TIDMEUR
RNS Number : 0818G
European Lithium Limited
13 March 2020
European Lithium Ltd
("European Lithium", "EUR" or "the Company")
Interim Financial Report
European Lithium is pleased to announce its audited interim
financial report for the 6 months ended 31 December 2019.
The full report can be found on the company website:
https://wcsecure.weblink.com.au/pdf/EUR/02086868.pdf
DIRECTORS' REPORT
Your Directors submit the Interim Financial Report of European
Lithium Limited (European Lithium or the Company) and its
controlled entities (together the Group) for the half-year ended 31
December 2019. In order to comply with the provisions of the
Corporations Act 2001, the Directors report as follows:
Review of Operations
Corporate
Placement
During the half year ended 31 December 2019, the Company issued
5.3m shares to raise cash proceeds of $477,000 (before expenses)
(Placement A).
Also, during the period, the Company issued 5.0m shares to raise
cash proceeds of $425,000 (before expenses) (Placement B).
Financing Facility - Magna
On 7 September 2018, the Company entered into a convertible note
agreement with MEF I, L.P. (Magna) of which A$2.5m (1,840,500
convertible notes) was drawn down on 7 September 2018.
On 13 September 2019, Magna agreed to extend the maturity date
of the convertible notes on issue from 7 September 2019 to 30
November 2019. In consideration for this extension, the Company
issued Magna 1,000,000 fully paid ordinary shares on 13 September
2019.
During the half year ended 31 December 2019, the Company
converted 253,260 notes and redeemed 434,782 notes (each with a
face value of US$1.10). As at 31 December 2019, Magna had nil
convertible notes remaining.
Financing Facility - Winance
On 31 July 2019, the Company entered into a convertible note
agreement with Winance Investment LLC (Winance) of which A$2.0m
(2,000 convertible notes) was drawn down on 20 September 2019.
During the half year ended 31 December 2019, the Company
converted 1,060 notes. As at 31 December 2019, Winance had 940
convertible notes outstanding.
Debt Facility
On 30 December 2019, the Company announced that it had agreed a
long-term debt facility of EUR 7,500,000 with a Swiss based
sophisticated investor introduced by Helvetican International AG
(Debt Facility).
The Debt Facility will allow the Company to continue with the
DFS at the Company's Wolfsberg Lithium Project in Austria and for
general working capital purposes.
Key terms and conditions of the Debt Facility are included in
the announcement released on 30 December 2019.
Capital Raisings and Movements
On 11 July 2019, the Company issued 2,000,000 fully paid
ordinary shares pursuant to Placement A. The Company also issued
983,548 fully paid ordinary shares to Magna upon the conversion
50,000 convertible notes.
On 31 July 2019, the Company issued 995,223 fully paid ordinary
shares issued to Magna upon the conversion of 50,000 convertible
notes.
On 16 August 2019, the Company issued 1,016,411 fully paid
ordinary shares issued to Magna upon the conversion of 50,000
convertible notes.
On 13 September 2019, the Company issued 1,000,000 fully paid
ordinary shares to Magna as consideration for the extension of
repayment date of the convertible notes.
On 25 September 2019, the Company issued 285,714 fully paid
ordinary shares to Winance upon the conversion of 20 convertible
notes.
On 30 September 2019, the Company issued 3,300,000 fully paid
ordinary shares pursuant to Placement A. THe Company also issued
1,999,999 fully paid ordinary shares to Winance upon the conversion
of 140 convertible notes.
On 7 October 2019, the Company issued 819,917 fully paid
ordinary shares to Magna upon the conversion 40,000 convertible
notes.
On 11 October 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 23 October 2019, the Company issued 1,428,570 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 30 October 2019, the Company issued 2,857,142 fully paid
ordinary shares to Winance upon the conversion of 200 convertible
notes.
On 5 November 2019, the Company issued 5,000,000 fully paid
ordinary shares pursuant to Placement B.
On 12 November 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 19 November 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 26 November 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 5 December 2019, the Company issued 853,289 fully paid
ordinary shares to Magna upon the conversion of 30,000 convertible
notes.
On 10 December 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
On 11 December 2019, the Company issued 17,500,000 unlisted
options to Directors and 8,440,000 options to participants in the
December 2017 and May 2017 placements and to various service
provider of the Company as approved at the Company's 2019 AGM. The
options are exercisable at 10c each on or before 30 June 2020.
On 13 December 2019, the Company issued 950,026 fully paid
ordinary shares to Magna upon the conversion of 33,260 convertible
notes.
On 17 December 2019, the Company issued 1,428,571 fully paid
ordinary shares to Winance upon the conversion of 100 convertible
notes.
Wolfsberg Lithium Project - Austria
Drilling
Phase 1 drilling covering the shallow holes with a depth of less
than 300m has been completed in Q3/2019. The drill core samples
have been assayed at ALS laboratory in Dublin, Ireland where
crushing, pulp and Li(2) O analysis was completed. The Company
expects the final assay results from phase 1 drilling in Q1/2020. A
short delay took place when some samples had to be resent to the
laboratory's facilities.
The five shallow drill holes of phase 1 with a maximum depth of
290.0 m were completed in Zone 1 during Q3/2019. All five drill
holes show multiple pegmatite intersections. Three drill holes
contain pegmatite intersections with a true thickness up to 2 m.
The phase 1 drillings confirm the suspected extension of pegmatite
veins at depth. For details on the Q3/2019 drilling results, we
refer to the company's Q3/2019 report, published on 31 October 2019
at the ASX and titled " 30 September 2019 Quarterly Report".
Application for drilling of the deep holes with more than 300m
of depth covering phase 2 in of the drilling program in Zone 1 has
been lodged in Q4/2019 to the mining authority. An official hearing
at the municipality involving compulsory public and private parties
during the approval process took place on 30th October and was
coordinated and moderated under the leadership of the mining
authority. The approval for the phase 2 drilling program is
expected to be issued in Q1/2020 when drilling will commence
shortly thereafter.
Definitive-Feasibility Study (DFS)
Results from phase 1 of the summer drilling program (shallow
holes <300m depth in Zone 1 have been assessed for eligibility
to convert the JORC resource from Inferred into Measured and
Indicated category and upgrade resources to 10.98mt. All holes have
been considered to be of sufficient quality to contribute to the
expected resource update. This is a successful outcome as expected
and convinces the company to move ahead with the envisaged deep
holes. Together with the deep holes from phase 2 will this form the
basis to convert the Measured and Indicated resources into JORC
reserves during the DFS mine planning and scheduling. The Zone 1
drilling programme to increase the Measured and Indicated Resource
allows the DFS to be undertaken at the envisaged higher mining rate
of max. 800,000tpa.
SRK Consulting (SRK) continued to work on the optimized mine
design and increased declaration of mineral reserves, based on the
PFS and current drilling program results.
During the 3(rd) and 4(th) quarter, Dorfner/Anzaplan carried out
significant metallurgical test work to assess and optimize the
process lines, flowsheets and layouts. This testing is to ensure a
high-quality final product (Lithium Hydroxide) is produced using
the most efficient and competitive metallurgical processes from the
beginning of the production cycle. All metallurgic test work took
place at the pilot plant for the Wolfsberg Project at
Dorfner/Anzaplan's testing facility in Hirschau, Germany and have
been completed in Q4/2019. The results will be published in a
timely manner during Q1/2020, based on the comprehensive and
detailed technical report.
DRA Global continued independently to assess and review the
metallurgical test work to complete their research studies in a
timely manner and attended to all work stages in Hirschau,
Germany.
Land Access
In Q4 2019 the company renewed 54 exploration and 11 mining
licenses. The decision of the mining authority is based on the
significant effort European Lithium has demonstrated to develop the
Wolfsberg Lithium Project. The exploration progress to increase the
resources and metallurgic test work to produce battery grade
lithium hydroxide in high level industrial purity have shown the
company's successful work to the mining authority. This is a
significant milestone to secure the company's rights to develop the
Wolfsberg Lithium Project through the DFS into production.
Environmental
No environmental work has been carried out in Q3 and
Q4/2019.
Monitoring of water flows and quality from the mine have
continued.
Hydrogeology
The Company continued during Q3 and Q4/2019 with hydrogeology
monitoring program on a weekly, monthly and quarterly time
frame:
-- Weekly monitoring includes measuring the water level at the surface and underground sites,
-- The monthly monitoring program includes sampling and
analyzing defined chemical and physical parameters,
-- The quarterly monitoring program includes water sampling and
analyzing water from previously defined field sites and analyses at
certified Austrian lab in Austria. The water samples are analyzed
according to the Austrian state requirements for drinking
water.
All hydrogeological data continues to be stored and secured into
the Company's database.
The preparation work by SRK, and the geological consultant, GEO
Unterweissacher, continues to ensure in-hole hydrogeological test
work has been completed appropriately and can continue in
future.
Data from the above activities is fed into a water measuring
database from which an annual report is abbreviated.
Marketing
The strategy for the Company has remained unchanged and focused
on the supply of lithium hydroxide to the nascent lithium battery
plants of Europe. The Company has continued discussions with a
number of industry players regarding future off-take contracts.
Good progress has already been made with potential off-take
partners.
Horizon 2020
As reported in Q1 2019, the company's 100% owned subsidiary ECM
Lithium AT GmbH (ECM) has lodged contribution papers to participate
in the European Union funded Horizon 2020 - GREENPEG programme. In
Q4 the company was approved to participate in the GREENPEG
programme. All requested and compulsory paperwork has been lodged
in Q4/2019 to Horizon 2020 administrators and approval is expected
in Q1/2020. This is another success showing the company's abilities
and legibility to contribute with EU-level support to the
sustainable supply of battery grade lithium, sourced and produced
in Europe.
During Q3 and Q4 2019 the company has continued to work
proactively in the already approved and funded Horizon 2020 LithRef
programme .
Events Subsequent to Reporting Date
On 6 January 2020, the Company issued 18,000,000 unlisted
options to Helvetican with an exercise price of $0.10c each that
can be exercised on or before 30 June 2020.
On 7 January 2020, the Company issued 20,000,000 unlisted
options to Helvetican with an exercise price of $0.10c each that
can be exercised on or before 30 June 2020.
On 20 January 2020, the Company entered into a short-term loan
agreement for $400k. Under the terms of the facility, interest of
$40k is payable at the repayment date of 20 February 2020 with
penalty interest applying for the late repayment of funds. Funds
were drawn down under the facility on 20 January 2020.
On 24 January 2020, the Company issued 8,333,333 fully paid
ordinary shares to Winance upon the conversion of 500 convertible
notes.
On 24 January 2020, the Company issued 500,000 unlisted options
to Winance with an exercise price of $0.10c each that can be
exercised on or before 30 June 2020.
On 5 February 2020, the Company announced that it had listed on
the ASX the options with an exercise price of $0.10 each that can
be exercise on or before 30 June 2020. Trading of these options is
under the ASX code EURO.
On 27 February 2020, the Company issued 7,333,333 fully paid
ordinary shares to Winance upon the conversion of 440 convertible
notes.
On 4 March 2020, Mr Stefan Muller resigned as a Non-Executive
Director of the Company. Following Mr Mullers resignation, Mr Tim
Turner was appointed as Non-Executive Director of the Company
effective 4 March 2020.
On 5 March 2020, the Company drew down $2m from the Winance
finance facility through the issue of 2,000 convertible notes.
No matters or circumstances have arisen since the end of the
half-year which significantly affected or may significantly affect
the operations of the Group, the results of those operations, or
the state of affairs in future financial years.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors,
HLB Mann Judd, to provide the Directors of the Company with an
Independence Declaration in relation to the review of the half-year
financial report. This Independence Declaration is set out on page
6 and forms part of this Directors' report for the half-year ended
31 December 2019.
This report is signed in accordance with a resolution of the
Board of Directors made pursuant to s.306(3) of the Corporations
Act 2001.
____________________________
Antony Sage
Non-Executive Chairman
13 March 2020
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEARED 31 DECEMBER 2019
Note For the six For the six
months ended months ended
31 December 31 December
2019 2018
$ $
--------------- -----------------
Continuing operations
Revenue and other income 3 3,365 23,817
Employee benefits expense 4 (96,000) (98,000)
Loss on fair value of financial assets
through profit or loss 6 - (81,000)
Depreciation and amortisation expense (2,473) (1,440)
Finance costs 4 (121,801) (27,715)
Transaction costs relating to the issue
of convertible note facility 7 (160,000) (100,000)
Difference between transaction price of
convertible note and fair value at initial
recognition 7 (363,883) (318,115)
Fair value loss on remeasurement of convertible
note 7 31,777 (46,754)
Impairment of deferred exploration and
evaluation expenditure 5 - (330)
Consulting fees (211,734) (327,212)
Travel expenses (155,589) (251,250)
Regulatory and compliance costs 4 (463,774) (584,492)
Share based payments 8 (364,490) (435,258)
Other expenses 4 (414,730) (21,589)
Loss before income tax (2,319,332) (2,269,338)
Income tax expense - -
--------------- -----------------
Loss after tax from continuing operations (2,319,332) (2,269,338)
--------------- -----------------
Other comprehensive income, net of income
tax
Items that may be reclassified to profit
or loss
Exchange differences on translation of
foreign operations (225,072) 529,387
Other comprehensive income for the period,
net of income tax (225,072) 529,387
Total comprehensive loss for the period (2,544,404) (1,739,951)
--------------- -----------------
Loss per share for the period
Basic loss per share (cents per share) 10 (0.39) (0.41)
Diluted loss per share (cents per share) 10 (0.39) (0.41)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Note 31 December 30 June 2019
2019 $
$
------------ -------------
ASSETS
Current Assets
Cash and cash equivalents 32,165 1,199,738
Trade and other receivables 443,792 309,918
Total Current Assets 475,957 1,509,656
------------ -------------
Non-Current Assets
Property, plant and equipment 6,500 7,030
Deferred exploration and evaluation
expenditure 5 34,892,153 33,004,593
Restricted cash and other deposits 31,140 31,517
Financial assets 6 128,000 128,000
------------ -------------
Total Non-Current Assets 35,057,793 33,171,140
------------ -------------
TOTAL ASSETS 35,533,750 34,680,796
------------ -------------
LIABILITIES
Current Liabilities
Trade and other payables 1,619,939 1,028,183
Convertible note 7 1,110,338 1,078,136
Total Current Liabilities 2,730,277 2,106,319
------------ -------------
TOTAL LIABILITIES 2,730,277 2,106,319
------------ -------------
NET ASSETS 32,803,473 32,574,477
============ =============
EQUITY
Issued capital 8 22,621,952 20,283,788
Reserves 9 7,111,600 6,901,436
Retained earnings 3,069,921 5,389,253
------------ -------------
TOTAL EQUITY 32,803,473 32,574,477
============ =============
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2019
Note 31 December 31 December
2019 2018
$ $
------------ ------------
Cash flows from operating activities
Payments to suppliers and employees (900,248) (1,478,111)
Payments for exploration (2,034,238) (1,149,251)
Finance costs (7,426) (27,715)
Interest received 3,365 23,817
VAT Refund (120,347) (6,752)
Net cash used in operating activities (3,058,894) (2,638,012)
Cash flows from investing activities
Proceeds from the sale of exploration
tenements - -
Payment for property, plant and equipment (1,992) (2,716)
Net cash used in investing activities (1,992) (2,716)
Cash flows from financing activities
Proceeds from capital raisings 902,000 -
Payment for share issue costs (35,051) -
Proceeds from convertible note facility 7 2,000,000 2,500,000
Transaction costs related convertible
note facility 7 (160,000) (75,000)
Repayment of convertible loan note
facility 7 (812,443) -
Net cash provided by financing activities 1,894,506 2,425,000
------------ ------------
Net decrease in cash and cash equivalents (1,166,380) (215,728)
Cash and cash equivalents at beginning
of year 1,199,738 3,258,892
Effects on exchange rate fluctuations
on cash held (1,193) 1,167
------------ ------------
Cash and cash equivalents at end
of year 32,165 3,044,331
============ ============
The above statements are to be read in conjunction with the
notes to the Financial Statements in the full report.
Going concern
The interim financial statements have been prepared on a going
concern basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Company incurred an operating loss after tax for the period
ended 31 December 2019 of $ 2,319,332 (31 December 2018: $
2,269,338 loss ), had cash and cash equivalents of $ 32,165 at 31
December 2019 (30 June 2019: $1,199,738), had a net working capital
deficit of $ 2,254,320 at 31 December 2019 (30 June 2019: $596,663
deficit) and a net cash outflow from operating activities amounting
to $ 3,058,894 (31 December 2018: $2,638,012) .
The Group's ability to continue as a going concern and to
continue to fund its planned expanded activities is dependent on
raising further capital and/or drawing down on the convertible note
facility and/or generating additional revenues from its operations
and/or reducing or deferring exploration expenditure or operational
costs.
The Directors believe the Group will continue as a going
concern, after consideration of the following factors:
-- The Group has successfully completed its pre-feasibility
study and work is underway on the Definitive-Feasibility Study
(DFS). The Company has agreed a long-term debt facility of EUR
7,500,000 with a Swiss based sophisticated investor introduced by
Helvetican International AG (Debt Facility) allowing access to
funds for the purposes of the DFS. The Company has yet to draw down
on the Debt Facility as outstanding security issues relating to the
loan require finalisation;
-- The Company has established the Winance convertible loan note
facility (refer note 7) allowing access to funds for the purposes
of working capital and project DFS; and
-- The Group is able to defer certain exploration-related
expenditures in order to retain a positive cash balance;
-- The Group is able to realise its financial assets if
required; and
-- The Group is in discussions with a number of entities
regarding future off-take contracts and is continuing efforts to
secure key customers in key markets and is confident of generating
additional sales revenue within the next 12 months.
However, should the fundraising above not be completed, or be
available on a sufficiently timely basis, there exists a material
uncertainty that may cast significant doubt as to where the Company
would continue as a going concern and therefore whether it will
realize its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the financial
report. Quarterly updates will be made with regards to this in
accordance with the NEX Exchange Growth Market Rules for
Issuers.
- END -
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014
For further information please contact:
European Lithium Ltd +61 861 819 792
Tony Sage info@europeanlithium.com
NEX Corporate Adviser +44 207 220 1666
James Joyce
James Sinclair-Ford
Tavistock (UK PR & IR Adviser)
+44 207 920 3150
Emily Fenton / Oliver Lamb +44 778 855 4035
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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