UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 20-F



 ̈

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014



OR



 ̈

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to __________



OR



 ̈

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ______________________



Avrupa Minerals Ltd.

(Exact name of Registrant as specified in its charter)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



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

(Address of principal executive offices)



Securities to be registered pursuant to Section 12(b) of the Act:

None



Securities to be registered pursuant to Section 12(g) of the Act:

Common Shares, without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None



Indicate the number of outstanding shares of each of the Companys classes of capital or common stock as of the close of the period covered by the annual report.  44,555,797 Common Shares



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes  ̈   No  x



If this report is an annual or a transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes  ̈  No x



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.    Yes x  No  ̈



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.  Yes  ̈     No   ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.   Large accelerated filer  ̈  Accelerated filer   ̈  Non-accelerated filer x



Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP  ̈

International Financial Reporting Standards as issued

Other  ̈

by the International Accounting Standards Board x



If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:  Item 17   ̈  Item 18  ̈



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ̈   No  x

Page 1 of 110

Index to Exhibits on Page 73





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Avrupa Minerals Ltd.

Form 20-F Annual Report



Table of Contents



Part I

5

Item 1.  Identity of Directors, Senior Management and Advisors

5

Item 2.  Offer Statistics and Expected Timetable

5

Item 3.  Key Information

5

Item 4.  Information on the Company

13

Item 5.  Operating and Financial Review and Prospects

35

Item 6.  Directors, Senior Management and Employees

46

Item 7.  Major Shareholders and Related Party Transactions

52

Item 8.  Financial Information

54

Item 9.  Offer and Listing of Securities

54

Item 10.  Additional Information

57

Item 11.  Disclosures About Market Risk

70

Item 12.  Description of Securities Other than Equity Securities

70



Part II

70

Item 13.  Defaults, Dividend Arrearages and Delinquencies

70

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

70

Item 15.  Controls and Procedures

70

Item 16.  Reserved

72

Item 16A.  Audit Committee Financial Expert

72

Item 16B.  Code of Ethics

72

Item 16C.  Principal Accounting Fees and Services

72

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

72

Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers

72

Item 16F.  Change in Registrants Certifying Accountant

72

Item 16G.  Corporate Governance

73

Item 16H.  Mine Safety Disclosure

73



Part III

73

Item 17.  Financial Statements

73

Item 18.  Financial Statements

73

Item 19.  Exhibits

73



Signature Page

110







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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$).



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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.



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Part I



Item 1.  Identity of Directors, Senior Management and Advisors



Table No. 1

Company Officers and Directors



|              |                                                 |                                                    
|------------- | ----------------------------------------------- | ---------------------------------------------------
|Name          | Position                                        | Business Address                                   
|Paul W. Kuhn  | CEO, President and Director                     | 325 Howe Street
Suite 410
Vancouver, B.C. V6C 1Z7  
|              |                                                 |                                                    
|Winnie Wong   | Chief Financial Officer and
Corporate Secretary | 325 Howe Street
Suite 410
Vancouver, B.C. V6C 1Z7  
|              |                                                 |                                                    
|Mark T. Brown | Director                                        | 325 Howe Street
Suite 410
Vancouver, B.C. V6C 1Z7  
|              |                                                 |                                                    
|Paul Dircksen | Director                                        | 1212 Ash Avenue
Coeur DAlene , ID 83814           
|              |                                                 |                                                    
|Ross Stringer | Director                                        | 4715 Willow Creek Road
West Vancouver, B.C. V7W 1C3



The Companys auditor is DeVisser Gray LLP, Chartered Accountants, 401 - 905 West Pender Street, Vancouver, British Columbia, Canada, V6C 1L6. DeVisser Gray LLP has been auditor of the Company since inception.



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, 2014, 2013 and 2012, 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 Year Ended December 31, 2011 and the Eight-Month Period ended December 31, 2010 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.



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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,
2014 | Year
Ended
December 31,
2013 | Year
Ended
December 31,
2012 | Year
Ended
December 31,
2011 | Eight
Months
Ended
December 31,
2010
|                                  |                              |                              |                              |                              |                                     
|Total Revenues                    | $0                           | $0                           | $0                           | $0                           | $0                                  
|Net Loss                          | $1,251                       | $1,883                       | $1,529                       | $2,117                       | $1,043                              
|Comprehensive Loss                | $1,266                       | $1,842                       | $1,536                       | $2,109                       | $1,055                              
|Loss Per Share                    | $0.03                        | $0.06                        | $0.07                        | $0.13                        | $0.08                               
|Dividends Per Share               | $0                           | $0                           | $0                           | $0                           | $0                                  
|Wtg. Avg. Shares                  | 40,495                       | 31,070                       | 21,425                       | 16,104                       | 12,453                              
|Working Capital                   | $572                         | $538                         | $1,351                       | $696                         | $3,020                              
|Exploration and Evaluation Assets | $1,479                       | $1,479                       | $1,336                       | $877                         | $877                                
|Long-Term Debt                    | $0                           | $0                           | $0                           | $0                           | $0                                  
|Shareholders Equity              | $2,126                       | $2,044                       | $2,711                       | $1,592                       | $3,913                              
|Total Assets                      | $3,236                       | $3,092                       | $2,986                       | $1,781                       | $4,098                              



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.



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Table No. 3

Canadian Dollar/U.S. Dollar



|                             |         |          |          |         
|---------------------------- | ------- | -------- | -------- | --------
|Period                       | Average | High     | Low      | Close   
|                             |         |          |          |         
|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    
|Year Ended 12/31/12          | 1.00    | 1.04     | 0.97     | 1.00    
|Year Ended 12/31/11          | 0.99    | 1.06     | 0.94     | 1.02    
|Year Ended 12/31/10          | 1.04    | 1.08     | 1.00     | 1.00    
|                             |         |          |          |         
|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    
|Three Months Ended   3/31/14 | 1.11    | 1.13     | 1.06     | 1.11    
|Three Months Ended 12/31/13  | 1.05    | 1.07     | 1.03     | 1.06    
|Three Months Ended   9/30/13 | 1.04    | 1.06     | 1.02     | 1.03    
|Three Months Ended   6/30/13 | 1.04    | 1.05     | 1.00     | 1.03    
|Three Months Ended   3/31/13 | 1.02    | 1.03     | 0.98     | 1.02    
|Three Months Ended 12/31/12  | 1.00    | 1.00     | 0.98     | 1.00    
|Three Months Ended   9/30/12 | 0.99    | 1.02     | 0.97     | 0.98    
|Three Months Ended   6/30/12 | 1.01    | 1.04     | 0.98     | 1.02    
|                             |         |          |          |         
|March 2015                   |         | $   1.28 | $   1.24 | $   1.27
|February 2015                |         | 1.26     | 1.24     | 1.25    
|January 2015                 |         | 1.27     | 1.17     | 1.27    
|December 2014                |         | 1.16     | 1.13     | 1.16    
|November 2014                |         | 1.14     | 1.12     | 1.14    
|October 2014                 |         | 1.13     | 1.11     | 1.13    



The exchange rate was $1.27 on March 31, 2015.



Statement of Capitalization and Indebtedness



Not applicable.



Reasons for the offer and use of proceeds



Not applicable.



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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.



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.



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In Portugal, the rights and obligations associated with mining concession are governed byDirecção-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 requires 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.



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.



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

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.



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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.  In particular, 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 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.



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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.



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.



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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 24, 2015, there were 44,555,797 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.  9 exploration licenses are currently held by the Company in the three countries, including 6 in Portugal, 2 (1 currently under application) in Kosovo, and 1 in Germany.



The Company is the operator of 2 joint-ventures in Portugal, and operates 1 joint-venture in Kosovo. 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.



The Company presently 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         
|Avrupa Holdings Ltd.                               | 100%           | Barbados     | Holding             
|Avrupa Portugal Holdings Ltd.                      | 100%           | Barbados     | Holding             
|Avrupa Kosovo Holdings Ltd.                        | 100%           | Barbados     | Holding             



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



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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 six 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 Joint-Venture

·

Covas Joint-Venture

·

Marateca

·

Alvito

·

Santa Margarida do Sado

·

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.



The Company, through its 100% holding in Innomatik, holds two exploration licenses in Kosovo:



·

Silvovo

·

Metovit (Kamenica)  Under Application



The Slivovo license was issued in 2012, and there is a 5% NSRs payable to the government of Kosovo. The original Kamenica license was dropped but replaced by the fully-overlapping new Metovit application. The Company is awaiting approval from the Kosovo mining bureau (ICMM).



In Germany, the Company currently has an 85% interest in the Oelsnitz Exploration License, a gold 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.



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



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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 9 mineral exploration properties, including 6 properties in Portugal, 2 properties (1 under application) in Kosovo, and 1 property in Germany. All of the Company's properties are currently at the exploration stage.



[avrupa20fmay715001.jpg]



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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.



[avrupa20fmay715002.jpg]



The licenses in 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 with the Covas exploration license being extended for 1 additional year.  In addition, all the licenses have a 3% NSR attached which may be negotiated downwards in certain instances.





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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.



Alvalade JV Project with Antofagasta



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 40% interest in the project which subject to a joint-venture agreement with Antofagasta Minerals S.A. (Antofagasta) who can earn up to an 80% interest in the property.



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 a warehouse 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.



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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 a 3% NSR attached which may be negotiated downwards in certain instances.



Joint-Venture Agreement



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 allows 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. The second amended agreement carries the following terms:



·

After due diligence, exploration funding of US$300,000 (completed).

·

Antofagasta must spend US$4 million on exploration to earn-in to 51% of the joint venture (Option 1 - completed).

·

To earn further 9% of the JV (for an aggregate total of 60%), Antofagasta must fund US$2 million exploration by December 31, 2015 (Option 2 - completed).

·

To earn a further 2.5% of the JV (for an aggregate total of 62.5%), Antofagasta must fund US$1.75 million by December 31, 2015 (Option 3 Year 1).

·

To earn a further 2.5% of the JV (for an aggregate total of 65%), Antofagasta must fund US$1.75 million by December 31, 2016 (Option 3 Year 2).

·

To earn a further 2.5% of the JV (for an aggregate total of 67.5%), Antofagasta must fund US$1.75 million by December 31, 2017 (Option 4 Year 1).

·

To earn a further 2.5% of the JV (for an aggregate total of 70%), Antofagasta must fund US$1.75 million by December 31, 2018 (Option 4 Year 2).



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·

To earn a further 5% of the JV (for an aggregate total of 75%), Antofagasta must fund US$25 million in exploration by December 31, 2022 with an option to partially earn in 1% for every US$5 million spent (Option 5).

·

If Option 5 expenditures are not sufficient to fund a Feasibility Study, Antofagasta will fund 100% of additional exploration but will be reimbursed for the Companys proportionate share (being 25% of Work Programs and Budgets) following the commencement of commercial production (Feasibility Study Phase).

·

To earn a further 5% of the JV (for an aggregate total of 80%), Antofagasta must have completed a Feasibility Study, funded 100% of all work programs during this phase and make a Development Decision within one year of the date of delivery of the Feasibility Study (Option 6).

·

Antofagasta will carry the Company through to production, and the Company will repay Antofagasta from proceeds, dividends, and sales generated by the actual production from any mine within the project area.



The Company operates the joint venture through Option 3 with Antofagasta supervising.



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.  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



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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 Aljusrel 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 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 new 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



All samples were sent to the ALS Chemex sample preparation facility in Seville, Spain. Chemex shipped the prepped material to their main European analytical laboratory located in Loughrea, Ireland. In the main sulfide zone from 151.65 to 162.50 meters, total copper, silver, lead, zinc, and cobalt results were obtained using a metals extraction method developed specifically for analysis of massive sulfide mineralization. This includes metals digestion by strong oxidizing agents, followed by analysis using the industry-standard technique of inductively coupled plasma  atomic emission spectroscopy (ICP-AES). Total tin results were obtained using a lithium borate fusion with the addition of a strong oxidizing agent, and followed by x-ray fluorescence (XRF) analysis. In addition to ALS Chemex quality assurance/quality control (QA/QC) of all work orders, the Joint Venture conducted its own normal, 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 SES002 work order have been evaluated, and conform to industry best practice standards.



Current and Anticipated Exploration



The final six holes of Phase 4 consisted of 1,531.3 meters of drilling to depths between 160.2 meters and 334.1 meters. The holes were collared in the general area of SES002.  The follow-up drilling program was designed to test the immediate area of the SES002 discovery, as well as to test the idea that Sesmarias may be a large-scale system covering a much wider area. The Company has been performing orientation-style ground geophysical surveys, and Company geologists are logging and sampling the new drill core. Results were announced on May 12, 2014.



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The drilling at Sesmanas consisted of the initial 2 drill holes and 6 additional holes designed to follow-up the massive sulfide mineralization from hole 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.



The new drill results indicate the potential for a large-scale mineralized system. Four of the seven holes intersected massive sulfide mineralization at variable depths below the surface. The Sesmarias target zone is heavily faulted, and the rocks are strongly contorted and displaced, which makes exploration extremely difficult.



A follow-up program of 5 additional holes was completed in the Sesmarias area. The highlight of this follow-up program was 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 a depth of 286.25 meters. Average grades for the entire massive sulfide intercept are 0.32% copper, 0.61% lead, 1.95% zinc, 0.45g/t gold, and 25.1 g/t silver. True thickness of the intercept is estimated to be approximately 35 to 40 meters.



Additional drilling was completed in 2014 to follow-up the prior 5-hole program. This drilling resulted in a further increase in the strike length of the Sesmarias West target to almost 2 kilometers. Geological and analytical results from all phases of drilling indicate that the near-vertical oriented mineralization, above a depth of 300 meters, including gravel cover, is interrupted by faults which have apparently displaced significant portions of the massive sulfide material. No drilling conducted to date has targeted the potential below this elevation. The drilling also revealed the potential of a 10-kilometer-long basin in the Pombal area, located 15 kilometers south of Sesmarias. Drill hole POM005, which reached a depth of 725 meters, penetrated through the layer of surface gravels and then overlying volcanic rocks to intercept a target horizon similar to the host unit of mineralization at Sesmarias. Although the hole did not intercept massive sulfide mineralization, geological information gathered from the drilling has improved the understanding of the model for this area, which will assist in future targeting in both basins. Weak to moderate alteration and thin beds of up to 35% iron sulfide mineralization, as well as narrow intervals of slightly elevated levels of copper and zinc in the target horizon, help to support the potential for the Pombal area.



Work during the past two drilling phases of 2014 led to the construction of an upgraded structure-controlled model for mineralization that suggests further VMS exploration potential fin the Sesmarias East zone, located 1-2 kilometers to the east of, and oriented sub-parallel to, Sesmarias West. Sesmarias West and East basins are two of potentially several sub-basins developed within the Sesmarias zone.



In October-November 2014, the Company drilled one further hole, SES014, to test the potential of another basin lying just to the east of Sesmarias South.  SES014 was drilled to 605 meters to test a potential Neves Corvo-like flat-lying target.  Information gained from drilling this hole indicated that potential mineralization in the Sesmarias East basin, if present, will be steeply-dipping, as at Sesmarias South.  The drill hole intercepted weakly altered rock units, similar to those found in the Sesmarias South target area, containing copper sulfide-bearing deformation quartz veins.  The deformation veins containing copper mineralization suggest the possible presence of primary sulfide mineralization, somewhere in the Sesmarias East basin.  Further work is needed to test for this possibility.



As of December 31, 2014, Antofagasta had forwarded a total of $6,527,251 (US$6,306,676) for the Alvalade project, including the US$300,000 for the initial study of the project, and has earned a 60% interest in the project. The Company spent an additional amount of $45,942 (US$39,995) in December 2014 which was subsequently reimbursed by Antofagasta. In addition, Antofagasta paid directly to its own consultants seconded to the project an amount of US$109,700 which contributes further to Antofagastas funding to the project.



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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, subject to a joint-venture option agreement with Blackheath Resources Inc. who may earn up to an 85% interest in the property.



Location and Access



The property is located in northwestern Portugal near the border with Spain, approximately 100 kilometers north of the city of Porto. The property is accessible by paved roads and access within the property is provided by gravel roads. Commercial mining operations were conducted on the property from the late 1940's until the 1980's. Power and water are available, and services and labor are available from the nearby communities.



Regional and Property Geology



The property lies within the Central Iberian Zone in Northern Portugal. Historic commercial tungsten mining on the property was from several pyrrhotite skarns which surround the central Covas structural dome. Tungsten mineralization of both wolframite and scheelite was mined from open pits as well as from underground. The Covas Dome is approximately 2 kilometers by 3 kilometers in size and hosts quartz veins which include gold values.



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.



Joint-Venture Agreement



On May 18, 2011, the Company announced the signing of 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 an initial 51% interest in the project by spending €300,000 (spent) in exploration on the project before March 20, 2013, of which €150,000 is a firm commitment and must be spent by March 20, 2012. Blackheath can then earn an additional 19% by spending a further €700,000 (spent) 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. As of April 30, 2014, Blackheath has earned a 70% interest in the project.



In May 2014, the Company announced it had signed an amended Joint-Venture Agreement with Blackheath. The revised agreement allows for additional interim financing by Blackheath and an expanded time frame for the Joint Venture Agreement. The amended agreement carries the following terms:



·

To earn 51% of the joint venture, Blackheath must spend €300,000 on exploration by March 20, 2013 (completed).



·

To earn a further 19% of the JV (for an aggregate total of 70%), Blackheath must fund €700,000 on exploration by March 20, 2014 (completed).



·

To earn a further 5% of the JV (for an aggregate total of 75%), Blackheath must fund €320,000 on exploration by March 20, 2015 (completed).



·

To earn a further 5% of the JV (for an aggregate total of 80%), Blackheath must fund €498,000 on exploration by March 20, 2016.



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·

To earn a further 5% of the JV (for an aggregate total of 85%), Blackheath must fund €833,000 on exploration by March 20, 2017.



The Company is the operator of the project.



Exploration History



The property commercially produced tungsten from the late 1940's until the 1980's by several companies, including Union Carbide, who abandoned the property in the early 1980's due to low commodity prices. Previous operators drilled nearly 27,000 meters in 329 drill holes, and Union Carbide developed a non 43-101 compliant historic resource of 922,900 metric tonnes @ 0.78% WO3 at Covas.  Information about the historic Covas tungsten resource comes from NI 43-101 technical report entitled Covas Tungsten Deposit, written for Wega Mining ASA by B.J. Price, P. Geo., in 2007.  The historical estimates here might have also used categories that are different from the categories in the National Instrument 43-101. The Company has not completed sufficient work recently to validate the information, although it is considered to be reliable and relevant.  Despite the large amount of drilling, the skarn ring has only been about 40% explored, and only cursory work has been completed in the Dome area.



On July 12, 2011, the Company announced the results of geological mapping, sampling, and drill targeting in the Covas Dome portion of the Covas W-Au project under the work program funded by Blackheath.  The most important result of the work by senior American-based consultant Bill Fuchs, Ph.D., C.P.G., of SFM Micro is the identification of a significant Reduced Intrusion-Related Gold (RIRG) target in the Covas Dome area.  The target area lies along a pronounced east-west trending magnetic lineament and presumed structural zone that, at present, measures +900 meters in length by an average of 100 meters in width.  The anomalous zone, generally located in an area of thick vegetation and lack of outcrop, is open-ended to both east and west.



The target zone is defined by the occurrence of quartz veining and mild to occasionally moderate development of gossan in and around the veining.  Quartz veins contain arsenopyrite and pyrite and/or oxidized versions of arsenic-bearing sulfides.  In addition, there is a quartz-muscovite greisen breccia blowout located in the same trend area.



In addition to the discovery of the previously-unknown gold potential at Covas, the work performed in 2011, combined with earlier work completed in 2009, delineated and upgraded a total of 17 tungsten and now gold targets lying in the Covas Dome and the Skarn Ring prospect areas.



The 2012 exploration program included a compilation of existing data and surface work including detailed mapping and sampling of certain anomalous areas, completion of a gravity survey in the Covas Dome area, followed by a diamond drill program. The Phase 1 drill program included 15 diamond drill holes totaling 1,606 meters in five different target areas both around the Skarn Ring and within the Covas Dome areas.  The drilling tested known skarn-related mineral occurrences and extensions, as well as new targets. The best results came from the Telheira and Lapa Grande target areas, where historic drilling had previously demonstrated the potential for high grade tungsten mineralization. In addition, step-out drilling at the Castelo target area showed potential for tungsten mineralization, southeast of previously known mineralized areas. The best results were obtained from Hole CO 7-12 in the Telheira target area, which returned 2.11% WO3 over 7.98 meters beginning at a depth 44.57 meters, and Hole CO 13-12 in Lapa Grande target area which returned 1.56% WO3 over 11.40 meters starting at a depth of 52.70 meters.



Current and Anticipated Exploration



In February 2014, the Company announced the results of Phase 2 drilling. The program consisted of 14 diamond drill holes, totaling 1,183 meters, drilled in 5 different target zones: Muito Seco, Lapa Grande, Telheira, Castelo, and a new zone lying between the historic Cerdeirinha Pit area and the Muito Seco zone.  Step-out drilling ranged from 50 to 550 meters, averaging over 200 meters in distance from previously known zones of mineralization.



Highlights of the Phase 2 program include 3.05 meters of 1.26% WO3, including 1.05 meters of 2.07% WO3, starting at a depth of 12.75 meters at Muito Seco and 3.25 meters of 0.19% WO3, including 1.25 meters of 0.38% WO3,



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starting at a depth of 82.55 meters at Telheira.  Drilling at Castelo extended tungsten-mineralized skarn in both the southwest and southeast directions in previously unexplored areas around the previously-known mineral zone.  All holes were drilled vertically, and intercepts are considered to represent close to true thickness of the mostly flat-lying mineralized zones.  Following is a summary of results from the Phase 2 drill program.



|          |         |          |        |                 |                                             |                                                                                                            
|--------- | ------- | -------- | ------ | --------------- | ------------------------------------------- | -----------------------------------------------------------------------------------------------------------
|HOLE ID   | EASTING | NORTHING | LENGTH | INTERCEPT DEPTH | INTERCEPT % WO3                             | SUMMARY EXTENSIONS DISTANCES                                                                               
|CO 22/13  | 525160  | 4635105  | 40.60  | 28.70           | 1.00 m @ 0.04% WO3                          | Extended Lapa Grande target over 80 meters to the SE                                                       
|CO 23/13  | 525515  | 4634892  | 149.50 | 128.40          | 2.20 m @ 0.21% WO3                         
|CO 24/13  | 525030  | 4634800  | 40.00  | 12.75           | 3.05 m @ 1.26% WO3                          | Extended Muito Seco target area over 200 meters to the SE                                                  
|CO 25/13  | 525180  | 4634670  | 58.60  | N/A             | Thick skarn, no significant tungsten values
|CO 26/13  | 524808  | 4634970  | 89.40  | N/A             | No skarn  collared in lower schist         | Expanded known tungsten mineralization 550 meters in new discovery target area at Muito Seco/ Cerdeir-inha.
|CO 27/13  | 524640  | 4634720  | 70.10  | 22.40           | 2.00 m @ 0.17% WO3                         
|CO 28/13  | 524780  | 4634665  | 41.30  | 35.50           | 0.75 m @ 0.15% WO3                         
|CO 29/13  | 524947  | 4634658  | 54.30  | 13.80           | 1.80 m @ 0.20% WO3                         
|CO 30/13  | 524201  | 4634026  | 118.10 | 88.20
& 
101.20 | 1.00 m @ 0.21 and 1.00 m @ 0.19% WO3        | Extended Castelo target area over 100 meters SW                                                            
|CO 31/13  | 522720  | 4635435  | 105.10 | 82.55           | 3.25 m @ 0.19% WO3                          | Extended Telheira target area over 180 meters NW and 130 meters to the S/SW                                
|CO 32/13A | 522773  | 4635244  | 141.30 | 125.50          | 1.00 m @ 0.12% WO3                         
|CO 33/13  | 522847  | 4635164  | 54.30  | N/A             | no significant tungsten values             
|CO 34/13  | 522725  | 4635514  | 53.60  | N/A             | no significant tungsten values             
|CO 35/13  | 524525  | 4633885  | 166.70 | 142.30          | 9.20 m @ 0.143% WO3                         | Extended Castelo target area over 75 meters SE                                                             



The Phase 2 drilling expanded and upgraded the target areas, and will allow for better targeting of potential high-grade tungsten zones. Results from both the first and second phases of drilling at Covas clearly indicate that there is further potential for expansion at all five target areas, as well as for discovery of new mineralization near and around the known mineral zones.



Phase 3 drilling at Covas was completed during Q4 of 2014.  A total of 1,337.4 meters in 18 holes was drilled during the 2014 program in the Lapa Grande, Muito Seco, Boundary, Castelo, and Valdarcas Extension zones.  Targeting was weighted towards in-fill drilling and incremental extension of potential tungsten resources at these known deposits.  Geological interpretations and geochemical analyses were underway at the end of 2014 from this work, in order to compile a first resource estimate for the Project.  Following is a summary of all significant Phase 3 tungsten intercept analyses completed to date:





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|                |                                                               |                                                                            |       |       |       | 
|--------------- | ------------------------------------------------------------- | -------------------------------------------------------------------------- | ----- | ----- | ----- | 
|Target area     | Hole ID                                                       | Intercept                                                                 
|                | Top (m)                                                       | Total thickness (m)                                                        | % WO3
|Lapa Grande     | CO 36/14                                                      |                                                                            | 34.20 | 2.60  | 0.180
|                | 42.60                                                         | 1.00                                                                       | 0.165
|CO 37/14        |                                                               | 71.25                                                                      | 1.05  | 0.350
|                | 76.30                                                         | 2.00                                                                       | 0.200
|CO 38/14        |                                                               | 59.55                                                                      | 6.00  | 0.283
|CO 39/14        |                                                               | 62.00                                                                      | 3.00  | 0.125
|                | 71.00                                                         | 1.15                                                                       | 0.561
|CO 40/14        | No sampling; skarn target zone, intruded by aplite-pegmatite.
|Lapa Grande No1 | CO 41/14A                                                     |                                                                            | 50.40 | 6.30  | 0.217
|included        | 50.40                                                         | 2.00                                                                       | 0.460
|Muito Seco      | CO 42/14                                                      |                                                                            | 15.30 | 1.70  | 0.146
|CO 43/14        |                                                               | 13.90                                                                      | 3.10  | 0.142
|CO 44/14        |                                                               | 14.60                                                                      | 5.20  | 0.990
|Boundary        | CO 45/14                                                      | No sampling; skarn target zone, intruded by aplite-pegmatite.             
|CO 46/14        |                                                               | 24.90                                                                      | 1.95  | 0.700
|Castelo         | CO 47/14                                                      |                                                                            | 69.95 | 2.15  | 0.135
|CO 48/14        | 5.25 meters of skarn, low tungsten values.                   
|CO 49/14        | 1.45 meters of skarn, low tungsten values.                   
|NW Valdarcas    | CO 50/14                                                      | No sampling; skarn target zone, intruded by porphyry and aplite-pegmatite.
|N Telheira      | CO 51/14                                                      |                                                                            | 27.90 | 1.50  | 0.192
|N Telheira      | CO 52/14                                                      | Several thin skarn lenses with low tungsten values.                       





In March 2015, Blackheath announced they had completed an initial independent resource estimate for the Covas property and are in the process of filing an NI-43-101 compliant report.



As of December 31, 2014, Blackheath forwarded a total $1,919,234 (€1,405,512) for the Covas property. The Company spent an additional amount of $110,208 (€78,484) in December 2014 which was subsequently reimbursed by Blackheath.





Other Portugal Properties



The Company is also actively exploring in other parts of the country, using its experience-amassed database to review old prospects and districts from new angles and to develop wholly new generative ideas.



The Company has a number of exploration licenses covering attractive areas around the country.





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Marateca



The Marateca property 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 covers approximately 742 square kilometers and 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 plans additional mapping and sampling at these and at other targets around the license to continue to upgrade the projects attractiveness for joint venture.



Alvito



The Alvito exploration license covers 1,035 square kilometers of prospectable land straddling the northeastern margin of the Pyrite Belt, adjacent to the Marateca license, and the Ossa Morena zone of southern Portugal. The current license agreement with the Government for the Alvito license runs through March 23, 2017.



In November 2013, the Company received $150,000 in exploration funding for the Alvito project from Callinan Royalties Corporation ("Callinan") in exchange for a 1.5% NSR royalty to Callinan. The project is designated as an Alliance Property under the Exploration Alliance Agreement as described below.



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.





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With the funding from Callinan, the Company completed additional exploration which has identified eight separate copper and copper-gold targets in the Alcacovas copper belt and another 14 poly-metallic targets of various types around the license. Less than half of the Ossa Morena portion of the license has been reviewed, and virtually none of the Pyrite Belt portion has been visited by the Companys exploration personnel.



As of December 31, 2014, Callinan had forwarded a total $150,000 (€103,609) for the Alvito property. Subsequently, Callinan terminated the Agreement.



On October 22, 2014, the Company and an optionee signed an exclusivity agreement (the Agreement) which calls for the optionee to fund various work programs during a two-stage review period.  The optionee will fund for stage 1 work program of up to US$61,500 with the Company providing a technical report by January 20, 2015. Within 30 days of receipt of the report, the optionee can proceed to commercial negotiations toward a potential transaction; or fund the stage 2 work program; or terminate the Agreement.



As of December 31, 2014, the optionee has forwarded a total $23,656 (US$20,973) for the Alvito property. The Company spent an additional amount of $39,705 (US$34,565) in December 2014, which was reimbursed in January 2015 by the optionee. The Company held $696 (€495) on behalf of the optionee to be spent on the Alvito project, which is recorded as restricted cash. Subsequent to December 31, 2014, the restricted cash was spent for Alvito matters.  On February 5, 2015, the optionee terminated the Agreement.



At present, a third party is reviewing the license for potential targets related to possible iron oxide copper-gold mineralization (IOCG).



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 covers 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. The Neves Corvo, Aljustrel, Sao Domingos, and Santa Margarida de Serra mineral trends, which are all four of the VMS target belts in Portugal, pass through the Santa Margarida license. This suggests strong exploration potential over a large area within the license, and based on historic exploration, the Company has already identified several general drill target areas.



Work is planned for the Santa Margarida do Sado license in order to bring it to JV-ready status.



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.



Work is planned for the Mertola license in order to bring it to JV-ready status.



Exploration Alliance Agreement



In October 2013, the Company signed a three-year Exploration Alliance Agreement (the Agreement) with Callinan Royalties Corporation (Callinan), an unrelated public company, to fund exploration for new mineral properties in Portugal and to advance early stage exploration work on certain existing projects owned by the Company in order to attract more potential joint venture partners.



Under the Agreement, Callinan could provide up to $350,000 in generative exploration in Portugal. The funding will include $150,000 during the first year of the Agreement and, at Callinans option, up to $100,000 in each of the two subsequent years. In return for such funding, the Company will grant Callinan the option to receive a 0.5% NSR



27



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royalty on any new projects acquired as a result of the generative exploration work, or, if Callinan funds an additional $150,000 in further exploration on any of the new projects, an option to receive a 1.5% NSR royalty on such projects. If the Company determines that further value can be generated for the new project after spending the additional $150,000, Callinan has the option to contribute subsequent funding with the Company on a joint 50/50 basis, with Callinans NSR and interest in the new project unchanged.



Callinan also had the option to fund additional exploration on the Companys existing mineral properties, if proposed by the Company, and would earn a 1.5% NSR royalty in return for funding $150,000 in exploration on those projects (the Alliance Property).



As of December 31, 2014, Callinan had forwarded a total $150,000 (€106,114) for generative exploration. The Company held $1,342 on behalf of Callinan to be spent on the generative exploration. These funds were spent in early 2015 for exploration purposes. Subsequent to the fiscal 2014 year-end, Callinan terminated the agreement.



Generative work



The Company has continued generative exploration in northern and central Portugal, particularly in the gold-tungsten belt, and in southern Portugal in and around the Pyrite Belt and Ossa Morena Zone. The Company applied for a license in the Freixeda gold district in the northeast portion of the country where numerous quartz veins were first mined in Roman times and most recently in the 1950s by a local mining group. There has been little work or exploration completed in the district since that time. After basic review of the license during 2014, the Company decided to terminate the Freixeda application, due to lack of significant geochemical results.



The Company maintains excellent relations with both the Mining Bureau and the Geological Survey in Portugal.  The Company intends to continue to generate high quality metal targets in Portugal, using innovative and aggressive exploration thinking and activities to upgrade the targets to JV-ready status. With a prospect generator business model, the Company will then attract larger, mining-oriented companies to take on the projects for further, higher-risk exploration, and hopefully development into metals production.



Former Portugal Projects



During fiscal 2014, the Company dropped the Arga, Arcas, Sabroso and Candedo licenses. Exploration work led to results unsuitable for potential joint-venture projects. The Company has also relinquished the Sines license, as there was no significant interest from potential joint-venture partners.



Kosovo



The Company holds its Kosovo property interests through 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 from four owners  Peter Merkel, Paul Nelles, Michael Diehl, and Gail Warrander, who are leading and respected exploration and mining advocates in Kosovo.  Dr. Nelles and Dr. Diehl continued with the Company in their roles with IEK as senior exploration, project management, and business development advisors in Kosovo.  In early 2015, Dr. Diehl left the Company and was replaced by a senior US-based consultant.



In consideration for the remaining 7.5% interest, the Company:



·

Issued the four owners a total 450,000 common shares; and



·

For a previous land payment extension granted in June 2012 by IEK on the two licenses in Kosovo, namely Kamenica and Glavej, the Company will provide, by December 31, 2013, the agreed-upon payments equivalent to €50,000 in cash or shares per license, as stipulated by the June 2012 agreement.





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The Company has been advancing its prospects in Kosovo towards JV-ready status and is actively searching in Europe and North America for suitable strategic partners to advance the Kosovo program.



[avrupa20fmay715004.gif]



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 (Kamenica) exploration license to JV ready status.



All 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.





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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 49% interest in the project subject to an earn-in and shareholders agreement with Byrnecut International, who can earn up to an 85% interest in the project.



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 has the option to earn a 51% interest in the Slivovo property by spending €1,000,000 in exploration on the project by April 10, 2015 (completed). 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. The Company is the operator of the project.



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 goldbearing 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 has been 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 has 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.



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.



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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



All samples were sent to the ALS Minerals sample preparation facility at Rosia Montana, Romania.  ALS performed the gold analyses at Rosia Montana, using their standard Au-AA23 fire assay-atomic absorption spectroscopy (AAS) method on a 30-gram prepared sample.  For the standard ME-MS61 multi-element analyses, ALS shipped the prepped material to their main European analytical laboratory located in Loughrea, Ireland, where all other metals results were obtained using a four-acid digestion, followed by ICP-AES analysis for near-total results in all metals  In addition to ALS Chemex quality assurance/quality control (QA/QC) of all work orders, the Joint Venture conducted its own normal, internal QAQC 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 SLV007/008 work orders have been evaluated, and conform to industry best practice standards.



31



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Detailed review and re-logging of the core from the first eight holes at Slivovo is ongoing.    The sedimentary beds hosting mineralization are strongly folded, but drilling in SLV004 crossed bedding at close to perpendicular, while SLV005 and SLV006 crossed bedding obliquely. Analysis also indicates that there are a number of phases of mineralization. The two most important are the early introduction of quartz-sericite-(gold-bearing) pyrite mineralization, and a subsequent strong acid leaching phase. This leaching phase liberated the gold from the pyrite and created spaces in the sedimentary rocks, allowing for the deposition of gold.  In addition, there appears to be a strong correlation between gold values and those of accessory metals tellurium and bismuth, which is often indicative of epithermal/low temperature precious metals mineralization. It is not yet clear whether this is an additional phase of gold mineralization.  A number of core samples are being analyzed to determine the characteristics of the gold



Near-term plans are to re-start the drilling in the so-called epithermal zone -- now called by its locality name, the Dzemail (pronounced Jemahl) target area.  The Company is planning up to four holes in the Dzemail area, totaling up to 1,000 meters, to test strong gold and base metal anomalism from soil and trench sampling. Possible mineralization may be hosted by altered sandstones and siltstones, similar to those encountered in the Gossan Zone target area.



At Peshter, the Company will contract another drill rig to commence second phase testing of the Main gossan zone area around SLV004.  The Company plans to drill approximately 2,000 meters in the Main Zone and a further 1,000 meters of drilling in the SW extension of the Main Zone, or other high quality targets.



The partners are planning an aggressive drilling program for 2015, including a total of 4,000 meters, split between the main target areas, but with heavy emphasis in the Peshter Gossan Zone area.



Since Byrnecut has completing its 51% earn-in obligations, a new joint venture company will be formed to operate the Slivovo Gold Project.  Byrnecut also notified the Company that it will continue to fund the next phase of the Slivovo project to earn-in a total interest of 75%. The Company will continue to be the operator of the technical program for the new JV Company.



As of December 31, 2014, Byrnecut forwarded a total $1,216,923 (€835,000) for the Slivovo property. The Company held $297,267 on behalf of Byrnecut to be spent on the Slivovo property.



Metovit (Kamenica)



The 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. According to recently-acquired UNMIK (United Nations Mission in Kosovo) information, in modern times the Artana Mine has produced 4-5 million metric tonnes of +10% Pb and Zn, 140 g/t Ag, and 1 g/t Au, over its still-continuing operation. Production information was compiled during UNMIK (United Nations Mission in Kosovo) administration of Trepça Mines after the war in Kosovo. The historic production information for the Artana Mine is non - NI 43-101  compliant, though Avrupa is of the opinion that the information is accurate with respect to available production records.



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.





32



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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 original Kamenica license was held on a retention basis, and no exploration work was conducted in fiscal 2014. The Kamenica license has now been dropped and replaced by the fully-overlapping new Metovit license application.  The Company is awaiting approval from the Kosovo mining bureau (ICMM) on the new Metovit license.



Former Kosovo Projects



During the fiscal year ended December 31, 2014, the Company dropped the Selac and Koritnik licenses. Subsequent to the end of the fiscal year ended December 31, 2014, the Company dropped the Glavej license. The exploration results of the licenses were not suitable for potential joint-ventures.



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.





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[avrupa20fmay715005.jpg]

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 valid until March 31, 2016, and renewable upon proof of continued exploration activities. There is no royalty attached to the license.



As of December 31, 2014, the Company spent $217,167 (€169,015) on the Oelsnitz property. The Company completed its 85% earn-in and is working with Beak to set up the joint-venture entity. 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. The Company will continue to look for joint venture partnerships in the coming year.



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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 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, 2014, 2013 and 2012.



Operating Results



Year ended December 31, 2014 vs. year ended December 31, 2013



During the year, the Company continued drill programs at the Alvalade JV, Covas JV, and Slivovo JV properties. The Company also received new licenses at Santa Margarida do Sado and Mertola in Portugal.



The comprehensive loss for the year ended December 31, 2014 was $1,265,761, or ($0.03) per share, compared to a comprehensive loss of $1,841,715, or ($0.06) per share, for the year ended December 31, 2013. Mineral exploration expenses were $4,754,648 (Year ended December 31, 2013 - $3,565,119), which were partially offset by advances from optionees of ($4,266,870) (2013 - $2,397,497).



Excluding the non-cash depreciation of $5,901 (2013 - $4,808) and share-based payment of $29,141 (2013 - $134,642), the Companys general and administrative expenses amounted to $738,202 during the year ended December 31, 2013 (2014 - $589,311), an increase of $148,891.



The increase in general and administrative expenses was due to increases in several expense categories. Professional fees rose to $258,688 (2013 - $220,640) due to the renegotiations of the Alvalade and Covas JV agreements; Consulting increased to $107,675 (2013 - $98,080), salaries increased to $30,543 (2013 - $122), office and administrative fees rose to $41,990 (2013  $23,768) and travel rose to $57,618 (2013  $29,228) due to the increase in operations and new agreements. Other items included foreign exchange gain of $7,181 (2013  loss of $1,188) which was due to more favorable exchange rates; Interest income of $8,956 (2013 - $3,141) as the Company had higher cash balances during the year; Other income was $222 (2013 - $Nil). Property investigation costs were $6,293 (2013 - $168) as the Company investigated the possible acquisition of potential new properties. Non-controlling interest was $Nil (2013 - $12,000) as the Company acquired the remaining 7.5% interest in IEK in August 2013 and eliminated the non-controlling interest. Exchange difference arising on the translation of foreign subsidiaries was a loss of $14,805 (2013  gain of $40,883).



During the year ended December 31, 2014, the Company expensed exploration costs totaling $4,754,648 including $769,810 on Covas, $261,779 on Marateca, $2,279,351 on Alvalade, $3,929 on Arga, $252,291 on Alvito, $142,812 on generative projects under the Exploration Alliance Agreement with Callinan, $100,434 on other projects in Portugal, a recovery of $1,833 on Glavej, $2,664 on Kamenica, $2,054 on Selac, $919,655 on Slivovo, $10,856 on other projects in Kosovo, and $10,846 on its project in Germany.



Year ended December 31, 2013 vs. year ended December 31, 2012



During the year, the Company acquired the remaining 7.5% interest in IEK and agreed to option the Slivovo project in Kosovo to Byrnecut International Ltd. Two drill programs were completed on the Alvalade copper project and one drill program was completed on the Covas tungsten project. The Company also signed an Exploration Alliance Agreement with Callinan Royalties Corp. to generate new exploration projects in Portugal.



35



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The comprehensive loss for the year ended December 31, 2013 was $1,841,715, or ($0.06) per share, compared to a comprehensive loss of $1,536,107, or ($0.07) per share, for the year ended December 31, 2012. Mineral exploration expenses were $3,565,119 (Year ended December 31, 2012 - $3,215,951), which were partially offset by advances from optionees of ($2,397,497) (2012 - $2,848,348).



Excluding the non-cash depreciation of $4,808 (2012 - $26,902) and share-based payment of $134,642 (2012 - $189,310), the Companys general and administrative expenses amounted to $589,311 during the year ended December 31, 2013 (2012 - $1,047,414), a decrease of $458,103. The reduction in general and administrative expenses was due to the reclassification of its Portuguese subsidiarys general and administrative expenses to mineral exploration expenses, as well as managements efforts to conserve cash to use in its exploration activities. This reclassification led to significant reductions in many of the expense categories, including rent, salaries and travel. Professional fees rose to $220,640 (2012 - $180,868) due to the acquisition of the remaining 7.5% of IEK and the new JV and Exploration Alliance Agreements. Other items included foreign exchange loss of $1,188 (2012 - gain of $4,798) which was due to unfavorable exchange rates; Interest income of $3,141 (2012 - $11,828) with the decline due to lower cash balances during the year; Property investigation costs were $168 (2012 - $7,920) as the Company expensed fewer costs for investigation of potential new properties. Non-controlling interest was $12,000 (2012 - $93,092) as the Company acquired the remaining 7.5% interest in IEK in August 2013 and eliminated the non-controlling interest.



During the year ended December 31, 2013, the Company expensed exploration costs totaling $3,565,119 including $695,681 on Covas, $80,446 on Marateca, $1,696,618 on Alvalade, $128,694 on Arga, $125,887 on Alvito, $5,846 on generative projects under the Exploration Alliance Agreement with Callinan, $515,103 on other projects in Portugal, $81,264 on Glavej, $121,782 on Kamenica, $12,909 on Selac, $30,637 on Slivovo, $75,464 on other projects in Kosovo, and a recovery of $5,212 on its project in Germany from its joint-venture partner.



Year ended December 31, 2012 vs. year ended December 31, 2011



During the year, the Company acquired the remaining 10% interest in MAEPA for $150,000 and the issuance of 500,000 common shares, bringing the Companys interest to 100%. Exploration, including drilling, was conducted on both the Alvalade and Covas joint-ventures. Early stage-exploration was conducted on licenses in the Companys portfolio in Portugal, Kosovo and Germany, and several additional exploration licenses were granted in Portugal.



The comprehensive loss for the year ended December 31, 2012 was $1,536,107, or ($0.07) per share, compared to a comprehensive loss of $2,108,559, or ($0.13) per share, for the year ended December 31, 2011. Excluding the non-cash depreciation of $26,902 (2011  $10,852) and share-based payment of $189,310 (2011 - $nil), general and administrative expenses were $1,047,414 compared to $858,731 for the year ended December 31, 2011. Significant changes in expenses occurred in investors relations to $169,254 (2011 - $79,118) due to increased efforts to provide awareness of the Companys activities; Salaries, which rose to $342,319 (2011 - $276,181); an increase in accounting and legal to $180,868 (2011 - $161,192) and listing and filing fees of $16,631 (2011 - $8,745) as the Company negotiated and acquired the remaining 10% interest in MAEPA; and an increase in licenses, fees and taxes to $18,639 (2011 - $1,163). Travel fell to $77,953 (2011 - $104,106). Other items included higher foreign exchange gain of $4,798 (2011 - $533) due to favorable exchange rates, and lower interest income of $11,828 (2011 - $20,572). Non-controlling interest fell to $93,092 (2011  $217,997).



During the year ended December 31, 2012, the Company expensed exploration costs of $421,039 on Covas, $93,315 on Marateca, $1,999,212 on Alvalade and $148,944 on other projects in Portugal (2011 - $148,241 on Covas, $699,250 on Marateca, $415,482 on Alvalade and $79,229 on other projects). The Company expensed exploration costs of $25,744 on Glavej, $80,216 on Kamenica, $59,147 on Selac and $209,451 on other projects in Kosovo (2011  - $56,731 on Glavej, $198,927 on Kamenica, $92,547 on Selac, and $210,563 on other projects). The Company also expensed $178,883 (2011 - $32,650) on its project in Germany.  During the year ended December 31, 2012, the Company received an advance of $2,477,322 from Antofagasta for the Alvalade JV Project as part of the US$4,300,000 over three years and $371,026 from Blackheath for the Covas project.





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Liquidity and Capital Resources



As at December 31, 2013, the Companys working capital was $572,287 (December 31, 2013 - $538,205).  With respect to working capital, $761,932 was held in cash (December 31, 2013 - $439,154). $299,305 was held in restricted cash (December 31, 2013 - $640,504). The increase in cash was mainly due to the completion of a private placement of common shares and proceeds from option and warrant exercises, while the decrease in restricted cash was due to the exploration work expensed during the year funded by the restricted cash provided by joint-venture partners.



On August 22, 2014, the Company completed a non-brokered private placement of 4,400,000 common share units at a price of $0.25 per unit for gross proceeds of $1,100,000. 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 $0.40 until August 22, 2017. A total of $27,250 cash finders fee was paid and 152,600 finders options were issued as part of the financing. Each finders option can be converted into a unit with the same terms as the private placement units at a price of $0.25 until August 22, 2017. Insiders participated in the offering by purchasing a total of 735,000 units.



On December 17, 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 fiscal 2014 ended December 31, 2014, the Company also issued 150,000 common shares pursuant to the exercise of stock options for cash proceeds of $15,000 and issued 946,666 common shares pursuant to the exercise of common share purchase warrants for cash proceeds of $142,000.



As of December 31, 2014, the Company has no outstanding commitments. The Company has not pledged any of its assets as security for loans other than €99,500 ($139,678) cash pledge for its exploration licenses in Portugal and is not subject to any debt covenants. The Company is aware of the current conditions in the financial markets and has planned accordingly. The Company has no internal sources of liquidity. The Companys external sources of liquidity includes financing from the sales of common stock in private placements, option payments from joint venture partners, and direct funding by joint venture for the exploration of the Companys properties. The Companys current treasury and the completed financing in 2014, along with the planned developments within the Company as well as with its JV partners will allow its efforts to continue throughout 2015. If the market conditions prevail or improve, the Company will make adjustment to budgets accordingly.



The current property exploration budget for fiscal 2015 are approximately €1.3 million to be funded by the Company's joint venture partners on Alvalade and Covas; €1 million to be funded by the Company’s joint venture partner on Slivovo in Kosovo; and approximately €20,000 funded by the Company on exploration on the Company’s project in Germany. General and Administrative expenses for 2015 are budgeted at a similar level to the 2014 expenditures.



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.



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Table No. 5

Common Share Issuances



|                  |                                      |                                |       |               
|----------------- | ------------------------------------ | ------------------------------ | ----- | --------------
|Year
Ended(1)     | Type of Share Issuance               | Number of Common Shares Issued | Price | Gross Proceeds
|                  |                                      |                                |       |               
|December 31, 2010 | Private Placement                    | 11,428,571                     | 0.35  | $  4,000,000  
|                  | Private Placement                    | 1,250,000                      | 0.40  | 500,000       
|                  | Exercise of Agents Options          | 100,000                        | 0.20  | 20,000        
|                  | Settlement of Working Capital Loan   | 275,000                        | 0.37  | -             
|                  |                                      |                                |       |               
|December 31, 2011 | None                                 | -                              | -     | -             
|                  |                                      |                                |       |               
|December 31, 2012 | Private Placement                    | 4,000,000                      | 0.30  | $  1,200,000  
|                  | Private Placement                    | 7,990,000                      | 0.15  | 1,198,500     
|                  | Purchase of Non-Controlling Interest | 500,000                        | 0.25  | 125,000       
|                  |                                      |                                |       |               
|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       



Year Ended December 31, 2014



As at December 31, 2014, the Companys working capital was $572,287 (December 31, 2013 - $538,205). During the year, Operating Activities used cash of ($1,139,627), including the loss for the year of ($1,250,956). Items not involving cash include Depreciation of $5,901 and Share-based payments of $29,141. Changes in non-cash working capital items include a decrease in Receivables of $58,602, an increase in due from optionees of ($195,855), a decrease in Bank Guarantee of $79,414, an increase in Prepaid Expenses of ($56,029), an increase in Accounts Payable and Accrued Liabilities of $365,730, an increase in Due to Related Parties of $36,834, and decrease in Funds Held for Optionees of ($341,199). Exchange difference arising on the translation of foreign subsidiaries was ($14,558).



Investing Activities used cash of ($68,523), with the entire amount used for the Purchase of Property, Plant and Equipment. Financing Activities provided cash of $1,189,729. Proceeds from the Issuance of Common Shares provided cash of $1,257,000, and Share Issue Costs used cash of ($67,271).



Cash, including restricted cash, totaled $1,061,237 as of December 31, 2014 compared to cash of $1,079,658 as of December 31, 2013, a decrease of $18,421 during the year.



Year Ended December 31, 2013



As at December 31, 2013, the Companys working capital was $538,205 (December 31, 2012 - $1,350,513). During the year, Operating Activities used cash of ($849,223), including the loss for the year of ($1,894,598). Items not involving cash include Depreciation of $20,029 and Share-based payments of $134,642. Changes in non-cash working capital items include a decrease in Receivables of $116,740, a decrease in Bank Guarantee of $223,662, an increase in Prepaid Expenses of ($45,994), a decrease in Other Assets of $1,884, an increase in Accounts Payable and Accrued Liabilities of $141,757, a decrease in Due to Related Parties of ($227,802), and increase in Funds Held for Optionees of $640,504. Exchange difference arising on the translation of foreign subsidiaries was $39,953.





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Investing Activities used cash of ($20,746), with the entire amount used for the Purchase of Property, Plant and Equipment. Financing Activities provided cash of $908,412. Proceeds from the Issuance of Common Shares provided cash of $950,000, and Share Issue Costs used cash of ($41,588).



Cash, including restricted cash, totaled $1,079,658 as of December 31, 2013 compared to cash of $1,041,215 as of December 31, 2012, an increase of $38,443 during the year.



Year Ended December 31, 2012



As at December 31, 2012, the Companys working capital was $1,350,513 (December 31, 2011 - $695,918). During the year, Operating Activities used cash of ($1,497,975), including the loss for the year of ($1,622,146). Items not affecting cash include Depreciation of $26,902 and Share-based payments of $189,310. Changes in non-cash working capital items include an increase in Receivables of ($100,069), an increase in Prepaid Expenses of ($17,884), an increase in Bank Guarantee of ($65,346), a decrease in Other Assets of $11, an increase in Due to Related Parties of $14,471, and an increase in Accounts Payable and Accrued Liabilities of $76,620.



Investing Activities used cash of ($182,667). Purchase of Property, Plant and Equipment used cash of ($32,667) and Acquisition of Non-controlling Interest related to the purchase of the remaining 10% interest of MAEPA used cash of ($150,000).



Financing Activities provided cash of $2,243,000, including $2,398,500 from the issuance of common shares. Share Issuance Costs used cash of ($155,460).



Cash and cash equivalents, including restricted cash, totaled $1,041,215 at December 31, 2012 compared to cash of $478,817 as of December 31, 2011, an increase of $562,398 during the year.



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, 2014.



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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         
|Avrupa Holdings Ltd.                               | 100%           | Barbados     | Holding             
|Avrupa Portugal Holdings Ltd.                      | 100%           | Barbados     | Holding             
|Avrupa Kosovo Holdings Ltd.                        | 100%           | Barbados     | Holding             



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



Asset Acquisitions



Acquisitions of subsidiaries and businesses are accounted for using the purchase method.  The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Company in exchange for control of the acquiree, plus any costs directly attributable to the business combination.  The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held-for-sale in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, which are recognized and measured at fair value less costs to sell.



Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Companys interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.



If, after reassessment, the Companys interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss.



The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.



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.



40



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Cash and cash equivalents

Cash equivalents include money market instruments which are readily convertible into cash or have maturities at the date of purchase of less than ninety days.



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.



Property, plant and equipment

Property, plant and equipment (PPE) are carried at cost, less accumulated depreciation and accumulated impairment losses.



The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.



Depreciation is provided at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value.



An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.  Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statement of comprehensive loss.



Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of plant and equipment.  Expenditures incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized.





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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.



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 for. 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 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.



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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, excluding commodity taxes receivable, 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.



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.





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 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 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 payables and accrued liabilities and funds held for optionees, all of which are recognized at amortized cost.





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Impairment of equipment and intangible assets (excluding goodwill)

Equipment and finite life intangible assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.



An assets recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.



If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately as additional depreciation. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal is recognized as a reduction in the depreciation charge for the period.



Asset retirement obligation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest.  Such costs arising for the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying value of the asset, as soon as the obligation to incur such costs arises.  Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.  These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight line method.  The related liability is adjusted each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.  Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profit or loss as extraction progresses.



The Company has no material restoration, rehabilitation and environmental costs as the disturbance to date is minimal.



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.





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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.



Application of new and revised accounting standards effective January 1, 2014



The Company has evaluated the following new and revised IFRS standard and has determined there to be no material impact on the consolidated financial statements upon adoption:



·

IAS 32 (Amended 2011) Financial Instruments: Presentation



New accounting standards and interpretations



Certain new accounting standards and interpretations have been published that are not mandatory for the December 31, 2014 reporting period.  The Company has not early adopted the following new and revised standard, amendment and interpretation that has been issued but are not yet effective:



·

IFRS 9 (Amended 2010) Financial Instruments (mandatory adoption date has not yet been finalized)



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 $1.16 on December 31, 2014.



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.



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Off-Balance Sheet Arrangements



The Company has no Off-Balance Sheet Arrangements.



Tabular Disclosure of Contractual Obligations



As of December 31, 2014, the Company had a total of €99,500 ($139,678) cash pledged for its exploration licenses in Portugal.



Item 6.  Directors, Senior Management and Employees



Table No. 6 lists as of April 24, 2015 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             |  | 59  | July 8, 2010                
|Mark T. Brown (1) | Canada               |  | 47  | January 23, 2008            
|Paul Dircksen (1) | United States        |  | 69  | September 30, 2013          
|Ross Stringer (1) | Canada               |  | 63  | 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 21, 2015.  Details of the charter are contained in Item 6, Board Practices below.



Table No. 7 lists, as of April 24, 2015, 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                               | 59  | July 8, 2010       
|Winnie Wong  | Chief Financial Officer and
Corporate Secretary | 40  | 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



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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 Accountants of British Columbia.  Since July 1, 2001, she has been 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 Big Sky Petroleum (since April 2014), Strategem Capital Corporation (since May 2005), and Alianza Minerals Ltd. (since April 2015).



Mark T. Brown 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. 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; Chief Executive Officer and a Director of Big Sky Petroleum, an oil and gas exploration company traded on the TSX Venture Exchange; Chief Financial Officer, Corporate Secretary and a Director of Galileo Petroleum, an oil and gas 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 of Sutter Gold Mining Inc., a mineral exploration company traded on the TSX Venture Exchange; and Chief Financial Officer, Corporate Secretary and a Director of Alianza Minerals Ltd., a mineral exploration company traded on the TSX Venture Exchange. Mr. Brown 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 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.



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



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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 4, 2014.



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        
|                                                     |                |                           |                             |                           |                           
|Paul W. Kuhn
CEO, President and
Director (1) (2)     | 2014
2013
2012 | $ 242,106
224,717
219,175 | $         Nil
21,716
32,255 | Nil
250,000
135,000       | $    67,487
62,933
59,110 
|                                                     |                |                           |                             |                           |                           
|Winnie Wong,
CFO and
Corporate Secretary (3)         | 2014
2013
2012 | N/A
N/A
N/A               | $         Nil
21,716
5,133  | Nil
250,000
25,000        | $  253,350
199,600
208,598
|                                                     |                |                           |                             |                           |                           
|Mark T. Brown, Director
Former CEO and President (4) | 2014
2013
2012 | NA
N/A
N/A                | $         Nil
17,377
6,223  | Nil
200,000
25,000        | $         Nil
Nil
Nil     
|                                                     |                |                           |                             |                           |                           
|Paul Dircksen,
Director                              | 2014
2013      | N/A
N/A                   | $         Nil
17,377        | Nil
200,000               | $         Nil
Nil         
|                                                     |                |                           |                             |                           |                           
|Ross Stringer,
Director                              | 2014
2013      | N/A
N/A                   | $   29,141
Nil              | 200,000
Nil               | $         Nil
Nil         
|                                                     |                |                           |                             |                           |                           
|Gregory E. McKelvey,
Former Director (5)             | 2013
2012      | N/A
N/A                   | $         Nil
4,800         | Nil
20,000                | $         Nil
Nil         
|                                                     |                |                           |                             |                           |                           
|Donald E. Ranta,
Former Director (6)                 | 2013
2012      | N/A
N/A                   | $         Nil
4,800         | Nil
20,000                | $         Nil
Nil         



(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.



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(3)

POC, a company of which Mark Brown is the President and of which Winnie Wong is the Vice President, charged a total of $253,350, $199,600, and $208,598 for rent and accounting and management fees for a team of four people during financial years ended December 31, 2014, December 31, 2013, and December 31, 2012, 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 $253,350, $199,600, and $208,598 for rent and accounting and management fees for a team of four people during financial years ended December 31, 2014, December 31, 2013, and December 31, 2012, respectively.

(5)

Mr. McKelvey resigned effective May 31, 2013.

(6)

Mr. Ranta resigned effective December 12, 2013.



No funds were set aside or accrued by the Company during fiscal 2014 to provide pension, retirement or similar benefits for Directors or Executive Officers.



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 only non-independent director is Paul W. Kuhn, as he serves as CEO and President of the Company.



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 2, 2014, shareholders approved the resolution to set the current Board at 4 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 once in person during fiscal 2014, although various matters were discussed telephonically during the year.





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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



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



50



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·

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;

·

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 7 employees (2013  18; 2012  14) and 2 executive officers (2013  2; 2012  2). Of the employees, 3 are located in Portugal, including 1 manager, 1 accounting/administrator, and 1 geologist. 4 employees are located in Kosovo, and include 3 geologists and 1 administrator.



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.



51



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Share Ownership



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.



Table No. 9 lists, as of April 24, 2015, 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)         | 1,187,500                                 | 2.61%           
|Common         | Winnie Wong (2)          | 425,000                                   | 0.95%           
|Common         | Mark T. Brown (3)        | 9,372,668                                 | 20.0%           
|Common         | Paul Dircksen (4)        | 200,000                                   | 0.45%           
|Common         | Ross Stringer (5)        | 660,000                                   | 1.47%           
|               | Total Directors/Officers | 11,845,168                                | 24.37%          



(1)

735,000 of these shares represent currently exercisable stock options and 130,000 represent currently exercisable share purchase warrants.

(2)

325,000 of these shares represent currently exercisable stock options.

(3)

5,411,334 of these common shares are held by Pacific Opportunity Capital Ltd. a private company controlled by Mark T. Brown. 1,361,000 of the common shares are held in Mr. Browns RRSP, and 240,000 shares are held in Mr. Browns TFSA. 100,000 common shares are held in the name of Spartacus Management Inc., a private company over which Mr. Brown has control. 275,000 of these shares represent currently exercisable common share purchase options. 1,740,334 are currently exercisable share purchase warrants held by Pacific Opportunity Capital, and 240,000 are currently exercisable share purchase warrants held in Mr. Browns TFSA.

(4)

200,000 of these shares represent currently exercisable stock options.

(5)

200,000 of these shares represent currently exercisable stock options and 200,000 represent currently exercisable share purchase warrants.



Based upon 44,555,797 common shares outstanding as of April 24, 2015, 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 Equity Financial Trust Company, 650 West Georgia Street, Suite 2700, Vancouver, BC V6B 4N9.



On April 24, 2015 the shareholders' list for the Company's common shares showed 41 registered shareholders, including depositories, and 44,555,797 common shares issued and outstanding. Of the total registered shareholders, 12 are resident in Canada holding 39,180,543 common shares, or 88.0% of the total issued and outstanding; 21 shareholders are resident in the United States holding 3,754,694 common shares, or 8.4% of the issued and outstanding, and 8 shareholders are resident of other nations holding 1,620,560 common shares, or 3.6% of the issued and outstanding.





52



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The Company is aware of two persons/companies who beneficially own 5% or more of the Registrant's voting securities. Table No. 10 lists as of April 24, 2015, 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)                  | 9,372,668                                 | 20.0%           
|Common         | Callinan Royalties Corporation (2) | 7,400,000                                 | 15.5%           



(1)

5,411,334 of these common shares are held by Pacific Opportunity Capital Ltd. a private company controlled by Mark T. Brown. 1,361,000 of the common shares are held in Mr. Browns RRSP, and 240,000 shares are held in Mr. Browns TFSA. 100,000 common shares are held in the name of Spartacus Management Inc., a private company over which Mr. Brown has control. 275,000 of these shares represent currently exercisable common share purchase options. 1,740,334 are currently exercisable share purchase warrants held by Pacific Opportunity Capital, and 240,000 are currently exercisable share purchase warrants held in Mr. Browns TFSA.

(2)

3,233,334 of these shares represent currently exercisable common share purchase warrants. Callinan is a public corporation whose common shares are traded on the TSX Exchange.



Based upon 44,555,797 common shares outstanding as of April 24, 2015, 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.



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, 2014, December 31, 2013, and December 31, 2012:



|                                     |                                                             |                                                           |                                                           |                                                          
|------------------------------------ | ----------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------------
|                                     | Services                                                    | Expenses
Incurred
During the
Year Ended
December 31,
2014 | Expenses
Incurred
During the
Year Ended
December 31,
2013 | Expenses
Incurred
During the
Year Ended
December 31,
2012
|Amounts due to:                      |                                                             |                                                           |                                                           |                                                          
|Pacific Opportunity Capital Ltd. (a) | Rent, management and accounting services                    | $    253,350                                              | $ 199,600                                                 | $ 208,598                                                
|Paul W. Kuhn                         | Geological consulting, housing allowance
and school payment | $    309,593                                              | $ 309,366                                                 | $ 310,540                                                
|Paul L. Nelles (b)                   | Salaries and share-based payment                            | $      74,351                                             | $   36,374                                                | $   88,366                                               
|Michael Diehl (b)                    | Salaries and share-based payment                            | $    143,088                                              | $   39,110                                                | $   95,505                                               
|Mineralia (c)                        | Geological consulting                                       | $    258,770                                              | $ 269,915                                                 | $ 215,501                                                
|TOTAL:                               |                                                             | $ 1,039,152                                               | $ 854,365                                                 | $ 918,510                                                



(a)

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

(b)

Paul L. Nelles and Michael Diehl were director and exploration manager of Innomatik respectively. 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.



53



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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, 2014, 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 44,555,797Common Shares issued and outstanding as of December 31, 2014 and as of April 24, 2015.



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, 2015;



·

each of the last twelve fiscal quarters ending the three months ended March 31, 2015; and



·

each of the last five annual reporting period, being the years ended December 31, 2014, 2013, 2012 and 2011, the eight-month period ended December 31, 2010, and the year ended April 30, 2010.



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.





54



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Table No. 11

TSX Venture Exchange

Common Shares Trading Activity



|                             |                  |       |      
|---------------------------- | ---------------- | ----- | -----
|                             | - Sales-        
|                             | Canadian Dollars
|Period                       | High             | Low   | Close
|                             |                  |       |      
|March 2015                   | $0.19            | $0.12 | $0.12
|February 2015                | $0.22            | $0.17 | $0.17
|January 2015                 | $0.38            | $0.20 | $0.22
|December 2014                | $0.40            | $0.18 | $0.29
|November 2014                | $0.21            | $0.16 | $0.18
|October 2014                 | $0.21            | $0.15 | $0.20
|                             |                  |       |      
|Three Months Ended   3/31/15 | $0.38            | $0.12 | $0.12
|Three Months Ended 12/31/14  | $0.40            | $0.16 | $0.29
|Three Months Ended   9/30/14 | $0.35            | $0.17 | $0.20
|Three Months Ended   6/30/14 | $0.28            | $0.14 | $0.25
|Three Months Ended   3/31/14 | $0.31            | $0.08 | $0.19
|Three Months Ended 12/31/13  | $0.12            | $0.06 | $0.08
|Three Months Ended   9/30/13 | $0.17            | $0.04 | $0.10
|Three Months Ended   6/30/13 | $0.12            | $0.04 | $0.04
|Three Months Ended   3/31/13 | $0.15            | $0.08 | $0.09
|Three Months Ended 12/31/12  | $0.19            | $0.14 | $0.14
|Three Months Ended   9/30/12 | $0.25            | $0.14 | $0.15
|Three Months Ended   6/30/12 | $0.29            | $0.18 | $0.25
|                             |                  |       |      
|Year Ended 12/31/14          | $0.40            | $0.08 | $0.29
|Year Ended 12/31/13          | $0.17            | $0.04 | $0.08
|Year Ended 12/31/12          | $0.40            | $0.14 | $0.14
|Year Ended 12/31/11          | $0.60            | $0.14 | $0.19
|Eight Months Ended 12/31/10  | $0.52            | $0.33 | $0.39
|Year Ended 4/30/10           | $0.21            | $0.07 | $0.16



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 2015 | €0.25    | €0.05 | €0.12



Table No. 12 lists, as of April 24, 2015, share purchase warrants outstanding, the exercise price, and the expiration date of the share purchase warrants.



55



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Table No. 12

Share Purchase Warrants Outstanding



|                                              |                      |                   
|--------------------------------------------- | -------------------- | ------------------
|Number of Share Purchase Warrants Outstanding | Exercise Price/share | Expiration Date   
|7,990,000                                     | $0.25                | October 4, 2015   
|5,720,000                                     | $0.15                | September 24, 2016
|2,833,334                                     | $0.15                | October 15, 2016  
|4,000,000                                     | $0.40                | March 28, 2017*   
|4,400,000                                     | $0.40                | August 22, 2017   
|Total:    24,943,334                          |                      |                   

* These were originally issued in March 2012 by way of private placement. On November 21, 2014, the Company extended the expiry date to March 28, 2017.



Table No. 13 lists, as of April 24, 2015, 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       
|545,500                                | $0.15                | October 4, 2015 (1)   
|148,800                                | $0.10                | September 24, 2016 (2)
|152,600                                | $0.25                | August 22, 2017 (3)   
|Total:        846,900                  |                      |                       



(1)

These finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until October 4, 2015 at $0.25

(2)

These finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until September 24, 2016 at $0.15

(3)

These finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until August 22, 2017 at $0.40



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.





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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.



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, 2014, the Company issued a total of 6,012,226 common shares. On August 22, 2014, the Company completed a non-brokered private placement of 4,400,000 common share units at a price of $0.25 per unit for gross proceeds of $1,100,000. 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 $0.40 until August 22, 2017. A total of $27,250 cash finders fee was paid and 152,600 finders options were issued as part of the financing. Each finders option can be converted into a unit with the same terms as the private placement units at a price of $0.25 until August 22, 2017. Insiders participated in the offering by purchasing a total of 735,000 units.



On December 17, 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. The Company also issued 150,000 common shares pursuant to the exercise of stock options for cash proceeds of $15,000 and issued 946,666 common shares pursuant to the exercise of common share purchase warrants for cash proceeds of $142,000.



During the year ended December 31, 2013, the Company completed two private placements of its common shares. On September 24, 2013, the Company completed the non-brokered private placement of 6,000,000 common share units at a price of $0.10 per unit for gross proceeds of $600,000. 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 September 24, 2016. Cash finders fees of $14,880 were paid and 148,800 finders options were issued as part of the financing. Each finders option can be converted into a unit with the same term as the financing at a price of $0.10 until September 24, 2016. Insiders participated in the offering for a total of 1,570,000



57



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units. On October 15, 2013, the Company closed a financing with Callinan Royalties Corporation of 3,500,000 common share units at a price of $0.10 for gross proceeds of $350,000. Each unit consists of one common share and one non-transferable purchase warrant. Each warrant entitles the holder to purchase one additional common share at a price of $0.15 until October 15, 2016. On August 20, 2013, the Company issued 450,000 common shares at a fair value of $47,250 to the non-controlling interest owners for the purchase of the remaining 7.5% of Innomatik not already owned.



During the year ended December 31, 2012, the Company completed two private placements of its common shares. On March 28, 2012, the Company completed the placement of 4,000,000 units (a Unit) at $0.30 per Unit for gross proceeds of $1,200,000. Each Unit is comprised of one common share and one non-transferable common share purchase warrant. Each warrant entitles the holder to purchase one additional common share for a period of 24 months that expires on March 28, 2014 at a price of $0.50 per common share.A cash finders fee of $55,174 was paid and finders warrants, entitling the holders to purchase up to 183,913 Units for a period of 24 months from issue at a price of $0.30 per Unit, were issued. On October 3, 2012, the Company completed the placement of 7,990,000 units at a price of $0.15 for gross proceeds of $1,198,500. Each unit consisted of one common share and one non-transferable warrant. Each warrant entitles the holder to purchase one additional common share at a price of $0.25 for a period of 36 months that expires on October 3, 2015. A cash finders fee of $40,913 was paid and finders options, entitling the holders to purchase up to 545,500 Units for a period of 36 months from issue at a price of $0.15 per unit, were issued. Each finders option consists of one common share and one warrant that is exercisable into one common share at a price of $0.25 for a 36 month period. Insiders participated in the financing for a total of 3,185,000 Units. Also during the year ended December 31, 2012, the Company issued 500,000 common shares for the purchase of the remaining 10% interest in MAEPA.



Shares Issued for Assets Other Than Cash



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).



During the year ended December 31, 2012, the Company issued 500,000 common shares for the purchase of the remaining 10% interest in MAEPA. The shares were issued at a deemed price of $0.25 per share ($125,000).



During the year ended December 31, 2011, the Company issued no shares.



During the eight-month period ended December 31, 2010, 275,000 common shares were issued to Peter Merkel, a non-controlling shareholder of the Companys subsidiary, Innomatik Exploration Kosovo LLC, at a fair value of $0.37 per share ($101,750) to settle the working capital loan and the interests thereto owing to him.



During the years ended April 30, 2010, the Company issued no shares for assets other than cash.



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.





58



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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 4, 2014. 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 24, 2015, as well as the number of options granted to Directors and all employees as a group.



59



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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                             | 350,000
100,000
35,000
250,000   | 350,000
100,000
35,000
250,000     | $0.35
0.30
0.30
0.10 | July 8, 2015
January 26, 2017
April 10, 2017
October 16, 2018
|                                                           |                                  |                                    |                      |                                                              
|Winnie Wong,
Chief Financial Officer
& Corporate Secretary | 50,000
25,000
250,000            | 50,000
25,000
250,000              | $0.35
0.30
0.10      | July 8, 2015
April 10, 2017
October 16, 2018                 
|                                                           |                                  |                                    |                      |                                                              
|Mark T. Brown,
Director                                    | 50,000
25,000
200,000            | 50,000
25,000
200,000              | $0.35
0.30
0.10      | July 8, 2015
April 10, 2017
October 16, 2018                 
|                                                           |                                  |                                    |                      |                                                              
|Paul Dircksen,
Director                                    | 200,000                          | 200,000                            | $0.10                | October 16, 2018                                             
|                                                           |                                  |                                    |                      |                                                              
|Ross Stringer,
Director                                    | 200,000                          | 200,000                            | $0.165               | March 3, 2019                                                
|                                                           |                                  |                                    |                      |                                                              
|Employees/Consultants                                      | 300,000
10,000
690,000
500,000   | 300,000
10,000
690,000
500,000     | $0.35
0.35
0.30
0.10 | July 8, 2015
July 15, 2015
April 10, 2017
October 16, 2018   
|                                                           |                                  |                                    |                      |                                                              
|Total Officers and Directors                               | 1,735,000                        | 1,735,000                          |                      |                                                              
|                                                           |                                  |                                    |                      |                                                              
|Total Employees/
Consultants                               | 1,500,000                        | 1,500,000                          |                      |                                                              
|                                                           |                                  |                                    |                      |                                                              
|Total Officers/Directors/
Employees and Consultants        | 3,235,000                        | 3,235,000                          |                      |                                                              



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.





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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 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.





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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.



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



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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 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.





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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.



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.



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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.



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



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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.



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



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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 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,



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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 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.



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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 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.



69



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Statement by Experts



The Companys auditors for its financial statements as at December 31, 2014, 2013 and 2012 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.



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 one cent change of the Canadian dollar would affect the Companys estimated one-year exploration expenditures by $10,000 based on a $1 million program.



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, 2013. The Chief Executive Officer and Chief Financial Officer concluded



70



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that the disclosure controls and procedures as of December 31, 2014, 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.



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, 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, 2014.



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.



71



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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.



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 2013
Ended
12/31/2014 | Fiscal 2012
Ended
12/31/2013
|Audit Fees                             | $  15,000                    | $  17,900                   
|Audit-Related Fees                     | -                            | -                           
|Tax Fees                               | -                            | -                           
|All Other Fees                         | -                            | -                           
|TOTAL                                  | $  15,000                    | $  17,900                   



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

--- No Disclosure Necessary ---



Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers

--- No Disclosure Necessary ---



Item 16F.  Change in Registrants Certifying Accountant

--- No Disclosure Necessary ---





72



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Item 16G.  Corporate Governance

--- No Disclosure Necessary ---



Item 16H.  Mine Safety Disclosure

--- No Disclosure Necessary ---



Part III



Item 17.  Financial Statements



The Company has provided financial statements pursuant to ITEM #18.



Item 18.  Financial Statements



The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with IFRS.



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.



Item 19.  Exhibits



(A)  The financial statements thereto as required under ITEM #18 are attached hereto and found immediately following the text of this Annual Report.  The audit report of DeVissser Gray LLP, Chartered Accountants, for the audited financial statements is included herein immediately preceding the audited financial statements.



·

Audited Financial Statements

·

Independent Auditors Report of DeVisser Gray LLP, Chartered Accountants, dated April 28, 2015.

·

Consolidated Statements of Financial Position at December 31, 2014, and December 31, 2013.

·

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2014 and December 31, 2013.

·

Consolidated Statements of Cash Flows for the years ended December 31, 2014 and December 31, 2013.

·

Consolidated Statements of Changes in Equity for the years ended December 31, 2014 and December 31, 2013.

·

Notes to Financial Statements



(B)  Index to Exhibits:



1.

Certificate of Incorporation, Certificates of Name Change, Articles of Incorporation, Articles of Amalgamation and By-Laws:

1.1

Certificate of Incorporation and Notice of Articles dated January 23, 2008**

1.2

Articles and Bylaws (British Columbia) dated January 23, 2008*

1.3

Certificate of Name Change dated July 7, 2010**

2.

Instruments defining the rights of holders of the securities being registered  See Exhibit Number 1

3.

Voting Trust Agreements  not applicable

4.

Material Contracts

4.1

Joint Venture agreement between the Company and Antofagasta Minerals S.A. (Antofagasta) regarding the exploration on the Alvalade project dated December 22, 2011.*

4.2

Agreement between the Company and Covas Tungsten Project to Blackheath Resources Inc. (Blackheath) regarding the optioning out of the Covas Tungsten Project dated May 18, 2011. *



73



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5.

List of Foreign Patents  not applicable

6.

Calculation of earnings per share  not applicable

7.

Explanation of calculation of ratios  not applicable

8.

List of Subsidiaries*

9.

Statement pursuant to the instructions to Item 8.A.4, regarding the financial statements filed in registration statements for initial public offerings of securities  not applicable

10.

Notice Required by Rule 104 of Regulation BTR  not applicable

11

Code of Ethics  not applicable

12

Certifications required by Rule 13a-14(a) or Rule 15d-14(a)****

13

Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code****

14.

Legal Opinion required by Instruction 3 of ITEM 7B  not applicable



15

Additional Exhibits:

15.1

Consent of DeVisser Gray LLP, Chartered Accountants, dated June 20, 2012***

15.2

Copy of Stock Option Plan*

___________



*

Incorporated by reference to the registrants Form 20FR filed with the Securities Exchange Commission on June 4, 2012.



**

Incorporated by reference to the registrants Form 20FR filed with the Securities Exchange Commission on October 5, 2012.



***

Incorporated by reference to the registrants Form 20FR filed with the Securities Exchange Commission on October 24, 2012.



****

Filed herewith.



74



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[avrupa20fmay715006.jpg]

























AVRUPA MINERALS LTD.



CONSOLIDATED FINANCIAL STATEMENTS



FOR THE YEARS ENDED



DECEMBER 31, 2014 AND 2013

















75



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AVRUPA MINERALS LTD.













Contents

Page





Auditors Report

77



Consolidated Statements of Financial Position

78



Consolidated Statements of Comprehensive Loss

79



Consolidated Statements of Changes in Equity

80



Consolidated Statements of Cash Flows

81



Notes to the Consolidated Financial Statements

82  109

















410  325 Howe Street, Vancouver, BC V6C 1Z7 T: (604) 687-3520 F: 1 (888) 889-4874     76



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[avrupa20fmay715008.gif]



INDEPENDENT AUDITORS REPORT



To the Shareholders of Avrupa Minerals Ltd.,



We have audited the accompanying consolidated financial statements of Avrupa Minerals Ltd. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2014 and December 31, 2013 and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years ended December 31, 2014 and December 31, 2013, and a summary of significant accounting policies and other explanatory information.



Managements Responsibility for the Consolidated Financial Statements



Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditors Responsibility



Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement.



An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.  The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Avrupa Minerals Ltd. and its subsidiaries as at December 31, 2014 and December 31, 2013 and their financial performance and their cash flows for the years ended December 31, 2014 and December 31, 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.



Emphasis of Matter



Without qualifying our opinion, we draw attention to Note 1 in the financial statements which indicates that the Company has no current source of revenue, has incurred losses from inception and is dependent upon its ability to secure new sources of financing. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern.



[avrupa20fmay715010.gif]

CHARTERED ACCOUNTANTS

Vancouver, Canada

April 28, 2015



77



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|                                                                                                                     |      |                        |  |                       
|-------------------------------------------------------------------------------------------------------------------- | ---- | ---------------------- |  | ----------------------
|AVRUPA MINERALS LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31
(Presented in Canadian Dollars)
|                                                                                                                     |      |                        |  |                       
|                                                                                                                     | Note | 2014                   |  | 2013                  
|                                                                                                                     |      |                        |  |                       
|Assets                                                                                                               |      |                        |  |                       
|Current assets                                                                                                       |      |                        |  |                       
|Cash                                                                                                                 |      | $              761,932 |  | $              439,154
|Restricted cash                                                                                                      | 5    | 299,305                |  | 640,504               
|Prepaid expenses and advances                                                                                        |      | 240,602                |  | 184,573               
|Due from optionees                                                                                                   | 5    | 195,855                |  | -                     
|Receivables                                                                                                          |      | 44,451                 |  | 103,053               
|Bank guarantees                                                                                                      | 14   | 139,678                |  | 219,092               
|                                                                                                                     |      | 1,681,823              |  | 1,586,376             
|Non-current assets                                                                                                   |      |                        |  |                       
|Exploration and evaluation assets                                                                                    | 5    | 1,479,204              |  | 1,479,204             
|Property, plant and equipment                                                                                        | 4    | 74,658                 |  | 26,741                
|                                                                                                                     |      | 1,553,862              |  | 1,505,945             
|                                                                                                                     |      |                        |  |                       
|Total assets                                                                                                         |      | $           3,235,685  |  | $           3,092,321 
|                                                                                                                     |      |                        |  |                       
|Liabilities                                                                                                          |      |                        |  |                       
|Current liabilities                                                                                                  |      |                        |  |                       
|Funds held for optionees                                                                                             | 5    | 299,305                |  | 640,504               
|Accounts payable and accrued liabilities                                                                             |      | 756,930                |  | 391,200               
|Due to related parties                                                                                               | 7    | 53,301                 |  | 16,467                
|                                                                                                                     |      | 1,109,536              |  | 1,048,171             
|Equity                                                                                                               |      |                        |  |                       
|Share capital                                                                                                        | 6    | $           5,633,560  |  | $           4,647,712 
|Reserves                                                                                                             | 6    | 4,427,290              |  | 4,080,183             
|Deficit                                                                                                              |      | (7,934,701)            |  | (6,683,745)           
|                                                                                                                     |      | 2,126,149              |  | 2,044,150             
|                                                                                                                     |      |                        |  |                       
|Total equity and liabilities                                                                                         |      | $           3,235,685  |  | $           3,092,321 



Event after the reporting period (Note 15)



These consolidated financial statements are authorized for issue by the Board of Directors on April 28, 2015. They are signed on the Company's behalf by:

|                |  |                 
|--------------- |  | ----------------
|/s/Paul W. Kuhn |  | /s/Mark T. Brown
|Director        |  | Director        



See notes to the consolidated financial statements









---







|                                                                                                                                   |      |                           |                          
|---------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------------------- | -------------------------
|AVRUPA MINERALS LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31
(Presented in Canadian Dollars)
|                                                                                                                                   |      |                           |                          
|                                                                                                                                   | Note | 2014                      | 2013                     
|                                                                                                                                   |      |                           |                          
|Mineral exploration expenses                                                                                                       |      |                           |                          
|Mineral exploration expenses                                                                                                       | 5    | $           4,754,648     | $           3,565,119    
|Advances from optionees                                                                                                            | 5    | (4,266,870)               | (2,397,497)              
|                                                                                                                                   |      | (487,778)                 | (1,167,622)              
|General administrative expenses                                                                                                    |      |                           |                          
|Bank charges                                                                                                                       |      | 11,553                    | 5,750                    
|Consulting                                                                                                                         |      | 107,675                   | 98,080                   
|Depreciation                                                                                                                       |      | 5,901                     | 4,808                    
|Insurance                                                                                                                          |      | 18,577                    | 9,614                    
|Investor relations                                                                                                                 |      | 175,574                   | 168,775                  
|Listing and filing fees                                                                                                            |      | 10,197                    | 9,771                    
|Office and administrative fees                                                                                                     |      | 41,990                    | 23,768                   
|Professional fees                                                                                                                  |      | 258,688                   | 220,640                  
|Rent                                                                                                                               |      | 17,441                    | 13,523                   
|Salaries                                                                                                                           |      | 30,543                    | 122                      
|Share-based payment                                                                                                                |      | 29,141                    | 134,642                  
|Telephone                                                                                                                          |      | 1,208                     | 2,396                    
|Transfer agent fees                                                                                                                |      | 7,138                     | 7,644                    
|Travel                                                                                                                             |      | 57,618                    | 29,228                   
|                                                                                                                                   |      | (773,244)                 | (728,761)                
|Other items                                                                                                                        |      |                           |                          
|Foreign exchange gain/(loss)                                                                                                       |      | 7,181                     | (1,188)                  
|Interest income                                                                                                                    |      | 8,956                     | 3,141                    
|Other income                                                                                                                       |      | 222                       | -                        
|Property investigation cost                                                                                                        |      | (6,293)                   | (168)                    
|                                                                                                                                   |      | 10,066                    | 1,785                    
|                                                                                                                                   |      |                           |                          
|Loss before non-controlling interest for the year                                                                                  |      | (1,250,956)               | (1,894,598)              
|                                                                                                                                   |      |                           |                          
|Non-controlling interest for the year                                                                                              |      | -                         | 12,000                   
|                                                                                                                                   |      |                           |                          
|Net loss for the year                                                                                                              |      | (1,250,956)               | (1,882,598)              
|Exchange difference arising on the translation of foreign subsidiaries                                                             |      | (14,805)                  | 40,883                   
|Comprehensive loss for the year                                                                                                    |      | $         (1,265,761)     | $         (1,841,715)    
|Basic and diluted loss per share                                                                                                   | 8    | $                  (0.03) | $                  (0.06)
|                                                                                                                                   |      |                           |                          
|                                                                                                                                   |      | 40,494,835                | 31,070,283               



See notes to the consolidated financial statements









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|                                                                                                  |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|------------------------------------------------------------------------------------------------- | ---------- | ---------------- | ------------- | ---------- | ---------- | ---------------- | -------------------------------- | -------------- | ---------------- | ------------------------ | -------------
|AVRUPA MINERALS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Presented in Canadian Dollars)
|                                                                                                  |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|                                                                                                  |            | Share capital    |               | Reserves   |            |                  |                                 
|                                                                                                  |            | Number of shares | Amount        |            | Warrants   | Finders options | Equity-settled employee benefits |                |                  | Non-controlling interest | Total  equity
|                                                                                                  | Exchange   | Deficit         
|                                                                                                  |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|Balance as at December 31, 2012                                                                   |            | 28,593,571       | $   4,512,522 |            | $2,471,342 | $181,911         | $    441,294                     | $(10,361)      | $  (4,801,147)   | $   (84,427)             | $   2,711,134
|Share issues:                                                                                     |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|Shares issued for private placements                                                              |            | 9,500,000        | 142,847       |            | 807,153    | -                | -                                | -              | -                | -                        | 950,000      
|Share issue costs                                                                                 |            | -                | (54,907)      |            | -          | 13,319           | -                                | -              | -                | -                        | (41,588)     
|Share-based payment                                                                               |            | -                | -             |            | -          | -                | 134,642                          | -              | -                | -                        | 134,642      
|Acquisition of non-controlling interest                                                           |            | 450,000          | 47,250        |            | -          | -                | -                                | -              | -                | 96,427                   | 143,677      
|Non-controlling interest for the year                                                             |            | -                | -             |            | -          | -                | -                                | -              | -                | (12,000)                 | (12,000)     
|Comprehensive loss                                                                                |            | -                | -             |            | -          | -                | -                                | 40,883         | (1,882,598)      | -                        | (1,841,715)  
|                                                                                                  |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|Balance as at December 31, 2013                                                                   |            | 38,543,571       | 4,647,712     |            | 3,278,495  | 195,230          | 575,936                          | 30,522         | (6,683,745)      | -                        | 2,044,150    
|Share issues:                                                                                     |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|Shares issued for private placement                                                               |            | 4,400,000        | 612,371       |            | 487,629    | -                | -                                | -              | -                | -                        | 1,100,000    
|Share issue costs                                                                                 |            | -                | (101,805)     |            | -          | 34,534           | -                                | -              | -                | -                        | (67,271)     
|Shares issued for property license fees                                                           |            | 515,560          | 128,890       |            | -          | -                | -                                | -              | -                | -                        | 128,890      
|Shares issued for warrants exercised                                                              |            | 946,666          | 222,431       |            | (80,431)   | -                | -                                | -              | -                | -                        | 142,000      
|Shares issued for options exercised                                                               |            | 150,000          | 28,030        |            | -          | -                | (13,030)                         | -              | -                | -                        | 15,000       
|Revaluation of extended warrants                                                                  |            | -                | 95,931        |            | (95,931)   | -                | -                                | -              | -                | -                        | -            
|Share-based payment                                                                               |            | -                | -             |            | -          | -                | 29,141                           | -              | -                | -                        | 29,141       
|Comprehensive loss                                                                                |            | -                | -             |            | -          | -                | -                                | (14,805)       | (1,250,956)      | -                        | (1,265,761)  
|                                                                                                  |            |                  |               |            |            |                  |                                  |                |                  |                          |              
|Balance as at December 31, 2014                                                                   | 44,555,797 | $  5,633,560     |               | $3,589,762 | $229,764   | $    592,047     | $   15,717                       | $  (7,934,701) | $              - | $   2,126,149           





See notes to the consolidated financial statements









---







|                                                                                                                           |      |                               |                              
|-------------------------------------------------------------------------------------------------------------------------- | ---- | ----------------------------- | -----------------------------
|AVRUPA MINERALS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Presented in Canadian Dollars)
|                                                                                                                           |      |                               |                              
|                                                                                                                           | Note | 2014                          | 2013                         
|                                                                                                                           |      |                               |                              
|Cash flows from operating activities                                                                                       |      |                               |                              
|Loss before non-controlling interest for the year                                                                          |      | $          (1,250,956)        | $          (1,894,598)       
|Items not involving cash:                                                                                                  |      |                               |                              
|Depreciation                                                                                                               |      | 5,901                         | 4,808                        
|Mineral exploration expenses                                                                                               |      | 143,348                       | 15,221                       
|Share-based payment                                                                                                        |      | 29,141                        | 134,642                      
|Changes in non-cash working capital items:                                                                                 |      |                               |                              
|Receivables                                                                                                                |      | 58,602                        | 116,740                      
|Due from optionees                                                                                                         |      | (195,855)                     | -                            
|Bank guarantees                                                                                                            |      | 79,414                        | 223,662                      
|Prepaid expenses and advances                                                                                              |      | (56,029)                      | (45,994)                     
|Other assets                                                                                                               |      | -                             | 1,884                        
|Accounts payable and accrued liabilities                                                                                   |      | 365,730                       | 141,757                      
|Due to related parties                                                                                                     |      | 36,834                        | (227,802)                    
|Funds held for optionees                                                                                                   |      | (341,199)                     | 640,504                      
|Exchange difference arising on the translation of foreign subsidiaries                                                     |      | (14,558)                      | 39,953                       
|                                                                                                                           |      |                               |                              
|Net cash (used in) operating activities                                                                                    |      | (1,139,627)                   | (849,223)                    
|                                                                                                                           |      |                               |                              
|Cash flows from investing activities                                                                                       |      |                               |                              
|Purchase of property, plant and equipment                                                                                  |      | (68,523)                      | (20,746)                     
|                                                                                                                           |      |                               |                              
|Net cash (used in) investing activities                                                                                    |      | (68,523)                      | (20,746)                     
|                                                                                                                           |      |                               |                              
|Cash flows from financing activities                                                                                       |      |                               |                              
|Proceeds from issuance of common shares                                                                                    |      | 1,257,000                     | 950,000                      
|Share issue costs                                                                                                          |      | (67,271)                      | (41,588)                     
|                                                                                                                           |      |                               |                              
|Net cash provided by financing activities                                                                                  |      | 1,189,729                     | 908,412                      
|                                                                                                                           |      |                               |                              
|Change in cash for the year                                                                                                |      | (18,421)                      | 38,443                       
|Cash, beginning of the year                                                                                                |      | 1,079,658                     | 1,041,215                    
|Cash, end of the year                                                                                                      |      | $            1,061,237        | $            1,079,658       
|                                                                                                                           |      |                               |                              
|Cash comprised of:                                                                                                         |      |                               |                              
|Cash                                                                                                                       |      | $               761,932       | $               439,154      
|Restricted Cash                                                                                                            |      | 299,305                       | 640,504                      
|                                                                                                                           |      | $            1,061,237        | $            1,079,658       
|Supplementary information:                                                                                                 |      |                               |                              
|Interest received                                                                                                          |      | $                   8,956     | $                   3,141    
|Shares issued for acquisition of non-controlling interest                                                                  |      | $                           - | $                 47,250     
|Shares issued for property license fees                                                                                    |      | $               128,890       | $                           -



Supplemental disclosure with respect to cash flows (Note 10)

See notes to the consolidated financial statements





See notes to the consolidated financial statements 81



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







1.

NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS



Avrupa Minerals Ltd. (the Company) was incorporated on January 23, 2008 under the Business Corporations Act of British Columbia and its registered office is Suite 2610  1066 West Hastings Street, Vancouver, BC, Canada, V6E 3X1. The Company changed its name on July 7, 2010 and began trading under the symbol AVU on the TSX Venture Exchange (the Exchange) on July 14, 2010. On September 20, 2012, the Company listed in Europe on the Frankfurt Stock Exchange under the trading symbol 8AM. The Company is primarily engaged in the acquisition and exploration of mineral properties in Europe.



These consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its commitments, continue operations and realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. There are material uncertainties that cast significant doubt about the appropriateness of the going concern assumption.



If the Company is to advance or develop its mineral properties further, it will be necessary to obtain additional financing and while it has been successful in the past, there can be no assurance that it will be able to do so in the future. Failure to raise sufficient funds would result in the Companys inability to make future required property payments, which would result in the loss of those property options.



These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement on financial position classifications that would be necessary were the going concern assumption inappropriate, and these adjustments could be material.



2.

BASIS OF PREPARATION



a)

Statement of compliance



These consolidated financial statements have been prepared in accordance and compliance with International Financial Reporting standards (IFRS) as issued by the International Accounting Standards Board (IASB) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC).



b)

Basis of preparation



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



These consolidated financial statements, including comparatives, have been prepared on the basis of IFRS standards that are effective as at December 31, 2014.



82



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES



a)

Basis of consolidation



These 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         
|Avrupa Holdings Inc.                               | 100%           | Barbados     | Holding             
|Avrupa Portugal Holdings Inc.                      | 100%           | Barbados     | Holding             
|Avrupa Kosovo Holdings Inc.                        | 100%           | Barbados     | Holding             



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



b)

Asset acquisitions



Acquisitions of subsidiaries and businesses are accounted for using the purchase method.  The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Company in exchange for control of the acquiree, plus any costs directly attributable to the business combination.  The acquirees identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held-for-sale in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, which are recognized and measured at fair value less costs to sell.



Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Companys interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.



If, after reassessment, the Companys interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss.



The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.





83



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



c)

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.



d)

Cash and cash equivalents



Cash equivalents include money market instruments which are readily convertible into cash or have maturities at the date of purchase of less than ninety days.



e)

Exploration and evaluation assets and expenditures



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.



84



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



e)

Exploration and evaluation assets and expenditures (Continued)



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.



f)

Property, plant and equipment



Property, plant and equipment (PPE) are carried at cost, less accumulated depreciation and accumulated impairment losses.



The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.



Depreciation is provided at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value.



An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.  Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the consolidated statement of comprehensive loss.



Where an item of plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of plant and equipment.  Expenditures incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized.



g)

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.



85



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



h)

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.



i)

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.



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 for. 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 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.



86



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



j)

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.



k)

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, excluding commodity taxes receivable, 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.



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.



87



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



k)

Financial instruments (Continued)



Financial liabilities



The Company classifies its financial liabilities into one of two 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 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 and funds held for optionees, all of which are recognized at amortized cost.



At December 31, 2014 and 2013, the Company did not have any derivative financial assets or liabilities.



l)

Impairment of equipment and intangible assets (excluding goodwill)



Equipment and finite life intangible assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired.



An assets recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.



If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately as additional depreciation. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal is recognized as a reduction in the depreciation charge for the period.





88



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



m)

Asset retirement obligation



An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest.  Such costs arising for the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying value of the asset, as soon as the obligation to incur such costs arises.  Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.  These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight line method.  The related liability is adjusted each period for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.  Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profit or loss as extraction progresses.



The Company has no material restoration, rehabilitation and environmental costs as the disturbance to date is minimal.



n)

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.



89



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







3.

SIGNIFICANT ACCOUNTING POLICIES(Continued)



o)

Application of new and revised accounting standards effective January 1, 2014



The Company has evaluated the following new and revised IFRS standard and has determined there to be no material impact on the consolidated financial statements upon adoption:



·

IAS 32 (Amended 2011) Financial Instruments: Presentation



p)

New accounting standards and interpretations



Certain new accounting standards and interpretations have been published that are not mandatory for the December 31, 2014 reporting period.  The Company has not early adopted the following new and revised standard, amendment and interpretation that has been issued but is not yet effective:



·

IFRS 9 (Amended 2010) Financial Instruments (mandatory adoption date has not yet been finalized)



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.







90



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







4.

PROPERTY, PLANT AND EQUIPMENT



|                                               |         |                               |                     |                  |               
|---------------------------------------------- | ------- | ----------------------------- | ------------------- | ---------------- | --------------
|                                               |         | Furniture and other equipment | Vehicles            | Other assets     | Total         
|Cost                                           |         |                               |                     |                  |               
|As at January 1, 2013                          |         | $        46,361               | $      137,386      | $        15,830  | $    199,577  
|Additions during the year                      |         | 18,183                        | -                   | 2,563            | 20,746        
|Exchange adjustment                            |         | 5,431                         | 16,096              | 1,856            | 23,383        
|As at December 31, 2013                        |         | 69,975                        | 153,482             | 20,249           | 243,706       
|Additions during the year                      |         | 45,964                        | 21,899              | 660              | 68,523        
|Disposals during the year                      |         | (3,744)                       | -                   | -                | (3,744)       
|Exchange adjustment                            |         | (2,946)                       | (6,462)             | (853)            | (10,261)      
|As at December 31, 2014                        |         | $      109,249                | $      168,919      | $        20,056  | $     298,224 
|                                               |         |                               |                     |                  |               
|Accumulated depreciation                       |         |                               |                     |                  |               
|As at January 1, 2013                          |         | $        31,853               | $      134,522      | $          8,630 | $     175,005 
|Depreciation for the year                      |         | 13,577                        | 2,986               | 3,466            | 20,029        
|Exchange adjustment                            |         | 4,699                         | 15,974              | 1,258            | 21,931        
|As at December 31, 2013                        |         | 50,129                        | 153,482             | 13,354           | 216,965       
|Depreciation for the year                      |         | 18,026                        | 763                 | 1,570            | 20,359        
|Depreciation for the year related to disposals | (3,744) | -                             | -                   | (3,744)         
|Exchange adjustment                            |         | (2,888)                       | (6,495)             | (631)            | (10,014)      
|As at December 31, 2014                        |         | $        61,523               | $      147,750      | $        14,293  | $     223,566 
|                                               |         |                               |                     |                  |               
|Net book value                                 |         |                               |                     |                  |               
|As at January 1, 2013                          |         | $        14,508               | $          2,864    | $          7,200 | $       24,572
|As at December 31, 2013                        |         | $        19,846               | $                 - | $          6,895 | $       26,741
|As at December 31, 2014                        |         | $        47,726               | $        21,169     | $          5,763 | $       74,658

















91



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5. EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES



|                                                                  |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|----------------------------------------------------------------- | ------- | --------------- | ----------------- | ----------------- | ------------- | ------------- | ------------------- | ---------------- | ------ | ------------- | ------------- | ------------- | ------------- | ------------- | ----- | ------------- | --------- | -------------
|                                                                  |         | Portugal        |                   | Kosovo            |               | Germany       |                     | Total           
|                                                                  |         | Marateca        | Alvalade          | Covas             | Arga          | Alvito        | Callinan Generative | Others           |        | Glavej        | Kamenica      | Selac         | Slivovo       | Others        |       |               |          
|Exploration and evaluation assets                                 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |              
|Acquisition costs                                                 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|As of January 1, 2014                                             |         | $ 1,096,840     | $     167,920     | $     71,289      | $           - | $           - | $           -       | $              - |        | $           - | $           - | $           - | $ 143,155     | $           - |       | $           - |           | $  1,479,204 
|Additions during the period                                       |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | -             | -             |       | -             |           | -            
|As of December 31, 2014                                           |         | $ 1,096,840     | $     167,920     | $     71,289      | $           - | $           - | $           -       | $              - |        | $           - | $           - | $           - | $ 143,155     | $           - |       | $           - |           | $  1,479,204 
|                                                                  |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Mineral exploration expenses for the year ended December 31, 2014 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Assaying                                                          |         | $             - | $               - | $               - | $           - | $           - | $           -       | $              - |        | $           - | $           - | $           - | $ 107,252     | $           - |       | $  10,846     |           | $     118,098
|Concession fees and taxes                                         |         | 30,679          | 37,285            | 25,949            | 3,668         | 5,134         | 55                  | 34,216           |        | (1,906)       | (1,906)       | 2,054         | 2,249         | 3,668         |       | -             |           | 141,145      
|Depreciation                                                      |         | 8,088           | -                 | -                 | -             | 3,107         | -                   | 3,263            |        | -             | -             | -             | -             | -             |       | -             |           | 14,458       
|Drilling                                                          |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | 279,925       | -             |       | -             |           | 279,925      
|Geological salaries and consulting                                | 157,049 | 1,988,160       | 690,958           | -                 | 195,244       | 85,498        | 18,331              |                  | -      | 4,039         | -             | 6,636         | 2,658         |               | -     |               | 3,148,573
|Geology work                                                      |         | -               | -                 | -                 | -             | -             | 31,401              | -                |        | -             | -             | -             | 382,799       | 4,039         |       | -             |           | 418,239      
|Insurance                                                         |         | 2,224           | 11,046            | 8,176             | -             | 1,213         | 758                 | 1,367            |        | 73            | 73            | -             | 4,033         | 130           |       | -             |           | 29,093       
|Legal and accounting                                              |         | 95              | -                 | -                 | -             | 29            | -                   | 62               |        | -             | -             | -             | 24,895        | -             |       | -             |           | 25,081       
|Office and administrative fees                                    |         | 18,025          | 64,982            | 4,172             | 261           | 8,511         | 4,600               | 12,061           |        | -             | 40            | -             | 13,016        | 2             |       | -             |           | 125,670      
|Rent                                                              |         | 37,167          | 99,886            | 11,267            | -             | 19,142        | 3,187               | 20,661           |        | -             | -             | -             | 11,878        | -             |       | -             |           | 203,188      
|Site costs                                                        |         | 6,316           | 22,889            | 16,378            | -             | 8,388         | 2,912               | 5,128            |        | -             | 59            | -             | 58,256        | -             |       | -             |           | 120,326      
|Travel                                                            |         | 2,136           | 55,103            | 12,910            | -             | 11,523        | 14,401              | 5,345            |        | -             | 359           | -             | 10,548        | 359           |       | -             |           | 112,684      
|Trenching and road work                                           |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | 18,168        | -             |       | -             |           | 18,168       
|Advances from optionee                                            |         | -               | (2,279,351)       | (769,369)         | (299)         | (183,292)     | (114,904)           | -                |        | -             | -             | -             | (919,655)     | -             |       | -             |           | (4,266,870)  
|                                                                  |         | $    261,779    | $               - | $          441    | $    3,630    | $  68,999     | $   27,908          | $   100,434      |        | $   (1,833)   | $     2,664   | $    2,054    | $           - | $  10,856     |       | $  10,846     |           | $     487,778
|Cumulative mineral exploration expenses since acquisition         |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Assaying                                                          |         | $             - | $               - | $               - | $           - | $           - | $           -       | $              - |        | $     3,292   | $     3,569   | $           - | $ 107,252     | $    1,255    |       | $  10,846     |           | $     126,214
|Concession fees and taxes                                         |         | 98,347          | 132,197           | 155,087           | 26,531        | 35,421        | 55                  | 87,119           |        | 76,597        | 79,309        | 10,044        | 6,755         | 25,420        |       | 4             |           | 732,886      
|Depreciation                                                      |         | 10,152          | -                 | -                 | 1,041         | 5,135         | -                   | 13,351           |        | -             | -             | -             | -             | -             |       | -             |           | 29,679       
|Drilling                                                          |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | 279,925       | -             |       | -             |           | 279,925      
|Geological salaries and consulting                                | 967,059 | 5,560,593       | 1,825,931         | 112,677           | 317,559       | 91,032        | 515,255             |                  | 65,963 | 161,565       | 75,875        | 36,175        | 205,976       |               | 7,064 |               | 9,942,724
|Geology work                                                      |         | -               | -                 | -                 | -             | -             | 31,401              | -                |        | 52,790        | 97,813        | 55,733        | 395,806       | 196,179       |       | 193,998       |           | 1,023,720    
|Insurance                                                         |         | 3,034           | 16,841            | 10,457            | 408           | 2,008         | 758                 | 5,323            |        | 1,908         | 4,383         | 1,986         | 5,191         | 6,306         |       | -             |           | 58,603       
|Legal and accounting                                              |         | 110             | 296               | -                 | -             | 29            | -                   | 134              |        | -             | -             | -             | 24,895        | -             |       | -             |           | 25,464       
|Office and administrative fees                                    |         | 32,137          | 168,406           | 21,175            | 3,113         | 14,118        | 4,702               | 36,929           |        | 493           | 4,998         | 3,266         | 15,335        | 7,423         |       | 5,255         |           | 317,350      
|Rent                                                              |         | 63,705          | 278,065           | 22,969            | 4,748         | 27,663        | 3,187               | 63,041           |        | 2,199         | 12,943        | 8,546         | 15,650        | 21,304        |       | -             |           | 524,020      
|Site costs                                                        |         | 30,361          | 95,357            | 55,679            | 1,817         | 12,662        | 3,054               | 20,159           |        | 27,206        | 123,867       | 10,154        | 94,880        | 28,748        |       | -             |           | 503,944      
|Travel                                                            |         | 33,973          | 205,896           | 52,972            | 5,126         | 20,345        | 14,469              | 23,250           |        | -             | 2,841         | 2,413         | 10,739        | 4,003         |       | -             |           | 376,027      
|Trenching and road work                                           |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | 18,168        | -             |       | -             |           | 18,168       
|Advances from optionee                                            |         | -               | (6,573,193)       | (2,029,442)       | (83,125)      | (212,665)     | (148,658)           | -                |        | -             | -             | -             | (919,655)     | -             |       | -             |           | (9,966,738)  
|                                                                  |         | $ 1,238,878     | $    (115,542)    | $   114,828       | $  72,336     | $222,275      | $           -       | $   764,561      |        | $ 230,448     | $ 491,288     | $168,017      | $   91,116    | $496,614      |       | $217,167      |           | $  3,991,986 





92



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5. EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES (Continued)

|                                                                  |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|----------------------------------------------------------------- | ------- | --------------- | ----------------- | ----------------- | ------------- | ------------- | ------------------- | ---------------- | ------ | ------------- | ------------- | ------------- | ------------- | ------------- | ----- | ------------- | --------- | -------------
|                                                                  |         | Portugal        |                   | Kosovo            |               | Germany       |                     | Total           
|                                                                  |         | Marateca        | Alvalade          | Covas             | Arga          | Alvito        | Callinan Generative | Others           |        | Glavej        | Kamenica      | Selac         | Slivovo       | Others        |       |               |          
|Exploration and evaluation assets                                 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Acquisition costs                                                 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|As of January 1, 2013                                             |         | $1,096,840      | $   167,920       | $     71,289      | $           - | $           - | $           -       | $              - |        | $           - | $           - | $           - | $           - | $           - |       | $           - |           | $1,336,049   
|Additions during the year                                         |         | -               | -                 | -                 | -             | -             | -                   | -                |        | -             | -             | -             | 143,155       | -             |       | -             |           | 143,155      
|As of December 31, 2013                                           |         | $1,096,840      | $   167,920       | $     71,289      | $           - | $           - | $           -       | $              - |        | $           - | $           - | $           - | $ 143,155     | $           - |       | $           - |           | $1,479,204   
|                                                                  |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Mineral exploration expenses for the year ended December 31, 2013 |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Concession fees and taxes                                         |         | $     14,831    | $     38,929      | $     10,330      | $  12,992     | $  18,007     | $           -       | $      39,975    |        | $  69,773     | $   69,773    | $           - | $        164  | $           - |       | $           - |           | $   274,774  
|Depreciation                                                      |         | 2,064           | -                 | -                 | 1,041         | 2,028         | -                   | 10,088           |        | -             | -             | -             | -             | -             |       | -             |           | 15,221       
|Geological salaries and consulting                                | 35,054  | 1,433,774       | 622,373           | 100,404           | 82,803        | 5,534         | 370,269             |                  | 9,446  | 37,834        | 11,126        | 17,390        | 21,896        |               | -     |               | 2,747,903
|Geology work                                                      |         | -               | -                 | -                 | -             | -             | -                   | -                |        | 811           | 811           | 541           | 2,705         | 40,655        |       | (5,212)       |           | 40,311       
|Insurance                                                         |         | 810             | 3,625             | 2,159             | 408           | 795           | -                   | 3,956            |        | 397           | 725           | 55            | 496           | 657           |       | -             |           | 14,083       
|Legal and accounting                                              |         | 15              | -                 | -                 | -             | -             | -                   | 72               |        | -             | -             | -             | -             | -             |       | -             |           | 87           
|Office and administrative fees                                    |         | 4,242           | 43,207            | 9,420             | 2,314         | 4,684         | 102                 | 22,824           |        | -             | 283           | -             | 82            | 141           |       | -             |           | 87,299       
|Rent                                                              |         | 19,281          | 98,256            | 8,182             | 4,748         | 8,521         | -                   | 42,380           |        | 752           | 4,528         | 752           | 1,879         | 5,660         |       | -             |           | 194,939      
|Site costs                                                        |         | 1,878           | 20,602            | 22,967            | 1,661         | 3,070         | 142                 | 13,874           |        | 85            | 5,346         | 241           | 7,730         | 2,811         |       | -             |           | 80,407       
|Travel                                                            |         | 2,271           | 58,225            | 20,250            | 5,126         | 5,979         | 68                  | 11,665           |        | -             | 2,482         | 194           | 191           | 3,644         |       | -             |           | 110,095      
|Advances from optionee                                            |         | -               | (1,540,768)       | (710,776)         | (82,826)      | (29,373)      | (33,754)            | -                |        | -             | -             | -             | -             | -             |       | -             |           | (2,397,497)  
|                                                                  |         | $     80,446    | $   155,850       | $   (15,095)      | $  45,868     | $  96,514     | $ (27,908)          | $    515,103     |        | $  81,264     | $ 121,782     | $   12,909    | $   30,637    | $   75,464    |       | $   (5,212)   |           | $1,167,622   
|Cumulative mineral exploration expenses since acquisition         |         |                 |                   |                   |               |               |                     |                  |        |               |               |               |               |               |       |               |           |              
|Assaying                                                          |         | $             - | $               - | $               - | $           - | $           - | $           -       | $              - |        | $     3,292   | $     3,569   | $           - | $           - | $     1,255   |       | $           - |           | $       8,116
|Concession fees and taxes                                         |         | 67,668          | 94,912            | 129,138           | 22,863        | 30,287        | -                   | 52,903           |        | 78,503        | 81,215        | 7,990         | 4,506         | 21,752        |       | 4             |           | 591,741      
|Depreciation                                                      |         | 2,064           | -                 | -                 | 1,041         | 2,028         | -                   | 10,088           |        | -             | -             | -             | -             | -             |       | -             |           | 15,221       
|Geological salaries and consulting                                | 810,010 | 3,572,433       | 1,134,973         | 112,677           | 122,315       | 5,534         | 496,924             |                  | 65,963 | 157,526       | 75,875        | 29,539        | 203,318       |               | 7,064 |               | 6,794,151
|Geology work                                                      |         | -               | -                 | -                 | -             | -             | -                   | -                |        | 52,790        | 97,813        | 55,733        | 13,007        | 192,140       |       | 193,998       |           | 605,481      
|Insurance                                                         |         | 810             | 5,795             | 2,281             | 408           | 795           | -                   | 3,956            |        | 1,835         | 4,310         | 1,986         | 1,158         | 6,176         |       | -             |           | 29,510       
|Legal and accounting                                              |         | 15              | 296               | -                 | -             | -             | -                   | 72               |        | -             | -             | -             | -             | -             |       | -             |           | 383          
|Office and administrative fees                                    |         | 14,112          | 103,424           | 17,003            | 2,852         | 5,607         | 102                 | 24,868           |        | 493           | 4,958         | 3,266         | 2,319         | 7,421         |       | 5,255         |           | 191,680      
|Rent                                                              |         | 26,538          | 178,179           | 11,702            | 4,748         | 8,521         | -                   | 42,380           |        | 2,199         | 12,943        | 8,546         | 3,772         | 21,304        |       | -             |           | 320,832      
|Site costs                                                        |         | 24,045          | 72,468            | 39,301            | 1,817         | 4,274         | 142                 | 15,031           |        | 27,206        | 123,808       | 10,154        | 36,624        | 28,748        |       | -             |           | 383,618      
|Travel                                                            |         | 31,837          | 150,793           | 40,062            | 5,126         | 8,822         | 68                  | 17,905           |        | -             | 2,482         | 2,413         | 191           | 3,644         |       | -             |           | 263,343      
|Advances from optionee                                            |         | -               | (4,293,842)       | (1,260,073)       | (82,826)      | (29,373)      | (33,754)            | -                |        | -             | -             | -             | -             | -             |       | -             |           | (5,699,868)  
|                                                                  |         | $   977,099     | $ (115,542)       | $   114,387       | $  68,706     | $153,276      | $ (27,908)          | $    664,127     |        | $232,281      | $ 488,624     | $ 165,963     | $   91,116    | $ 485,758     |       | $ 206,321     |           | $3,504,208   





93



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5.

EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES(Continued)



Portugal

The Company, through its 100% holding in MAEPA, holds seven 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

·

Alvito

·

Marateca

·

Sines

·

Santa Margarida do Sado

·

Mertola



Licenses have varying work commitments, as approved by the government of Portugal, and all licenses carry a 3% Net Smelter Return (NSR), payable to the government of Portugal.



Alvalade:



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. 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 whereby the 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 (spent by February 2014).  On February 25, 2014, the two parties signed an amended Joint Venture agreement. Subsequent to year end, on January 27, 2015, the two parties signed a second amended Joint Venture agreement, which allows for more interim funding by Antofagasta, an expanded time frame in which to get a feasibility study decision, and a means for the Company to be carried to production, if there is a production decision to be made for the project. The amended agreement carries the following terms (in summary):



·

After due diligence, exploration funding of US$300,000 (completed).

·

Antofagasta must spend US$4 million on exploration to earn-in to 51% of the joint venture (JV) (Option 1 completed).

·

To earn a further 9% of the JV (for an aggregate total of 60%), Antofagasta must fund US$2 million in exploration by December 31, 2015, for a total of US$6,300,000 (Option 2 completed).

·

To earn a further 2.5% of the JV (for an aggregate total of 62.5%), Antofagasta must fund US$1.75 million by December 31, 2015 (Option 3 Year 1).

·

To earn a further 2.5% of the JV (for an aggregate total of 65%), Antofagasta must fund US$1.75 million by December 31, 2016 (Option 3 Year 2).

·

To earn a further 2.5% of the JV (for an aggregate total of 67.5%), Antofagasta must fund US$1.75 million by December 31, 2017 (Option 4 Year 1).

·

To earn a further 2.5% of the JV (for an aggregate total of 70%), Antofagasta must fund US$1.75 million by December 31, 2018 (Option 4 Year 2).

·

To earn a further 5% of the JV (for an aggregate total of 75%), Antofagasta must fund US$25 million in exploration by December 31, 2022 with an option to partially earn in 1% for every US$5 million spent (Option 5).



94



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5.

EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES(Continued)



Portugal(Continued)

Alvalade:(Continued)



·

If Option 5 expenditures are not sufficient to fund a Feasibility Study, Antofagasta will fund 100% of additional exploration but will be reimbursed for the Companys proportionate share (being 25% of Work Programs and Budgets) following the commencement of commercial production (Feasibility Study Phase).

·

To earn a further 5% of the JV (for an aggregate total of 80%), Antofagasta must have completed a Feasibility Study, funded 100% of all work programs during this phase and make a Development Decision within one year of the date of delivery of the Feasibility Study (Option 6).

·

Antofagasta will carry the Company through to production, and the Company will repay Antofagasta from proceeds, dividends, and sales generated by the actual production from any mine within the project area.



As of December 31, 2014, Antofagasta had forwarded a total of $6,527,251 (US$6,306,676) for the Alvalade property, including the US$300,000 for the initial study of the project. The Company spent an additional amount of $45,942 (US$39,995) in December 2014 which was subsequently reimbursed by Antofagasta.  In addition, Antofagasta paid directly to its own consultants seconded to the project an amount of US$109,700 which contributes further to Antofagastas funding to the project.



Covas:



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 (spent) 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 (spent) by March 20, 2014



On May 7, 2014, the Company and Blackheath signed an amended Joint Venture agreement. The amended agreement carries the following terms (in summary):



·

To earn 51% of the joint venture (“JV”), Blackheath must spend €300,000 on exploration by March 20, 2013 (completed).

·

To earn a further 19% of the JV (for an aggregate total of 70%), Blackheath must fund €700,000 on exploration by March 20, 2014 (completed).

·

To earn a further 5% of the JV (for an aggregate total of 75%), Blackheath must fund €320,000 on exploration by March 20, 2015 (completed).

·

To earn a further 5% of the JV (for an aggregate total of 80%), Blackheath must fund €498,000 on exploration by March 20, 2016.

·

To earn a further 5% of the JV (for an aggregate total of 85%), Blackheath must fund €833,000 on exploration by March 20, 2017.



As of December 31, 2014, Blackheath had forwarded a total $1,919,234 (€1,405,512) for the Covas property. The Company spent an additional amount of $110,208 (€78,484) in December 2014 which was subsequently reimbursed by Blackheath.



95



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5.

EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES(Continued)



Portugal(Continued)

Alvito:



On November 20, 2013, the Company received $150,000 in funding from Callinan Royalties Corporation (Callinan) to fund exploration at the Alvito license to better attract potential joint venture partners in exchange for a 1.5% NSR royalty.  The project is designated as an Alliance Property under the Exploration Alliance Agreement between the Company and Callinan (see Callinan Generative below).



As of December 31, 2014, Callinan had forwarded a total $150,000 (€103,609) for the Alvito property.  Subsequently, Callinan terminated the Agreement and retains the 1.5% BSR royalty.



On October 22, 2014, the Company and an optionee signed an exclusivity agreement (the “Agreement”) which calls for the optionee to fund various work programs during a two-stage review period.  The optionee will fund for stage 1 work program of up to US$61,500 with the Company providing a technical report by January 20, 2015. Within 30 days of receipt of the report, the optionee can proceed to commercial negotiations toward a potential transaction; or fund the stage 2 work program; or terminate the Agreement.



As of December 31, 2014, the optionee had forwarded a total $23,656 (US$20,973) for the Alvito property. The Company spent an additional amount of $39,705 (US$34,565) in December 2014 which was subsequently reimbursed by the optionee. The Company held $696 (€495) on behalf of the optionee to be spent on the Alvito project, which is recorded as restricted cash. On February 5, 2015, the optionee terminated the Agreement.



Callinan Generative:



On October 3, 2013, the Company and Callinan signed a three-year Generative Exploration Alliance Agreement (the Agreement) which calls for Callinan to fund $150,000 of generative exploration in Portugal during the first year of the Agreement and, at Callinans option, to fund up to $100,000 in each of the two subsequent years.  In return for such funding, the Company will grant Callinan the option to receive a 0.5% NSR royalty on any new projects acquired as a result of the generative exploration work, or, if Callinan funds an additional $150,000 in further exploration on any of the new projects, an option to receive a 1.5% NSR royalty on such projects.  If the Company determines that further value can be generated for the new project after spending the additional $150,000, Callinan has the option to contribute subsequent funding with the Company on a joint 50/50 basis, with Callinans NSR and interest in the new project unchanged.



Callinan also has the option to fund additional exploration on the Companys existing mineral properties, if proposed by the Company, and would earn a 1.5% NSR royalty in return for funding $150,000 in exploration on those projects (the Alliance Property).



As of December 31, 2014, Callinan had forwarded a total $150,000 (€106,114) for the Callinan Generative exploration project. The Company held $1,342 on behalf of Callinan Generative exploration project to be spent on the generative exploration project, which is recorded as restricted cash.



Subsequently, Callinan terminated the Agreement.



96



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5.

EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES(Continued)



Portugal(Continued)

Arga:



On May 10, 2013, the Company signed an agreement to option out the Arga Tungsten-Gold Project to Blackheath. Under the terms of the agreement, Blackheath had the option to earn a 51% interest in the project by spending €200,000 in exploration on the project before March 23, 2015, of which €60,000 (spent) was a firm commitment and must be spent by March 23, 2014. Blackheath could then earn an additional 19% by spending an additional €800,000 by March 23, 2017.  Blackheath could 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 23, 2020.



On May 7, 2014, Blackheath terminated the agreement with the Company on the Arga property and the Company dropped the property.



Kosovo



The Company, through its 100% holding in Innomatik, holds three exploration licenses in Kosovo:



·

Slivovo

·

Glavej (dropped subsequent to December 31, 2014)

·

Kamenica  (dropped subsequent to December 31, 2014)



The Glavej and Kamenica licenses were held under Retention status, which means no work commitment is necessary for the duration of 2014.  The Slivovo license was issued during 2012.  The license carries a work commitment, and there is a 5% NSR payable to the government of Kosovo attached to the Slivovo license.



In August 2013, the Company purchased the remaining 7.5% interest in Innomatik Exploration Kosovo LLC (Innomatik) and allocated $143,155 to the Slivovo property. Refer to note 6 (b)(i).



Slivovo:



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 has the option to earn a 51% interest in the Slivovo property by spending €1,000,000 in exploration on the project by April 10, 2015, of which €360,000 is a firm commitment to be spent by October 10, 2014.  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.



As of December 31, 2014, Byrnecut had forwarded a total $1,216,923 (€835,000) for the Slivovo property. The Company held $297,267 on behalf of Byrnecut to be spent on the Slivovo property, which is recorded as restricted cash.



97



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







5.

EXPLORATION AND EVALUATION ASSETS AND MINERAL EXPLORATION EXPENSES(Continued)



Germany



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 on exploration to gain an 85% interest in the Oelsnitz Exploration License, which was issued to Beak on January 12, 2012.  There is no royalty attached to the license. Once the Company has earned into the project, the two companies will form a joint venture to explore for gold on the property. As of December 31, 2014, the Company had spent $217,167 (€169,015) on the Oelsnitz property. The Company has completed its 85% earn-in and is working with Beak to set up the joint-venture entity.



98



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







6.

CAPITAL AND RESERVES



(a)

Authorized:



At December 31, 2014, the authorized share capital was comprised of an unlimited number of common shares.  The common shares do not have a par value.  All issued shares are fully paid.



(b)

Share issuances:



i.

On August 20, 2013, a total of 450,000 common shares of the Company at a fair value of $47,250 were issued to the non-controlling interest owners (NCI owners) for purchasing the remaining 7.5% interest in Innomatik in Kosovo. The purchase of the 7.5% interest in Innomatik results in the Company owning 100% of Innomatik. The net purchase price of $143,155 was allocated to the Slivovo property in Innomatik (Note 5).



ii.

On September 24, 2013, the Company completed a non-brokered private placement issuing 6,000,000 units at a price of $0.10 per unit for gross proceeds of $600,000. 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 for a period of 36 months. The warrants were ascribed a value of $509,793.



A total of $14,880 cash finders fee was paid and 148,800 finders options were issued as part of the financing. In addition, another $24,103 was included in share issue costs.  Each finders option can be converted into a unit with the same term as the financing at a price of $0.10 for a period of 36 months. The finders options were ascribed a value of $13,319.  Insiders participated in the offering for a total of 1,570,000 units.



iii.

On October 15, 2013, the Company closed a strategic financing with Callinan issuing 3,500,000 units at a price of $0.10 per unit for gross proceeds of $350,000. Each unit consists of one common share and one non-transferable common share purchase warrant. Each warrant entitles the holder to purchase one additional common share at a price of $0.15 for a period of 36 months. The warrants were ascribed a value of $297,360.



A total of $2,605 was paid as share issue costs.



iv.

During the year ended December 31, 2014, the Company issued common shares pursuant to the exercise of 150,000 stock options for cash proceeds of $15,000 and the exercise of 946,666 warrants for cash proceeds of $142,000.



v.

On August 22, 2014, the Company completed a non-brokered private placement issuing 4,400,000 units at a price of $0.25 per unit for gross proceeds of $1,100,000. 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 $0.40 for a period of 36 months. The warrants were ascribed a value of $487,629.



A total of $27,250 cash finders fee was paid and 152,600 finders options were issued as part of the financing. In addition, another $40,021 was included in share issue costs.  Each finders option can be converted into a unit with the same term as the financing at a price of $0.25 for a period of 36 months. The finders options were ascribed a value of $34,534.  Insiders participated in the offering for a total of 735,000 units.



vi.

On December 17, 2014, a total of 515,560 common shares of the Company at a fair value of $128,890 were issued to make the payment of Glavej and Kamenica licenses. The agreed-upon payment equivalent to €50,000 in cash or shares per license.





99



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







6.

CAPITAL AND RESERVES (Continued)



(c)

Escrow shares:



1,300,000 seed shares were placed in escrow in accordance with the escrow agreement dated July 28, 2008. 10% of the escrowed common shares were released on July 13, 2010, upon the completion of the Qualifying Transaction. As at December 31, 2014, there were no common shares of the Company held in escrow. The final 195,000 escrow shares were released on July 13, 2013.



(d)

Share Purchase Option Compensation Plan:



The Company has established a stock option plan whereby the Company may grant options to directors, officers, employees and consultants of up to 10% of the common shares outstanding at the time of grant. The exercise price, term and vesting period of each option are determined by the board of directors within regulatory guidelines.



Stock option transactions and the number of stock options for the year ended December 31, 2014 are summarized as follows:



|                                |          |              |         |           |           |             
|------------------------------- | -------- | ------------ | ------- | --------- | --------- | ------------
|                                | Exercise | December 31, |         |           | Expired/  | December 31,
|Expiry date                     | price    | 2013         | Granted | Exercised | cancelled | 2014        
|July 8, 2015                    | $0.35    | 820,000      | -       | -         | (50,000)  | 770,000     
|July 15, 2015                   | $0.35    | 10,000       | -       | -         | -         | 10,000      
|January 27, 2017                | $0.30    | 100,000      | -       | -         | -         | 100,000     
|April 10, 2017                  | $0.30    | 775,000      | -       | -         | (20,000)  | 755,000     
|October 16, 2018                | $0.10    | 1,550,000    | -       | (150,000) | -         | 1,400,000   
|March 3, 2019                   | $0.165   |              | 200,000 | -         | -         | 200,000     
|Options outstanding             |          | 3,255,000    | 200,000 | (150,000) | (70,000)  | 3,235,000   
|Options exercisable             |          | 3,255,000    | 200,000 | (150,000) | (70,000)  | 3,235,000   
|Weighted average exercise price |          | $0.22        | $0.165  | $0.10     | $0.34     | $0.22       



As of December 31, 2014, the weighted average contractual remaining life is 2.62 years (December 31, 2013  3.54 years).



Stock options transactions and the number of stock options for the year ended December 31, 2013 are summarized as follows:



|                                |          |              |           |           |           |             
|------------------------------- | -------- | ------------ | --------- | --------- | --------- | ------------
|                                | Exercise | December 31, |           |           | Expired/  | December 31,
|Expiry date                     | price    | 2012         | Granted   | Exercised | cancelled | 2013        
|August 28, 2013                 | $0.20    | 220,000      | -         | -         | (220,000) | -           
|July 8, 2015**                  | $0.35    | 870,000      | -         | -         | (50,000)  | 820,000     
|July 15, 2015                   | $0.35    | 10,000       | -         | -         | -         | 10,000      
|January 27, 2017                | $0.30    | 100,000      | -         | -         | -         | 100,000     
|April 10, 2017**                | $0.30    | 800,000      | -         | -         | (25,000)  | 775,000     
|October 16, 2018*               | $0.10    | -            | 1,550,000 | -         | -         | 1,550,000   
|Options outstanding             |          | 2,000,000    | 1,550,000 | -         | (295,000) | 3,255,000   
|Options exercisable             |          | 2,000,000    | 1,550,000 | -         | (295,000) | 3,255,000   
|Weighted average exercise price |          | $0.31        | $0.10     | $Nil      | 0.23      | $0.22       



* Subsequent to December 31, 2013, 150,000 options were exercised at the price of $0.10.

** Subsequent to December 31, 2013, 70,000 options expired.



100



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







6.

CAPITAL AND RESERVES (Continued)



(d)

Share Purchase Option Compensation Plan: (Continued)



The weighted average assumptions used to estimate the fair value of options for the years ended December 31, 2014 and 2013 were:



|                        |         |        
|----------------------- | ------- | -------
|                        | 2014    | 2013   
|Risk-free interest rate | 1.60%   | 1.90%  
|Expected life           | 5 years | 5 years
|Expected volatility     | 138.42% | 132.75%
|Expected dividend yield | Nil     | Nil    



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



(e)

Finders Options:



The continuity of finders options for the year ended December 31, 2014 is as follows:



|                                |          |              |         |           |           |             
|------------------------------- | -------- | ------------ | ------- | --------- | --------- | ------------
|                                | Exercise | December 31, |         |           |           | December 31,
|Expiry date                     | price    | 2013         | Issued  | Exercised | Expired   | 2014        
|March 28, 2014                  | $0.30    | 183,913      | -       | -         | (183,913) | -           
|October 4, 2015(1)              | $0.15    | 545,500      | -       | -         | -         | 545,500     
|September 24, 2016(2)           | $0.10    | 148,800      | -       | -         | -         | 148,800     
|August 22, 2017(3)              | $0.25    | -            | 152,600 | -         | -         | 152,600     
|Outstanding                     |          | 878,213      | 152,600 | -         | (183,913) | 846,900     
|Weighted average exercise price |          | $0.17        | $0.25   | $Nil      | $0.30     | $0.16       



(1)

The finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until October 4, 2015 at $0.25.

(2)

The finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until September 24, 2016 at $0.15.

(3)

The finders options are exercisable into units, with each unit consisting of one common share and one warrant exercisable until August 22, 2017 at $0.40.



As of December 31, 2014, the weighted average contractual remaining life is 1.27 years (December 31, 2013  1.60 years).



The continuity of finders options for the year ended December 31, 2013 is as follows:



|                                |          |              |         |           |         |              |  |  |  |  |  |  | 
|------------------------------- | -------- | ------------ | ------- | --------- | ------- | ------------ |  |  |  |  |  |  | 
|                                | Exercise | December 31, |         | Exercised | Expired | December 31,
|Expiry date                     | price    | 2012         | Issued  |           |         | 2013        
|March 28, 2014*                 | $0.30    | 183,913      | -       | -         | -       | 183,913     
|October 4, 2015                 | $0.15    | 545,500      | -       | -         | -       | 545,500     
|September 24, 2016              | $0.10    | -            | 148,800 | -         | -       | 148,800     
|Outstanding                     |          | 729,413      | 148,800 | -         | -       | 878,213     
|Weighted average exercise price |          | $0.19        | $0.10   | $Nil      | $Nil    | $0.17       



*Subsequent to December 31, 2013, 183,913 finders options expired.



101



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







6.

CAPITAL AND RESERVES (Continued)



(e)

Finders Options: (Continued)



The weighted average assumptions used to estimate the fair value of finders options for the years ended December 31, 2014 and 2013 were:

|                        |         |        
|----------------------- | ------- | -------
|                        | 2014    | 2013   
|Risk-free interest rate | 1.11%   | 1.42%  
|Expected life           | 3 years | 3 years
|Expected volatility     | 158.03% | 148.06%
|Expected dividend yield | Nil     | Nil    



(f)

Warrants:



The continuity of warrants for the year ended December 31, 2014 is as follows:



|                                |          |              |           |           |         |             
|------------------------------- | -------- | ------------ | --------- | --------- | ------- | ------------
|                                | Exercise | December 31, |           |           |         | December 31,
|Expiry date                     | price    | 2013         | Issued    | Exercised | Expired | 2014        
|October 4, 2015                 | $0.25    | 7,990,000    | -         | -         | -       | 7,990,000   
|September 24, 2016              | $0.15    | 6,000,000    | -         | (280,000) | -       | 5,720,000   
|October 15, 2016                | $0.15    | 3,500,000    | -         | (666,666) | -       | 2,833,334   
|March 28, 2017*                 | $0.40    | 4,000,000    | -         | -         | -       | 4,000,000   
|August 22, 2017                 | $0.40    | -            | 4,400,000 | -         | -       | 4,400,000   
|Outstanding                     |          | 21,490,000   | 4,400,000 | (946,666) | -       | 24,943,334  
|Weighted average exercise price |          | $0.23        | $0.40     | $0.15     | $Nil    | $0.27       



* On November 21, 2014, the Company extended the expiry date of 4,000,000 outstanding common share purchase warrants to March 28, 2017. The warrants were issued in March 2012, by way of private placement. Each warrant entitles the holder to acquire one common share of the Company at a price of $0.40. The fair value of these extended warrants using the Black-Scholes pricing model assumes an average risk free rate of 1.09%, no dividend yield, average expected life of 27 months and an expected price volatility of 160.63%. As a result, $95,931 was reallocated from fair value of warrants to share capital.



As of December 31, 2014, the weighted average contractual life is 1.67 years (December 31, 2013  1.92 years).



The continuity of warrants for the year ended December 31, 2013 is as follows:



|                                |          |              |           |           |             |             
|------------------------------- | -------- | ------------ | --------- | --------- | ----------- | ------------
|                                | Exercise | December 31, |           |           |             | December 31,
|Expiry date                     | price    | 2012         | Issued    | Exercised | Expired     | 2013        
|January 8, 2013                 | $0.50    | 5,714,284    | -         | -         | (5,714,284) | -           
|April 27, 2013                  | $0.55    | 625,000      | -         | -         | (625,000)   | -           
|March 28, 2014*                 | $0.50    | 4,000,000    | -         | -         | -           | 4,000,000   
|October 4, 2015                 | $0.25    | 7,990,000    | -         | -         | -           | 7,990,000   
|September 24, 2016**            | $0.15    | -            | 6,000,000 | -         | -           | 6,000,000   
|October 15, 2016                | $0.15    | -            | 3,500,000 | -         | -           | 3,500,000   
|Outstanding                     |          | 18,329,284   | 9,500,000 | -         | (6,339,284) | 21,490,000  
|Weighted average exercise price |          | $0.39        | $0.15     | $Nil      | $0.50       | $0.25       



* Subsequent to December 31, 2013, the Company extended the expiry date of 4,000,000 outstanding common share purchase warrants to December 15, 2014.

** Subsequent to December 31, 2013, 280,000 warrants were exercised at the price of $0.15.



102



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







6.

CAPITAL AND RESERVES (Continued)



(f)

Warrants: (Continued)



The weighted average assumptions used to estimate the fair value of warrants for the years ended December 31, 2014 and 2013 were:



|                        |           |        
|----------------------- | --------- | -------
|                        | 2014      | 2013   
|Risk-free interest rate | 1.10%     | 1.42%  
|Expected life           | 2.04 year | 3 years
|Expected volatility     | 166.35%   | 148.06%
|Expected dividend yield | Nil       | Nil    





7.

RELATED PARTY TRANSACTIONS AND BALANCES



The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:



For the year ended December 31, 2014

|                                               |                              |                          |                          |                      |                |                      |         
|---------------------------------------------- | ---------------------------- | ------------------------ | ------------------------ | -------------------- | -------------- | -------------------- | --------
|                                               | Short-term
employee benefits | Post-employment
benefits | Other
long-term
benefits | Termination
benefits | Other expenses | Share-based
payments | Total   
|Paul W. Kuhn
Chief Executive Officer, Director | $242,106                     | $Nil                     | $Nil                     | $Nil                 | $67,487        | $Nil                 | $309,593
|Winnie Wong,
Chief Financial Officer           | $Nil                         | $Nil                     | $Nil                     | $Nil                 | $Nil           | $Nil                 | $Nil    



For the year ended December 31, 2013

|                                               |                              |                          |                          |                      |                |                      |         
|---------------------------------------------- | ---------------------------- | ------------------------ | ------------------------ | -------------------- | -------------- | -------------------- | --------
|                                               | Short-term
employee benefits | Post-employment
benefits | Other
long-term
benefits | Termination
benefits | Other expenses | Share-based
payments | Total   
|Paul W. Kuhn
Chief Executive Officer, Director | $224,717                     | $Nil                     | $Nil                     | $Nil                 | $62,933        | $21,716              | $309,366
|Winnie Wong,
Chief Financial Officer           | $Nil                         | $Nil                     | $Nil                     | $Nil                 | $Nil           | $21,716              | $21,716 





103



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







7.

RELATED PARTY TRANSACTIONS AND BALANCES (Continued)



Related party liabilities



|                                     |                                                          |                     |                   |               |                
|------------------------------------ | -------------------------------------------------------- | ------------------- | ----------------- | ------------- | ---------------
|                                     |                                                          | Years ended         |                   |              
|                                     | Services                                                 | December 31,   2014 | December 31, 2013 | As at         | As at          
|December 31, 2014                    | December 31, 2013                                       
|Amounts due to:                      |                                                          |                     |                   |               |                
|Pacific Opportunity Capital Ltd. (a) | Rent, management and accounting services                 | $      253,350      | $     199,600     | $     27,562  | $         7,613
|Paul W. Kuhn                         | Consulting and housing allowance and share-based payment | $      309,593      | $      309,366    | $       5,105 | $         8,854
|Paul L. Nelles (b)                   | Salaries and share-based payment                         | $        74,351     | $        36,374   | $Nil          | $Nil           
|Michael Diehl (b)                    | Salaries and share-based payment                         | $      143,088      | $        39,110   | $Nil          | $Nil           
|Mineralia (c)                        | Consulting                                               | $      258,770      | $      269,915    | 20,634        | $Nil           
|TOTAL:                               |                                                          | $   1,039,152       | $      854,365    | $     53,301  | $       16,467 



(d)

Pacific Opportunity Capital Ltd., a company controlled by a director of the Company.

(e)

Paul L. Nelles and Michael Diehl were director and exploration manager of Innomatik respectively. 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.

(f)

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



8.

LOSS PER SHARE



Basic and diluted loss per share



The calculation of basic and diluted loss per share for the year ended December 31, 2014 was based on the loss attributable to common shareholders of $1,250,956 (December 31, 2013  $1,882,598) and a weighted average number of common shares outstanding of 40,494,835 (December 31, 2013  31,070,283).



Diluted loss per share did not include the effect of 3,235,000 share purchase options, 846,900 finders options and 24,943,334 warrants for the year ended December 31, 2014 (December 31, 2013  3,255,000 share purchase options, 878,213 finders options and 21,490,000 warrants) as they are anti-dilutive.



104



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







9.

FINANCIAL INSTRUMENTS



The fair values of the Companys cash and cash equivalents, receivables, due from optionees, accounts payables and accrued liabilities, and due to related parties approximate their carrying values because of the short-term nature of these instruments.



The Companys financial instruments are exposed to certain financial risks, including credit risk, liquidity risk, interest risk and commodity price risk.



(a)

Credit risk



The Companys cash and cash equivalents are held in financial institutions in Canada, Portugal, Kosovo and Barbados.  The Company does not have any asset-backed commercial paper in its cash and cash equivalents



(b)

Liquidity risk



Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure.



As at December 31, 2014, the Company had cash of $761,932 (December 31, 2013 - $439,154) and due from optionees of $195,855 (December 31, 2013 - $Nil) to settle current liabilities, net of funds held for optionees, of $810,231 (December 31, 2013 - $407,667).



Accounts payable and accrued liabilities are due within the current operating period.



(c)

Interest rate risk



Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.  The risk that the Company will realize a loss as a result of a decline in the fair value of cash and cash equivalents is limited because they are generally held to maturity.



(d)

Commodity price risk



The Company is exposed to price risk with respect to equity prices. Price risk as it relates to the Company is defined as the potential adverse impact on the Companys ability to finance due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.



(e)

Currency risk



The Companys property interests in Portugal 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.



105



---

AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







9.

FINANCIAL INSTRUMENTS (Continued)



IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:



Level 1  quoted prices (unadjusted) in active markets for identical assets or liabilities;



Level 2  inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and



Level 3  inputs for the asset or liability that are not based on observable market data (unobservable inputs).



The following table sets forth the Companys financial assets measured at fair value by level within the fair value hierarchy as at December 31, 2014 and 2013.



|                        |   |           |   |         |   |         |   |          
|----------------------- | - | --------- | - | ------- | - | ------- | - | ---------
|As at December 31, 2014 |   | Level 1   |   | Level 2 |   | Level 3 |   | Total    
|Assets:                 |   |           |   |         |   |         |   |          
|Cash                    | $ | 761,932   | $ | -       | $ | -       | $ | 761,932  
|Restricted cash         |   | 299,305   |   | -       |   | -       |   | 299,305  
|                        | $ | 1,061,237 | $ | -       | $ | -       | $ | 1,061,237



|                        |   |           |   |         |   |         |   |          
|----------------------- | - | --------- | - | ------- | - | ------- | - | ---------
|As at December 31, 2013 |   | Level 1   |   | Level 2 |   | Level 3 |   | Total    
|Assets:                 |   |           |   |         |   |         |   |          
|Cash                    | $ | 439,154   | $ | -       | $ | -       | $ | 439,154  
|Restricted cash         |   | 640,504   |   | -       |   | -       |   | 640,504  
|                        | $ | 1,079,658 | $ | -       | $ | -       | $ | 1,079,658





10.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS



The non-cash transactions during the year ended December 31, 2014 were as follows:



·

$14,458 (2013 - $15,221) in mineral exploration expenses was related to depreciation;

·

$128,890 (2013 - $nil) in mineral exploration expenses was the fair value of 515,560 common shares issued to make the payment of property license fees;

·

$93,461 (2013 - $nil) was reclassified from equity reserves to share capital pursuant to the exercise of warrants and stock options;

·

$95,931 (2013 - $nil) was reclassified from equity reserves to share capital pursuant to the revaluation of extended warrants.





106



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AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







11.

MANAGEMENT OF CAPITAL RISK



The Company manages its cash and cash equivalents, common shares, warrants, finders options and share purchase options as capital (see Note 6).  The Companys objectives when managing capital are to safeguard its ability to continue as a going concern and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.



The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.  To maintain or adjust the capital structure, the Company may attempt to issue new shares, acquire or dispose of assets or adjust the amount of cash and cash equivalents held.



In order to maximize ongoing operating efforts, the Company does not pay out dividends.  The Companys investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with maturities of 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.



The Company expects its current capital resources will be sufficient to carry out its exploration and operations in the near term.





12.

INCOME TAX

A reconciliation of income taxes at statutory rates is as follows:



|                                           |  |                         |  |                        
|------------------------------------------ |  | ----------------------- |  | -----------------------
|                                           |  | 2014                    |  | 2013                   
|                                           |  |                         |  |                        
|Net loss                                   |  | $     (1,250,956)       |  | $     (1,894,598)      
|                                           |  |                         |  |                        
|Expected income tax recovery               |  | $        (325,249)      |  | $        (487,859)     
|Effect of foreign tax rate                 |  | 266,345                 |  | 85,577                 
|Non-deductible items                       |  | 7,727                   |  | 34,670                 
|Deductible items                           |  | (26,721)                |  | (25,805)               
|Unrecognized benefit of non-capital losses |  | 77,898                  |  | 393,417                
|                                           |  |                         |  |                        
|                                           |  | $                     - |  | $                     -



The significant components of the Companys deferred income tax assets are as follows:



|                               |  |                         |  |                        
|------------------------------ |  | ----------------------- |  | -----------------------
|                               |  | 2014                    |  | 2013                   
|                               |  |                         |  |                        
|Deferred income tax assets     |  |                         |  |                        
|Non-capital loss carryforwards |  | $          690,349      |  | $          493,625     
|Share issue costs              |  | 36,648                  |  | 45,879                 
|                               |  | 727,087                 |  | 539,504                
|Valuation allowance            |  | (727,087)               |  | (539,504)              
|                               |  |                         |  |                        
|Net deferred income tax assets |  | $                     - |  | $                     -





107



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AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







12.

INCOME TAX(Continued)



The Company has available for deduction against future taxable income non-capital losses of approximately $2,679,500 in Canada. These losses, if not utilized, will expire through to 2034.  Tax benefits which may arise as a result of these non-capital losses have not been recognized in these consolidated financial statements and have been offset by a valuation allowance.  The following table shows the non-capital losses in Canada:





|               |                |                            
|-------------- | -------------- | ---------------------------
|Year of Origin | Year of Expiry | Non-capital losses/(Income)
|               |                |                            
|2008           | 2028           | $                  10,500  
|2009           | 2029           | 45,000                     
|2010           | 2030           | 38,500                     
|2010           | 2030           | 325,000                    
|2011           | 2031           | 51,500                     
|2012           | 2032           | 798,000                    
|2013           | 2033           | 606,000                    
|2014           | 2034           | 781,000                    
|               |                | $           2,655,500      





13.

SEGMENTED FINANCIAL INFORMATION



The Company operates in one industry segment, being the acquisition and exploration of mineral properties. Geographic information is as follows:





|                             |                          |                          
|---------------------------- | ------------------------ | -------------------------
|                             | December 31, 2014        | December 31, 2013        
|Non-current assets           |                          |                          
|Portugal                     | $              1,386,250 | $               1,360,955
|Kosovo                       | 167,612                  | 144,990                  
|                             | $              1,553,862 | $               1,505,945
|                             |                          |                          
|                             | Years ended             
|                             | December 31, 2014        | December 31, 2013        
|Mineral exploration expenses |                          |                          
|Portugal                     | $              3,810,406 | $               3,248,275
|Kosovo                       | 933,396                  | 322,056                  
|Germany                      | 10,846                   | (5,212)                  
|                             | $              4,754,648 | $               3,565,119





14.

BANK GUARANTEES



As of December 31, 2014, the Company had a total of €99,500 ($139,678) (December 31, 2013: €149,500 ($219,092)) of cash pledged for its exploration licenses in Portugal.  The advances to the Portuguese regulatory authorities are refundable to the Company, subject to completion of the work obligations described in the exploration license applications.



108



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AVRUPA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

(Presented in Canadian Dollars)







15. EVENT AFTER THE REPORTING PERIOD



On April 15, 2015, the Company announced that Byrnecut completed Phase 2 funding and has earnedin to 51% of the Slivovo project.  Byrnecut also notified the Company that it will continue to fund the next phase of the Slivovo project to earn-in a total interest of 75%.









109



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Signature Page



Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.





Avrupa Minerals Ltd.

Registrant



|                      |                                    
|--------------------- | -----------------------------------
|Dated:    May 7, 2015 | Signed:    /s/  Winnie Wong      
|                      | Winnie Wong
Chief Financial Officer









110