REG - Bradda Head Lithium - Audited Final Results for year ending 29 Feb 2024
27/06/2024 07:00
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RNS Number : 0499U Bradda Head Lithium Ltd 27 June 2024
27 June 2024
Bradda Head Lithium Ltd
("Bradda Head", "Bradda", or the "Company")
Audited Final Results for the financial year ending 29 February 2024
Bradda Head Lithium Ltd (AIM: BHL, TSXV:BHLI), the North America-focused
lithium development group, is pleased to announce its audited financial
results for the year ending 29 February 2024.
Financial and operational highlights
· Successful completion of the Basin drill programme in August
2023, which preceded an upgraded Mineral Resource Estimate ("MRE") for a total
Inferred Lithium Carbonate Equivalent ("LCE") content of 1.0Mt.
· Receipt of US$2.5 million royalty payment following MRE update.
· Conclusion of the Phase 3 drill programme at San Domingo
highlighting encouraging assay results, and expansion of project area with an
additional 8km(2) of new lode claims staked.
· Recorded net loss of US$ 1,503,858 (28 February 2023:
US$3,887,588)
· Cash and cash deposit balances at year end stand at US$ 1,664,662
(28 February 2023: US$ 7,746,519).
Ian Stalker, Chairman of Bradda Head, commented:
"It is with great pleasure that I share this report following the close of a
challenging but exciting year for the Company. As the following report
demonstrates, Bradda Head has maintained its clear focus to expand and develop
our resources, and has successfully delivered what we set out to do. The
drilling programme at Basin, completed in August 2023, significantly upgraded
our resource to 1.0Mt, triggering a royalty payment of US$2.5 million from the
LRC. We were also highly encouraged by the promising results from our San
Domingo drilling programme completed in December 2023, the second large-scale
drilling programme completed at this project in a year. Both of these
achievements speak to our determined and ongoing efforts to progress our
portfolio.
"In the coming year we intend to further replicate these successes. We are
currently evaluating the final results from our Basin drilling programme
completed in FY2023 and firmly believe these will deliver a further upgrade of
our existing MRE, unlocking a further royalty payment of US$3 million from the
LRC, facilitating further investment into our portfolio. Since year end, we
were pleased to have successfully reached a settlement agreement over the
fraudulent payment (notified 29 March 2022), recovering a portion of the
funds, in line with our expectations.
"At Bradda Head, we remain confident in our long-term vision to provide US
lithium for the US market. Despite a challenging year for the lithium market,
there is growing optimism that this is changing, driven by the demand for
electric vehicles combined with the precariousness of current supply chains.
Our assets are optimally located to capitalise on these developments, as the
US seeks to define a domestic source of lithium supply. We look forward to
continuing to meaningfully progress our portfolio, and seize the opportunity
presented to us by the strategic location of our assets."
Copies of the 2024 Audited Report and Financial Statements are being posted
to shareholders and will shortly be available from the Company's
website www.braddaheadltd.com (http://www.braddaheadltd.com/) .
The Company will post its Notice of Annual General Meeting ("AGM") to
Shareholders shortly. The AGM will be held at the Sanderson
Suite, Claremont Hotel, Loch Promenade, Douglas, Isle of Man IM1 2LX, with
the date to be confirmed.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
For further information please visit the Company's
website: www.braddaheadltd.com (http://www.braddaheadltd.com/) .
Contact:
Bradda Head Lithium Limited +44 (0) 1624 639 396
Ian Stalker, Executive Chairman
Denham Eke, Finance Director
Beaumont Cornish (Nomad) +44 (0) 2076 283 396
James Biddle / Roland Cornish
Panmure Gordon (Joint Broker) +44 (0) 2078 862 500
Hugh Rich
Shard Capital (Joint Broker) +44 (0) 2071 869 927
Damon Heath / Isabella Pierre
Red Cloud (North American Broker) +1 416 803 3562
Joe Fars
Tavistock (Financial PR) + 44 20 7920 3150
Nick Elwes / Josephine Clerkint braddahead@tavistock.co.uk
About Bradda Head Lithium Ltd.
Bradda Head Lithium Ltd. is a North America-focused lithium development
group. The Company currently has interests in a variety of projects, the most
advanced of which are in Central and Western Arizona: The Basin
Project (Basin East Project, and the Basin West Project) and the Wikieup
Project.
The Basin East Project has an Indicated Mineral Resource of 17 Mt at an
average grade of 940 ppm Li and 3.4% K for a total of 85 kt LCE and an
Inferred Mineral Resource of 210 Mt at an average grade of 900 ppm Li and
2.8% K (potassium) for a total of 1.09 Mt LCE. In the rest of the Basin
Project SRK has determined an Exploration Target of 250 to 830 Mt of material
grading between 750 to 900 ppm Li, which is equivalent to a range of between
1 to 4 Mt contained LCE. The Group intends to continue to develop its three
phase one projects in Arizona, whilst endeavouring to unlock value at its
other prospective pegmatite and brine assets in Arizona, Nevada,
and Pennsylvania. All of Bradda Head's licences are held on a 100% equity
basis and are in close proximity to the required infrastructure. Bradda Head
is quoted on the AIM of the London Stock Exchange with the ticker of BHL and
on the TSX Venture Exchange with a ticker of BHLI.
The Mineral Resource statement for the Basin Project was authored by Martin
Pittuck, CEng, MIMMM, FGS who works for SRK Consulting (UK) Ltd, an
independent mining consultancy. Mr. Pittuck has over 25 years' experience
undertaking and reviewing Mineral Resource estimates and has worked on lithium
clay estimates for over 5 years. Mr. Pittuck consents to the inclusion of the
technical information in this press release and context in which they appear.
Reference is made to the report entitled "Independent technical report on the
Basin and Wikieup Lithium clay projects, Arizona, USA" dated October 18, 2022
with an effective date of June 10, 2022 was prepared by Martin Pittuck, CEng,
MIMMM, FGS, and Kirsty Reynolds MSci, PhD, FGS and reviewed by Nick Fox MSc,
ACA, MIMMM. The Report is available for review on SEDARplus
(www.sedarplus.ca/landingpage (https://www.sedarplus.ca/landingpage/) ) and
the Company's website www.braddaheadltd.com (http://www.braddaheadltd.com/) .
Bradda Head is quoted on the AIM of the London Stock Exchange with the ticker
of BHL, and on the TSX Ventures exchange with a ticker of BHLI.
Forward-Looking Statements
Neither TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. This News Release
includes certain "forward-looking statements" which are not comprised of
historical facts. Forward-looking statements include estimates and statements
that describe the Company's future plans, objectives or goals, including words
to the effect that the Company or management expects a stated condition or
result to occur. Forward-looking statements may be identified by such terms as
"believes", "anticipates", "intends to", "expects", "estimates", "may",
"could", "would", "will", or "plan". Since forward-looking statements are
based on assumptions and address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Although these
statements are based on information currently available to the Company, the
Company provides no assurance that actual results will meet management's
expectations. Risks, uncertainties, and other factors involved with
forward-looking information could cause actual events, results, performance,
prospects, and opportunities to differ materially from those expressed or
implied by such forward-looking information. Forward looking information in
this news release includes, but is not limited to, following: The Company's
objectives, goals, or future plans. Factors that could cause actual results to
differ materially from such forward-looking information include, but are not
limited to: failure to identify mineral resources; failure to convert
estimated mineral resources to reserves; delays in obtaining or failures to
obtain required regulatory, governmental, environmental or other project
approvals; political risks; future operating and capital costs, timelines,
permit timelines, the market and future price of and demand for lithium, and
the ongoing ability to work cooperatively with stakeholders, including the
local levels of government; uncertainties relating to the availability and
costs of financing needed in the future; changes in equity markets, inflation,
changes in exchange rates, fluctuations in commodity prices; delays in the
development of projects, capital and operating costs varying significantly
from estimates; an inability to predict and counteract the effects of COVID-19
on the business of the Company, including but not limited to the effects of
COVID-19 on the price of commodities, capital market conditions, restriction
on labour and international travel and supply chains; and the other risks
involved in the mineral exploration and development industry, and those risks
set out in the Company's public documents filed on SEDARplus. Although the
Company believes that the assumptions and factors used in preparing the
forward-looking information in this news release are reasonable, undue
reliance should not be placed on such information, which only applies as of
the date of this news release, and no assurance can be given that such events
will occur in the disclosed time frames or at all. The Company disclaims any
intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, other than
as required by law.
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
Annual report and consolidated financial statements
For the year ended 29 February 2024
Chairman's Statement and Operational Review
It is my pleasure to present the Annual Report and the Audited Financial
Statements for Bradda Head Lithium Limited (the "Company" or "Bradda Head")
for the year ended 29 February 2024. The 2023/2024 year has been both exciting
and challenging in a tough Lithium Market space. However, as always it has
been an extremely busy period for the Company, focussing on our key lithium in
clay, pegmatite and oil brines projects.
As 2024 has unfolded, there is a growing optimism in the lithium pricing
environment that should positively impact on market related values. Bradda
Head is well positioned to take advantage of this rising tide within the
lithium exploration and development space with the work undertaken in the last
twelve months by our 'American' based team.
Operational Review
Arizona Sedimentary Hosted Lithium Projects
Basin Project
Our 2023 Basin drill programme finished during August 2023, with the drill
results being fed into an updated Mineral Resource Estimate, released on 28
September 2023.
Based on 2,355.20m of sonic drilling completed as part of the 2023 Basin
drill programme, Bradda Head added 729 kt of Lithium Carbonate Equivalent
("LCE") to the Inferred Mineral Resource, for an updated total Inferred LCE
content of 1.0 Mt. The total new Mineral Resource now comprises 17.0 million
tonnes in the Indicated category at 940 ppm carrying 85kt LCE, and 210 million
tonnes in the Inferred category at 900 ppm, carrying 1,000 kt LCE. This was a
significant milestone for the Basin Project, with the first 1Mt LCE being
achieved.
As per the Gross Overriding Royalty Agreement with the Lithium Royalty Company
("LRC"), this new contained LCE Tonnage, which exceeded the contracted
threshold of 1 million tonnes LCE, enabled the Company to trigger the payment
of US$ 2.5 million from LRC, which was received by the Company on 5 October
2023.
Mineral Resource Statement for Basin East, Basin East Extension and Basin
North effective 1 September 2023
Classification Domain Tonnes Mean Grade Contained Metal
Mt Li (ppm) K (%) LCE (kt) K (kt)
Indicated Upper Clay 11 720 3.5 42 380
Upper Clay HG 6 1350 3.2 43 190
Lower Clay - - - - -
Sub Total 17 940 3.4 85 570
Inferred Upper Clay 143 790 2.7 600 3,800
Upper Clay HG 48 1290 3.1 330 1,500
Lower Clay 19 690 2.8 70 530
Sub Total 210 900 2.8 1,000 5,800
· Mineral Resource statement has an effective date of 1 September
2023.
· The Mineral Resource is reported using a cut-off grade of 550 ppm
Li and is constrained to an optimised open pit shell, which was generated
using the following assumptions: lithium carbonate metal prices of 22,000
USD/tLCE; State of Arizona royalty (selling cost) of 6%; operating costs of 40
USD/ tore; Li recovery of 72%; mining dilution and recovery of 0% and 100%;
and pit slope angle of 45°.
· Tonnages are reported in metric units.
· Rounding as required by reporting guidelines may result in
apparent summation differences between tonnes, grade and contained metal
content which are not considered material.
· Conversion factor of Li metal to LCE = 5.323
· The figures above are reported on a gross basis given Bradda
Head's 100% interest in the property
The average in situ grade of the Inferred Basin East Mineral Resource has
increased from 694 to 900 ppm Li, a 30% increase.
The Mineral Resource Update analysis used a stringent approach to both the
in-situ density measurement and the cut-off grade utilised. A lower in-situ
density and higher cut-off grade than previously reported resulted in a more
robust estimate. Both of these measures are currently under review for
application into the next drilling campaign and resource expansion.
The recent drill results on Basin East Extension and Basin North solidify
Bradda Head's belief in a widespread and continuous lithium-rich stratigraphic
sequence, with potential further into Basin North and across to Basin West
that the Company believes will lead to significant resource growth and
opportunity to become a Tier 1 lithium deposit.
Post year-end, the Company commenced drilling at its Basin North project
during March 2024. A six-hole program has been designed to significantly
expand the Company's lithium in clay MRE, with the objective being to add a
minimum of 1.5Mt LCE, surpassing the benchmark of 2.5Mt LCE which will trigger
the final US$ 3 million royalty payment from LRC to Bradda Head. The drilling
programme finished during May 2024, with assay results being fed into the
updated MRE.
In late 2023, the Company completed a gravity survey, with post-processing
revealing a significant gravity low over the Basin North area, interpreted as
a deep, depositional centre for sedimentary rocks and a deep basement rock
geological setting. The results of the gravity survey were very positive and
field reconnaissance prompted the staking of 2.8km(2) of new lode and placer
claims to the north on open BLM land, expanding the clay potential
significantly.
Wikieup Project
On February 28, 2024, the Company announced the completion of the land
exchange over the unpatented lode claims at the Wikieup clay project in
Western Arizona. Bradda Head retained 66 new claims equating to 1,302 acres
(5.27 km(2)), which the Company staked in early 2019, and held in its
subsidiary Zenolith (USA) LLC. In turn, Bradda Head transferred 55 unpatented
lode claims to Arizona Lithium's subsidiary, Big Sandy Inc., to the amount of
roughly 1,136 acres (4.60 km(2)), per the terms of this settlement.
Arizona Pegmatite Hosted Lithium Project
San Domingo Project
On 10 August 2023, the Company mobilised a drill rig for its Phase 3 drill
programme at the San Domingo pegmatite district in Arizona, with drilling
commencing later in the month. This represents the second large-scale drill
programme conducted in less than one year at San Domingo, which underscores
the Company's commitment to exploring and unlocking the potential of the
33km(2) land package held within this highly prospective pegmatite district.
Drilling completed during December 2023, with final assay results being
received during January 2024 which highlighted the encouraging results from
the drill programme.
San Domingo, Morning Star and South Morning Star Drill Hole Highlights
Hole number From (m) To (m) Int (m) Li2O (%) Sn (ppm) Ta2O5 (ppm) BeO (%) Target
SD-DH23-088 28.80 31.09 2.28 0.41 620 0.06 Morning Star
28.80 45.63 16.82 0.19 164
39.26 42.15 2.90 0.46 872 0.23
46.51 49.62 3.11 223
48.77 49.62 0.85 0.49 259
75.74 102.02 21.45 0.03
75.74 81.08 5.34 477
SD-DH23-089 21.95 39.78 17.82 0.04
29.32 32.31 2.98 80
44.96 51.21 6.23 76 147
48.01 50.9 2.89 298
Hole number From (m) To Int (m) Li2O (%) Sn (ppm) Ta2O5 (ppm) BeO Target
(m) (%)
SD-DH23-090 6.10 22.52 17.43 0.17 75 42 Morning Star
6.10 10.82 4.73 116
16.25 19.05 2.80 0.65 109 48
SD-DH23-091 43.28 55.17 7.45 0.06 91
61.57 63.58 2.01 1.84 404
SD-DH23-093 5.64 11.67 6.04 151
16.76 17.83 1.07 0.31
31.39 40.39 8.99 1.20
with 31.39 36.79 5.40 1.70
44.20 58.83 14.63 0.54 71
with 51.66 55.93 4.18 1.63 100 52 Morning Star
78.64 83.39 4.75 0.04 82
SD-DH23-094 17.22 23.16 5.93 0.07
52.12 53.80 1.68 0.89 80 80
66.75 72.09 5.33 0.05
SD-DH23-095 68.64 72.24 3.6 0.04 62
SD-DH23-096 48.37 56.39 7.05 0.03
SD-DH23-097 75.29 76.23 0.94 0.12
97.99 101.59 3.60 0.04
SD-DH23-098 78.46 90.22 11.75 0.05
SD-DH23-099 8.53 15.24 6.69 0.58 89 23 South Morning Star
26.27 27.37 1.10 0.10 160 266
31.03 36.58 5.55 1.03 99
SD-DH23-100 7.10 9.36 2.26 367
10.91 39.68 28.77 0.36 91
with 10.91 13.11 2.20 0.64 81
plus 16.15 19.20 3.05 0.68 123
and 32.92 39.68 6.76 0.82 145
SD-DH23-100 5.03 6.71 1.68 0.49 55 48
SD-DH23-101 13.56 15.85 2.29 0.30 80 58
18.80 20.85 1.37 0.12 58
SD-DH23-102 39.08 42.37 3.29 0.04
SD-DH23-103 7.32 14.02 6.70 0.07 77 41
SD-DH23-104 8.84 10.52 1.68 0.65 Morning Star
54.56 58.70 4.14 2.07 67
66.75 71.32 4.57 1.12 76 32
71.32 77.69 6.36 0.10 149
90.83 91.78 1.23 0.14
*All drill depths are from surface
Total drilled metres at San Domingo, from both drill programmes completed to
date, is only 13,076 meters, covering less than 1% of the total property held.
Following positive results of soil sampling completed in February 2023 that
identified further spodumene in outcrops at San Domingo, and in order to
strengthen our land holding position, Bradda Head staked just under 8km(2 )of
new lode claims at its San Domingo asset. This is the 4th round of claim
expansion at San Domingo, and the land holding has grown from c.13km(2) to
now c.33km(2) since July 2021.
Nevada Brine Hosted Lithium Projects
Eureka and Wilson Salt Flat
No significant work has been undertaken on this project during the current
year.
Environment, Social and Governance ("ESG")
The Company aims to achieve outstanding performance in ESG related matters.
For example, at each step of the process, both prior to and during drilling,
the Company is in regular discussions with all related stakeholders in our
claims, including local councils, tribal representatives, and government
officials. With water scarcity being a key consideration in Arizona, the
Company used sonic drilling at our Basin East drill programme, which minimised
water consumption. A number of community-based programmes have been rolled out
during 2023 and into 2024, including sponsorship of local rodeo events, water
conservation studies, and other engagement events within our local
communities.
The Company identified a water well in close proximity to the Basin project,
greatly reducing the distance the water truck must travel to obtain water for
drilling. This reduces our water truck carbon footprint by minimizing the
distance of water source to the project, now only 4 miles as opposed to 50
miles distance and limits fugitive dust production. When necessary, the water
truck will lay water on the dirt roads to reduce dust. The Company also looks
to secure contracts with drillers whose equipment is new and modern, very
compact, has efficient fuel consumption, in order to lower emissions and size
of drill site construction.
When core drilling at any of our projects, sumps are made and lined with
plastic to capture all fluids that in turn, are recycled in the drill hole,
thus reducing water consumption.
Financial Review
For the year ended 29 February 2024, the Company recorded a net loss of US$
1,503,858 (28 February 2022: US$ 3,887,588). The net loss is after receipt of
the second tranche of royalty monies from the Lithium Royalty Company, the net
amount being US$ 2,370,127 (2023: Nil).
As at year end, cash and cash deposit balances stood at US$ 1,666,662 (28
February 2023: US$ 7,746,519), capitalised deferred mining, exploration,
licence, and permit costs stood at US$ 13,807,158 (28 February 2023: US$
9,574,266), and total assets were US$ 15,848,063 (28 February 2023: US$
18,198,559). The Company is in a net asset position of US$ 15,661,704 (28
February 2023: US$ 16,984,940).
In light of the challenging market conditions, the Company has streamlined its
corporate overheads. The net effect of this effort means that we continue with
our 'steady as she goes' approach with no superfluous costs and intend to move
forward with the resource growth plan at our Basin Project.
Post yearend on 20 May 2024, the Company announced that it entered into a
settlement agreement regarding the fraudulent payment made to an unidentified
party, as disclosed in the prior year accounts. Pursuant to the settlement
agreement, the Company has been partially reimbursed for the fraudulent funds
transfer. The partial settlement is consistent with Company's expectations at
the time of initiating enforcement proceedings with gross recovery of
approximately 40% of total misappropriated funds. Bradda Head confirms that
the Agreement provides for no admission of liability by either party involved
and the full commercial terms of the settlement are subject to strict
confidentiality obligations on both parties so it will not be making any
further comment on this matter.
Approach to Risk and Corporate Governance
"The Company's general risk appetite is a moderate, balanced one that allows
it to maintain appropriate growth, profitability and scalability, whilst
ensuring full corporate compliance."
The Group's primary risk drivers include: -
Strategic, Reputational, Credit, Operational, Market, Liquidity, Foreign
Exchange, Capital and Funding, Compliance and Conduct.
Our risk appetite is classified as High under an "impact" matrix defined as
Zero, Low, Medium, and High. Appropriate steps have been taken and adequate
controls implemented to monitor the risks of the Company, and the appropriate
committees and reporting structures have been established to monitor risks
facing the Company.
Our Corporate Governance Report outlining our adherence to the Quoted
Companies Alliance Code is detailed on page 12.
Financing
With effect from January 1, 2024, the Company delisted its shares from trading
on the US OTCQB Market, due to share trading liquidity expectations not having
been met and cost saving in this current market environment.
The Company's shares continue to trade on the London AIM Market and on the
Canadian TSX Venture Exchange.
Strategy and Outlook
It is estimated that the United States has some of the world's largest lithium
deposits, but less than 1% of global lithium is currently mined there. Demand
for lithium in the USA is growing exponentially, while access to secure
supplies of lithium is becoming more challenging, and more importantly local
sources of lithium are scarce. China dominates the global lithium-ion battery
industry, with Chinese companies supplying 80% of the world's battery cells
and accounting for nearly 60% of the EV battery market.
Global demand for lithium-ion batteries is expected to increase from about 700
gigawatt hours (GWh) in 2022 to 4,700 GWh by 2030, mainly due to clean-energy
policies that promote the adoption of electric vehicles, with the USA and
Europe expected to experience the highest growth rates. Under the Joe Biden
administration, lithium is vital to decarbonising the USA economy and meeting
its goal of 50% electric vehicle adoption by 2030.
Regardless of the upcoming presidential election, IRA continuance is
considered solid and expected to generate widespread investment into green
energy throughout the USA. While the economy has slowed post-COVID and the US
is teetering on recession, the long-term demand on EV's is very positive over
the next decade and will drive the resurgence of lithium prices.
It is hoped that the construction at Thacker Pass, leveraged by General Motors
commitment and US Department of Energy loan, may help pave the path for
development of large-scale lithium mines in the US.
Advances in DLE technology are proceeding well throughout the industry and
will drive exploration and improve permitting timelines, something Bradda Head
is poised to take advantage of with our brine projects. The entry by Exxon
proves lithium extraction through DLE methods will form a unique niche in the
overall lithium global market.
The Company, with its portfolio of assets covering all three main lithium
deposit types, is strategically placed to leverage this demand growth in the
USA. The projects held are in advantageous locations with respect to
end-users, power, rail, and road transport, renewable electricity, and gas
infrastructure.
With its current portfolio of assets, a highly experienced and motivated team,
the Board believes it is in a strong position to unlock value from its
projects and create value for shareholders.
Ian John Stalker
Executive Chair
26 June 2024
Directors' Report
The Directors present their annual report and the consolidated financial
statements for Bradda Head Lithium Limited (the "Company") for the year ended
29 February 2024.
Principal activity
Bradda Head Lithium Limited is a lithium exploration Group focused on
developing its high-quality projects in the USA.
Results and transfers to reserves
The results and transfers to reserves for the year are set out on pages 29 to
33 of the consolidated financial statements.
The Company made a total comprehensive loss attributable to equity
shareholders for the year after taxation of US$ 1,503,858 (28 February 2023:
US$ 3,887,588).
Dividend
The Directors do not propose the payment of a dividend for the year (2023: US$
Nil).
Policy and practice on payment of creditors
It is the policy of the Company to agree appropriate terms and conditions for
its transactions with suppliers by means of standard written terms to
individually negotiated contracts. The Company seeks to ensure that payments
are always made in accordance with these terms and conditions.
Financial risks
Details relating to the financial risk management are set out in note 16 to
the financial statements.
Directors
The Directors who served during the period and to date are:
Denham Eke
James Mellon
Ian Stalker
Euan Jenkins
Alex Borrelli
Charles FitzRoy (resigned on 29 August 2023)
Directors' interests
As at 29 February 2024, the interests of the Directors and their families (as
such term is defined in the AIM Rules for Companies) in the share capital of
the Company are as follows:
29 February 2024 28 February 2023
% of issued % of issued
Number share capital Number share capital
James Mellon (1) 73,097,004 18.72% 65,097,004 16.67%
Denham Eke 124,307 0.03% 124,307 0.03%
Ian Stalker (2) 3,870,140 0.99% 3,870,140 0.99%
Euan Jenkins 2,198,934 0.56% 2,198,934 0.56%
Alex Borrelli 343,329 0.09% 343,329 0.09%
────── ────── ────── ──────
79,633,714 20.39% 71,633,714 18.34%
══════ ══════ ══════ ══════
(1) James Mellon's interest comprises of 71,879,831 (2023: 63,879,831) shares
directly held by Galloway Limited, which is indirectly wholly owned by James
Mellon. Denham Eke is a director of Galloway Limited. Burnbrae Limited holds
200,000 (2023: 200,000) shares, which is indirectly wholly owned by James
Mellon. Denham Eke is a director of Burnbrae Limited. A total of 1,017,173
(2023: 1,017,173) shares are held directly by James Mellon.
(2) Ian Stalker's interest comprises of 3,786,717 (2023: 3,786,717) shares
directly held by Promaco Limited, which is wholly owned by Ian Stalker. The
balance of 83,423 shares are held directly in his name.
Significant shareholdings
Except for the interests disclosed in this note, the Directors are not aware
of any holding of ordinary shares as at 29 February 2024 representing 3% or
more of the issued share capital of the Company:
Number of Percentage of total
ordinary shares issued capital
James Mellon (1) 73,097,004 18.72%
Zenith Minerals Limited 43,959,305 11.26%
Hargreaves Lansdown private clients 31,100,709 7.97%
Electrification and Decarbonization AIE 21,758,783 5.57%
Nigel Wray 20,375,000 5.22%
LI Equities Investments 14,980,786 3.84%
Anthony Baillieu 14,400,000 3.69%
Jason Macdonald (2) 14,095,706 3.61%
Barclays Smart Investor private clients 11,960,883 3.06%
(1) James Mellon's interest comprises of 71,879,831 (2023: 63,879,831) shares
directly held by Galloway Limited, which is indirectly wholly owned by James
Mellon. Denham Eke is a director of Galloway Limited. Burnbrae Limited holds
200,000 (2023: 200,000) shares, which is indirectly wholly owned by James
Mellon. Denham Eke is a director of Burnbrae Limited. A total of 1,017,173
(2023: 1,017,173) shares are held directly by James Mellon.
(2 ) Jason Macdonald's interest comprises of 12,307,004 (2023: 12,307,004)
shares directly held by the J&E Macdonald Trust, in which Jason Macdonald
has a vested interest. The balance of 1,788,702 (2023: 1,788,702) shares is
held directly in his name.
Auditors
PKF Littlejohn LLP, being eligible, have expressed their willingness to
continue in office.
By order of the Board
Denham Eke
Director
26 June
2024
Corporate Governance Statement
The Board of Bradda Head Lithium Limited (the "Board") is committed to best
practice in corporate governance throughout the Company (the "Company"). The
Directors have agreed to comply with the provisions of the Quoted Companies
Alliance ("QCA") Corporate Governance Code for Small and Mid-Size Quoted
Companies (2018) to the extent which is appropriate to its nature and scale of
operations. This report illustrates how the Company complies with those
principles.
QCA Principle 1: Establish a strategy and business model which promotes
long-term value for shareholders
The strategy and business operations of the Company are set out in the Chair's
Statement and Operational Review on pages 4 to 9.
The Company's strategy and business model and amendments thereto are developed
by the Chairman and his senior management team and approved by the Board. The
management team is responsible for implementing the strategy and managing the
business at an operational level.
The Company operates in an inherently high-risk sector and this is reflected
in the principal risks and uncertainties.
In executing the Company's strategy and operational plans, management will
typically confront a range of day-to-day challenges associated with these key
risks and uncertainties and will seek to deploy the identified mitigation
steps to manage these risks as they manifest themselves.
QCA Principle 2: Seek to understand and meet shareholder needs and
expectations
The Company via the Chairman seeks to maintain a regular dialogue with both
existing and potential new shareholders in order to communicate the Company's
strategy and progress and to understand the needs and expectations of
shareholders.
Beyond the Annual General Meeting, the Chairman and, where appropriate, other
members of the senior management team or Board will meet with investors and
analysts to provide them with updates on the Company's business and to obtain
feedback regarding the market's expectations of the Company.
The Company's investor relations activities encompass dialogue with both
institutional and private investors. From time to time, the Company attends
private investor events, providing an opportunity for those investors to meet
with representatives from the Company in a more informal setting.
QCA Principle 3: Take into account wider stakeholder and social
responsibilities and their implications for long-term success
The Company is aware of its corporate social responsibilities and the need to
maintain effective working relationships across a range of stakeholders. These
include the Company's advisors, suppliers and investee companies. The
Company's operations and working methodologies take account of the need to
balance the needs of all of these stakeholders while maintaining focus on the
Board's primary responsibility to promote the success of the Company for the
benefit of its members as a whole. The Company endeavours to take account of
feedback received from stakeholders, and where appropriate, ensures any
amendments are consistent with the Company's longer-term strategy.
The Company takes due account of any impact that its activities may have on
the environment and seeks to minimise this impact wherever possible.
QCA Principle 4: Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board is responsible for the systems of risk management and internal
control and for reviewing their effectiveness. Internal controls are designed
to manage rather than eliminate risk and provide reasonable but not absolute
assurance against material misstatement or loss. Through the activities of the
Company Audit, Risk and Compliance Committee, the effectiveness of these
internal controls is reviewed annually.
A comprehensive budgeting process is completed once a year and is reviewed and
approved by the Board. The Company's results, compared with the budget, are
reported to the Board on a monthly basis.
The Company maintains appropriate insurance cover in respect of actions taken
against the Directors because of their roles, as well as against material loss
or claims against the Company. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
The senior management team meets at least quarterly to consider new risks and
opportunities presented to the Company, making recommendations to the Board
and/or Company Audit, Risk and Compliance Committee as appropriate.
QCA Principle 5: Maintain the board as a well-functioning, balanced team led
by the chair
The Company's Board currently comprises three Non-Executive Directors and two
Executive Directors.
All of the Directors are subject to election by shareholders at the first
Annual General Meeting after their appointment to the Board and will continue
to seek re-election at least once every three years.
The Board is responsible to the shareholders for the proper management of the
Company and intends to meet at least four times a year to set the overall
direction and strategy of the Company, to review operational and financial
performance and to advise on management appointments. All key operational
decisions are subject to Board approval.
Alex Borrelli and Euan Jenkins, both Non-Executive Directors, are considered
to be independent. The QCA Code suggests that a board should have at least two
independent Non-Executive Directors. The Board considers that the current
composition and structure of the Board of Directors is appropriate to maintain
effective oversight of the Company's activities for the time being.
Directors receive their fees in the form of a basic cash emolument. The
current remuneration structure for the Board's Executive and Non-Executive
Directors is deemed to be proportionate.
QCA Principle 6: Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Board considers that the Executive Directors and Non-Executive Directors
are of sufficient competence and calibre to add strength and objectivity to
its activities and bring considerable experience in the operational and
financial development of the Company.
The Directors' biographies are detailed on the Company's website
www.braddaheadltd.com (http://www.braddaheadltd.com) .
The Board regularly reviews the composition of the Board to ensure that it has
the necessary breadth and depth of skills to support the ongoing development
of the Company.
The Executive Chairman, in conjunction with the Finance Director, ensures that
the Directors' knowledge is kept up to date on key issues and developments
pertaining to the Company, its operational environment and to the Directors'
responsibilities as members of the Board.
Directors' service contracts or appointment letters make provision for a
Director to seek professional advice in furtherance of his or her duties and
responsibilities, normally via the Company Secretary.
QCA Principle 7: Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
Internal evaluation of the Board, the Committees and individual Directors is
undertaken on an annual basis in the form of peer appraisal and discussions to
determine their effectiveness and performance as well as the Directors'
continued independence.
The results and recommendations that come out of the appraisals for the
Directors shall identify the key corporate and financial targets that are
relevant to each Director and their personal targets in terms of career
development and training. Progress against previous targets is also assessed
where relevant.
QCA Principle 8: Promote a corporate culture that is based on ethical values
and behaviours
The Board seeks to maintain the highest standards of integrity and probity in
the conduct of the Group's operations. These values are enshrined in the
written policies and working practices adopted by all employees and
contractors in the Group. An open culture is encouraged within the Group, with
regular communications to staff regarding progress and staff feedback
regularly sought. The Executive Management regularly monitors the Group's
cultural environment and seeks to address any concerns that may arise,
escalating these to Board level as necessary.
The Group is committed to providing a safe environment for its staff and all
other parties for which the Group has a legal or moral responsibility in this
area. The Group's health and safety policies and procedures are enshrined in
the Group's documented quality systems, which encompass all aspects of the
Group's day-to-day operations.
QCA Principle 9: Maintain governance structures and processes that are fit for
purpose and support good decision- making by the board
The Role of the Board
The Board is collectively responsible for the long-term success of the
organisation. Its principal function is to determine the strategy and policies
of the Company within an effective control framework which enables risk to be
assessed and managed.
The Board ensures that the necessary financial and human resources are in
place for the Company to meet its objectives and that business and management
performance is reviewed. Furthermore, the Board ensures that the Company
operates within its constitution, relevant legislation and regulation and that
proper accounting records and effective systems of business control are
established, maintained, documented and audited.
There are at least four formal Board meetings each year. All Board members
have the benefit, at the Company's expense, of liability insurance in respect
of their responsibilities as Directors and have access to independent legal or
other professional advice if required. The Board has a formal schedule of
matters which are reserved for its consideration and it has established three
committees to consider specific issues in greater detail, being the Company
Audit, Risk and Compliance, Remuneration and Nomination Committees. The Terms
of Reference for each of these Committees are published on the Company's
website.
The Executive Chairman
The Executive Chairman is responsible for leading the Board, ensuring its
effectiveness in all aspects of its role, promoting a culture of openness of
debate and communicating with the Company's members on behalf of the Board.
The Chairman sets the direction of the Board and promotes a culture of
openness and debate by facilitating the effective contribution of
Non-Executive Directors and ensuring constructive relations between Executive
and Non-Executive Directors. The Chairman also ensures that Directors receive
accurate, timely and clear information. In doing so, this fosters a positive
corporate governance culture throughout the Company.
Non-Executive Directors
The Non-Executive Directors are responsible for bringing independent judgement
to the discussions held by the Board, using their breadth of experience and
understanding of the business. Their key responsibilities are to
constructively challenge and contribute to strategic proposals, and to monitor
performance, resources, and standards of conduct, compliance and control,
whilst providing support to executive management in developing the Company.
Board Committees
The Board has established a Company Audit, Risk and Compliance Committee
("ARCC"), and a Remuneration Committee with formally delegated duties and
responsibilities.
Company Audit, Risk and Compliance Committee
The Company Audit, Risk and Compliance Committee (the "ARCC") meets at least
two times each year and is chaired by Alex Borrelli. The external auditors
attend by invitation. Its role is to be responsible for reviewing the
integrity of the financial statements and the balance of information disclosed
in the accompanying Directors' Report, to review the effectiveness of internal
controls and risk management systems and recommend to the Board (for approval
by the members) the appointment or re-appointment of the external auditor. The
ARCC reviews and monitors the external auditor's objectivity, competence,
effectiveness and independence, ensuring that if it or its associates are
invited to undertake non-audit work it will not compromise auditor objectivity
and independence.
Further information can be found within the Company Audit, Risk and Compliance
Report contained within this Annual Report.
Remuneration Committee
The Remuneration Committee intends to meet at least once a year and comprises
of two Non-Executive Directors. It is chaired by Euan Jenkins and is
responsible for determining the remuneration of the Executive Directors, and
other members of the management. Committee members do not take part in
discussions concerning their own remuneration.
Further information can be found within the Remuneration Report contained
within this Annual Report.
Re-election
The Company's Rules require that all Directors are submitted for election at
the AGM following their first appointment to the Board. Thereafter all
Directors will submit themselves for re-election at least once every three
years, irrespective of performance.
Board and committee attendance
The number of formal scheduled Board and committee meetings held and attended
by Directors during the year was as follows: -
Name Board ARCC Remuneration
James Mellon 13/13 - -
Denham Eke 13/13 - -
Ian Stalker 13/13 5/5 -
Charles FitzRoy (to 29 August 2023) 8/8 - -
Euan Jenkins 13/13 5/5 4/4
Alex Borrelli 13/13 5/5 4/4
QCA Principle 10: Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The Company places a high priority on regular communications with its various
stakeholders and aims to ensure that all communications concerning the
Company's activities are clear, fair and accurate. The Company's website is
regularly updated, and users can register to be alerted when announcements or
details of presentations and events are posted onto the website.
Notices of General Meetings of the Company can be found here:
https://www.braddaheadltd.com/investor-centre/regulatory-news/
(https://www.braddaheadltd.com/investor-centre/regulatory-news/)
The results of voting on all resolutions in general meetings are posted to the
Company's website, including any actions to be taken as a result of
resolutions for which votes against have been received from at least 20 per
cent of independent shareholders.
Approval
This report was approved by the Board of Directors and signed on its behalf
by:
Denham Eke
Finance Director
26 June 2024
Audit, Risk and Compliance Committee Report
The Directors ensure the Company complies with the provisions of the Quoted
Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size
Quoted Companies (2018) to the extent which is appropriate to its nature and
scale of operations.
This report illustrates how the Company complies with those principles in
relation to its Audit, Risk and Compliance Committee (the "ARCC").
Membership
The members of the ARCC are Ian Stalker, Alex Borrelli ("AB") and Euan Jenkins
("EJ"), with AB and EJ being the independent Non-Executive directors, with
Alex Borrelli being the Chairman. The composition of the Committee has been
reviewed during the year and the Board is satisfied that the Committee members
have the relevant financial experience and the expertise to resource and
fulfil its responsibilities effectively, including those relating to risk and
controls.
Meetings
The Committee meets at least two times a year, including the review of the
interim and full year results. Other Directors and representatives from the
external auditors attend by invitation.
Duties
The Committee carries out the duties below for the Company, as appropriate:
§ Monitors the integrity of the financial statements of the Company,
including annual and half-yearly reports, interim management statements, and
any other formal announcement relating to financial performance, reviewing
significant financial reporting issues and judgements which they contain.
§ Reviews and challenges the consistency of the information presented within
the financial statements, compliance with stock exchange or other legal
requirements, accounting policies and the methods used to account for
significant or unusual transactions.
§ Keeps under review the effectiveness of the Company's internal controls and
risk management systems.
§ Oversee the relationship with the external auditors, PKF Littlejohn LLP,
including meetings when considered appropriate to discuss their remit and
review the findings and any issues with the annual audit. It will also review
their terms of appointment, and plans to meet them once a year independent of
management and will consider and make recommendations to the Board, to be put
to the Company for approval at the Annual General Meeting, in relation to the
appointment, re-appointment and removal of the Company's external auditor.
There are no contractual restrictions in place in respect of the auditor
choice.
§ The Committee is governed by a Terms of Reference and a copy of this is
available on the Company's website.
2024 Annual Report
During the year, ARCC confirms that it has received sufficient, reliable and
timely information from management and the external auditors to enable it to
fulfil its responsibilities.
The Committee has satisfied itself that there are no relationships between the
auditor and the Company which could adversely affect the auditor's
independence and objectivity.
All internal control and risk issues that have been brought to the attention
of ARCC by the external auditors have been considered and the Committee
confirms that it is satisfied that management has addressed the issues or has
plans to do so.
The Company has a number of policies and procedures in place as part of its
internal controls and these are subject to continuous review and as a minimum
are reviewed by ARCC on an annual basis.
§ ARCC has reviewed and discussed together with management and the external
auditor the Company's financial statements for the year ended 29 February 2024
and reports from the external auditor on the planning for and outcome of their
reviews and audit. The key accounting issues and judgements considered
relating to the Company's financial statements and disclosures were as
follows:
o Carrying amount of capitalised deferred mining and exploration costs, and
capitalised licences and permits - US$ 13,807,158; and
o Going concern - ARCC reviewed the going concern position of the Company,
taking into account the 12-month cash flow forecasts. ARCC is satisfied that
preparing the financial statements on a going concern basis is appropriate.
Disclosures are included in note 2.
Alex Borrelli
Chairman of Audit, Risk and Compliance Committee
26 June 2024
Report of the Remuneration Committee
As a BVI registered company there is no requirement to produce a Directors'
Remuneration Report. However, the Board follows best practice and therefore
has prepared such a report.
The Directors have agreed to comply with the provisions of the Quoted
Companies Alliance ("QCA") Corporate Governance Code for Small and Mid-Size
Quoted Companies (2018) to the extent which is appropriate to its nature and
scale of operations.
This report illustrates how the Company complies with those principles in
relation to Directors' remuneration.
The level and components of employee remuneration
The Remuneration Policy reflects the Company's business strategy and
objectives as well as sustained and long-term value creation for shareholders.
In addition, the policy aims to be fair and provide equality of opportunity,
ensuring that:
§ the Company is able to attract, develop and retain high-performing and
motivated employees in the competitive local and wider markets;
§ employees are offered a competitive remuneration package to encourage
enhanced performance and are, in a fair and responsible manner, rewarded for
their individual contribution to the success of the Company;
§ it reflects the Company's culture and values; and
§ there is full transparency of the Remuneration Policy.
In line with the Board's approach, which reflects that adopted within other
comparable organisations, the Remuneration Policy provides for the reward of
the employees through salary and other benefits.
Executive Director's Emoluments
The remuneration for the Executive Directors reflects their responsibilities.
It comprises basic salary, eligibility to participate in an annual bonus
scheme when this is considered appropriate, and share option incentives.
Annual bonus scheme payments are not pensionable and are not contracted.
As with staff generally, whose salaries are subject to annual reviews, the
basic salary payable to the Executive Directors are reviewed each year with
reference to jobs carrying similar responsibilities in comparable
organisations, market conditions generally and local employment competition in
view of the Group's geographical position.
The Committee believes that share ownership by executives strengthens the link
between their personal interests and those of shareholders. Options are
granted to executives periodically at the discretion of the Remuneration
Committee. The grant of share options is not subject to fixed performance
criteria. This is deemed to be appropriate as it allows the Committee to
consider the performance of the Group and the contribution of the individual
executives and, as with annual bonus payments, illustrates the relative
importance placed on performance-related remuneration.
The Group does not intend to contribute to the personal pension plans of
Directors in the forthcoming year.
Executive Directors' Contractual Terms
The service contract of the Executive Directors provides for a notice period
of six months.
Non-Executive Directors' Remuneration
Non-Executive Directors do not receive any benefits other than their fees and
travelling expenses for which they are reimbursed. The level of fees payable
to Non-Executive Directors is assessed using benchmarks from a group of
comparable organisations.
The Procedure for Determining Remuneration
The Remuneration Committee, comprising two Non-Executive Directors, is
responsible for setting the remuneration of the Executive Directors. Committee
members do not take part in discussions concerning their own remuneration. The
basic Non-Executive Director fee is set by the Chairman. The Chairman of the
Committee reports at the Board meeting following a Committee meeting.
It is the view of the Committee that Directors' remuneration awarded across
the Company for the year has been in accordance with the Company's stated
Remuneration Policy and, on behalf of the Committee I recommend that you
endorse this report. An analysis of Directors' emoluments is as follows:
Directors' Emoluments
Share based payment remuneration 2024 2023
Fees US$ Total Total
US$ US$ US$
Executive - salary
Denham Eke 64,427 - 64,427 57,345
Charles FitzRoy (to 29 August 2023) 93,728 37,630 131,358 745,348
Non-Executive - fees
Jim Mellon 51,520 - 51,520 47,333
Ian Stalker 150,340 48,587 198,927 574,182
Alex Borrelli 51,520 - 51,520 76,905
Euan Jenkins 51,520 - 51,520 76,905
Aggregate emoluments 463,055 86,217 * 549,272 1,578,018
* represents the share-based payment charge for share options granted during
the year.
Approval
The report was approved by the Board of directors and signed on behalf of the
Board.
Euan Jenkins
Chairman of Remuneration Committee
26 June 2024
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
consolidated financial statements in accordance with applicable law.
The Directors are required to prepare financial statements for each financial
year. They have elected to prepare the financial statements in accordance
with International Financial Reporting Standards, and applicable law.
The Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and of its profit or loss for that period. In preparing each of the
consolidated financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable International Financial Reporting
Standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
· assess the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the Company or to cease operations, or have
no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group. They
are responsible for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets
of the Company and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BRADDA HEAD LITHIUM LIMITED
Opinion
We have audited the group financial statements of Bradda Head Lithium Limited
(the 'group') for the year ended 29 February 2024 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs).
In our opinion, the group financial statements:
· give a true and fair view of the state of the group's affairs as
at 29 February 2024 and of the group's loss for the year then ended; and
· have been properly prepared in accordance with International
Financial Reporting Standards ("IFRS").
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the group in
accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's ability to continue to adopt the going concern basis
of accounting included:
- Reviewing the cash flow forecasts prepared by management for the
period up to 31 December 2025 for reasonableness and agreeing these to
corroborating evidence; and, by providing challenge on key assumptions and
inputs, including an assessment of the likelihood of raising additional funds
and performing sensitivity analysis;
- Assessing and evaluating the liquidity of existing assets as of the
year end;
- Reviewing and assessing the cash flows forecasts for plausible
scenarios;
- Reviewing post-year end Regulatory News Service (RNS) announcements
impacting going concern; and
- Assessing the adequacy of going concern disclosures within the
Annual Report and Consolidated Financial Statements.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's ability to continue as
a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality in both planning and performing the audit
and evaluating the effect of misstatements. For the purposes of determining
whether the group financial statements are free from material misstatements,
we define materiality as the magnitude of misstatement that makes it probable
that the economic decisions of a reasonably knowledgeable person, relying on
the group financial statements, would be changed or influenced. We also
determine a level of performance materiality which we use to assess the extent
of testing needed to reduce to an appropriate level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for
the group financial statements as a whole. When establishing our overall audit
strategy, we determined a magnitude of uncorrected misstatements that we
judged would be material for the group financial statements as a whole.
The materiality applied to the Group consolidated financial statements was
$159,000, based on a 1% of gross assets, as we consider gross assets to be the
most relevant performance indicator for the exploration Group having no trade
and limited volume of transactions during the year.
A benchmark of 65% for performance materiality during our audit of the Group
was applied, being $103,000, as we believe that this would provide sufficient
coverage of significant and residual risks.
We agreed with the audit committee that we would report to them all audit
differences identified during the course of our audit in excess of $8,000. We
also agreed to report any other audit misstatements below that threshold that
we believe warranted reporting on qualitative grounds.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on the areas at
greatest risk of material misstatement, aspects subject to significant
management judgement as well as greatest complexity, risk and size.
In designing our audit, we determined materiality and assessed the risk of
material misstatement in the consolidated financial statements. In particular,
we looked at areas involving significant accounting estimates and judgements
by management, such as the recoverability of exploration and evaluation
assets.
We also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Capitalisation and assessment of impairment of deferred mining and exploration How our scope addressed this matter
costs and exploration permits and licenses (refer note 2 'critical accounting
estimates and judgements', note 7 'Deferred mining and exploration costs' and
note 8 'Exploration permits and licenses'.
The group has reported deferred mining and exploration costs and exploration Our audit work in this area included:
permits and licenses of $11.01m and $2.78m respectively. There is a risk that
the carrying values of these non-current assets are not fully recoverable and · Substantive testing of a sample of additions to assess their
should be impaired in line with IFRS 6. eligibility for capitalisation under IFRS 6 by corroborating to the original
source documentation;
This risk also relates to the appropriate capitalisation of exploration costs
in accordance with IFRS 6. · Confirming the group has good title to the permits and claims;
The group capitalises all expenditure incurred directly relating to · Ensuring, where applicable, that any specific requirements
exploratory activities as deferred mining or exploration costs once a licence contained within the permits and claims have been met, to include minimum
or permit has been obtained for exploratory activities. expenditure clauses;
The estimated recoverable amount of these assets requires judgement in · Making enquiries of management regarding future plans for each
determining whether future economic benefits will arise either from future project including obtaining cashflow projections;
exploitation or sale. The costs are capitalized to the extent that they do not
exceed the estimated economically recoverable amount from mineral interests. · Considering whether there are indications of impairment on a
project-by-project basis in accordance with IFRS 6 criteria;
The costs relate to projects which are at an early stage of exploration and · Reviewing management's impairment paper in respect of the
there is no certainty as to whether commercially viable quantities of mineral carrying value of assets and providing challenge, corroborating any key
resources will be discovered, whether the group will continue its exploration assumptions used; and
activities in each of its licence areas or whether the group will have
sufficient funding to undertake the required exploration activities. · Evaluating the independence and competence of the experts engaged
by management to calculate the mineral resource estimates.
Other information
The other information comprises the information included in the annual report,
other than the group financial statements and our auditor's report thereon.
The directors are responsible for the other information contained within the
annual report. Our opinion on the group financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the
consolidated financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the group financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of group financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and the sector in which
it operates to identify laws and regulations that could reasonably be expected
to have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, as well as
the application of cumulative audit knowledge and experience of the sector.
· We determined the principal laws and regulations relevant to the
group in this regard to be those arising from AIM rules, CSE rules, the QCA
Corporate Governance Code, the operating terms set out in the mining licenses,
as well as local laws and regulations.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
with those laws and regulations. These procedures included, but were not
limited to:
o enquiries of management;
o review of minutes of board meetings;
o review of stock exchange announcements; and
o review of legal and professional fees to understand the nature of the
costs and the existence of any non-compliance with laws and regulations.
· We also identified the risks of material misstatement of the
group financial statements due to fraud at the group level. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management bias was
identified in relation to the impairment assessment of non-current exploration
and evaluation assets. We addressed this by challenging the assumptions and
judgements made by management when evaluating any indicators of impairment.
· We addressed the risk of fraud arising from management override
of controls by performing audit procedures which included, but were not
limited to: the testing of journals; reviewing accounting estimates for
evidence of bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with our engagement letter dated 29 February 2024. Our audit work has been
undertaken so that we might state to the Company's members those matters we
are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the Company and the Company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Engagement Partner)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Registered
Auditor
London
E14
4HD
26 June 2024
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF BRADDA HEAD LITHIUM LIMITED IN
RESPECT OF CANADIAN NATIONAL INSTRUMENT 52-107 (ACCEPTABLE ACCOUNTING
PRINCIPLES AND AUDITING STANDARDS) FOR THE YEAR ENDED 29 February 2024
Opinion
We have audited the group financial statements of Bradda Head Lithium Limited
(the "group") for the year ended 29 February 2024 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in Equity, the
Consolidated Statement of Cash Flows and notes to the financial statements,
including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board ("IAASB").
In our opinion, the group financial statements:
• present fairly, in all material respects, the financial position
of the group as at 29 February 2024 and 28 February 2023 and its financial
performance and its cash flows for the years then ended; and
• the group financial statements have been properly prepared in
accordance with IFRSs as issued by the IAASB.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs) as issued by the International Auditing and Assurance Standards Board
(IAASB) and applicable law.
Our responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial statements section
of our report. We are independent of the group in accordance with the
International Ethics Standards Board for Accountants' Code of Ethics for
Professional Accountants (IESBA Code) together with the ethical requirements
that are relevant to our audit of the group financial statements in the UK,
and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA code. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions related to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's ability to continue to adopt the going concern basis
of accounting included a review of budgets and cash flow forecasts covering a
period of at least 12 months from the date of approval of the financial
statements, including challenge of management on the basis of preparation,
together with ascertaining the most recent cash position of the group, and
identifying subsequent events impacting the going concern position.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
year and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter How our scope addressed this matter
Capitalisation and assessment of impairment of deferred mining and exploration Our audit work in this area included:
costs and exploration permits and licenses (refer note 2 'critical accounting
estimates and judgements', note 7 'Deferred mining and exploration costs', and · Substantive testing of a sample of additions to assess their
note 8 'Exploration permits and licenses'. eligibility for capitalisation under IFRS 6 by corroborating to the original
source documentation;
The group has reported deferred mining and exploration costs and exploration
permits and licenses of $11.01m and $2.78m respectively. There is a risk that · Confirming the group has good title to the permits and claims;
the carrying values of these non-current assets are not fully recoverable and
should be impaired in line with IFRS 6. · Ensuring, where applicable, that any specific requirements
contained within the permits and claims have been met, to include minimum
This risk also relates to the appropriate capitalisation of exploration costs expenditure clauses;
in accordance with IFRS 6.
· Making enquiries of management regarding future plans for each
The group capitalises all expenditure incurred directly relating to project including obtaining cashflow projections;
exploratory activities as deferred mining or exploration costs once a licence
or permit has been obtained for exploratory activities. · Considering whether there are indications of impairment on a
project-by-project basis in accordance with IFRS 6 criteria;
The estimated recoverable amount of these assets requires judgement in
determining whether future economic benefits will arise either from future · Reviewing management's impairment paper in respect of the
exploitation or sale. The costs are capitalized to the extent that they do not carrying value of assets and providing challenge, corroborating any key
exceed the estimated economically recoverable amount from mineral interests. assumptions used; and
The costs relate to projects which are at an early stage of exploration and · Evaluating the independence and competence of the experts engaged
there is no certainty as to whether commercially viable quantities of mineral by management to calculate the mineral resource estimates.
resources will be discovered, whether the group will continue its exploration
activities in each of its licence areas or whether the group will have
sufficient funding to undertake the required exploration activities.
Other information
The other information comprises the information included in the annual report
and the management discussion and analysis, other than the financial
statements and our auditor's report thereon. The Directors are responsible for
the other information.
Our opinion on the group financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Responsibilities of directors
The Directors are responsible for the preparation and fair presentation of the
financial statements in accordance with IFRSs, and for such internal control
as the Directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with International Standards on Auditing
(ISAs) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
group's financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit
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
group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Directors.
· Conclude on the appropriateness of the Directors' use of the
going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the group's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw
attention in the auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of the
auditor's report. However, future events or conditions may cause the group to
cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within the group
to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial
statements of the current year and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
The partner in charge of the audit resulting in this independent auditors'
report is David Thompson.
David Thompson (Engagement Partner)
for and on behalf of PKF Littlejohn LLP
Registered Auditor
26 June 2024
Consolidated Statement of Comprehensive Income
for the year ended 29 February 2024
Notes Year ended 29 February 2024 Year ended 28 February 2023
US$ US$
Expenses
General and administrative 4 (4,205,897) (5,880,205)
Foreign exchange gains/(losses) 171,416 (1,408,001)
Share based payments 15 (180,622) (1,148,456)
Impairment 8 - (19,470)
──────── ────────
Operating loss (4,215,103) (8,456,132)
Other income
Gain on sale 5 2,370,127 -
Unrealised (loss)/gain on investment 13 (24,570) 37,804
Warrant fair value re-measurement 15, 16 230,201 4,518,470
──────── ────────
Loss before finance costs (1,639,345) (3,899,858)
Finance income 135,487 12,270
Finance costs - -
──────── ────────
Loss before income tax (1,503,858) (3,887,588)
Income tax expense 6 - -
──────── ────────
Total loss and total comprehensive loss for the year (1,503,858) (3,887,588)
════════ ════════
Basic and diluted loss per share (cents) 19 (0.385) (1.018)
The notes on pages 34 to 57 form an integral part of these consolidated
financial statements.
Consolidated Statement of Financial Position
as at 29 February 2024
Notes 29 February 2024 28 February 2023
US$ US$
Non-Current assets
Deferred mining and exploration costs 7 11,025,423 7,461,851
Exploration permits and licences 8 2,781,735 2,112,415
Plant and equipment 12 78,972 79,602
Advances and deposits 10 106,812 104,192
Investment at fair value through profit or loss 13 67,191 91,761
─────── ───────
Total non-current assets 14,060,133 9,849,821
─────── ───────
Current assets
Cash and cash equivalents 1,664,662 7,746,519
Advances and deposits 10 - 385,624
Trade and other receivables 10 123,268 216,595
─────── ───────
Total current assets 1,787,930 8,348,738
─────── ───────
Total assets 15,848,063 18,198,559
═══════ ═══════
Equity
Share premium 14 30,616,373 30,616,373
Retained deficit (14,954,669) (13,631,433)
─────── ───────
Total equity 15,661,704 16,984,940
═══════ ═══════
Current liabilities
Trade and other payables 11 186,359 983,418
Warrant liability 16 - 230,201
─────── ───────
Total current liabilities 186,359 1,213,619
─────── ───────
Total equity and liabilities 15,848,063 18,198,559
═══════ ═══════
The notes on pages 34 to 57 form an integral part of these consolidated
financial statements.
These financial statements were approved by the Board of Directors and were
signed on their behalf by:
Denham
Eke
Director
26 June 2024
Consolidated Statement of Changes in Equity
for the year ended 29 February 2024
Share premium Retained deficit Total equity
US$ US$ US$
Balance at 1 March 2023 30,616,373 (13,631,433) 16,984,940
Total comprehensive loss for the year
Loss for the year - (1,503,858) (1,503,858)
────── ─────── ──────
Total comprehensive income for the year - (1,503,858) (1,503,858)
Transactions with owners of the Company
Equity settled share-based payments (note 15) - 180,622 180,622
────── ─────── ──────
Total transactions with owners of the Company - 180,622 180,622
────── ─────── ──────
Balance at 29 February 2024 30,616,373 (14,954,669) 15,661,704
═════ ═════ ═════
The notes on pages 34 to 57 form an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Equity (continued)
for the year ended 29 February 2024
Share premium Retained deficit Total equity
US$ US$ US$
Balance at 1 March 2022 23,434,385 (11,177,220) 12,257,165
Total comprehensive loss for the year
Loss for the year - (3,887,588) (3,887,588)
────── ─────── ──────
Total comprehensive income for the year - (3,887,588) (3,887,588)
Transactions with owners of the Company
Issue of ordinary shares (note 14) 7,729,904 - 7,729,904
Capitalised share issue costs (547,916) - (547,916)
Equity settled share-based payments (note 15) - 1,433,375 1,433,375
────── ─────── ──────
Total transactions with owners of the Company 7,181,988 1,433,375 8,615,363
────── ─────── ──────
Balance at 28 February 2023 30,616,373 (13,631,433) 16,984,940
═════ ═════ ═════
The notes on pages 34 to 57 form an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
for the year ended 29 February 2024
Year ended 29 February 2024 Year ended 28 February 2023
Notes
US$ US$
Cash flows from operating activities
Loss before income tax (1,503,858) (3,887,588)
Adjusted for non-cash and non-operating items:
Depreciation 12 50,630 33,240
Unrealised loss/(profit) on investment 13 24,570 (37,804)
Finance income (135,487) (12,270)
Equity settled share based payments expense 15 180,622 1,148,456
Impairment of deferred mining and exploration costs and licences and permits
7, 8 - 19,470
Warrant fair value re-measurement (230,201) (4,518,470)
─────── ───────
(1,613,724) (7,254,966)
Change in trade and other receivables 93,327 (519,824)
Change in trade and other payables (797,059) (114,253)
─────── ───────
Net cash flows from operating activities (2,317,456) (7,889,043)
Cash flows from investing activities
Amounts paid for deferred mining and exploration costs (3,563,571) (3,278,107)
Amounts paid for licences and permits (669,320) (582,809)
Interest received 135,487 12,270
Plant and equipment purchased (50,000) (58,672)
Return of project bonds 383,003 -
─────── ───────
Net cash flows from investing activities (3,764,401) (3,907,318)
Cash flows from financing activities
Cash received from share issues - 12,782,135
Share issue commissions paid - (566,558)
─────── ───────
Net cash flows from financing activities - 12,215,577
─────── ───────
Decrease/(increase) in cash and cash equivalents (6,081,857) 419,216
Cash and cash equivalents at beginning of year 7,746,519 7,327,303
─────── ───────
Cash balances at end of year 1,664,662 7,746,519
═══════ ═══════
The notes on pages 34 to 57 form an integral part of these consolidated
financial statements.
1 Reporting Entity
Bradda Head Lithium Limited (the "Company") is a company domiciled in the
British Virgin Islands. The address of the Company's registered office is
Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. The Company
and its subsidiaries together are referred to as the "Group".
Bradda Head Lithium Limited is a lithium exploration Group focused on
developing its projects in the USA.
2 Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs).
(b) Basis of measurement
Functional and Presentation Currency
The consolidated financial statements of the Group are presented in US Dollars
(US$), which is also the functional currency of all entities in the Group. All
financial information presented in US Dollars has been rounded to the nearest
dollar.
Critical accounting estimates and judgements
The preparation of the consolidated financial statements requires management
to make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected. Significant estimates
and assumptions include those related to recoverability of mineral properties
and determination as to whether costs are expensed or deferred.
The Company is in the process of exploring its mineral properties and has not
yet determined whether the properties contain economically recoverable mineral
reserves. Including whether a commercially feasible means of extraction from
clay deposits is established. The recoverability of carrying amounts for
mineral properties is dependent upon the discovery of economically recoverable
mineral reserves, the ability of the Company to obtain the financing necessary
to complete exploration and development, and the success of future development
of the properties. It is also dependent on all claims being properly legally
established.
Judgement is required in applying the Company's accounting policy for
exploration and evaluation assets in determining whether it is likely that
costs incurred will be recovered through successful exploration and
development or sale of the asset under review when assessing impairment.
Furthermore, the assessment as to whether economically recoverable reserves
exist is itself an estimation process. Estimates and assumptions made may
change if new information becomes available. If information becomes available
suggesting that the recovery of expenditures is unlikely, the amount
capitalised is written off to profit and loss in the period when the new
information becomes available. In situations where indicators of impairment
are present for the Company's exploration and evaluation assets, estimates of
recoverable amount must be determined as the higher of the estimated value in
use or the estimated fair value less costs to sell. Refer to notes 3, 7 and 8.
Impact of Ukraine conflict on the financial statements
The Directors have considered the ongoing conflict in Ukraine, and its impact
on the Group's operations and information included in these financial
statements. The Group's operations are largely based in the USA, which
currently has seen no direct impact due to the conflict. The Directors are
aware of increases in global oil and gas prices, which could have an impact on
fuel and electricity prices in the USA, and knock-on price impacts on the
Group's USA based suppliers and contractors. Management is in regular
communication with suppliers and contractors, and no significant impact has
been seen relating to this.
The Group is in a net asset position of US$ 15,661,704 as at 29 February 2024
(28 February 2023: US$ 16,984,940). Given the early exploration stage of the
Group's projects, the Group is not yet generating any revenue and is incurring
expenditure in progressing its exploration work. Accordingly, the Group
incurred a loss attributable to equity shareholders of US$ 1,503,858 for the
year ended 29 February 2024 (28 February 2023: loss of US$ 3,887,588). As at
29 February 2024, the Group had cash and deposit balances of US$ 1,664,662
(2023: US$ 7,746,519).
Further expenditure will be necessary in order for the Group to progress the
projects to a stage where their feasibility can be assessed and where they may
potentially be able to ultimately generate revenue, if economically viable.
Continued operations of the Group and further progressing its exploration and
evaluation activities is dependent on the Company's ability to obtain
additional financing and generate profitable operations in the future.
The Group expects to have sufficient cash resources to be able to complete its
existing and ongoing exploration programmes, and meet any committed
operational expenditures as they fall due, for a period of at least 12 months
from the date of signing the financial statements. If necessary, adjustments
can be made to defer the Group's discretionary exploration expenditure, based
on results of its exploration activities and cash resource levels whilst
maintaining good title to its licenses and permits, with the level of
exploration activities and related expenditure being full controllable by the
Company.
Based on forecasts prepared by Directors, they believe it remains appropriate
to prepare the financial statements on a going concern basis, taking into
consideration the level of cash held by the Group. The Directors are confident
that further funds can be raised and have a reasonable expectation that the
Group will have adequate resources for its continuing existence and projected
activities for the foreseeable future, and for these reasons, continue to
adopt the going concern basis in preparing the financial statements for the
year ended 29 February 2024.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements, and have been applied
consistently by Group entities for the period ended 29 February 2024.
Basis of consolidation
The consolidated financial statements for the year ended 29 February 2024
incorporate the financial information of the Company and entities controlled
by the Company (its "subsidiaries"). The results of subsidiaries are included
in the consolidated statement of comprehensive income from the date on which
control is obtained, and up to the date control is lost.
Business combination
Acquisitions of subsidiaries and businesses are accounted for using the
purchase method. The cost of acquisition is measured at the aggregate of the
fair values (at the date of exchange) of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group 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 recognised at their
fair value 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
recognised and measured at fair value less costs to sell.
Non-controlling interest
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity therein. The interests of
non-controlling shareholders may be initially measured at fair value or at the
non-controlling interests' proportionate share of the acquiree's identifiable
net assets which are generally at fair value. Subsequent to acquisition, the
carrying amount of non-controlling interests is adjusted for the
non-controlling interests' share of subsequent changes in equity. Total
comprehensive income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from transactions
with equity accounted investees are eliminated against the investment to the
extent of the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
Foreign currency transactions
Transactions in foreign currencies are translated into functional currency
based on the exchange rates prevailing at the transaction dates. Foreign
currency denominated monetary assets and liabilities are translated into
functional currency at the exchange rate prevailing at the reporting date.
Gains or losses arising from foreign currency transactions are recognised in
the consolidated statement of comprehensive income.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined or if measured at
historical cost are translated using the exchange rate at the date of
transaction.
Consolidation of foreign operations
The assets and liabilities of foreign operations are translated to US Dollars
at exchange rates at the reporting date while income and expenses are
translated at exchange rates at date of transactions although if not
practically available, the average rate for the period is used.
Deferred mine exploration costs
The Group deems that all expenditure incurred in the country of the project,
directly relating to exploratory activities, in addition to the acquisition
costs of an existing, granted exploration permit or license, is capitalisable
as deferred mine costs once a license or permit has been obtained for
exploratory activities. Pre-license costs are expensed in the period in which
they are incurred. License costs paid in connection with a right to explore in
an existing exploration area are capitalised.
Exploration expenditures relate to the initial search for mineral deposits
with economic potential as well as expenditures incurred for the purposes of
obtaining more information about existing mineral deposits. Exploration
expenditures typically comprise costs that are directly attributable to:
· researching and analysing existing exploration data;
· conducting geological studies;
· exploratory drilling and sampling for the purposes of obtaining
core samples and the related metallurgical assay of these cores; and
· drilling to determine the volume and grade of deposits in an area
known to contain mineral resources or for the purposes of converting mineral
resources into proven and probable reserves.
The assessment of probability is based on the following factors: results from
previous drill programmes; results from a geological study; results from a
mine scoping study confirming economic viability of the resource; and
preliminary estimates of the volume and grade of the deposit, and the net cash
flows expected to be generated from its development. The application of the
Group's accounting policy for exploration and evaluation expenditure requires
judgment in determining whether future economic benefits will arise either
from future exploitation, or sale, or where activities have not reached a
stage which permits a reasonable assessment of the existence of reserves.
Deferred mine exploration cost are capitalised to the extent that they do not
exceed the estimated economically recoverable amount from mineral interests.
The deferral policy requires management to make certain estimates and
assumptions about future events or circumstances, in particular whether an
economically viable extraction operation can be established.
Estimates and assumptions made may change if new information becomes
available. If after expenditure is capitalised, information becomes available
suggesting that the recovery of expenditure is unlikely, the amount
capitalised is written off in the consolidated statement of comprehensive
income in the period when the new information becomes available. Management
reviews the carrying values of its deferred mine exploration costs at least
annually and whenever events or changes in circumstances indicate that their
carrying values may exceed their estimated net recoverable amounts. An
impairment loss is recognised when the carrying value of those assets is not
recoverable and exceeds their fair value.
These costs are carried forward provided that at least one of the following
conditions is met:
· the period for which the entity has the right to explore in the
specific area has not expired during the period or will expire in the near
future, and is expected to be renewed;
· substantive expenditure on further exploration for and evaluation
of mineral resources in the specific area is either budgeted or planned;
· such costs are expected to be recouped in full through successful
development and exploration of the area of interest or alternatively, by its
sale; or
· exploration and evaluation activities in the area of interest
have not yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves, and active and
significant operations in relation to the area are continuing, or planned for
the future.
Upon reaching commercial production, these capitalised costs will be
transferred from development properties to producing properties on the
Consolidated Statement of Financial Position and will be amortised using the
unit-of-production method over the estimated period of economically
recoverable reserves.
Exploration permits
Exploration permits acquired by way of an asset acquisition or business
combination are recognised if the asset is separable or arises from
contractual or legal rights. On acquisition of a mineral property in the
exploration stage, an estimate is prepared of the fair value attributable to
the exploration potential, including mineral resources, if any, of that
property. The fair value of the exploration permits is recorded as an
intangible asset (acquired exploration permits) as at the date of acquisition.
When an exploration stage property moves into development, any acquired
exploration intangible asset balance attributable to that property is
transferred to non-depreciable mining interests within property, plant and
equipment. Impairment testing and the reversal of impairments are conducted in
accordance with the accounting policy adopted for deferred mine exploration
costs.
Mineral property expenses
Mineral property expenses are costs incurred that do not qualify for
capitalisation and are therefore expensed to the profit or loss as incurred.
These include payments for costs incurred prior to obtaining licenses.
Impairment of tangible and intangible assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the CGU to which the asset belongs. An intangible asset with an
indefinite useful life is tested for impairment at least annually and whenever
there is an indication that the asset may be impaired.
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 the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than
its carrying amount, the carrying amount of the asset (CGU) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately. Where an impairment loss subsequently reverses, the carrying
amount of the asset (CGU) is increased to the revised estimate of its
recoverable amount but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (CGU) in prior years. A reversal of an
impairment loss is recognised as income immediately.
Financial instruments
Measurement
Financial instruments are initially measured at fair value, which includes
transaction costs. Subsequent to initial recognition these instruments are
measured as set out below:
Trade and other receivables
Trade and other receivables are stated at amortised costs using the effective
interest method less impairment losses.
Cash and cash equivalents
Cash and cash equivalents are measured at amortised costs and are due on
demand.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised costs using
the effective interest method.
Fair value of financial instruments
The Company determines fair values using other valuation techniques in
compliance with IFRS9: Financial Instruments, IFRS13: Fair Value Measurement,
and based on the International Private Equity and Venture Capital Valuation
Guidelines ("IPEV").
For financial instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying degrees of
judgement depending on liquidity, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument.
The Company measures fair values using the following fair value hierarchy that
reflects the significance of the inputs used in making the measurements:
· Level 1: Inputs that are quoted market prices (unadjusted) in
active markets for identical instruments;
· Level 2: Inputs other than quoted prices included within Level 1
that are observable either directly (i.e. as prices) or indirectly (i.e.
derived from prices). This category includes instruments valued using; quoted
market prices in active markets for similar instruments; quoted prices for
identical or similar instruments in markets that are considered less than
active; or other valuation techniques in which all significant inputs are
directly or indirectly observable from market data; or
· Level 3: Inputs that are unobservable. This category includes all
instruments for which the valuation technique includes inputs not based on
observable data and the unobservable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are valued
based on quoted prices for similar instruments but for which significant
unobservable adjustments or assumptions are required to reflect differences
between the instruments.
Various valuation techniques may be applied in determining the fair value of
investments held as Level 3 in the fair value hierarchy. The objective of
valuation techniques is to arrive at a fair value measurement that reflects
the price that would be received to sell the asset or paid to transfer the
liability in an orderly transaction between market participants at the
measurement date.
Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method.
Finance costs comprise interest expense on borrowings, unwinding of the
discount on provisions, and losses on hedging instruments that are recognised
in profit or loss. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised
in profit or loss using the effective interest method.
Share premium
Ordinary shares are classified as equity. The ordinary shares of the Company
have a nil par value. As such all proceeds received for the issue of shares
has been credited to share premium. Proceeds from the exercise of stock
options or conversion of share purchase warrants are recorded in share premium
at the amount received on exercise or conversion. Commissions paid to
underwriters or agents and other related share issue costs, such as legal,
accounting and printing, are charged to share premium.
Share based payments
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value is calculated using the Black-Scholes option pricing
model (where no fair value of the service or assets provided is evident). The
fair value determined at the grant date of the equity settled share-based
payment is expensed based on the vesting period and based on the Company's
estimate of the number of shares that will eventually vest.
On determining fair values, terms and conditions attaching to the instruments
are taken into account. Management is also required to make certain
assumptions and estimates regarding such items as the life of instruments,
volatility and forfeiture rates. Changes in the assumptions used to estimate
fair value could result in materially different results.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being exploration for lithium in the USA. Information
presented to the Board of Directors for the purpose of decision making is
based on this single segment.
Property and equipment
Property and equipment assets are stated at cost less accumulated depreciation
and accumulated impairment losses.
Depreciation of fixed assets commences when the asset is available for use.
The Company assesses at each reporting date whether tangible fixed assets are
impaired. Depreciation is charged to the profit and loss account on a
straight-line basis over the estimated useful lives of each part of an item of
tangible fixed assets. The estimated useful lives are as follows:
Owned vehicles - 3 years
Depreciation methods, useful lives and residual values are reviewed if there
is an indication of a significant change since last annual reporting date in
the pattern by which the Company expects to consume an asset's future economic
benefits.
Gain on sale of mining interest
The Group may monetise its future revenue streams by entering into royalty
agreements with investment companies for a given percentage royalty. This
transaction represents a disposal of a portion of the relevant mineral
interest which is subject to the royalty, which is represented by deferred
mine exploration costs and exploration permits and licences in the financial
statements.
Where the consideration in exchange for the sale of the interest is variable,
the IFRS 15 variable consideration guidance is applied and the consideration
is included in the transaction price only to the extent that it is highly
probable that a significant reversal of revenue will not occur ('the
constraint').
A gain/loss on the sale is recognised in profit or loss.
Royalty payments due, under the royalty agreements, are recognised as a
reduction of revenue as amounts become due and payable.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the current period ended, and have not been applied in
preparing these consolidated historical financial statements:
New/revised International Accounting Standards / International Financial Effective date
Reporting Standards ("IAS/IFRS")
(accounting periods commencing on or after)
Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023
Transaction (Amendments to IAS 12)
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2)
Definition of Accounting Estimates (Amendments to IAS 8)
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) 1 January 2024
Pillar Two Model Rules (Amendments to IAS12) 1 January 2024
The Directors do not expect the adoption of the standards and interpretations
to have a material impact on the Company's financial statements in the period
of initial application.
4 General and administrative and exceptional cost
The Group's general and administrative expenses include the following:
Year ended 29 February 2024 Year ended 28 February 2023
US$ US$
Auditors' fees 55,640 113,173
Directors and management fees and salaries 569,599 599,824
Legal and accounting 335,677 492,041
Contractor costs 1,566,803 2,933,852
Professional and marketing costs 690,897 1,012,171
Other administrative costs 987,281 729,144
────── ──────
Total 4,205,897 5,880,205
══════ ══════
5 Gain on sale
On 21 December 2021, the Company completed a royalty agreement with the
Lithium Royalty Corporation ("LRC"). Key terms of the royalty agreement are:
- LRC has been granted a 2% gross overriding royalty (GOR) over Bradda
Head's sedimentary lithium claims in Arizona (Wikieup project
and Basin project) leaving the Company's pegmatite and brine projects
unencumbered;
- LRC has paid to the Company upon closing the sum of US$2.5 million
for granting of the Royalty;
- LRC has paid to the Company an additional US$2.5 million upon the
Company publicly reporting a 1 million tonne lithium carbonate equivalent
(LCE) Mineral Resource with a minimum lithium grade of 800 parts per million
(ppm);
- LRC will pay to the Company an additional US$3 million upon the
Company publicly reporting a 2.5 million tonne LCE Mineral Resource with a
minimum lithium grade of 800ppm.
In addition, LRC has also subscribed for US$2 million of new ordinary shares
(along with US$0.5 million via a further subscription from a LRC director)
alongside the royalty closing. See note 14 for details.
During the year, the Company hit the next milestone of a 1 million tonne
lithium carbonate equivalent (LCE) Mineral Resource with a minimum lithium
grade of 800 parts per million (ppm), thereby triggering the next royalty
payment from LRC. This has been recognised as a gain on sale in the
consolidated statement of comprehensive income.
Reconciliation of gain on sale
Year ended 29 February 2024
US$
Initial proceeds received from royalty receipt 2,500,000
Less: Deferred mine exploration costs disposal (note 7) (105,273)
Less: Exploration permits and licences disposal (note 8) (24,600)
──────
2,370,127
══════
6 Taxation
Income tax
The British Virgin Islands under the International Business Companies Act 2004
imposes no corporate taxes or capital gains taxes.
Zenolith USA LLC, Gray Wash LLC and Verde Grande LLC are Delaware (USA)
limited liability companies that have elected to be taxed as standard
corporations. To date, these companies have been loss making and therefore no
corporation tax is applicable.
The maximum deferred tax asset that could be recognised at year end is
approximately US$ 683,943 (2022: US$ 478,138. The Group has not recognised any
asset as it is not reasonably known whether the Group will recover such
deferred tax assets.
7 Deferred mine exploration costs
The schedule below details the current projects of the Group and the related
exploration costs capitalised:
Total
US$
Cost and net book value
At 29 February 2022 4,183,744
──────────
Capitalised during the year 3,278,107
──────────
At 28 February 2023 7,461,851
──────────
Capitalised during the year 3,668,845
Disposal under royalty agreement * (105,273)
──────────
At 29 February 2024 11,025,423
──────────
Cost and net book value
At 29 February 2024 11,025,423
At 28 February 2023 7,461,851
═══════
* In terms of the LRC royalty agreement, the Company has sold a 2% royalty on
future sales from its lithium clay assets. The Company has effectively sold 2%
of its capitalised deferred mine exploration costs to date, with this
adjustment being recorded to reflect this. See note 5 and 14.
All the deferred mining and exploration expenditure has been incurred by
Zenolith USA LLC and San Domingo LLC, both subsidiaries of the Group. See
notes 8 and 9.
Deferred mine exploration costs ("DMEC") represent intangible assets. Refer to
note 8 for details on exploration permits and licences held.
The recoverability of the carrying amounts of exploration and evaluation
assets is dependent on the successful development and commercial exploitation
or sale of the respective area of interest, as well as maintaining the assets
in good standing. The Group assessed the DMEC relating to areas for which
licenses and permits are held for impairment as at 29 February 2024.
The Board reviewed the projects held and concluded that no facts and
circumstances have been identified which suggest the recoverable amount of
these assets would not exceed the carrying amount and, as such, no impairment
was recognised.
8 Exploration permits and licences
The schedule below details the current projects of the Group and the related
exploration permit and licence costs capitalised:
Total
US$
Cost and net book value
At 28 February 2022 1,549,076
──────────
Capitalised during the year 582,809
Impairment (19,470)
──────────
At 28 February 2023 2,112,415
═══════
Capitalised during the year 693,920
Disposal under royalty agreement * (24,600)
──────────
At 29 February 2024 2,781,735
═══════
Cost and net book value
At 29 February 2024 2,781,735
At 28 February 2023 2,112,415
═══════
* In terms of the LRC royalty agreement, the Company has sold a 2% royalty on
future sales from its lithium clay assets. The Company has effectively sold 2%
of its capitalised deferred mine exploration costs to date, with this
adjustment being recorded to reflect this. See note 5 and 14.
The licences and permits are held through indirect subsidiaries of the
Company. See note 9.
The Group assessed the carrying amount of the licences and permits held for
impairment as at 29 February 2024. The Board reviewed the projects held and
concluded that no facts and circumstances have been identified which suggest
the recoverable amount of these assets would not exceed the carrying amount
and, as such, no impairment was recognised (28 February 2023: impairment of
US$ 19,470).
USA
The USA exploration permits and licences are held by Zenolith (USA) LLC
("Zenolith"), San Domingo LLC ("San Domingo"), Gray Wash LLC and Verde Grande
LLC, subsidiaries of Bradda Head (see note 9). Zenolith holds licences and
permits over land in the states of Nevada and Arizona, USA, which provide
Zenolith with exclusive rights to explore for lithium. Gray Wash and Verde
Grande hold licences over land in the state of Arizona.
9 Investment in subsidiary undertakings
As at 29 February 2024 and 28 February 2022, the Group had the following
subsidiaries:
Name of company Place of incorporation Ownership interest Principal activity
Bradda Head Limited* BVI 100% Holding company of entities below
Zenolith (USA) LLC USA 100% Holds USA lithium licences and permits
Verde Grande LLC USA 100% Holds USA lithium licences and permits
Gray Wash LLC USA 100% Holds USA lithium licences and permits
San Domingo LLC ** USA 100% Holds USA lithium licences and permits
Minera Salmuera, S.A. de C.V. Mexico 100% In process of being liquidated
* Held directly by the Company. All other holdings are indirectly held
through Bradda Head Limited
** Held directly by Zenolith USA LLC
The consolidated financial statements include the results of the subsidiaries
from the date that control is obtained to 29 February 2024, and up to the date
that control ceases.
10 Prepayments and advances and deposits
Non-current
29 February 2024 28 February 2023
US$ US$
Advances and deposits 106,812 104,192
══════ ══════
Current
29 February 2024 28 February 2023
US$ US$
Prepayments 123,268 216,595
Advances and deposits - 385,624
══════ ══════
11 Trade and other payables
29 February 2024 28 February 2023
US$ US$
Accounts payable 161,648 904,944
Accrued expenses and other payables 24,711 78,474
────── ──────
186,359 983,418
══════ ══════
12 Plant and equipment
Motor vehicle Other equipment Total
Cost US$ US$ US$
As at 1 March 2023 114,390 - 114,390
Additions during the year - 50,000 50,000
────── ────── ──────
As at 29 February 2024 114,390 50,000 164,390
══════ ══════ ══════
Motor vehicle Other equipment Total
Accumulated depreciation US$ US$ US$
As at 1 March 2023 (34,788) - (34,788)
Depreciation charge for the year (38,130) (12,500) (50,630)
────── ────── ──────
As at 29 February 2024 (72,918) (12,500) (85,418)
══════ ══════ ══════
Carrying amount
As at 29 February 2024 41,472 37,500 78,972
As at 28 February 2023 79,602 - 79,602
══════ ══════ ══════
13 Investment at fair value through profit or loss
On 1 July 2011, the Company acquired, by way of private placement, a strategic
investment in Crazy Horse Resources Inc. (which changed its name to Rockwealth
Resources Inc ("RWR"), a copper and gold company traded on the TSX Venture
Exchange, which owns the Taysan Project, an advanced copper gold porphyry
deposit located 100 km south of Manila in the Philippines. On 6 December 2021,
RWR changed its name to Strathmore Plus Energy Corp. On 22 September 2022,
Strathmore Plus Energy Corp changed its name to Strathmore Plus Uranium Corp
and its TSX-V ticker to SUU.
As at 29 February 2024, the Company holds 249,688 shares in SUU (2023: 249,688
shares).
This investment is classified as a financial asset at fair value through
profit or loss. For valuation purposes, it was valued using the closing bid
price as at the reporting period.
29 February 2024 28 February 2023
Total number of shares held 249,688 249,688
US$ US$
Market value of investment at closing bid price 67,191 91,761
Total cost (5,861,409) (5,861,409)
─────── ───────
Unrealised loss on investment (5,794,218) (5,769,648)
═══════ ═══════
In line with IFRS13: Fair Value Measurement, and based on the International
Private Equity and Venture Capital Valuation Guidelines ("IPEV"), the
investment held is considered to be level 2 in the fair value hierarchy, due
to there being a lack of an active market for the traded shares.
The unrealised loss on the investment in SUU charged to the Consolidated
Statement of Comprehensive Income and movement in investment fair value is as
follows:
US$
Balance at 28 February 2023 91,761
Change in fair value (24,570)
───────
Balance at 29 February 2024 67,191
═══════
14 Share premium
Authorised
The Company is authorised to issue an unlimited number of nil par
value shares of a single class.
Shares Share capital Share premium
Issued ordinary shares of US$0.00 each US$ US$
At 28 February 2022 317,413,879 - 23,434,385
═══════ ═══════ ═══════
Shares issued for cash (note 16) 73,195,560 - 7,729,904
Share issue costs capitalised - - (547,916)
─────── ─────── ───────
At 28 February 2023 and 29 February 2024 390,609,439 - 30,616,373
═══════ ═══════ ═══════
On 13 April 2022, the Company completed a fundraise, issuing 73,195,560
ordinary shares for gross proceeds of US$ 12.9 million. Refer to note 16.
15 Equity settled share based payments
The cost of equity settled transactions with certain Directors of the Company
and other participants ("Participants") is measured by reference to the fair
value at the date on which they are granted. The fair value is determined
based on the Black-Scholes option pricing model.
Options and warrants
The total number of share options and warrants in issue as at the period end
is set out below.
Recipient Grant Term Exercise Number at March 1, 2023 Number Issued Number Lapsed/ cancelled/expired Number Exercised 29 February 2024 Fair value
Date in years Price
Options US$
Directors and Participants April 2018 5 US$ 0.15668 1,606,304 - (1,460,252) - 146,052 24,028
Directors and Participants June 2021 5 US$ 0.048 18,000,000 - - - 18,000,000 1,110,556
Directors and Participants September 2021 5 £0.09 3,500,000 - (500,000) - 3,000,000 314,962
Directors and Participants April 2022 5 £0.18 8,925,000 - (550,000) - 8,375,000 1,089,312
Directors and Participants December 2022 5 £0.105 1,000,000 - - - 1,000,000 273,727
Directors and Participants April 2023 5 £0.03025 - 4,800,000 (300,000) - 4,500,000 180,622
Directors and Participants February 2024 5 £0.00867 - 2,850,000 - - 2,850,000 -
Warrants
Supplier warrants July 2021 5 £0.0550 1,818,182 - - - 1,818,182 124,482
Supplier warrants July 2021 3 £0.0825 2,254,545 - - - 2,254,545 8,275
Shareholder warrants December 2021 2 £0.0885 1,185,687 - - - 1,185,687 44,858
Supplier warrants April 2022 2 £0.1350 3,244,331 - - 3,244,331 284,918
─────── ─────── ─────── ─────── ─────── ───────
41,534,049 7,650,000 (2,810,252) - 46,373,797 3,455,740
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
Recipient Grant Term Exercise Number at March 1, 2022 Number Issued Number Lapsed/ cancelled/expired Number Exercised 28 February 2023 Fair value
Date in years Price
Options US$
Directors and Participants April 2018 5 US$ 0.15668 1,606,304 - - - 1,606,304 24,028
Directors and Participants June 2021 5 US$ 0.048 18,000,000 - - - 18,000,000 1,110,556
Directors and Participants September 2021 5 £0.09 4,000,000 - (500,000) - 3,500,000 314,962
Directors and Participants April 2022 5 £0.18 - 9,200,000 (275,000) - 8,925,000 1,089,312
Directors and Participants December 2022 5 £0.105 - 1,000,000 - - 1,000,000 273,727
Warrants
Supplier warrants July 2021 5 £0.0550 1,818,182 - - - 1,818,182 124,482
Supplier warrants July 2021 3 £0.0825 2,254,545 - - - 2,254,545 8,275
Shareholder warrants December 2021 2 £0.0885 1,185,687 - - - 1,185,687 44,858
Supplier warrants April 2022 2 £0.1350 - 3,244,331 - - 3,244,331 284,918
─────── ─────── ─────── ─────── ─────── ───────
28,864,718 13,444,331 (775,000) - 41,534,049 3,275,118
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The amount expensed in the income statement has been calculated by reference
to the fair value at the grant date of the equity instrument and the estimated
number of equity instruments to vest after the vesting period.
29 February 2024 28 February 2023
US$ US$
US$ US$
Share based payments charge 180,622 1,148,456
═══════ ═══════
The inputs used in the measurement of the fair values at grant date of the
equity-settled share-based payment plans issued during the period are as
follows:
April 2023 options Award date and exercise price
Fair value at grant date £0.0303
Exercise price £0.106
Weight average expected volatility 78.50%
Weighted average expected life (years) 5
Risk-free interest rate (based on comparable companies) 3.82%
Terms of the issued options are as follows:
- 4,800,000 options have been granted and are subject to the three
independent vesting conditions for 1/3 of the entitlement, relating to the
successful fund raising in respect of the Group's operational budget,
commencement of a drilling program in respect of the San Domingo project and
resolution of certain Wickieup project title claims. All un-exercised options
expire after a period of 5 years from grant date. It is assumed that options
are exercised within 5 years from date of grant. The applied volatility is
based on historical volatility.
-
February 2024 options Award date and exercise price
Fair value at grant date £0.0087
Exercise price £0.02
Weight average expected volatility 73.60%
Weighted average expected life (years) 5
Risk-free interest rate (based on comparable companies) 4.64%
Terms of the issued options are as follows:
- 2,850,000 options have been granted and are subject to the three
independent vesting conditions for 1/3 of the entitlement, relating to the
successful fund raising in respect of the Group's operational budget,
commencement of a drilling program in respect of the San Domingo project and
resolution of certain Wickieup project title claims. All un-exercised options
expire after a period of 5 years from grant date. It is assumed that options
are exercised within 5 years from date of grant. The applied volatility is
based on historical volatility.
16 Warrants
The cost of equity warrants granted during the period are measured by
reference to the fair value at the date on which they are granted. The fair
value is determined based on the Black-Scholes option pricing model.
During year ended 28 February 2023, the Company awarded warrants to investors
who participated in the fundraise completed during April 2022.
The total number of warrants in issue as at the period end is set out below.
Recipient Grant Term Exercise Warrants at 1 March 2023 Number of Warrants Issued Number of Warrants Lapsed/ cancelled/expired Number of Warrants Exercised Number of Warrants at 29 February 2024 Fair value
Date in years Price
Warrants US$
Shareholder warrants April 2022 2 £0.2100 73,195,560 - - - 73,195,560 -
─────── ─────── ─────── ─────── ─────── ───────
73,195,560 - - - 73,195,560 -
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The fair value applied to the shareholder warrants has been classified as a
financial liability. At the date of grant the fair value of shareholder
warrants of US$ 4,748,671 was deducted from the gross proceeds raised against
share premium. At period end, the warrant liability has been re-measured to
fair value, with a corresponding entry to profit and loss of US$ 230,201 (28
February 2023: US$ 4,518,470) within Warrant Fair Value Re-Measurement.
Reconciliation of warrant liability fair value:
Fair value
US$
Balance at March 1, 2023 -
Warrants issued during the period included within share premium 230,201
Fair value re-measurement through profit or loss (230,201)
───────
Balance at 29 February 2024 -
═══════
17 Financial instruments
Financial risk management
The Company has risk management policies that systematically review the risks
that could prevent the Company from achieving its objectives. These policies
are intended to manage risks identified in such a way that opportunities to
deliver the Company's objectives are achieved. The Company's risk management
takes place in the context of day-to-day operations and normal business
processes such as strategic planning and business planning. Management has
identified each risk and is responsible for coordinating and continuously
improving risk strategies, processes and measures in accordance with the
Company's established business objectives.
The Company's principal financial instruments consist of cash, receivables and
payables arising from its operations and activities. The main risks arising
from the Company's financial instruments and the policies for managing each of
these risks are summarised below.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset.
Liquidity risk is managed by the Company by means of cash flow planning to
ensure that future cash requirements are anticipated. All liabilities are due
within one month and all cash maintained in call accounts. To date the Company
has relied upon equity funding to finance operations. The carrying amount of
financial assets and liabilities reported in the consolidated statement of
financial position represents the maximum exposure to liquidity risk.
Management is confident that adequate resources are available to meet current
obligations. See note 2(b) in respect of the Board's going concern assessment,
and note 19 regarding exploration commitments.
The residual undiscounted contractual maturities of financial liabilities are
as follows:
29 February 2024
Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years
US$ US$ US$ US$ US$
Trade and other payables 161,648 - - - -
28 February 2023
Less than 1 month 1-3 months 3 months to 1 year 1-5 years Over 5 years
US$ US$ US$ US$ US$
Trade and other payables 983,418 - - - -
Credit risk
Credit risk is the risk of loss associated with the counter-party's inability
to fulfil its payment obligations. The Company's credit risk is primarily
attributable to receivables and cash balances with the maximum exposure being
the reported balance in the statement of financial position. The Company holds
available cash with licensed banks which have strong history. The Company
considers the credit ratings of banks in which it holds funds in order to
reduce exposure to credit risk. All funds are available on demand.
The receivables are actively monitored to avoid significant concentration of
credit risk and the Directors consider there to be no significant
concentration of credit risk.
Interest rate exposure
Interest rate risk is the risk that the Company will sustain losses through
adverse movements in interest bearing assets or liabilities; however, it is
the Directors' opinion that the Company is not significantly exposed to
interest rate risk. Any interest-bearing liabilities carry fixed interest
rates and are not exposed to interest rate fluctuations.
Market price risk
Equity price risk arises from financial assets at fair value through profit or
loss due to uncertainties about future values of the instrument. The
investment at year end represents an interest held in the share capital of
Strathmore Plus Uranmium Corp, a company traded on the TSX Venture Exchange.
The performance of this investment is monitored and reviewed by management on
a regular basis. As at 29 February 2024, the fair value of equity security
exposed to price risk was US$ 67,191 (2023: US$ 91,760). A 5% increase or
decrease in the fair value of this listed investment, with all other variables
constant, would have increased/decreased consolidated profit or loss and
equity by US$ 3,360 (2023: US$ 4,588).
Foreign exchange risk
The Group was exposed to foreign currency risk on fluctuations related to
financial assets and liabilities that are denominated in Pounds (GBP). The
amounts exposed to foreign currency risk are as follows (in currency balance):
GBP
29 February 2024 Cash 38,482
═══════
GBP
28 February 2023 Cash 4,374,471
═══════
The impact of 10% strengthening of the GBP against the US Dollar to total
comprehensive income/loss is set-out below. A 10% weakening in these
currencies would have had the equal but opposite effect, on the basis that all
other variables remain constant.
29 February 2024 28 February 2023
US Dollars against: US$ US$
GBP 3,848 528,129
═════ ═════
There is no other impact on the Company's equity other than those already
affecting the consolidated statement of comprehensive income/(loss).
Political risks
The Company's operations are subject to laws and regulations governing
exploration activities. While the Company believes that it is in substantial
compliance with all material current laws and regulations affecting its
activities, future changes in laws and regulations could result in changes in
legal requirements or in the terms of existing agreements applicable to the
Company which could have a material adverse impact on the Company's current
operations or planned implementation of its strategy.
Accounting classifications and fair value
Financial instruments comprise cash and trade and other receivables
(classified as loans and receivables), accounts payable and accrued expenses
(classified as trade and other payables), investments and convertible loan
notes and working capital loan advances (classified as related party
balances). The carrying amounts of loans and receivables and trade and other
payables, reported in the consolidated statement of financial position,
approximate their fair values due to the short-term nature of these accounts.
The related party balances consist of convertible loan notes, which have fixed
interest rates and specified repayment terms and conditions. These have been
classified as non-current. The convertible loan notes accrue interest, with
the rate being charged considered to be similar to market related rates for
similar type instruments. Fair value is therefore considered to approximate
the carrying value of these instruments.
The working capital loan facility has a repayment term of one year, and has
therefore been classified as a current asset.
Financial liabilities not measured at fair value
Carrying amount, measured at amortised cost
29 February 2024 28 February 2023
US$ US$
Trade and other payables 161,648 983,418
═════ ═════
The fair value of investments is based on available market price data, taking
into account the liquidity of the listed securities.
Capital Management
The Company manages its capital to maximise the return to the shareholders
through the optimisation of equity. The capital structure of the Company at 29
February 2024 consists of equity attributable to equity holders of the
Company, comprising issued capital, reserves and retained earnings as
disclosed.
The Company manages its capital structure and makes adjustments to it, in
light of economic conditions and the strategy approved by shareholders. To
maintain or adjust the capital structure, the Company may adjust any dividend
payment to shareholders, return capital to shareholders or issue new shares
and release the Company's share premium account. No changes were made in the
objectives, policies or processes during the years ended 29 February 2024.
18 Related party transactions and balances
Key management personnel
The Directors of the Company received the following remuneration
during the year:
29 February 2024
US$ US$ US$
Fees and salary Share-based payment remuneration Total
Charles FitzRoy (to 29 August 2023) 93,728 37,630 131,358
Ian Stalker 150,340 37,630 187,970
Euan Jenkins 51,520 - 51,520
Denham Eke 64,427 - 64,427
Jim Mellon 51,520 - 51,520
Alex Borrelli 51,520 - 51,520
─────── ─────── ───────
463,055 75,260 * 538,315
═══════ ═══════ ═══════
* The fair value of the options issued has been determined in line with the
requirements of IFRS. Refer to note 3 and 15 for the basis of calculatuion.
28 February 2023
US$ US$ US$
Fees and salary Share-based payment remuneration Total
Charles FitzRoy 169,105 576,243 745,348
Ian Stalker 142,000 432,182 574,182
Euan Jenkins 47,333 29,572 76,905
Denham Eke 57,345 - 57,345
Jim Mellon 47,333 - 47,333
Alex Borrelli 47,333 29,572 76,905
─────── ─────── ───────
510,449 1,067,569 * 1,578,018
═══════ ═══════ ═══════
* The fair value of the options issued has been determined in line with the
requirements of IFRS. Refer to note 3 and 15 for the basis of calculatuion.
The Directors hold the following number of shares in the Company as at 29
February 2024:
29 February 2024 28 February 2023
% of issued Options held % of issued Options held
Number share capital Number share capital
James Mellon 73,097,004 18.72% - 65,097,004 16.67% -
Denham Eke 124,307 0.03% - 124,307 0.03% -
Ian Stalker 3,870,140 0.99% 18,250,000 3,870,140 0.99% 17,250,000
Euan Jenkins 2,198,934 0.56% 500,000 2,198,934 0.56% 500,000
Alex Borrelli 343,329 0.09% 500,000 343,329 0.09% 500,000
────── ────── ────── ────── ────── ──────
79,633,714 20.39% 19,250,000 71,633,714 18.34% 18,250,000
══════ ══════ ══════ ══════ ══════ ══════
Edgewater Associates Limited ("Edgewater")
During the year, Directors and Officers insurance was obtained through
Edgewater, which is a 100% subsidiary of Manx Financial Group ("MFG"). James
Mellon and Denham Eke are Directors of both the Company and MFG.
The premium payable on the policy was US$ 43,061 (2023: US$ 49,318), of which
US$ 11,560 was prepaid as at the period end (2023: US$ 14,497).
19 Basic and diluted loss per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the weighted average number
of shares in issue during the year.
The calculation of diluted earnings per share is based on the basic earnings
per share, adjusted to allow for the issue of shares, on the assumed
conversion of all dilutive share options.
An adjustment for the dilutive effect of share options in the current year has
not been reflected in the calculation of the diluted loss per share, as the
effect would have been anti-dilutive, due the Company recognising a loss for
the year.
29 February 2024 28 February 2023
US$ US$
Loss for the year (1,503,858) (3,887,588)
No. No.
Weighted average number of ordinary shares in issue 390,609,436 381,785,865
Dilutive element of share options if exercised (note 15) 37,871,052 33,031,304
Diluted number of ordinary shares 428,480,488 414,817,169
Basic earnings per share (cents) (0.385) (1.018)
Diluted earnings per share (cents) (0.385) (1.018)
The earnings applied are the same for both basic and diluted earnings
calculations per share as there are no dilutive effects to be applied.
20 Exploration commitments
The Group has certain obligations to expend minimum amounts on exploration
works on mining tenements in order to retain an interest in them, which would
be approximately US$ 387,290 during the next 12 months. This includes annual
fees in respect of licence renewals. These obligations may be varied from time
to time, subject to approval and are expected to be filled in the normal
course of exploration and development activities of the Company.
21 Subsequent events
Post yearend the Company announced that it entered into a settlement agreement
regarding the fraudulent payment made to an unidentified party, as disclosed
in the prior year accounts. Pursuant to the settlement agreement, the Company
has been partially reimbursed for the fraudulent funds transfer. The partial
settlement is consistent with Company's expectations at the time of initiating
enforcement proceedings with gross recovery of approximately 40% of total
misappropriated funds.
ENDS
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