.78	18.88	SW gossan -- sediments
within	16.00	69.60	53.60	0.91	8.07	SW gossan --sediments

SLV008	75.00	77.65	2.65	1.06		SW gossan -- sediments

Table of Contents

The second phase of drilling, totaling five holes and 1,035 meters, was completed during Q2 2015.

Drill Hole #	From (m)	To (m)	Intercept (m)	Gold (g/t)	Silver (g/t)	Comment
SLV 011	67	91	25	1.02	7.08	0.08% Cu; 0.14% Pb; 0.41% Zn
	91	121	30	6.92	16.20	0.1% Cu; 0.24% Pb; 0.46% Zn
Total	67	121	55	4.24	12.06

Also	132.7	142.7	10	0.81	4.41	Mineralization along footwall fault zone

Drill Hole #	Interval (m)	From (m)	To (m)	Gold -- g/t	Silver -- g/t
SLV014	57.35	31	88.35	2.09	15.94
	including
	17.00	45	62	3.42	20.58
	and
	11.00	70	81	3.23	11.18

The third phase of drilling was predominantly conducted in the Peshter Gossan zone. Some of the highlighted intercepts are as follows:

Drill Hole #	From (m)	To (m)	Interval (m)	Gold -- g/t	Silver -- g/t
SLV018	11	136	125	6.91	19.19
	Including
	11	116	105	7.98	20.94
	And
	11	89	78	9.4	21.65
	And
	41	49	8	36.02	33.27

SLV 025	2.00	4.00	2	0.98	7.55
	And
	78.00	102.00	24	11.59	9.26
	Including
	78.00	99	21	13.18	9.90
	And
	108.00	113.00	5	4.81	7.32
	And
	116.00	118.00	2	0.96	3.45
	And
	122.00	136.00	14	0.82	12.09
	Including
	124.00	134.00	10	1.03	13.3
	And including
	131.00	134.00	3	2.28	12.07

SLV026	0.00	3.00	3	1.61	5.35
	And
	84.00	115.00	31	3.92	8.35
	Including
	84.00	93.00	9	6.35	15.66

Table of Contents

	And including
	100.00	108.00	8	7.12	6.89

SLV027	0.00	97.00	97	7.94	17.03
	Including
	42.00	77.00	35	13.83	16.49

SLV028	29	149	120	5.37	23.15
	Including
	119	147	28	8.26	23.74

SLV029	37	64	27	6.39	34.97
	And
	80	82	2	8.63	79.25

SLV032	18	81.65	63.65	2.34	9.28
	Including
	26	31	5	8.95	7.56
	And
	49	76	27	2.89	11.94

SLV037	0	74	74	6.02	20.23
	Including
	11	17	6	7.94	19.48
	Including
	30	44	14	8.46	13.99
	Including
	52	61	9	14.77	29.31

SLV038	17	26	9	1.44	9.71
	And
	33	58	25	2.06	9.85

SLV043	13	26	13	2.32	7.93
	Including
	13	20	7	3.69	9.8
	And
	39	46	7	5.10	9.34
	And
	52	54	2	1.54	30.75
	And
	58	72	14	11.11	27.68
	Including
	63	72	9	16.28	39.81

Byrnecut contracted with associate company Mining Plus Pty. Ltd. (“Mining Plus”) to work on an initial resource model and calculation. The goal will be to provide enough information to make a tactical decision to move onto the next phase which will include work to move the Slivovo exploration license to a mining license and work on pre-feasibility study. Mining Plus is tabulating and compiling the project data. The Company contracted with Mr. Gary Giroux to prepare an NI 43-101 compliant maiden resource estimate which will be part of a larger NI 43-101 compliant document prepared by Mining Plus.

Table of Contents

The initial indicated Mineral Resource for the main Peshter Gossan Zone was completed in May 2016. The mineralized body at Slivovo is a moderately ENE-plunging block of mineralization, exposed at the surface to the SW, and cut off on the NW and SE by steep, post-mineralization faults and underneath by a shallow ENE-dipping, post-mineralization fault. The mineralization is open down-plunge to the ENE. Precious metal mineralization is hosted within a package of steeply dipping sedimentary beds of silicified and de-calcified pebble conglomerates, sandstone conglomerates, and sandstones. Understanding of the total post-mineral fault movement suggests that further mineral targets exist in the proximity of the Slivovo Indicated Mineral Resource, as well as elsewhere on the exploration license.

The results of the Mineral Resource estimate are provided in the table below. The Indicated Mineral Resources are reported at a cut-off of 1.0 g/t gold.

Cautionary Note to U.S. Investors concerning estimates of Indicated Resources

This section uses the term “indicated resources”. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. U.S. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

Au Cut-off (g/t)	Tonnes > Cut-off (tonnes)	Grade> Cut-off		Contained Metal
		Au (g/t)	Ag (g/t)	Au (ozs)	Ag (ozs)
0.50	660,000	4.66	14.61	98,900	310,000
1.00	640,000	4.80	14.68	98,700	302,000
1.50	590,000	5.07	14.85	96,200	282,000
2.00	540,000	5.39	15.09	93,500	262,000
2.50	490,000	5.71	15.32	89,900	241,000
3.00	440,000	6.08	15.55	86,000	220,000
3.50	380,000	6.49	15.75	79,300	192,000
4.00	340,000	6.87	16.03	75,100	175,000
4.50	290,000	7.32	16.18	68,300	151,000
5.00	240,000	7.79	16.39	60,100	126,000

All samples were submitted for gold and silver analysis, with samples from holes up to SLV014 submitted for a full multi-element suite of analysis. Multi-elements analysis ceased from SLV015 onward due to budget constraints. All analysis was undertaken by ALS at a number of their fully accredited laboratories. All samples were sent to the ALS sample preparation facility in Serbia where they were logged into the Company’s LIMS and prepared for analysis. The sample is logged in the tracking system, weighed, dried and finely crushed to better than 70 % passing a 2 mm (Tyler 9 mesh, US Std. No.10) screen. A split of up to 250 g is taken and pulverized to better than 85% passing a 75 micron (Tyler 200 mesh, US Std. o. 200) screen. This pulp is then used for the gold, silver and multi-element analysis.

Gold analysis was undertaken at the ALS laboratory in Romania using Fire Assay with an Atomic Absorption Spectrometry Finish on a 30g charge. The upper detection limit for this method (Au-AA23) is set at 10 g/t gold, with any over limit values re-analysed via Fire Assay with a Gravimetric Finish (Au-GRA21). Silver analysis has been undertaken at the ALS laboratory in Ireland using a multi-acid digest and a hydrochloric acid leach with an AAS read. An upper detection limit of 100 g/t silver is set for this analytical technique – no samples returned grades above this upper detection limit. The analytical techniques for gold and silver are considered appropriate for the style of mineralization at the Slivovo Project.

The QA/QC program used for Phase 1 drilling consisted of the submission of only standards and pulp blanks used along with the laboratory repeat analyses to test for the accuracy and precision of the analytical laboratory. A more comprehensive system was introduced from SLV009 (Phase 2 onward) which expanded to include the submission of a barren marble as a blank to test the sample preparation, as well as the regular submission of field duplicates (quarter core) and pulp duplicates. Mining Plus reviewed the QA/QC protocols during the site visit and found that

Table of Contents

they were generally acceptable for the stage of the project, although it was noted that the submission of standards closer to the mean gold grade of the deposit would be preferable than the low grade nature of the standards used.

Based on the initial indicated Mineral Resource, Byrnecut proceeded with funding a Pre-Feasibility Study (“PFS”) of the project through the new JV company, Peshter Mining. A geophysical program consisting of 10 lines of IP/Resistivity covering 21.375 line kilometers and 5 lines of Turam electromagnetics was initiated over the zones of Slivovo mineralization and surrounding lands. A new 15 hole drill program was also completed in 2016. Most of the holes were infill drilling to confirm continuity of mineralization and to potentially increasing the size of the indicated resource in the Gossan Extension Zone. The gold and silver assays from the 2016 drilling are as follows:

Drill Hole #	From (m)	To (m)	Intercept (m)	Gold (g/t)	Silver (g/t)		Comment
DHIP001	84.5	99.5	15	5.98	15.89		Drilled specifically for downhole IP geophysics test which supported surface geochemical anomalism; main gold intercept is below low angle fault, differing from the Main Gossan Zone

SLV047	No significant intercepts						Poor host rock for mineralization

SLV048	No significant intercepts						Drilled outside of Gossan Extension

SLV049	16	25.2	9.2	1.53	10.73		Gossan Extension Zone

SLV050	0	6	6	1.01	8.44		Gossan Extension Zone
and	14.85	27.1	12.25	0.52	15.81

SLV051	68	94.4	26.4	2.76	17.93		Gossan Extension Zone
Including	79	94.4	15.4	4.40	25.47

SLV052	75.75	110.7	34.95	1.07	11.34		Gossan Extension Zone
Including	86.45	110.7	24.25	1.31	10.86
Including	86.45	99	12.55	1.90	9.04
Including	106	109.25	3.25	2.31	25.27

SLV053	No significant intercepts						Not drilled deep enough to reach Gossan Extension Corridor

SLV054	71	108.85	37.85	1.52	18.07		Drilled to north into Gossan Extension Corridor

SLV055	28.5	47.2	18.7	2.51	12.38		Gossan Extension Zone
Including	33.5	47.2	13.7	3.32	15.21

SLV056	112	157	45	2.47	13.45		Gossan Extension Zone
Including	124	157	33	3.01	15.63

SLV057	51	77	26	1.29	7.2		Gossan Extension Zone
In a wider zone	37	90	53	0.85	9.5

SLV058	120	123	3	38.7	33.9	Lower plate mineralization in the Gossan Extension Zone close to DHIP001

Table of Contents

	134	156.6	22.6	3.29	9.7
Including	134	142	8	5.96	8.0
and	147	156.6	9.6	2.51	13.3

SLV059						Drilled outside Gossan Extension Zone

SLV060	38	41	3	1.54	9.6	Upper plate – in hornblende porphyry
	136	151	15	0.64	8.2	Lower plate mineralization in the Gossan
	159	161	2	4.08	6.8	Extension Zone
	173	176.55	3.55	0.98	14.2
	182	205	23	4.37	7.2
Including	198	205	7	8.72	9.1
	208.5	210.85	2.35	0.85	16.4	EOH – hole stops in mineralization

SLV061	42	72	30	1.32	11.9	Gossan Extension Zone

While gold is present only in amenable host rocks above the low angle reverse fault in the Main Gossan Zone, it is now clear that gold mineralization has additional possibilities in permeable host rocks below the fault in the Gossan Extension Zone, as displayed in the geophysical drill hole DHIP001 and the two new drill holes, SLV058 and SLV060. The new drilling indicates that mineralization in the Gossan Extension Zone continues for at least 90 meters to the east from the high angle fault that divides the two zones. Older drill results from SLV012 may indicate the Gossan Extension Zone continues for at least another 20+ meters in the lower plate beyond SLV060.

In addition to the 15 exploration drill holes completed in 2016, Peshter also drilled other holes for certain required data for the Pre-Feasibility Study. One vertical hole was drilled in the Gossan Extension to run a downhole geophysical survey, seven hydrological test holes were completed to test water flow in the potential mine area, and seven geotechnical holes were completed to test for rock mechanics and stability information around the edges of the planned mine.

Current and Anticipated Exploration

Byrnecut completed the Project Study which was reviewed both internally and by an independent mining engineer. During 2017, Byrnecut completed an 18 hole drill program totaling 6,280 meters. The drilling was originally planed for 5,670 meters and was designed to discover, delineate and define additional high grade (defined as 5 g/t or greater gold) gold resources. The program focused on five areas of interest which were designated as:

Main Gossan Offset

Gossan Extension

Sandstone Gossan

Deep IP Anomaly

Dzemail

Targets were selected for viability based on three major factors:

IP anomalies, shallow (less than 100 meters deep) and deep (greater than 100 meters deep), identified in the 2016 geophysical program

Structural and geological models based on historic drilling and geological mapping

Limited-in-scope, widespread geochemical surveys

Results from the drilling were mixed. New geological and structural information gained from the work indicated that the complexity of the Slivovo system is greater than originally suspected. Geochemical results from sampling of the mineralized core did not significantly extend near-surface gold mineralization. The combination of these results indicated new mineral possibilities in the immediate Slivovo target area, but none close enough to the surface to significantly increase the size of the present, potentially surface-mineable Slivovo gold deposit.

Table of Contents

Byrnecut commissioned a follow-up, independent technical report to verify potential of significant mineralization around the Slivovo deposit, at Peshter and Brus, as well as around the remaining areas of the license. Results of the independent study, completed in November 2017, diverged somewhat from earlier work, particularly in genesis and placement of the mineralization in the Slivovo area. Earlier work assumed mineral-bearing fluids originated from perhaps a single, large porphyry intrusive source on the property, allowing for potential of a larger deposit at Slivovo. The new work presumes however that Slivovo gold mineralization is sourced from a large, off-property intrusive center. Numerous small, satellite porphyritic intrusions emplaced perpendicularly to the mineral-hosting calcareous rocks at Slivovo, thus forming small mineral bodies around the Slivovo gold deposit. The independent study finally suggests a number of small (10K) to medium size (100K) targets within the license area,

The 2017 program was fully funded by Byrnecut as Avrupa decided not to participate in funding the program. Avrupa’s ownership portion of the project is therefore being diluted as funds are spent by Bynecut. If the Company’s share of Peshter declines below 10%, Avrupa’s interest will convert to a 2% Net Smelter Royalty which is expected to occur during 2018.

Metovit (Kamenica)

The original Kamenica license was renewed for two years under the new Mining Law. The size of the license was reduced by 50% to approximately 45 km2. Targets in the Kamenica license are located 2 to 5 kilometers, along strike, from the historic Artana (Novo Brdo) silver/lead/zinc/gold mine. The Artana Mine has operated intermittently since Saxon times in the 12th to 14th centuries.

On February 14, 2012, the Company announced that it completed an initial round of exploratory drilling in late 2011 on the Kamenica license. Two core holes, totaling 382.6 meters, were completed at two separate targets located about three kilometers apart. The most interesting of the two holes, at the Metovic target, intercepted multiple generations of visible Fe-Zn-Pb sulfide mineralization in pervasive disseminations and stockwork quartz veining, hosted by strongly altered, calcareous silt and sandstones over the entire 193.3-meter length of the hole. The hole bottomed in altered quartz diorite porphyry and brecciated quartz diorite containing fragments of the porphyry. The widespread anomalous sulfide mineralization and strong alteration may indicate the presence of a possible large porphyry-style system within the Kamenica license.

The second hole, at the Grbes target, encountered pyritic gneisses from close to the surface to 120 meters depth, followed by sooty, pyritic black shales and graphitic schists to the bottom of the hole at 189.3 meters. These strongly altered rock units do not appear at the surface, and are of an older Vardar formation that has been uplifted in this portion of the exploration area. Further work is necessary to assist in targeting for a possible large mineral system.

The Kamenica license has been dropped, but replaced by the fully-overlapping new Metovit application which has been approved by ICMM. In February 2016, Byrnecut advanced €31,871 for the Company to meet 2016 legal work commitments and further advance this property. The current exploration program included geological and geochemical reviews which continued at the end of 2016 and into the first month of 2017. About 700 samples were sent to the lab, and the results have been tabulated, compiled and reviewed. Results of the sampling indicated geochemical anomalism along certain structures crossing the license. However, there were only a few indications of wide zones of potential mineralization. The possibility of further follow-up work is being discussed. The initial period of the Metovit license expires at the end of the second quarter of 2018, and the Company will decide on whether to request an extension as allowed by Kosovo mining law.

Germany

The Company currently has an 85% interest in an exploration license located in the Free State of Saxony, eastern Germany. This exploration license was granted through the mining bureau of the Free State of Saxony, called the Sachsisches Oberbergamt. The Company received this license in approximately 6 months after application.

The Company views that the license in Germany is not material at this stage.

Table of Contents

Oelsnitz

On January 23, 2012, the Company announced the signing of a Memorandum of Understanding (“MOU”) with Beak Consultants GmbH (“Beak”) to explore for gold deposits in the Erzgebirge mining district near Oelsnitz in the Free State of Saxony in eastern Germany. The Company must spend €140,000 for exploration purpose to gain 85% of Oelsnitz Exploration License, which was issued to Beak on January 12, 2012. The license covers 307.2 square kilometers and has been issued for gold, silver, tin, tungsten, molybdenum, copper, lead, zinc, tellurium, barite and fluorite. The license is renewable upon proof of continued exploration activities, and the application for renewal until March 31, 2019 has been approved. There is no royalty attached to the license.

Table of Contents

The Company earned into 85% of the project (as of December 31, 2017 - $252,083 (€192,576)), and the two companies are setting up a joint venture to further explore for gold on the property. The goal of the Company is to explore for and find gold targets related to the emplacement of large granitic intrusions. Previous work has not, at all, been dedicated to gold exploration in this region, and the Company is probably the first group to do so. The first-pass work completed at the end of 2012 indicated several areas of gold and tin anomalism that need further follow-up. Follow-up of gold and tin anomalism in a number of target areas is now currently underway, and the Company is continuing to look for joint venture partnerships at the present time.

Item 5. Operating and Financial Review and Prospects

Overview

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with IFRS. The value of the U.S. Dollar in relationship to the Canadian Dollar was $1.25 on December 31, 2017.

The Company has since inception financed its activities through the issuance of equity. The Company anticipates having to raise additional funds by equity issuance in the next several years, as all of the Company’s properties are at the exploration stage. The timing of such offerings is dependent upon the success of the Company’s exploration programs as well as the general economic climate.

Set out below is the operating and financial review for the financial years ended December 31, 2017, 2016 and 2015.

Operating Results

Year ended December 31, 2017 vs. year ended December 31, 2016

During fiscal 2017, the Company completed its exploration program at the Alvito property in preparation of drilling in fiscal 2018. The Company also reacquired a 100% interest in the Alvalade property and signed an initial letter of intent with a funding partner in regards to the acquisition of an interest in the Alvalade, Marateca, and Mertola properties. In Kosovo, the Company’s partner completed a drill program at Slivovo and commissioned a new technical report on the property.

The comprehensive loss for the year ended December 31, 2017 was $1,879,521, or ($0.02) per share, compared to a comprehensive loss of $1,900,329, or ($0.03) per share, for the year ended December 31, 2016. Mineral exploration expenses were $1,742,813 (Year ended December 31, 2016 - $1,157,878), which were partially offset by advances from optionees of $780,195 (2016 - $581,875). Excluding the non-cash depreciation of $2,589 (2016 - $5,176) and share-based payment of $110,564 (2016 - $270,698) related to the grant and vesting of stock options, the Company’s general and administrative expenses totaled $750,542 during the year ended December 31, 2017 (2016 - $807,439), a decrease of $56,897. The decrease was primarily due to lower consulting expense of $124,520 (2016 - $266,573), a decrease in office and administrative fees to $29,070 (2016 - $44,867). Listing and filing fees declined slightly to $10,485 (2016 -$12,035). Professional fees were largely unchanged at $203,662 (2016 - $202,484). Rent rose to $9,000 (2016 - $7,308), transfer agent fees increased to $10,581 (2016 - $8,432), and travel rose to $66,882 (2016 - $61,023). Investor relations expense rose to $292,430 (2016 - $191,544) as the Company continued its efforts to raise investors awareness.

Other items included write down of due from optionee of $1 (2016 - $238,705) and a write-down of exploration and evaluation assets of $71,289 (2016 - $Nil) as the Company wrote-off the Covas property. Loss on disposal of equipment was $2,105 (2016 - $Nil). Interest income fell to $2,068 (2016 - $3,056) due to lower average cash balances in the current year. Other income was $2,837 (2016 - $2,308). Exchange differences arising on the translation of foreign subsidiaries was a gain of $26,776 (2016 – loss of $28,208).

During the year ended December 31, 2016, the Company expensed exploration costs totaling $1,742,813 including $222,672 on Alvalade, $109,482 on Covas, $655,098 on Alvito, $418,276 on other projects in Portugal, $Nil on Slivovo, $235,563 on other projects in Kosovo, $29,621 in Germany, and $72,101 on others.

Table of Contents

Year ended December 31, 2016 vs. year ended December 31, 2015

During the year, the Company continued exploration on several properties with its JV partners, including conducting a drill program and releasing the initial gold resource estimate on the Slivovo project.

The comprehensive loss for the year ended December 31, 2016 was $1,900,329, or ($0.03) per share, compared to a comprehensive loss of $1,543,337, or ($0.03) per share, for the year ended December 31, 2015. Mineral exploration expenses were $1,157,878 (Year ended December 31, 2015 - $3,395,193), which were partially offset by advances from optionees of ($581,875) (2015 - $2,654,670).

Excluding the non-cash depreciation of $5,176 (2015 - $5,765) and share-based payment of $270,698 (2015 - $192,043) related to the grant and vesting of stock options, the Company’s general and administrative expenses amounted to $807,439 during the year ended December 31, 2016 (2015 - $618,610), an increase of $188,289.

The increase in general and administrative expenses was primarily due to higher consulting, investor relations, and professional fees related to the Company’s efforts to raise investor awareness. Consulting fees rose to $266,573 (2015 - $143,100), investor relations rose to $191,544 (2015 - $163,278), and professional fees increased to $202,484 (2015 - $180,836). Listing and filing fees rose slightly to $12,035 (2015 - $10,087), office and administrative increased to $44,867 (2015 - $21,777), and rent declined to $7,308 (2015 - $25,729). Transfer agent fees rose to $8,432 (2015 - $6,335) and travel increased to $61,023 (2015 - $52,130).

Other items included foreign exchange gain of $20,536 (2015 - $4,256) which was due to favorable exchange rates; Interest income of $3,056 (2015 - $2,508) as the Company had higher cash balances during the year; Other income was $2,308 (2015 - $1,247). The Company also recorded a write down of due from optionee of $238,705 which is related to the Company’s partner’s default of the Alvalade Joint-Venture.

During the year ended December 31, 2016, the Company expensed exploration costs totaling $1,157,878 including $67,182 on Covas, $515,036 on Alvalade, $132,011 on Alvito, $396,588 on other projects in Portugal, a negative amount of $54,734 on Slivovo (due to adjustment of amounts recorded in previous years), $32,718 on other projects in Kosovo, and $69,077 on others.

Year ended December 31, 2015 vs. year ended December 31, 2014

During the year, the Company continued exploration work at the Alvito project, and conducted drill programs on the Slivovo project with JV partner Byrnecut International and on the Alvalade project with new JV partner Colt Resources.

The comprehensive loss for the year ended December 31, 2015 was $1,543,337, or ($0.03) per share, compared to a comprehensive loss of $1,265,761, or ($0.03) per share, for the year ended December 31, 2014. Mineral exploration expenses were $3,395,193 (Year ended December 31, 2014 - $4,754,648), which were partially offset by advances from optionees of ($2,654,670) (2014 - $4,266,870).

Excluding the non-cash depreciation of $5,765 (2014 - $5,901) and share-based payment of $192,043 (2014 - $29,141) related to the grant and vesting of stock options, the Company’s general and administrative expenses amounted to $618,610 during the year ended December 31, 2015 (2014 - $738,202), a decrease of $119,592.

The decrease in general and administrative expenses was due to the reclassification of the Company’s Portuguese subsidiary’s general and administrative expenses to mineral exploration expenses in 2015, and declines in several other expense categories. Professional fees fell to $180,836 (2014 - $258,688) as the Company renegotiated the Alvalade and Covas JV agreements in 2014; Consulting increased to $143,100 (2014 - $107,675), salaries decreased to $161 (2014 - $30,543), office and administrative fees fell to $21,777 (2014 - $41,990) and travel declined to $52,130 (2014 -$57,618). Other items include insurance of $4,600 (2014 – $18,577); Investor relations of $163,278 (2014 - $175,574); Rent rose to $25,729 (2014 - $17,441); and Telephone was $Nil (2014 - $1,208)

Table of Contents

Other items included foreign exchange gain of $4,256 (2014 - $7,181) which was due to favorable exchange rates; Interest income of $2,508 (2014 - $8,956) as the Company had lower cash balances during the year; Other income was $1,247 (2014 - $222). Property investigation costs were $Nil (2014 - $6,293). Exchange difference arising on the translation of foreign subsidiaries was a gain of $5,593 (2014 - loss of $14,805).

During the year ended December 31, 2015, the Company expensed exploration costs totaling $3,395,193 including $165,587 on Covas, $310,914 on Alvalade, $242,848 on Alvito, $1,342 on generative projects under the Exploration Alliance Agreement with Callinan, $520,865 on other projects in Portugal, $2,028,893 on Slivovo, $32,377 on other projects in Kosovo, $5,295 on its project in Germany, and $87,072 on others.

Liquidity and Capital Resources

As at December 31, 2017, the Company’s working capital was $27,102 (December 31, 2016 - $484,426). With respect to working capital, $182,794 (December 31, 2016 - $518,196) was held in cash. $167,910 (December 31, 2016 - $4,175) was held in restricted cash. The decrease in cash was due the higher exploration expenditures on the Company’s mineral properties during the year.

During the year ended December 31, 2017, the Company completed two private placements of its common shares. On April 20, 2017, the Company completed a non-brokered private placement of 2,500,000 common shares at a price of $0.09 per share for gross proceeds of $225,000. On July 12, 2017, the Company completed a non-brokered private placement of 10,170,000 units at a price of $0.10 per unit for gross proceeds of $1,017,000. Each unit consisted of one common share and one non-transferable warrant, with each warrant exercisable at a price of $0.15 until July 12, 2020.

Subsequent to the year-end, the Company completed a private placement of 6,875,000 units at a price of $0.08 per unit for gross proceeds of $550,000. Each unit consists of one common share and one non-transferable warrant, with each warrant exercisable at a price of $0.12 until March 26, 2020.

As of December 31, 2017, the Company has no outstanding commitments except for a long-term loan to purchase a used vehicle which is repayable in monthly payments totaling $34,812 as of December 31, 2017 which matures on April 5, 2022. The Company has not pledged any of its assets as security for loans other than €118,000 ($177,613) cash pledge for its exploration licenses in Portugal and is not subject to any debt covenants. The Company issues stock in private placements, option payments from joint venture partners, direct funding by joint venture for the exploration of the Company’s properties, and the exercise of warrants, finders’ warrants, and options. The Company’s funding from its JV partners will allow its efforts to continue throughout 2018. If the market conditions prevail or improve, the Company will make adjustment to budgets accordingly.

The current property exploration budget for fiscal 2018, exclusive of the amounts to be spent by the Company’s’ joint-venture partners, is approximately €150,000. The General and Administrative expenses for 2018 are budgeted at a similar level to the 2017 expenditures.

Table of Contents

The Company has financed its operations through the issuance of common shares. The following sales and issuances of common stock have been completed in the last 5 fiscal years.

Table No. 5

Common Share Issuances

Year Ended (1)	Type of Share Issuance	Number of Common Shares Issued	Price	Gross Proceeds

December 31, 2013	Private Placement	6,000,000	$ 0.10	$ 600,000
	Private Placement	3,500,000	0.10	350,000
	Purchase of Non-Controlling Interest	450,000	0.105	47,250

December 31, 2014	Private Placement	4,400,000	$ 0.25	$ 1,100,000
	Property License Fees	515,560	0.25	128,890
	Exercise of Options	150,000	0.10	15,000
	Exercise of Warrants	946,666	0.15	142,000

December 31, 2015	Private Placement	10,920,000	$ 0.10	$ 1,092,000

December 31, 2016	Private Placement	13,547,000	$ 0.10	$ 1,354,700
	Exercise of Options	200,000	0.10	20,000
	Exercise of Finders’ Options	453,000	0.10	45,300
	Exercise of Warrants	4,573,000	0.15	685,950

December 31, 2017	Private Placement	2,500,000	$ 0.09	$ 225,000
	Private Placement	10,170,000	0.10	1,017,000

Year Ended December 31, 2017

As at December 31, 2017, the Company’s working capital was $27,102 (December 31, 2016 - $484,426).

During the year, Operating Activities used cash of ($1,479,332), including the loss for the year of ($1,906,297). Items not involving cash include Depreciation of $2,589, loss on disposal of equipment of $2,105, Write-down of due from optionee of $1, Write-down of exploration and evaluation assets of $71,289, Mineral exploration expenses of $21,520, and Share-based payments of $110,564.

Changes in non-cash working capital items include a decrease in VAT Receivables of $6,510; an increase in Due from Optionees of ($28,557); a decrease in Prepaid Expenses and Advances of $19,818; Increase in Other Receivables of ($11,121); an increase in Accounts Payable and Accrued Liabilities of $82,982; a decrease in Accounts Payable Owed by Optionees of ($31,124); a decrease in Due From/To Related Parties of ($7,842); an increase in Funds Held for Optionees of $163,735; and Exchange difference arising on the translation of foreign subsidiaries was $24,496.

Investing Activities provided cash of $123,988. Net proceeds from investments – available for sale provided cash of $84,862. Net proceeds from sale of equipment provided cash of $12,167 and purchase of equipment used cash of ($13,630). Property deposits provided cash of $40,589.

Financing Activities provided cash of $1,183,677. Proceeds from issuance of common shares provided cash of $1,242,000 and share issue costs used cash of ($58,323).

Cash, included restricted cash of $167,910, was $350,704 as of December 31, 2017 compared to cash of $522,371 as of December 31, 2016, a decrease of $171,667 during the year.

Table of Contents

Year Ended December 31, 2016

As at December 31, 2016, the Company’s working capital was $484,426 (December 31, 2015 - $10,562).

During the year, Operating Activities used cash of ($1,722,472), including the loss for the year of ($1,872,121). Items not involving cash include Depreciation of $5,176, Write-down of due from optionee of $238,705, Mineral exploration expenses of ($179,800), and Share-based payments of $270,698.

Changes in non-cash working capital items include a decrease in VAT Receivables of $300,722; a decrease in Due from Optionees of $68,577; a decrease in Prepaid Expenses and Advances of $65,650; Increase in Other Receivables of ($19,438); a decrease in Accounts Payable and Accrued Liabilities of ($475,300); a decrease in Accounts Payable Owed by Optionees of ($80,538); a decrease in Due From/To Related Parties of ($24,176); an increase in Funds Held for Optionees of $4,175; and Exchange difference arising on the translation of foreign subsidiaries was ($24,802).

Investing Activities provided cash of $53,814, with $2,245 from Net proceeds from investments – available for sale and $51,569 from Property deposits.

Financing Activities provided cash of $2,029,103. Proceeds from issuance of common shares provided cash of $2,105,950 and share issue costs used cash of ($76,847).

Cash, included restricted cash of $4,175, was $522,371 as of December 31, 2016 compared to cash of $161,926 as of December 31, 2015, an increase of $360,445 during the year.

Year Ended December 31, 2015

As at December 31, 2015, the Company’s working capital was $10,562 (December 31, 2014 - $432,609).

During the year, Operating Activities used cash of ($1,811,119), including the loss for the year of ($1,548,930). Items not involving cash include Depreciation of $5,765, Mineral exploration expenses of $15,669, and Share-based payments of $192,043.

Changes in non-cash working capital items include an increase in VAT Receivables of ($299,447); an increase in Amounts Due from Optionees of ($4,494); a decrease in Prepaid Expenses and Advances of $113,160; a decrease in Accounts Payable and Accrued Liabilities of ($25,418); an increase in Due to Related Parties of $38,240; a decrease in Funds Held for Optionees of ($299,305); and Exchange difference arising on the translation of foreign subsidiaries was $1,598.

Investing Activities used cash of ($143,834), with the $13,741 used for the Purchase of Equipment and ($130,093) from Property Deposits.

Financing Activities provided cash of $1,055,642. Proceeds from the Issuance of Common Shares provided cash of $1,092,000, and Share Issue Costs used cash of ($36,358).

Cash was $161,926 as of December 31, 2015 compared to cash, including restricted cash, of $1,061,237 as of December 31, 2014, a decrease of $899,311 during the year.

Table of Contents

Critical Accounting Policies and Estimates

Management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, management evaluates its estimates and assumptions. The estimates are based on historical experience, past results, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form that basis for making judgments about the carrying values of assets, including mineral properties, and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates due to events or circumstances which may be beyond the control of the Company.

The financial statements have been prepared in accordance with International Accounting Standard (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Basis of preparation

The consolidated financial statements, including comparatives, have been prepared on the basis of IFRS standards that are effective as at December 31, 2017.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries as follows:

	% of ownership	Jurisdiction	Nature of operations

MAEPA Empreendimentos Mineiros e Participacoes Lda	100%	Portugal	Exploration
Innomatik Exploration Kosovo LLC	100%	Kosovo	Exploration
Peshter Mining J.S.C (subsequently reduced to 15%)	11.06%	Kosovo	Exploration
Avrupa Holdings Inc.	100%	Barbados	Holding
Avrupa Portugal Holdings Inc.	100%	Barbados	Holding
Avrupa Kosovo Holdings Inc.	100%	Barbados	Holding

All subsidiaries are entities that are controlled, either directly or indirectly. Control is defined as the exposure, or rights, to variable returns from involvement with an investee and the ability to affect those returns through power over the investee. Power over an investee exists when the Company has existing rights that give it the ability to direct the activities that significantly affect the investee’s returns. This control is generally evidenced through owning more than 50% of the voting rights or currently exercisable potential voting rights of a company’s share capital. All of the intra-group balances and transactions, including unrealized profits and losses arising from intra-group transactions, have been eliminated in full. For subsidiaries that the Company controls, but does not own 100% of, the net assets and net profit attributable to outside shareholders are presented as amounts attributable to non-controlling interests in the consolidated statements of financial position and consolidated statements of comprehensive loss.

Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing the consolidated financial statements.

Interests in Joint Arrangements

A joint arrangement can take the form of a joint venture or joint operation. All joint arrangements involve a contractual arrangement that establishes joint control, which exists only when decisions about the activities that significantly affect the returns of the investee require unanimous consent of the parties sharing control. A joint operation is a joint arrangement in which the Company has rights to the assets and obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement in which the Company has rights to only the net assets of the arrangement.

Table of Contents

Joint ventures are accounted for in accordance with the policy “Investments in Associates and Joint Ventures.” Joint operations are accounted for by recognizing the Company’s share of the assets, liabilities, revenue, expenses and cash flows of the joint operation in the consolidated financial statements.

Investments in Associates and Joint Ventures

Investments over which the Company exercises significant influence and which it does not control or jointly control are associates. Investments in associates are accounted for using the equity method, except when classified as held for sale. Investments in joint ventures as determined in accordance with the policy “Interests in Joint Arrangements” are also accounted for using the equity method.

The equity method involves recording the initial investment at cost and subsequently adjusting the carrying value of the investment for the Company’s proportionate share of the profit or loss, other comprehensive income or loss and any other changes in the associate’s or joint venture’s net assets.

The Company’s proportionate share of the associate’s or joint venture’s profit or loss and other comprehensive income or loss is based on its most recent financial statements. Adjustments are made to align any inconsistencies between the Company’s accounting policies and the associate’s or joint venture’s policies before applying the equity method. Adjustments are also made to account for depreciable assets based on their fair values at the acquisition date of the investment and for any impairment losses recognized by the associate or joint venture.

If the Company’s share of the associate’s or joint venture’s losses equals or exceeds the investment in the associate or joint venture, recognition of further losses is discontinued. After the Company’s interest is reduced to zero, additional losses will be provided for and a liability recognized only to the extent that the Company has incurred legal or constructive obligations to provide additional funding or make payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, the Company resumes recognizing its share of those profits only after its share of the profits equals the share of losses not recognized.

At each statement of financial position date, management considers whether there is objective evidence of impairment in associates and joint ventures. If there is such evidence, management determines if there is a need to record an impairment in relation to the associate or joint venture.

Foreign currencies

The Company assesses functional currency on an entity by entity basis based on the related fact pattern; however, the presentation currency used in these consolidated financial statements is determined at management’s discretion.

The currency of the parent company, and the presentation currency applicable to these consolidated financial statements, is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of the exchange prevailing on dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at each reporting date. Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

The Company has determined that the functional currency of its wholly-owned subsidiaries in Europe is the Euro and that the functional currency of its wholly-owned subsidiaries in Barbados is the US dollar. Exchange differences arising from the translation of the subsidiaries’ functional currencies into the Company’s presentation currency are taken directly to the exchange reserve.

Table of Contents

Exploration and evaluation assets and expenditure

Exploration and evaluation expenditures include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. Exploration and evaluation expenditures are expensed as incurred except for expenditures associated with the acquisition of exploration and evaluation assets through a business combination or asset acquisition which are recognized as assets. Costs incurred before the Company has obtained the legal rights to explore an area are recognized in the consolidated statement of comprehensive loss.

Capitalized costs, including general and administrative costs, are only allocated to the extent that these costs can be related directly to operational activities in the relevant area of interest where they are considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Share-based payment transactions

The share option plan allows the Company’s employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as a share-based payment expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each statement of financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

Loss per share

The Company presents the basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share is determined by adjusting the loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares. In the Company’s case, diluted loss per share is the same as basic loss per share as the effects of including all outstanding options and warrants would be anti-dilutive.

Significant accounting judgments and estimates

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout these consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and further periods if the revision affects both current and future periods.

Table of Contents

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the consolidated statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Critical judgments

The analysis of the functional currency for each entity of the Company. In concluding that the Canadian dollar is the functional currency of the parent, management considered both the funds from financing activities and the currency in which goods and services are paid. The functional currency of its wholly-owned subsidiaries in Europe is the Euro and subsidiaries in Barbados is the US Dollar as management considered the currencies which mainly influence the cost of providing goods and services in those subsidiaries. The Company chooses to report in Canadian dollar as the presentation currency;

The assessment of indications of impairment of each mineral property and related determination of the net realized value and write-down of those properties where applicable; and

The determination that the Company will continue as a going concern for the next year.

Provisions

Provisions are recognized in the consolidated statement of financial position when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefit will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Financial instruments

Financial assets

The Company classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or assets acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the statements of financial position at fair value with changes in fair value recognized in the consolidated statements of comprehensive loss.

Loans and receivables - These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company's management has the positive intention and ability to hold to maturity. These assets are measured at amortized cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized in the consolidated statements of comprehensive loss.

Available-for-sale - Non-derivative financial assets not included in the above categories are classified as available-for-sale. They are carried at fair value with changes in fair value recognized directly in equity. Where a decline in the fair value of an available-for-sale financial asset constitutes objective evidence of impairment, the amount of the loss is removed from equity and recognized in the consolidated statements of comprehensive loss.

Table of Contents

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described above.

Financial liabilities

The Company classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Company's accounting policy for each category is as follows:

Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in the consolidated statements of financial position at fair value with changes in fair value recognized in the consolidated statements of comprehensive loss.

Other financial liabilities - This category includes due to related parties, accounts payable and accrued liabilities, accounts payable owed by optionees, funds held for optionees and long-term loan all of which are recognized at amortized cost.

At December 31, 2017, 2016 and 2015, the Company did not have any derivative financial assets or liabilities.

Income taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the statement of financial position liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable loss; nor differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted that are expected to apply when temporary differences are expected to settle.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. To the extent that the Company does not consider it probable that a future tax asset will be recovered, it provides a valuation allowance against that excess.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for the December 31, 2017 reporting period. The Company has not early adopted the following new and revised standards, amendments and interpretations that have been issued but are not yet effective:

IFRS 9 (Amended 2010) Financial Instruments (effective January 1, 2018)

Table of Contents

The Company anticipates that the application of the above new and revised standard, amendment and interpretation will have no material impact on its results and financial position.

Variation in Operating Results

The Company derives interest income on its bank deposits, which depend on the Company's ability to raise funds.

Management periodically, through the exploration process, reviews results both internally and externally through mining related professionals. Decisions to abandon, reduce or expand exploration efforts is based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labor and capital costs. There cannot be a pre-determined hold period for any property as geological or economic circumstances render each property unique.

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with IFRS. The value of the Canadian Dollar in relationship to the US Dollar was $1.25 on December 31, 2017.

Research and Development

The Company conducts no Research and Development activities, nor is it dependent upon any patents or licenses.

Trend Information

The Company knows of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company’s operations or financial condition.

Off-Balance Sheet Arrangements

The Company has no Off-Balance Sheet Arrangements.

Tabular Disclosure of Contractual Obligations

As of December 31, 2017, the Company had a total of €118,000 ($177,613) cash pledged for its exploration licenses in Portugal.

Table of Contents

Item 6. Directors, Senior Management and Employees

Table No. 6 lists as of April 20, 2018 the names of the Directors of the Company. The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.

Table No. 6

Directors

Name	Country of Residence	Age	Date First Elected/Appointed
Paul W. Kuhn	Portugal	62	July 8, 2010
Mark T. Brown (1)	Canada	50	January 23, 2008
Paul Dircksen (1)	United States	72	September 30, 2013
Frank Hogel	Germany	45	August 3, 2016
Paul Nelles	Germany	71	April 7, 2016
Ross Stringer (1)	Canada	66	December 16, 2013

(1)Member of Audit Committee.

Members of the audit committee meet periodically to approve and discuss the annual financial statements and each quarterly report before filing and mailing. The committee operates under a written charter as included in the Company's Management Information Circular dated April 28, 2017. Details of the charter are contained in Item 6, “Board Practices” below.

Table No. 7 lists, as of April 20, 2018, the names of the Executive Officers of the Company. The Executive Officers serve at the pleasure of the Board of Directors. Paul W. Kuhn is a citizen of the United States; Winnie Wong is a citizen of Canada.

Table No. 7

Executive Officers

Name

Position

Age

Date of Appointment

Paul W. Kuhn

CEO and President

July 8, 2010

Winnie Wong

Chief Financial Officer and

Corporate Secretary

July 8, 2010

Paul W. Kuhn, joined Avrupa in July 2010 after working with Metallica Mining in Oslo, Norway since August 2008. He has more than 30 years of experience in the minerals exploration business in North America, Central Asia and Europe. He earned an A.B. Degree from Dartmouth College, US, in 1978, and an M.S. Degree from the University of Montana, US, in 1983. Mr. Kuhn has worked in a variety of geological terrains, exploring for gold, silver, base metals, uranium, and phosphate deposits, and has spent time as a production geologist in the deep underground mines of the Coeur d`Alene Mining District, historically one of the world’s most important silver districts. Mr. Kuhn has managed successful exploration programs in the US and Turkey, and was involved in a number of base and precious metal discoveries in Turkey, including the Taç and Çorak polymetallic deposits (presently being developed by Mediterranean Resources), the Cerattepe Cu-Au volcanogenic massive sulfide deposit (held by Inmet Mining), the Altıntepe epithermal Au deposit (being developed by Stratex International), the Diyadın Carlin-style Au deposit (developed by Newmont Mining and currently held by Koza Altin), and the Karakartal porphyry Cu-Au deposit (being developed by Anatolia Minerals). Mr. Kuhn was also involved with the original mapping and description of the Çöpler porphyry Au deposit (presently under mine construction and development by Anatolia Minerals).

Winnie Wong received a Bachelor of Commerce Degree (Honours) from Queen’s University in 1996 and is a member of the Institute of Chartered Professional Accountants of British Columbia. Since July 1, 2001, she has been

Table of Contents

Vice President of Pacific Opportunity Capital Ltd. Her role is to manage the financial administration team and to assist Pacific Opportunity Capital Ltd.’s management group on corporate finance projects. From July 1 to December 31, 2000, Ms. Wong was the controller of Pivotal Corporation, a company providing software, services and support to a variety of businesses. Between 1996 and 1999, Ms. Wong worked with Deloitte & Touche, Chartered Accountants. Ms. Wong acts as the CFO and/or Corporate Secretary for other publicly listed companies including Alianza Minerals (since April 2015), Big Sky Petroleum (since April 2014), Mountain Boy Minerals (since December 2017), Paget Minerals Corp. (since November 2015) and Strategem Capital Corporation (since May 2005). Ms. Wong spends approximately 30% of her time on the affairs of the Company.

Mark T. Brown has been a Chartered Professional Accountant since 1993 and is President of Pacific Opportunity Capital Ltd., a private company which provides small and medium sized companies with financial, equity and management solutions. Mr. Brown received a Bachelor of Commerce Degree from the University of British Columbia in 1990 and is a member of the Institute of Chartered Accountants of British Columbia. He has been a Chartered Accountant since 1993 and is President of Pacific Opportunity Capital Ltd., a private company which provides small and medium sized companies with financial, equity and management solutions. From 1990 to 1994, he worked with PricewaterhouseCoopers before becoming controller of Miramar Mining Corporation. In 1996, he became controller of Eldorado Gold Corporation where his duties included debt and equity financings, international acquisitions, corporate reporting and system implementation. He is one of the founders of Rare Element Resources Ltd., a resource exploration company traded on the NYSE MKT and TSX Exchanges. He also is a former and current officer and director of other public companies. His current officer and directorships include: a Director of Almaden Minerals Ltd., a resource exploration company traded on the NYSE MKT and TSX Exchanges; a Director of Almadex Minerals, a mineral exploration company traded on the TSX Venture Exchange; a Director of Alianza Minerals Ltd., a mineral exploration company traded on the TSX Venture Exchange; Chief Executive Officer, President and a Director of Big Sky Petroleum, an oil and gas exploration company traded on the TSX Venture Exchange; CEO and a Director of Paget Minerals, a mineral exploration company traded on the TSX Venture Exchange; a Director of Strategem Capital Corporation, a merchant banking company traded on the TSX Venture Exchange; a Director and Chairman of Sutter Gold Mining Inc., a mineral exploration company traded on the TSX Venture Exchange; Chief Financial Officer of Adamera Minerals Corp., a mineral exploration company traded on the TSX Venture Exchange; President, CEO and Director of Mountain Boy Minerals Ltd., a mineral exploration company traded on the TSX Venture Exchange; Chief Financial Officer of Orestone Mining Corp., a mineral exploration company traded on the TSX Venture Exchange; and Chief Financial Officer of Redstar Gold Corp., a mineral exploration company traded on the TSX Venture Exchange. Mr. Brown devotes approximately 25% of his time to Company affairs.

Dr. Paul Nelles was one of the founders of the Company’s wholly-owned subsidiary Innomatik Exploration Kosovo LLC (“IEK”) and is currently a non-executive director of IEK. Dr. Nelles is the CEO of Peshter Mining Company J.S.C. that holds the Slivovo license in which the Company has 15% interest. Dr. Nelles graduated from TU Berlin in 1972 with a degree in mining engineering and obtained a PhD in mineral processing in 1975. He worked internationally in base metal mining for Metallgesellschaft between 1975 and 1991, at which stage he held the position of General Manager Project Development. In 1991, he was employed as technical director and appointed to the executive board of DESTAG, a leading dimension stone producer and worldwide trader. He was subsequently appointed CEO of the company. Dr. Nelles joined Normandy LaSource in France, as executive director for gold production and industrial minerals in 1997. In 2002, he was appointed as the “Trepca Manager” by the United Nations Mission in Kosovo and was promoted to Deputy Managing Director of the Kosovo Trust Agency in 2004, in charge of all major publicly owned enterprises. Since 2006 he has worked as an independent mining industry advisor. Dr. Nelles devotes approximately 25% of his time to Company affairs.

Paul Dircksen holds an M.S. in Geology from the Mackay School of Mines at the University of Nevada He has a strong technical background, serving as a team member on ten gold discoveries, seven of which later became operating mines. Mr. Dircksen has over 35 years of experience in the mining and exploration industry, serving in executive, managerial, and technical roles at several companies. He has held senior management positions with a number of resource groups including Orvana Minerals, Lacana Gold, The Cordex Group, Brett Resources, and the Bravo Venture Group. Mr. Dircksen is currently a Vice-President of business development and technical services of

Table of Contents

Timberline Resources Corporation, a public mineral exploration company which is listed on the TSX Venture Exchange and the NYSE Market. Mr. Dircksen devotes approximately 5% of his time to Company affairs.

Ross Stringer holds a Bachelor’s degree from Simon Fraser University where he majored in Commerce and Economics. He is a Chartered Accountant with extensive experience in the financial services industry as well as in the mineral exploration and operation industry. Mr. Stringer’s expertise includes advisory and risk-based assurance services at the operational as well as governance levels. Mr. Stringer’s previous board positions encompass private business in the services industry as well as many public service organizations. Mr. Stringer devotes approximately 5% of his time to Company affairs.

Frank Högel has a MBA with a focus on financial management, banking, and international business and management from the University of Nürtingen, Germany. He currently serves as the CEO of Peter Beck Performance Funds GbR and sits on the advisory board of Concept Capital Management. Concept Capital is an asset management company focused on evaluating and investing in Canadian resource companies through equity investments, convertible bonds and gold, silver and copper off-take agreements. Mr. Högel also sits on the board of several other public companies listed on the TSX Venture Exchange, including Canamex Gold Corp., Golden Goliath Resources Ltd., Monarca Minerals Inc., Nicola Mining Inc., and Tembo Gold Corp. Mr. Hogel devotes approximately 5% of his time to Company affairs.

No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he or she is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he or she is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.

There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he or she was selected as a Director or Executive Officer. No members of the Board of Directors are related.

COMPENSATION

The Company has no arrangements pursuant to which directors are compensated by the Company for their services in their capacity as directors, or for committee participation. There are no director’s service contracts providing for benefits upon termination of employment.

To assist the Company in compensating, attracting, retaining and motivating personnel, the Company grants incentive stock options under a formal Stock Option Plan which was initially adopted by the directors of the Company on July 29, 2008 and subsequently re-approved by shareholders at every Annual Meeting of shareholders thereafter, up to and including the Annual Meeting on June 8, 2017.

Table of Contents

Table No. 8 sets forth the compensation paid to the Company’s executive officers and members of its administrative body during the last three years.

Table No. 8

Summary Compensation Table

All Figures in Canadian Dollars unless otherwise noted

Name

Fiscal

Year

Salary

Stock-based

Compensation

Number of

Options Granted

Other

Compensation

Total

Compensation

Paul W. Kuhn

CEO, President and

Director (1) (2)

2017

2016

2015

$ 265,828

265,571

235,936

$ 16,880

16,270

31,850

200,000

100,000

350,000

$ 53,262

67,972

65,251

$ 335,970

349,813

333,037

Winnie Wong,

CFO and

Corporate Secretary (3)

2017

2016

2015

N/A

$ 12,660

16,270

20,475

150,000

100,000

225,000

$ 218,690

236,975

254,775

$ 231,350

253,245

275,250

Mark T. Brown,

Director (4)

2017

2016

2015

N/A

$ 12,660

48,810

25,025

150,000

300,000

275,000

$ Nil

Nil

$ 12,660

48,810

25,025

Paul Dircksen,

Director

2017

2016

2015

N/A

$ 4,220

16,270

18,200

50,000

100,000

200,000

$ Nil

Nil

$ 4,220

16,270

18,200

Ross Stringer,

Director

2017

2016

2015

N/A

$ 4,220

16,270

18,200

50,000

100,000

200,000

$ Nil

Nil

$ 4,220

16,270

18,200

Paul Nelles,

Director

2017

2016

N/A

$ 4,220

16,270

50,000

100,000

$ Nil

Nil

$ 4,220

16,270

Frank Hogel,

Director

2017

2016

N/A

$ 4,220

40,675

50,000

250,000

$ Nil

Nil

$ 4,220

40,675

(1)“Other Compensation” for Paul W. Kuhn is for housing allowance and school fees.

(2)Paul W. Kuhn’s salary is paid in Euros. The dollar amounts are calculated based on a conversion rate of Euros to Canadian dollars as at the average rate of the year.

(3)POC, a company of which Mark Brown is the President and of which Winnie Wong is the Vice President, charged a total of $218,690, $236,975, and $254,775 for rent and accounting and management fees for a team of four people during financial years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively.

(4)Mark T. Brown resigned as Chief Executive Officer and President on July 8, 2010 and Paul W. Kuhn was appointed Chief Executive Officer and President. POC, a company of which Mark Brown is the President and of which Winnie Wong is the Vice President, charged a total of $218,690, $236,975, and $254,775 for rent and accounting and management fees for a team of four people during financial years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively.

No funds were set aside or accrued by the Company during fiscal 2017 to provide pension, retirement or similar benefits for Directors or Executive Officers.

Table of Contents

Board Practices

The Board of Directors’ mandate is to manage or supervise the management of the business and affairs of the Company and to act with a view to the best interests of the Company. The Company’s corporate governance practices are the responsibility of the Board.

Management has been delegated the responsibility for meeting defined corporate objectives, implementing approved strategic and operating plans, carrying out the Company's business in the ordinary course, evaluating business opportunities, recruiting staff and complying with applicable regulatory requirements. The Board facilitates its independent supervision over management by reviewing and approving long-term strategic, business and capital plans, material contracts and business transactions, all debt and equity financing transactions. Through its Audit Committee, the Board examines the effectiveness of the Company's internal control processes. The Board reviews and sets executive compensation and recommends incentive stock options.

The Board facilitates its exercise of independent supervision over management by ensuring that a majority of its members are independent of the Company. Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Company's Board, be reasonably expected to interfere with the exercise of a director's independent judgment. Currently, the Company has two non-independent directors. Paul W. Kuhn serves as CEO and President of the Company, and Paul Nelles is a non-executive director of IEK and CEO of Peshter Mining Company J.S.C., the company that holds the Slivovo license in which the Company has a 11.06% interest.

The Board considers its size each year when it considers the number of directors to recommend to the shareholders for elections at the annual meeting of shareholders, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of views and experience. At the Annual General Meeting of Shareholders held on June 8, 2017, shareholders approved the resolution to set the current Board at 6 members. The Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed. When new directors are appointed, they receive orientation on the Company's business, current projects and the industry. Board meetings may also include presentations by the Company's management and employees to give the directors additional insight into the Company's business.

The Board has found that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual directors' participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

The Board of Directors met three times in person during fiscal 2017, and various other matters were discussed telephonically during the year and all other matters were approved by resolutions.

Audit Committee

The Audit Committee is a committee of the board of directors to which the Board has delegated its responsibility for oversight of the nature and scope of the annual audit, management’s reporting on internal accounting standards and practices, financial information and accounting systems and procedures, financial reporting and statements and recommending, for Board approval, the audited financial statements and other mandatory disclosure releases containing financial information. The objectives of the Committee are:

1.To assist directors in meeting their responsibilities (especially for accountability) in respect of the preparation and disclosure of the financial statements of the Company and related matters;

2.To provide effective communication between directors and external auditors appointed by the Company;

3.To enhance the external auditors’ independence; and

Table of Contents

4.To increase the credibility and objectivity of financial reports.

Membership of Committee

The Committee shall be comprised of at least three directors of the Company, all of whom shall be “financially literate” as defined by National Instrument 52-110 - Audit Committees. The Board shall have the power to appoint the Committee Chairman.

Meetings

At all meetings of the Committee every question shall be decided by a majority of the votes cast. In case of an equality of votes, the Chairman of the meeting shall not be entitled to a second or casting vote. A quorum for meetings of the Committee shall be a majority of its members, and the rules for calling, holding, conducting and adjourning meetings of the Committee shall be the same as those governing the Board.

Meetings of the Committee should be scheduled to take place at least four times per year. Minutes of all meetings of the Committee shall be taken. The Committee shall report the results of meetings and reviews undertaken and any associated recommendations to the Board.

The Committee shall meet with the external auditors at least once per year (in connection with the preparation of the year-end financial statements) and at such other times as the external auditors and the Committee consider appropriate.

Mandate and Responsibilities of Committee

It is the responsibility of the Committee to oversee the work of the external auditors, including resolution of disagreements between management and the external auditors regarding financial reporting. It is the responsibility of the Committee to satisfy itself on behalf of the Board with respect to the Company’s internal control system:

identifying, monitoring and mitigating business risks; and

ensuring compliance with legal, ethical and regulatory requirements.

It is a responsibility of the Committee to review the annual financial statements of the Company prior to their submission to the Board for approval. The process should include but not be limited to:

reviewing changes in accounting principles, or in their application, which may have a material impact on the current or future years’ financial statements;

reviewing significant accruals or other estimates such as the ceiling test calculation;

reviewing accounting treatment of unusual or non-recurring transactions;

ascertaining compliance with covenants under loan agreements;

reviewing disclosure requirements for commitments and contingencies;

reviewing adjustments raised by the external auditors, whether or not included in the financial statements;

reviewing unresolved differences between management and the external auditors; and

obtaining explanations of significant variances within comparative reporting periods.

The Committee is to review the financial statements (and make a recommendation to the Board with respect to their approval), prospectuses, management discussion and analysis and all public disclosure containing audited or unaudited financial information before release and prior to Board approval. The Committee must be satisfied that adequate procedures are in place for the review of the Company’ disclosure of all other financial information and shall periodically access the accuracy of those procedures.

With respect to the appointment of external auditors by the Board, the Committee shall:

recommend to the Board the appointment of the external auditors;

Table of Contents

recommend to the Board the terms of engagement of the external auditors, including the compensation of the external auditors and a confirmation that the external auditors shall report directly to the Committee; and

when there is to be a change in auditors, review the issues related to the change and the information to be included in the required notice to securities regulators of such change.

The Committee shall review with external auditors (and the internal auditor if one is appointed by the Company) their assessment of the internal controls of the Company, their written reports containing recommendations for improvement, and management’s response and follow-up to any identified weaknesses. The Committee shall also review annually with the external auditors their plan for their audit and, upon completion of the audit, their reports upon the financial statements of the Company and its subsidiaries. The Committee must pre-approve all non-audit services to be provided to the Company or its subsidiaries by the external auditors. The Committee may delegate to one or more members the authority to pre-approve non-audit services, provided that the member(s) report to the Committee at the next scheduled meeting such pre-approval and the member(s) comply with such other procedures as may be established by the Committee from time to time.

The Committee shall review risk management policies and procedures of the Company (i.e. hedging, litigation and insurance).

The Committee shall establish a procedure for:

the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and

the confidential, anonymous submission by employees and agents of the Company of concerns regarding questionable accounting or auditing matters.

The Committee shall review and approve the Company’ hiring policies regarding employees and former employees of the present and former external auditors of the Company. It shall have the authority to investigate any financial activity of the Company. All employees of the Company are to cooperate as requested by the Committee.

The Committee may retain any person having special expertise and/or obtain independent professional advice to assist in filling their responsibilities at the expense of the Company without any further approval of the Board.

The current Audit Committee members are Mark T. Brown, Paul Dircksen and Ross Stringer.

Staffing

The Company currently has 6 employees (2016 – 6; 2015 – 7) and 2 executive officers (2016 – 2; 2015 – 2). Of the employees, 4 are located in Portugal, including 1 manager, 1 accounting/administrator, 1 landsman, and 1 geologist. 2 employees are located in Kosovo, and include 1 geologist and 1 administrator. All of the company’s prior employees in Kosovo are currently working for Peshter Mining J.S.C., which is 10.94% owned by the Company.

Management, administrative and secretarial functions in Vancouver are provided by Pacific Opportunity Capital Ltd., a private company of which Mark T. Brown, a director of the Company, is the president and director.

Table of Contents

Share Ownership

Table No. 9 lists, as of April 20, 2018, Directors and Executive Officers who beneficially own the Registrant's voting securities and the amount of the Registrant's voting securities owned by the Directors and Executive Officers as a group.

Title of Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Common	Paul W. Kuhn (1)	1,704,500	1.80%
Common	Winnie Wong (2)	950,000	1.00%
Common	Mark T. Brown (3)	14,201,334	15.01%
Common	Paul Dircksen (4)	650,000	0.69%
Common	Frank Hogel (5)	400,000	0.42%
Common	Paul Nelles (6)	980,791	1.04%
Common	Ross Stringer (7)	910,000	0.96%
	Total Directors/Officers	19,796,625	20.03%

(1)1,050,000 of these shares represent currently exercisable stock options and 92,000 represent currently exercisable share purchase warrants.

(2)850,000 of these shares represent currently exercisable stock options.

(3)7,521,334 of these common shares are held by Pacific Opportunity Capital Ltd. a private company controlled by Mark T. Brown. 4,960,000 of the common shares are held in Mr. Brown’s RRSP. 325,000 common shares are held in the name of Spartacus Management Inc., a private company over which Mr. Brown has control and 545,000 are common shares held by Mr. Brown directly. 850,000 of these shares represent currently exercisable common share purchase options.

(4)650,000 of these shares represent currently exercisable stock options.

(5)400,000 of these shares represent currently exercisable stock options.

(6)475,000 of these shares represent currently exercisable stock options

(7)Of these shares, 200,000 are common shares held by Ross G. Stringer Inc., a company controlled by Mr. Stringer, and 60,000 are common shares held by Mr. Stringer directly. 650,000 of these shares represent currently exercisable stock options.

Based upon 93,793,797 common shares outstanding as of April 20, 2018, share purchase warrants and Stock options held by each beneficial holder exercisable within sixty days as detailed in Table No. 14 “Stock Options Outstanding” below.

Item 7. Major Shareholders and Related Party Transactions

The Registrant is a publicly owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents. The Registrant is not controlled by another corporation as described below. The Company's common shares are issued in registered form and the following information is taken from the records of TSX Trust Company, 650 West Georgia Street, Suite 2700, Vancouver, BC V6B 4N9.

On April 20, 2018, the shareholders' list for the Company's common shares showed 72 registered shareholders, including depositories, and 93,793,797 common shares issued and outstanding. Of the total registered shareholders, 19 are resident in Canada holding 81,210,276 common shares, or 87% of the total issued and outstanding; 40 shareholders are resident in the United States holding 8,381,694 common shares, or 9% of the issued and outstanding, and 13 shareholders are resident of other nations holding 4,201,827 common shares, or 4% of the issued and outstanding.

Table of Contents

The Company is aware of one person/company who beneficially own 5% or more of the Registrant's voting securities. Table No. 10 lists as of April 20, 2018 persons and/or companies holding 5% or more beneficial interest in the Company’s outstanding common stock.

Table No. 10

5% or Greater Shareholders

Title of Class	Name of Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Common	Mark T. Brown (1)	14,201,334	15.01%

(1)7,521,334 of these common shares are held by Pacific Opportunity Capital Ltd. a private company controlled by Mark T. Brown. 4,960,000 of the common shares are held in Mr. Brown’s RRSP. 325,000 common shares are held in the name of Spartacus Management Inc., a private company over which Mr. Brown has control and 545,000 are common shares held by Mr. Brown directly. 850,000 of these shares represent currently exercisable common share purchase options.

No shareholders of the Company have different voting rights from any other shareholder.

RELATED PARTY TRANSACTIONS

The Company had the following related party transactions for the years ended December 31, 2017, December 31, 2016, and December 31, 2015:

	Services	Expenses Incurred During the Year Ended December 31, 2017	Expenses Incurred During the Year Ended December 31, 2016	Expenses Incurred During the Year Ended December 31, 2015
Amounts due to:
Pacific Opportunity Capital Ltd. (a)	Rent, management and accounting services	$ 218,690	$ 236,975	$ 254,775
Paul W. Kuhn	Geological consulting, housing allowance and school payment	$ 335,970	$ 349,813	$ 333,037
Paul L. Nelles (b)	Salaries and share-based payment	$ 23,320	$ 35,387	$ 100,526
Michael Diehl (b)	Salaries and share-based payment	$ Nil	$ Nil	$ 47,213
Mineralia (c)	Geological consulting	$ 198,089	$ 239,882	$ 254,598
B&B Renting and Consulting (d)	Rent	$ 42,026	$ 26,293	$ Nil
Adriano Barros (c, d)	Share-based payment	$ 16,880	$ 11,389	$ 4,550
TOTAL:		$ 834,975	$ 899,739	$ 994,699

(a)Pacific Opportunity Capital Ltd., a company controlled by, Mark Brown, a director of the Company

(b)Paul L. Nelles is a director and Michael Diehl was exploration manager of Innomatik. Starting from April 1, 2014, Mr. Nelles’ and Mr. Diehl’s amounts were paid with Byrnecut’s funding for Slivovo. Subsequently, in February 2015, Mr. Diehl ceased to be the exploration manager of Innomatik.

(c)Mineralia, a private company partially owned by Adriano Barros, the general manager of MAEPA.

(d)B&B Renting and Consulting is a private company partially owned by Adriano Barros, the general manager of MAEPA.

Table of Contents

Item 8. Financial Information

The financial statements as required under Item #18 are attached hereto and found immediately following the text of this Annual Report. The audit report of DeVisser Gray LLP, Chartered Accountants, is included herein immediately preceding the financial statements and schedules.

Current Legal Proceedings

The Company knows of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any other material proceeding or pending litigation. The Company knows of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.

Dividends

The Company has not declared any dividends on its common shares since inception and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future earnings, if any, for use in its operations and the expansion of its business.

Item 9. Offer and Listing of Securities

As of December 31, 2017, the end of the Company's most recent fiscal year, the authorized capital of the Company consisted of an unlimited number of Common Shares without par value. There were 86,918,797 common Shares issued and outstanding as of December 31, 2017 and 93,793,797 common shares issued and outstanding as of April 20, 2018.

NATURE OF TRADING MARKET

The Company's common shares trade on the TSX Venture Exchange in Vancouver, British Columbia, Canada under the stock symbol is “AVU”. The CUSIP number is 05453A108. The Company's common shares are not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates.

Table No. 11 lists the high, low and closing sale prices on the TSX Venture Exchange for the Company's common shares for:

each of the last six months ending March 31, 2018;

each of the last twelve fiscal quarters ending the three months ended March 31, 2018; and

each of the last five fiscal years ended December 31, 2017.

The Company was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia. The Company became a “Capital Pool Company” as defined in the Exchange’s Listing Policy 2.4 and its common shares began trading on the Exchange on September 2, 2008. The Company completed its Qualifying Transaction (“QT”) on July 13, 2010 to acquire 90% of the issued and outstanding shares in MAEPA Empreendimentos Mineiros e Participacoes Lda., a private Portugese company (“MAEPA”) and (b) 92.5% of the issued and outstanding shares of Innomatik Exploration Kosovo LLC, a private Kosovo company (“Innomatik”). The Company received the final approval from the Exchange for its QT and its common shares resumed trading under its current name and trading symbol “AVU.V” as of July 14, 2010.

Table of Contents

Table No. 11

TSX Venture Exchange

Common Shares Trading Activity

	- Sales-
	Canadian Dollars
Period	High	Low	Close

March 2018	$0.09	$0.08	$0.09
February 2018	$0.09	$0.07	$0.09
January 2018	$0.09	$0.06	$0.08
December 2017	$0.08	$0.06	$0.06
November 2017	$0.08	$0.06	$0.08
October 2017	$0.09	$0.07	$0.07

Three Months Ended 3/31/18	$0.09	$0.06	$0.09
Three Months Ended 12/31/17	$0.09	$0.06	$0.06
Three Months Ended 9/30/17	$0.11	$0.08	$0.08
Three Months Ended 6/30/17	$0.13	$0.09	$0.10
Three Months Ended 3/31/17	$0.14	$0.09	$0.09
Three Months Ended 12/31/16	$0.17	$0.09	$0.12
Three Months Ended 9/30/16	$0.25	$0.11	$0.17
Three Months Ended 6/30/16	$0.13	$0.08	$0.10
Three Months Ended 3/31/16	$0.14	$0.08	$0.09
Three Months Ended 12/31/15	$0.17	$0.08	$0.11
Three Months Ended 9/30/15	$0.16	$0.07	$0.14
Three Months Ended 6/30/15	$0.15	$0.09	$0.10

Year Ended 12/31/17	$0.14	$0.06	$0.06
Year Ended 12/31/16	$0.25	$0.08	$0.12
Year Ended 12/31/15	$0.38	$0.07	$0.11
Year Ended 12/31/14	$0.40	$0.08	$0.29
Year Ended 12/31/13	$0.17	$0.04	$0.08

On September 12, 2012, the Company’s common shares began trading on the Frankfurt Stock Exchange in Germany under the symbol “8AM”. Table 11a lists the high, low and closing sale prices on the Frankfurt Stock Exchange for the Company's common shares since inception of trading.

Table No. 11a

Frankfurt Stock Exchange

Common Shares Trading Activity

	- Sales-
	Euros
Period	High	Low	Close

September 2012 to March 2018	€0.25	€0.03	€0.06

Table No. 12 lists, as of April 20, 2018, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.

Table of Contents

Table No. 12

Share Purchase Warrants Outstanding

Number of Share Purchase Warrants Outstanding	Exercise Price/share	Expiration Date
10,920,000	$0.15	July 14, 2018
13,547,000	$0.15	July 4, 2019
6,875,000	$0.12	March 26, 2020
10,170,000	$0.15	July 12, 2020
Total: 41,512,000

Table No. 13 lists, as of April 20, 2018, finder’s options outstanding, the exercise price, and the expiration date of the finder’s options.

Table No. 13

Finder’s Options Outstanding

Number of Finder’s Options Outstanding	Exercise Price/share	Expiration Date
99,000	$0.10	July 14, 2018
411,250	$0.10	July 4, 2019 (1)
Total: 510,250

(1)The finder’s options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until July 4, 2019 at $0.15.

American Depository Receipts.

Not applicable.

Other Securities to be Registered

Not applicable

Current Canadian Trading Market

The Company's common stock is currently listed and trading on the TSX Venture Exchange (“TSX-V”).

The TSX-V was created through the acquisition of the Canadian Venture Exchange by the Toronto Stock Exchange. The Canadian Venture Exchange was a result of the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange which took place on November 29, 1999. On August 1, 2001, the Toronto Stock Exchange completed its purchase of the Canadian Venture Exchange from its member firms and renamed the Exchange the TSX Venture Exchange. The TSX-V currently operates as a complementary but independent exchange from its parent.

The initial roster of the TSX-V was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Toronto, Montreal and Winnipeg Stock Exchanges. The TSX-V is a venture market as compared to the TSX Exchange which is Canada’s senior market and the Montreal Exchange which is Canada’s market for derivatives products.

The TSX-V is a self-regulating organization owned and operated by the TSX Group. It is governed by representatives of its member firms and the public.

The TSX Group acts as a business link between TSX Venture Exchange members, listed companies and investors. TSX-V policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established. Listings are predominately small and medium sized companies.

Table of Contents

Regulation of the TSX Venture Exchange, its member firms and its listed companies is the responsibility of Investment Industry Regulatory Organization of Canada ("IIROC"). IIROC is a not-for-profit, independent Canadian self-regulatory organization that, among other things, oversees trading in exchanges and marketplaces.

IIROC administers, oversees and enforces the Universal Market Integrity Rules (“UMIR”). To ensure compliance with UMIR, IIROC monitors real-time trading operations and market-related activities of marketplaces and participants, and also enforces compliance with UMIR by investigating alleged rule violations and administering any settlements and hearings that may arise in respect of such violations.

Investors in Canada are protected by the Canadian Investor Protection Fund (“CIPF”). The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following Self-Regulatory Organizations: the TSX Venture Exchange, the Montreal Exchange, the TSX, the Toronto Futures Exchange and the IIROC.

Item 10. Additional Information

Share Capital

The Company has financed its operations through the issuance of common shares through private placements, and the exercise of stock options. The changes in the Company’s share capital during the last 3 fiscal years are as follows:

During the year ended December 31, 2016, the Company completed a non-brokered private placement of 13,547,000 units issued at a price of $0.10 per Unit for gross proceeds of $1,354,700. Each Unit consists of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share for a 3 year period at a price of $0.15. 411,250 finder’s options were issued as part of the financing. Each of finder’s option is exercisable into one Unit at a price of $0.10 for a period of 36 months. Each Unit consists of one common share and one non-transferable warrant exercisable for a 3 year period at a price of $0.15. The Company also issued common shares pursuant to the exercise of 4,573,000 warrants for cash proceeds of $685,950; 200,000 common shares pursuant to the exercise of 200,000 stock options for cash proceeds of $20,000; and 453,000 common shares pursuant to the exercise of 453,000 finder’s options for cash proceeds of $45,300.

During the year ended December 31, 2015, the Company completed a non-brokered private placement of 10,920,000 units issued at a price of $0.10 per unit for gross proceeds of $1,092,000. Each unit consists of one common share and one non-transferable common share purchase warrant. Each warrant entitles the holder to purchase an additional common share at a price of $0.15 until July 14, 2018. 468,000 finder’s options were issued in relation to the financing. Each finder’s option can be converted into a share with the same term as the financing at a price of $0.10 until July 14, 2018.

Shares Issued for Assets Other Than Cash

During the year ended December 31, 2017, the Company issued no shares for assets other than cash.

During the year ended December 31, 2016, the Company issued no shares for assets other than cash.

During the year ended December 31, 2015, the Company issued no shares for assets other than cash.

Table of Contents

During the year ended December 31, 2014, the Company issued 515,560 common shares of the Company at a fair value of $128,890 to satisfy the payment of the Glavej and Kamenica licenses. The agreed-upon payment was the equivalent of €50,000 in cash or shares per license.

During the year ended December 31, 2013, the Company issued 450,000 common shares to the non-controlling interest owners for the purchase of the remaining 7.5% of Innomatik not already owned. The shares were issued at a deemed price of $0.105 per share ($47,250).

Shares Held By Company

No Disclosure Necessary-

Stock Options

Stock Options to purchase securities from Registrant can be granted to Directors, Officers, Employees and Consultants of the Company on terms and conditions acceptable to the regulatory authorities in Canada, notably the TSX Venture Exchange.

The Company has a Rolling Stock Option Plan (the "Plan") which is required to be approved by shareholders annually. The Plan was initially adopted by the directors of the Company on July 29, 2008 and subsequently re-approved by shareholders at every Annual Meeting of shareholders thereafter, up to and including the Annual Meeting held on June 6, 2016. Under the Plan, stock options may be issued to qualified Officers, Directors, Employees and Consultants. The number of common shares reserved for issuance under the Plan is 10% of the currently issued common shares of the Company.

Under the Plan, the exercise price of the option may not be less than the closing price of the common shares on the TSX Venture Exchange on the day immediately preceding the date of grant, less the applicable discount allowed by the policies on the TSX Venture Exchange. An option granted under the Plan must be exercised within a period of five years from granting. Within this five year period, the Company's Board of Directors may determine the limitation period during which an option may be exercised and whether a particular grant will have a minimum vesting period. Any agreement to decrease the option price of options previously granted to insiders will require the approval of "disinterested shareholders", which is defined as approval by a majority of the votes cast at the Meeting other than votes attaching to shares of the Company beneficially owned by insiders of the Company to whom options may be granted under the Plan, and associates of such persons.

A complete copy of the Company’s Stock Option Plan as approved by shareholders at the Annual General Meeting held on June 5, 2012 has been included as an exhibit to the Company’s Form 20-F Registration Statement.

The names and titles of the Directors/Executive Officers of the Registrant to whom outstanding stock options have been granted and the numbers of common shares subject to such options are set forth in Table No. 14 as of April 20, 2018, as well as the number of options granted to Directors and all employees as a group.

Table of Contents

Table No. 14

Stock Options Outstanding

Name	Number of Shares of Common Stock	Number of Options Currently Vested	CDN$ Exercise Price	Expiration Date

Paul W. Kuhn President and CEO	250,000 350,000 100,000 200,000 150,000	250,000 350,000 100,000 200,000 150,000	$0.10 0.10 0.18 0.10 0.10	October 16, 2018 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Winnie Wong, Chief Financial Officer & Corporate Secretary	250,000 225,000 100,000 150,000 125,000	250,000 225,000 100,000 150,000 125,000	$0.10 0.10 0.18 0.10 0.10	October 16, 2018 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Mark T. Brown, Director	275,000 300,000 150,000 125,000	275,000 300,000 150,000 125,000	$0.10 0.18 0.10 0.10	July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Paul Dircksen, Director	200,000 200,000 100,000 50,000 100,000	200,000 200,000 100,000 50,000 100,000	$0.10 0.10 0.18 0.10 0.10	October 16, 2018 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Frank Hogel, Director	250,000 50,000 100,000	250,000 50,000 100,000	0.18 0.10 0.10	September 26, 2021 April 26, 2022 March 14, 2023

Paul Nelles, Director	25,000 200,000 100,000 50,000 100,000	25,000 200,000 100,000 50,000 100,000	$0.10 0.10 0.18 0.10 0.10	October 16, 2018 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Ross Stringer, Director	200,000 200,000 100,000 50,000 100,000	200,000 200,000 100,000 50,000 100,000	$0.165 0.10 0.18 0.10 0.10	March 3, 2019 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023

Employees/Consultants	420,000 565,000 525,000 610,000 1,000,000 40,000	420,000 565,000 525,000 610,000 1,000,000 40,000	$0.10 0.10 0.18 0.10 0.10 0.10	October 16, 2018 July 15, 2020 September 26, 2021 April 26, 2022 March 14, 2023 March 26, 2023

Table of Contents

Total Officers and Directors	4,925,000	4,925,000

Total Employees/ Consultants	3,160,000	3,160,000

Total Officers/Directors/ Employees and Consultants	8,085,000	8,085,000

Resolutions/Authorization/Approvals

-No Disclosure Necessary-

Memorandum and Articles of Association

The Company was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia under the name “Everclear Capital Ltd.” On July 7, 2010, the Company changed its name to “Avrupa Minerals Ltd.”

There are no restrictions on the business the Company may carry on in the Articles of Incorporation.

Under the Company’s articles and bylaws any director or senior officer that has a disclosable interest in a contract or transaction shall be liable to account to the Company for any profits that accrue to the director or senior officer under or as a result of the contract or transaction unless disclosure is made thereof and the contract or transaction is approved in accordance with the provisions of the Business Corporations Act of British Columbia. A director is not allowed to vote on any transaction or contract with the Company in which he has a disclosable interest unless all directors have a disclosable interest in that transaction or contract, in which case all of those directors may vote on such resolution. A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual's duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act of British Columbia.

Section 16 of the Company’s bylaws address the duties of the directors, while Part 8 discusses the Borrowing Powers. The Company may, if authorized by the directors, may:

a)borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate

b)issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

c)guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

d)mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

Any bonds, debentures or other debt obligations of the Company may be issued at a discount, premium or otherwise, and with any special privileges as to redemption, surrender, drawings, allotment of or conversion into or exchange for shares or other securities, attending and voting at general meetings of the Company, appointment of directors and otherwise, and may, by their terms, be assignable free from any equities between the Company and the person to whom they were issued or any subsequent holder thereof, all as the directors may determine.

There are no age limit requirements pertaining to the retirement or non-retirement of directors and a director need not be a shareholder of the Company. At each annual general meeting of the Company, all the directors shall retire

Table of Contents

and the shareholders shall elect a Board of Directors consisting of the number of directors for the time being set pursuant the Company's Articles. A retiring director shall be eligible for re-election.

The remuneration of the directors may from time to time be determined by the directors or, if the directors shall so decide, by the shareholders. Such remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such who is also a director. Directors shall be paid such reasonable travelling, hotel and other expenses as they incur in and about the business of the Company and if any director shall perform any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director or shall otherwise be specially occupied in or about the Company's business, he may be paid a remuneration to be fixed by the Board or, at the option of such director, by the Company in general meeting, and such remuneration my be either in addition to or in substitution for any other remuneration that he may be entitled to receive.

Subject to the Business Corporations Act of British Columbia, a director may hold any office or place of profit with the Company, other than the office of auditor with the Company, in conjunction with his office of director for such period and such terms as the directors may determine. No director or intended director shall be disqualified by his office from contracting with the Company. Subject to compliance with the Business Corporations Act of British Columbia, a director or his firm may act in a professional capacity for the Company, other than as auditor, and he or his firm shall be entitled to remuneration for professional services as if he were not a director.

Section 21 deals with indemnification and payment of expenses of directors and officers. Subject to the provisions of the Business Corporations Act of British Columbia, the directors shall cause the Company to indemnify and pay all eligible penalties and expenses of an eligible party and, where appropriate, the heirs and personal or other legal representatives of an eligible party in accordance with the provisions of the Business Corporations Act of British Columbia. Each director, alternate director and officer is deemed to have contracted with the Company on the terms of the indemnity contained in Article 21.1. The failure of a director, alternate director, or officer of the Company to comply with the provisions of the Business Corporations Act of British Columbia or these Articles shall not invalidate any indemnity to which he is entitled under this Part. The directors may cause the Company to purchase and maintain insurance for the benefit of eligible parties.

Section 27 covers the Nomination of Directors and was an alteration of the articles approved by shareholders at the Annual General and Special Meeting held on June 4, 2014. The Company adopted Advance Notice Provisions which covers the nomination of persons for election to the Board of Directors of the Company. Nominations may be made at any annual or special meeting of shareholders if one of the purposes of the meeting was for the election of directors. Nominations may be made:

(a)by or at the direction of the board, including pursuant to a notice of meeting;

(b)by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Act, or a requisition of the shareholders made in accordance with the provisions of the Act; or

(c)by any person (a “Nominating Shareholder”): (A) who, at the close of business on the date of the giving of the notice provided for in Section 27 and on the record date for notice of such meeting, is entered in the securities register as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) who complies with the notice procedures set forth in Section 27.

For a nomination to be made by a Nominating Shareholder, the Nominating Shareholder mush have given timely notice in proper written form to the Secretary of the Company at the principal executive offices of the Company. No person shall be eligible for election as a director unless nominated in accordance with Section 27. The Chairman of the meeting shall have the power and duty to determine whether a nomination was made in accordance with the required procedures and, if any such nomination is not in compliance, to declare that such defective nomination shall be disregarded. The Board may, in its sole discretion, waive any requirement of Section 27.

Table of Contents

The majority required for the passage of a special resolution or a special separate resolution shall be 2/3 of the votes cast on the resolution.

The rights, preferences and restrictions attaching to each class of the Company’s shares are as follows:

The authorized share structure of the Company consists of an unlimited number of common shares without par value. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Directors may from time to time declare and authorize payment of such dividends, if any, as they deem advisable and need not give notice of such declaration to any shareholder. Dividends are subject to the rights, if any, of shareholders holding shares with special rights as to dividends. No dividend shall be paid otherwise than out of funds and/or assets properly available for the payment of dividends and a declaration by the directors as the amount of such funds or assets available for dividends shall be conclusive.

The Company may by resolution of its directors make any changes to the authorized share structure as may be permitted under Section 54 of the Business Corporations Act of British Columbia, or in its name as may be permitted under Section 263 of the Business Corporations Act of British Columbia, and may by resolution of its directors make or authorize the making of any alterations to these Articles and the notice of articles as may be required by such changes. The Company may by ordinary resolution create or vary special rights and restrictions as provided in Section 58 of the Business Corporations Act of British Columbia. No alteration, as provided in Article 9, will be valid as to any part of the issued shares of any class unless the holders of all the issued shares of that class consent to the alteration in writing or consent by special separate resolution. The Company may alter its Articles by resolution of its directors and, if required by such alteration, may by resolution of its directors alter the Notice of Articles.

Subject to the provisions of the Business Corporations Act of British Columbia, the Company or the Directors on behalf of the Company, may pay a reasonable commission or allow a reasonable discount to any person in consideration of his purchasing or agreeing to purchase, whether absolutely or conditionally, any shares, debentures, share rights, warrants or debenture stock in the Company, or procuring or agreeing to procure purchasers, whether absolutely or conditionally, for any such shares, debentures, share rights, warrants or debenture stock. The Company may also pay such brokerage as may be lawful.

An annual general meeting shall be held once every calendar year at such time (not being more than 15 months after the annual reference date for the preceding calendar year) and place as may be determined by the Directors. The Directors may, as they see fit, convene an extraordinary general meeting. An extraordinary general meeting, if requisitioned in accordance with the Business Corporations Act of British Columbia, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided in the Business Corporations Act of British Columbia.

There are no limitations upon the rights to own securities.

There are no provisions that would have the effect of delaying, deferring, or preventing a change in control of the Company.

There is no special ownership threshold above which an ownership position must be disclosed.

A copy of the Company’s Articles is incorporated by reference to the Company’s 20-F Registration Statement.

Material Contracts

1.On June 3, 2011, the Company signed a Memorandum of Understanding (“MOU”) with Antofagasta Minerals S.A. (“Antofagasta”) to undertake exploration on the Alvalade project The MOU covers three exploration licenses: Alvalade, Canal Caveira, and Ferriera do Alentejo. Antofagasta completed a US$300,000 initial study of the project. Upon successful completion of the initial study, on December 22, 2011, the Company entered into the Alvalade Joint Venture agreement with Antofagasta whereas the

Table of Contents

Company granted to Antofagasta the option to acquire an undivided 51% interest in the project, which can be exercised by Antofagasta funding or incurring expenditures of an additional US$4 million over three years. After exercise of the first option, Antofagasta will be granted a further option to acquire an additional 24% interest in the project, for an aggregate 75% undivided interest, by completing and delivering a Feasibility Study on the project to the Company within five years. The Company operates the joint venture through the first option period. A copy of this agreement has been filed as an exhibit to the Company’s 20-F Registration Statement.

2.On May 18, 2011, the Company signed an agreement to option out the Covas Tungsten Project to Blackheath Resources Inc. (“Blackheath”). Under the terms of the agreement, Blackheath has the option to earn a 51% interest in the project by spending €300,000 in exploration on the project before March 20, 2013, of which €150,000 (spent) is a firm commitment and must be spent by March 20, 2012. Blackheath can then earn an additional 19% by spending an additional €700,000 for a total interest of 70% for total expenditures of €1,000,000, by March 20, 2014. Blackheath can also earn another 15% for a total interest of 85% by completing a pre-feasibility study (as defined by NI 43-101 regulations) on the property by March 20, 2016. During the year ended December 31, 2011, Blackheath completed the €150,000 exploration commitment by incurring €26,127 directly, reimbursing €64,687 for MAEPA’s exploration expenses and advancing €59,186 to the Company for future exploration work. A copy of this agreement has been filed as an exhibit to the Company 20-F Registration Statement.

Exchange controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Company's securities, except as discussed in ITEM 10, ”Taxation" below.

Restrictions on Share Ownership by Non-Canadians: There are no limitations under the laws of Canada or in the organizing documents of Avrupa on the right of foreigners to hold or vote securities of Avrupa, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.

Taxation

The following summary of the material Canadian federal income tax consequences are stated in general terms and are not intended to be advice to any particular shareholder. Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of common stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder’s particular circumstances.

This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm’s length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere.

Table of Contents

This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act" or “ITA”) and the Canada-United States Tax Convention (the “Tax Convention”) as at the date of the Annual Report and the current administrative practices of Canada Customs and Revenue Agency. This summary does not take into account provincial income tax consequences.

Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.

Canadian Income Tax Consequences

Disposition of Common Stock

The summary below is restricted to the case of a holder (a “Holder”) of one or more common shares (“Common Shares”) who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arm’s length with the Company.

Dividends

A Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares

A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted “taxable Canadian property” as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arm’s length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.

A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (“taxable capital gain”) in computing his taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one half of any capital loss (“allowable capital loss”) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.

Table of Contents

United States Federal Income Tax Consequences

The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of common shares of the Company. This discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury Regulations, published Internal Revenue Service (“IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time. In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time. The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the Company. Each holder and prospective holder of common shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Company applicable to their own particular circumstances.

U.S. Holders

As used herein, a (“U.S. Holder”) includes a holder of common shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other than the U.S. dollar, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.

This summary is limited to U.S. Holders who own common shares as capital assets. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.

Distribution on Common Shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States Federal Income tax liability or, alternatively, individuals may be deducted in computing the U.S. Holder’s United States Federal taxable income by those individuals who itemize deductions. (See more detailed discussion at “Foreign Tax Credit” below). To the extent that distributions exceed current or accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

Table of Contents

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.

Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a “foreign personal holding company” or a “passive foreign investment company”, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company. The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion.

Under current Treasury Regulations, dividends paid on the Company’s common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Company’s common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 31% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

Foreign Tax Credit

For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(j), the limitation on credit does not apply.

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States income tax liability that the U.S. Holder’s foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation. The various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as “passive income”, “high withholding tax interest”, “financial services income”, “shipping income”, and certain other classifications of income. Dividends distributed by the Company will generally constitute “passive income” or, in the case of certain U.S. Holders, “financial services income” for these purposes. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the difference, if any, between (I) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s tax basis in the common shares of the Company. Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts. This gain or loss will be capital gain or loss if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders, which are not corporations, any unused portion of such net capital loss may be carried over to be used in later

Table of Contents

tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses. For U.S. Holders, which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of common shares of the Company.

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the total combined voting power or the total value of the Company’s outstanding shares is owned, actually or constructively, by five or fewer individuals who are citizens or residents of the United States and 60% (50% after the first tax year) or more of the Company’s gross income for such year was derived from certain passive sources (e.g. from interest income received from its subsidiaries), the Company would be treated as a “foreign personal holding company.” In that event, U.S. Holders that hold common shares of the Company would be required to include in gross income for such year their allocable portions of such passive income to the extent the Company does not actually distribute such income.

The Company does not believe that it currently has the status of a “foreign personal holding company”. However, there can be no assurance that the Company will not be considered a foreign personal holding company for the current or any future taxable year.

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Company’s outstanding shares are held, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31), and the Company is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the Company might be treated as a “foreign investment company” as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares of the Company to be treated as ordinary income rather than capital gains.

Passive Foreign Investment Company

As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (“PFIC”), as defined in Section 1297 of the Code, depending upon the percentage of the Company’s income which is passive, or the percentage of the Company’s assets which is held for the purpose of producing passive income.

The rule governing PFICs can have significant tax effects on U.S. shareholders of foreign corporations who are subject to U.S. Federal income taxation under alternative methods at the election of each such U.S. shareholder. As a PFIC, each U.S. shareholder’s income or gain, with respect to a disposition or deemed disposition of the PFIC’s shares or a distribution payable on such shares will generally be subject to tax at the highest marginal rates applicable to ordinary income and certain interest charges, unless the U.S. shareholder has timely made a “qualified electing fund” election or a “mark-to-market” election for those shares.

A U.S. shareholder who elects to treat the PFIC as a Qualified Electing Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his income, for any taxable year in which the corporation qualifies as a PFIC, his pro-rata share of the corporation's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain to the Electing U.S. Holder, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each case, for the U.S. Holder's taxable year in which the

Table of Contents

corporation’s taxable year ends, regardless of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the pledge of his common shares) as capital gain; treat his share of the corporation's net capital gain, if any, as long-term capital gain instead of ordinary income, and either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of the corporation's annual realized net capital gain and ordinary earnings.

The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which the corporation is a PFIC. If the U.S. shareholder makes a QEF election in such first year, then the U.S. shareholder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files a tax return for such first year. If, however, the corporation qualified as a PFIC in a prior year during the U.S. shareholder’s holding period, then the U.S. shareholder may make a retroactive QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains IRS permission.

If a U.S. shareholder has not made a QEF Election at any time (a "Non-electing U.S. Holder"), then special taxation rules under Section 1291 of the Code will apply to gains realized on the disposition (or deemed to be realized by reason of a pledge) of his common shares, and certain "excess distributions" by the corporation. An excess distribution is a current year distribution received by the U.S. shareholder on PFIC stock to the extent that the distribution exceeds its ratable portion of 125% of the average amount received by the U.S. shareholder during the preceding three years.

A Non-electing U.S. shareholder generally would be required to pro-rate all gains realized on the disposition of his common shares and all excess distributions over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. shareholder (other than years prior to the first taxable year of the corporation during such U.S. Holder's holding period and beginning after January 1, 1987 for which it was a PFIC) would be taxed at the highest marginal tax rate for each such prior year applicable to ordinary income. The Non-electing U.S. shareholder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-electing non-corporate U.S. shareholder must treat this interest charge as "personal interest" which is wholly non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance.

If a corporation is a PFIC for any taxable year during which a Non-electing U.S. shareholder holds common shares, then the corporation will continue to be treated as a PFIC with respect to such common shares, even if it is no longer by definition a PFIC. A Non-electing U.S. shareholder may terminate this deemed PFIC status by electing to recognize a gain, which will be taxed under the rules for Non-Electing U.S. Holders, as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC. If the corporation no longer qualifies as a PFIC in a subsequent year, then normal Code rules and not the PFIC rules will apply with respect to a U.S. shareholder who has made a QEF election.

In certain circumstances, a U.S. Holder of stock in a PFIC can make a “qualified electing fund election” to mitigate some of the adverse tax consequences of holding stock in a PFIC by including in income its share of the corporation’s income on a current basis. However, the Company does not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.

Controlled Foreign Corporation

A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporation’s tax year, owned (directly or indirectly) by U.S. Shareholders. If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the

Table of Contents

Company could be treated as a “controlled foreign corporation” under Subpart F of the Code. This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC’s Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts.

In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was “controlled”) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.

The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holder’s federal income tax liability.

Filing of Information Returns

Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and management urges United States Investors to consult their own tax advisors concerning these requirements.

Statement by Experts

The Company’s auditors for its financial statements as at December 31, 2017, 2016 and 2015 was DeVisser Gray LLP, Chartered Accountants. Their audit report is included with the related financial statements within this Annual Report.

Documents on Display

All documents incorporated in the Company’s 20-F Registration Statement and this Annual Report may be viewed at the Company’s Executive Office located at 410 – 325 Howe Street, Vancouver, British Columbia, Canada, V6C 1Z7.

Item 11. Disclosures About Market Risk

The Company competes with other resource companies for exploration properties and possible joint venture agreements. There is a risk that this competition could increase the difficulty of concluding a negotiation on terms that the Company considers acceptable.

Table of Contents

The Company’s property interests in Portugal, Germany and Kosovo make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian Dollar and foreign functional currencies. The Company does not invest in foreign currency contracts to mitigate the risks. A 1% change in the absolute rate of exchange in US dollars and Euros would affect its net loss by $18,300.

As the Company is currently in the exploration phase and has no producing mineral properties, it is not currently exposed to commodity price risk.

Item 12. Description of Securities Other than Equity Securities

Not Applicable

Part II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not Applicable

Item 14. Modifications of Rights of Securities Holders and Use of Proceeds

Not Applicable

Item 15. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to the Company, including its consolidated subsidiaries, is made known to senior management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as December 31, 2017. The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of December 31, 2017, were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Office and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) to provide reasonable assurance that the financial information prepared by the Company for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with IFRS. The Board of Directors is responsible for ensuring that management fulfills its responsibilities. The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements. Management reviewed the results of their assessment with the Company’s Audit Committee.

Table of Contents

Because of its inherent limitations, the Company’s internal control over financial reporting may not prevent or detect all possible misstatements or frauds. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

To evaluate the effectiveness of the Company’s internal control over financial reporting, Management has used the Internal Control - Integrated Framework (2013), which is a suitable, recognized control framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has assessed the effectiveness of the Company’s internal control over financial reporting and concluded that such internal control over financial reporting is effective as of December 31, 2017.

Limitations on the Effectiveness of Controls

The Company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Attestation Report of the Registered Accounting Firm.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Form 20-F Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 16. Reserved

Item 16A. Audit Committee Financial Expert

The Company does not have an “audit committee financial expert” serving on its audit committee. The Company’s Audit Committee consists of three directors (two independent), all of whom are both financially literate and very knowledgeable about the Company’s affairs. Because the Company’s structure and operations are straightforward, the Company does not find it necessary at the current time to augment its Board with a financial expert.

Item 16B. Code of Ethics

The Board has not adopted a written code of ethics. However, the Board views good corporate governance as an integral component to the Company’s success. It has found that the fiduciary duties placed on individual directors by the Company’s governing corporate legislation and the common law and the restrictions placed by the applicable corporate legislation on an individual director’s participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

Table of Contents

Item 16C. Principal Accounting Fees and Services

The audit committee is directly responsible for the appointment, compensation and oversight of auditors; the audit committee has in place procedures for receiving complaints and concerns about accounting and auditing matters; and has the authority and the funding to engage independent counsel and other outside advisors.

The Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals required by this policy / procedure. The decisions of any Audit Committee member to whom authority is delegated to pre-approve a service shall be presented to the full Audit Committee at its next scheduled meeting.

In accordance with the requirements of the US Sarbanes-Oxley Act of 2002 and rules issued by the Securities and Exchange Commission, we introduced a procedure for the review and pre-approval of any services performed by DeVisser Gray LLP, including audit services, audit related services, tax services and other services. The procedure requires that all proposed engagements of DeVisser Gray LLP for audit and permitted non-audit services are submitted to the finance and audit committee for approval prior to the beginning of any such services.

Fees, including reimbursements for expenses, for professional services rendered by DeVisser Gray LLP to the Company are detailed below.

Principal Accountant Fees and Services	Fiscal 2017 Ended 12/31/2017	Fiscal 2016 Ended 12/31/2016
Audit Fees	$ 18,250	$ 16,250
Audit-Related Fees	-	-
Tax Fees	-	-
All Other Fees	-	-
TOTAL	$ 18,250	$ 16,250

Item 16D. Exemptions from the Listing Standards for Audit Committees