REG - Bradda Head Lithium - MD&A for the three and 12 months ended Feb 28 2023
25/08/2023 07:00
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RNS Number : 4537K Bradda Head Lithium Ltd 25 August 2023
Bradda Head Lithium Limited
Management discussion and analysis for the three and 12-month periods ended
February 28, 2023
This management's discussion and analysis ("MD&A") reports on the
operating results and financial condition of the Company for the three and 12
months ended February 28, 2023, and is prepared as of August 25, 2023. The
MD&A should be read in conjunction with Bradda Head Lithium Limited's (the
"Company" or "Bradda Head") audited consolidated financial statements for the
year ended February 28, 2023, and the notes thereto which were prepared in
accordance with International Financial Reporting Standards ("IFRS").
All dollar amounts referred to in this MD&A are expressed in United States
dollars except where indicated otherwise.
Overview
Bradda Head Lithium Limited was incorporated on October 28, 2009, in the
British Virgin Islands under the British Virgin Islands Companies Act with
registered number 1553975 with the name Copper Development Corporation. On
October 5, 2015, the Company changed its name from Copper Development
Corporation to Life Science Developments Limited, and on April 18, 2018, the
Company changed its name to Bradda Head Holdings Limited. On September 15,
2021, the Company changed its name to Bradda Head Lithium Limited.
The Company has one business segment, being mineral exploration. The Company
is focused on appraising and developing lithium mining projects within North
America and currently has interests in a variety of projects in the United
States.
Corporate and Exploration Highlights
Exploration Highlights
Set forth in this section is a description of the Company's material mineral
projects. All scientific and technical data contained in this MD&A has
been reviewed and approved by Joey Wilkins, B.Sc., P.Geo., who is Chief
Operating Officer at Bradda Head and a Qualified Person as defined by National
Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI
43-101").
Arizona Sedimentary Hosted Lithium Projects
Basin Project
Following the successful completion of a follow-up sonic drill programme in
March 2022, which consisted of 14 holes covering 1,200m of drilling, the
Company updated its Basin East MRE, on 16 January 2023, resulting in a 22%
increase in LCE tonnes. The Indicated category of the MRE, much of which is
located in the upper part of the deposit, has increased by 17%. Following
completion of the Basin East Step Out drill programme, a total of 1.4km(2) of
Bradda's 46km(2) of sedimentary claims been drill-tested.
The updated MRE comprises:
- an Indicated Mineral Resource of 21.2 Mt at an average grade of
891 ppm Li and 3.5% K (potassium) for a total of 100 kt LC, and
- an Inferred Mineral Resource of 73.3 Mt at an average grade of 694
ppm Li and 3.2% K (potassium) for a total of 271 kt LCE.
Basin East 2023 Mineral Resource Estimate
Classification Domain Tonnes Mean Grade Contained Metal
Mt Li (ppm) K (%) LCE (kt) K (Mt)
Indicated Upper Clay 16.0 738 3.6 63 0.6
Upper Clay HG 5.2 1,354 3.0 38 0.2
Lower Clay - - - - -
Sub Total 21.2 891 3.5 100 0.7
Inferred Upper Clay 31.7 767 3.6 129 1.2
Upper Clay HG 2.3 1,448 3.5 18 0.1
Lower Clay 39.3 592 2.9 124 1.1
Sub Total 73.3 694 3.2 271 2.4
Total 94.5 738 3.3 371 3.1
- Mineral Resource statement has an effective date of 13 October
2022.
- A Mineral Resource is reported using a cut-off grade of
300 ppm Li and constraining the model to an optimised open pit shell, which
was generated using the following assumptions: lithium carbonate metal prices
of 18,000 USD/tLCE; State of Arizona royalty (selling cost) of 6%; operating
costs of 5,000 USD/ tLCE or 27 USD/ tore; Li recovery of 75%; mining
dilution and recovery of 5% and 95%; 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.
- Conversion factor of Li metal to lithium carbonate equivalent
(LCE) = 5.323
Wikieup Project
No significant work has been undertaken on this project during the 3-month
period.
Arizona Pegmatite District
San Domingo Project
During February 2023, the Company announced that significant high grade
lithium bearing minerals were intercepted at multiple locations, following the
initial set of results from its first diamond core drilling programme at the
Company's 23km(2) San Domingo pegmatite district in Arizona. This is the
first extensive drilling campaign undertaken at San Domingo since the 1950's
and is the maiden program for the Company in this district.
Highlights include:
· 31.85m @ 1.60% Li(2)O (including 3.90m @ 2.88% Li(2)O, and 20.03m @ 1.97%
Li(2)O (including 7.06m @ 1.92% Li(2)O, 3.21m @ 3.74% Li(2)O and 3.81m @ 3.25%
Li(2)O)) in SD-DH22-024
· 9.75m @ 0.78% Li(2)O (including 5.36m @ 1.20% Li(2)O) in SD-DH22-003
· 4.27m @ 1.86% Li(2)O in SD-DH22-005
· 2.44m @ 1.63% Li(2)O in SD-DH22-001
The progamme was completed during March 2023, and has only tested just over 1%
of the 23km(2) that Bradda Head holds in Arizona.
Nevada Lithium Brine Projects
Wilson Project
No significant work has been undertaken on this project during the 3-month
period.
Eureka Project
No significant work has been undertaken on this project during the 3-month
period.
Corporate Highlights
On 20 February 2023, the Company appointed Joseph ("Joey") Wilkins as Chief
Operating Officer. Joey is a highly-regarded geologist with significant
experience of working in Arizona and Nevada.
On 26 January 2023, senior management of the the Company opened trading on the
TSX Venture Exchange, following the listing on November 10, 2022.
Issuance of Stock Options
On 21 December 2022, the Company announced that is awarded a total of
1,000,000 options to acquire ordinary shares (the "Options") at an exercise
price of £0.105 to its Independent Non-Executive Directors, Euan Jenkins and
Alex Borrelli. The options are subject to the following conditions:
- Options vest immediately;
- The options have no performance or non-performance conditions
attached to them;
- Are exercisable for a period of five years from date of issue;
and
- The options issued to each participant should lapse upon any
participant no longer being an employee or connected person remunerated by the
Company.
Directors included in the award are detailed in the table below:
Director Total options awarded and held at February 28, 2023 Total shares held at February 28, 2023 Total diluted percentage holding at February 28, 2023
Euan Jenkins 500,000 2,198,934 0.53%
Alex Borrelli 500,000 343,329 0.17%
Total 1,000,000 2,542,263 0.70%
Selected Financial Information
The following table sets forth selected financial information with respect to
the Company for the years ended February 28, 2023, and February 28, 2022. The
selected financial information has been derived from the audited financial
statements for the periods indicated. The following should be read in
conjunction with the said financial statements and related notes that are
available on the Company's website - www.braddaheadltd.com.
The annual financial statements and interim financial statements are presented
in US dollars and are prepared in accordance with IFRS, See "Summary Financial
Data" and "Currency Information".
Year ended February 28, 2023 Year ended February 28, 2022
(Audited) (Audited)
(US$) (US$)
Statement of Operations:
Total revenue - 2,413,228
Total operating expenses (3,899,858) (3,521,636)
Net finance costs - (32,832)
Net finance income 12,270 -
Net loss (3,887,588) (3,554,468)
Loss per share (cents) (1.018) (2.855)
Balance Sheet Data:
Cash & cash equivalents 7,746,519 7,327,303
Total assets 18,198,559 13,354,840
Total liabilities 1,213,619 1,097,675
Accumulated deficit (13,631,433) (11,177,220)
Total Shareholder's Equity 16,984,940 12,257,165
MANAGEMENT DISCUSSION AND ANALYSIS: QUARTER ENDED FEBRUARY 28, 2023
Introduction
This interim Management Discussion and Analysis (the "interim MD&A") should be read in conjunction with the audited financial statements of the Company for the year ended February 28, 2023, and related notes. This MD&A is made as of August 25, 2023.
Results of Operations for the 12-months ended February 28, 2023
The Company's net loss after tax for the 12-month period to February 28, 2023
was US$ 3,428,194, compared to US$ 3,554,468 for the comparative period ended
February 28, 2022. The major expenses for the three and 12-month periods
ended February 28, 2023 were operational expenses incurred on the Company's
exploration projects which have not been capitalised, and are broken down in
the respective projects as follows:
Project Expensed Exploration Expenditure
12-Month Period Ended February 28, 2023 Three-Month Period Ended February 28, 2023
(Audited) (Unaudited)
US$ US$
Basin Project 1,241,009 276,537
San Domingo Project 1,276,954 501,743
Wikieup Project 128,522 13,134
Other projects 289,616 165,067
TOTAL 2,936,101 956,481
During the 12-month period to February 28, 2023, the Company incurred and
capitalised exploration expenditures of US$ 3,841,146, compared to US$
3,621,308 for the comparative 12-month period to February 28, 2022.
The capitalied exploration costs for the three and 12-month periods ended
February 28, 2023 have been allocated amongst the Company's exploration
projects in approximately the following amounts:
Project Capitalisied exploration costs Capitalised expenditires for licences and permits
12-Month Period Ended February 28, 2023 Three-Month Period Ended February 28, 2023 12-Month Period Ended February 28, 2023 Three-Month Period Ended February 28, 2023
(Audited) (Unaudited) (Audited) (Unaudited)
US$ US$ US$ US$
Basin Project 276,202 45,543 79,805 9,440
San Domingo Project
3,078,685 1,504,406 81,165 -
Wikieup Project * (207,387) - 70,455 (19,470)
Other Project 130,607 - 320,198 -
TOTAL 3,278,107 1,549,949 551,623 (10,030)
* US$ 300,000 was moved during the period from capitalised exploration
expenditures to drilling deposits.
During the 12-month period to February 28, 2023, it was identified that
certain projects showed signs of impairment as the relevant project licences
and permits were not renewed, and thus an impairment charge of US$ 19,470 was
recognised during the year ended 28 February 2023 relating to the Wikiuep
project.
The exploration expenditures have been primarily costs associated with
drilling, assaying, resource and mining consultants, metallurgical testing,
environmental studies, project team fees, acquisition of new leases, and
annual renewal of existing leases.
General and administrative expenses for the 12-month period to February 28,
2023 totalled US$ 5,880,205, compared to US$ 3,459,272 for the comparative
12-month period to February 28, 2022. General and administrative expenses are
broken down as follows:
Project General and administrative expenditures
12-Month Period Ended February 28, 2023 Three-Month Period Ended February 28, 2023
(Audited) (Unaudited)
US$ US$
Auditors' fees 113,173 (64,452)
Directors and management fees and salaries 599,824 136,892
Legal and accounting 492,041 132,930
Contractor costs 2,933,852 954,232
Professional and marketing costs 1,012,171 170,183
Other administrative costs 729,144 307,899
TOTAL 5,880,205 1,637,684
During the 12-month period to February 28, 2023, there have been no changes in
financial performance or other elements that relate to non-core buisness
activities and operations.
Cash flows
During the 12-month period ended February 28, 2023, the Company had net cash
inflows of US$ 1,367,824, compared to inflows of US$ 7,443,893 during the
comparative 12-month period to February 28, 2022. The cashflows for the two
periods are shown below:
12-Month Period Ended February 28, 2023 Three-Month Period Ended February 28, 2023
(Audited) (Unaudited)
US$ US$
Statement of cashflows
Cash flows from operating activities (7,889,043) (1,442,322)
Cash flows from investing activities (3,907,318) (1,414,196)
Cash flows from financing activities 12,215,577 -
Net cash flows during the period 419,216 (2,856,518)
Cash balances at beginning of the period 7,327,303 10,603,037
Effect of foreign exchange on cash balances - -
Cash balances at the end of the period 7,746,519 7,746,519
Liquidity and Capital Resources
As at February 28, 2023, the Company had cash and cash equivalents of US$
7,746,519, and a working capital surplus of US$ 7,135,119. As of February 28,
2022, the Company had cash and cash equivalents of US$ 7,327,303, and a
working capital surplus of US$ 6,327,624.
Outstanding Share Data
As of February 28, 2023, the following securities were outstanding:
Shares 390,609,439
Warrants 81,698,305
Stock options 33,031,304
Fully diluted shares outstanding 505,339,048
The Company's objectives when managing capital are to safeguard its ability to
continue as a going concern, so that it can continue to provide returns for
shareholders, benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The capital structure of the Company includes cash and cash equivalents,
equity attributable to equity holders comprised of contributed equity,
reserves and accumulated losses. In order to maintain or adjust the capital
structure, the Company may issue new shares, sell assets to reduce debt or
adjust the level of activities undertaken by the Company.
The Company monitors capital based on cash flow requirements for operational,
exploration and evaluation expenditures. The Company has no debt or other
borrowings as at the date of this Application. The Company will continue to
use capital market issuances to satisfy anticipated funding requirements.
The availability of equity capital, and the price at which additional equity
could be issued, is dependent upon the success of the Company's exploration
activities, and upon the state of the capital markets generally. Additional
financing may not be available on terms favourable to the Company or at all.
If the Company does not receive future financing, it may not be possible for
the Company to advance the exploration and development of its mineral
exploration properties. If the Company is not able to fund these minimum
expenditures, it may not be able to maintain part or all of its mineral
exploration property interests. See "Risk Factors".
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Transactions with Related Parties
The Company has conducted transactions with officers, directors and persons or
companies related to directors or officers and paid or accrued amounts as
follows:
Edgewater Associates Limited ("Edgewater")
During the 12-month period ended February 28, 2023, Directors and Officers
insurance was obtained on an arms-length basis from Edgewater, which is a 100%
subsidiary of Manx Financial Group ("MFG"). James Mellon and Denham Eke are
Directors of both the Company and MFG.
During the period, the premium payable on the policy was US$ 49,318, of which
US$ 14,497 was prepaid as at the period end.
Critical Accounting Estimates
The preparation of financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Such estimates and assumptions affect
the carrying value of assets, and impact decisions as to when exploration and
development costs should be capitalized or expensed.
As at February 28, 2023, the Company had incurred capitalised exploration
expenditures, including capitalised licence and permit costs, of US$
9,574,266. Changes in management's judgment as to the prospective nature,
assessment of the existence or otherwise of economically recoverable reserves,
technical feasibility and/or commercial viability of the relevant tenements
and the Company's intentions with respect to the relevant tenements, could
affect the assessment of the recoverable amount.
The Company regularly reviews its estimates and assumptions: however, actual
results could differ from these estimates and these differences could be
material.
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", "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.
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