REG - Bradda Head Lithium - Unaudited Interim Results for the 3 and 9 months
27/01/2023 09:00
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RNS Number : 1000O Bradda Head Lithium Ltd 27 January 2023
27 January 2023
Bradda Head Lithium Ltd
("Bradda Head", "Bradda", or the "Company")
Unaudited Interim Results for the three and nine months ended 30 November
2022
Bradda Head Lithium Ltd (AIM: BHL), the North America-focused lithium
development group, is pleased to announce that it has today published its
unaudited financial results for the three and nine months ended 30 November,
2022 and the Management's Discussion and Analysis for the same period.
Both of the above have been posted on the Company's
website www.braddaheadltd.com (http://www.braddaheadltd.com) and are also
available on SEDAR at www.sedar.com (http://www.sedar.com/) .
Financial and operational highlights for the third quarter
· Commenced an updated Mineral Resource Estimate ("MRE") based on a
1,200m sonic drill programme at Basin East ("BE"), with the updated resource
being announced post period end on January 16, 2023.
· The updated MRE added 65 kt of LCE to the Mineral Resource, for an
updated total LCE content of 371 kt.
· Drilling continued at the San Domingo pegmatite project, with
lithium-bearing minerals being identified in the first hole at this programme,
including spodumene and lepidolite.
· Completed an initial soil sampling programme covering an initial
3km(2), identifying a potential >3km lithium-bearing trend and
highly-prospective follow-up drill targets.
· Cash balances and total assets stood at US$ 10,603,037 and US$
19,584,569 respectively.
· On November 10, 2022, completed a dual listing on the TSX-Venture
Exchange.
Ian Stalker, Chairman of Bradda Head, commented:
"The third quarter of the financial year has been very busy for the Company.
Drilling continued at our San Domingo pegmatite asset, with lithium-bearing
minerals being identified in the first drill hole. Post quarter end, the
Company also updated its Mineral Resource Estimate at Basin East and
highlighted the significant exploration potential that remains within this
large, mineralised location. The pace of development will continue through the
final quarter and into the next financial year, and we look forward to
updating our shareholders as we receive the exploration results."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance
with the Company's obligations under Article 17 of MAR.
For further information please visit the Company's website:
www.braddaheadltd.com (http://www.braddaheadltd.com)
For further information, please contact:
Bradda Head Lithium Limited +44 (0) 1624 639 396
Charlie FitzRoy, CEO
Denham Eke, Finance Director
Beaumont Cornish (Nomad) +44 20 7220 1666
James Biddle/Roland Cornish
Peterhouse (Joint Broker) +44 207 469 0930
Charles Goodfellow
Duncan Vasey
Lucy Williams
Shard Capital (Joint Broker) +44 207 186 9927
Damon Heath
Isabella Pierre
Red Cloud (North American Broker) +1 416 803 3562
Joe Fars
Tavistock (PR) + 44 20 7920 3150
Nick Elwes braddahead@tavistock.co.uk
Adam Baynes
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 21.2 Mt at an
average grade of 891 ppm Li and 3.5% K for a total of 100 kt LCE and an
Inferred Mineral Resource of 73.3 Mt at an average grade of 694 ppm Li and
3.2% K for a total of 271 kt LCE. In the rest of the Basin Project SRK has
estimated an Exploration Target of between 300 to 1,300 Mt of material
grading between 600 to 850 ppm Li which is equivalent to a range of between
1 to 6 Mt 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, on the TSX Ventures exchange
with a ticker of BHLI, and on the US OTCQB market with a ticker of BHLIF.
Management discussion and analysis for the three and nine-month period ended
November 30, 2022
This management's discussion and analysis ("MD&A") reports on the
operating results and financial condition of the Company for the three and
nine months ended November 30, 2022, and is prepared as of January 27 ,2023.
The MD&A should be read in conjunction with Bradda Head Lithium Limited's
(the "Company" or "Bradda Head") unaudited consolidated financial statements
for the three and nine months ended November 30, 2022, and the audited annual
consolidated financial statement for the years ended February 28, 2022, and
February 28, 2021, 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 Head of
North American Operations 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
Geological consultants, SRK Consulting (UK) ("SRK"), commenced an updated
Mineral Resource Estimate based on a 1,200m sonic drill programme at Basin
East ("BE"). This is planned as an interim update whilst we prepare to drill
at Basin East Extension ("BEE") and Basin North ("BN"). The programme
consisted of infill and expansion drilling (14 holes total, 8 infill and 6
expansion). The initial results from the programme showed that mineralization
is open to the north at BE, as well as the west and northwest as previously
identified.
Permitting efforts continued at Basin for permission to drill at BEE and BN.
Permission was awarded on May 2, 2022 to drill at BN, with final permitting at
BEE still in progress. Efforts now are focused on ensuring that we access the
areas with as little disturbance as possible, with an expected drilling start
date at BN during Q1 2023.
Permitting is ongoing for the Plan of Operations permit at Basin West ("BW")
and Basin West Extension ("BWE"), and we expect a decision on this in the
second half of 2023. This is for an 80-hole drill programme to test the
resource potential at the c.11km(2) area covered by BW and BWE.
Wikieup Project
Analysis is ongoing at Wikieup for a follow-up drill programme in 2023,
building on the initial sonic drill programme which finished in early 2022.
Arizona Pegmatite District
San Domingo Project
Progress at the first diamond core scout programme at San Domingo continued
over the quarter, with good progress seen after an initially mixed start due
to adverse weather conditions over the Arizona monsoon season. The Company has
now moved assay labs to SGS Canada Inc, following excessive delays (up to 17
weeks) from the previous lab. As a result, assays are expected to be received
in a more consistent manner from now.
Visible lithium-bearing minerals were identified in the first hole at this
programme, including spodumene and lepidolite. To confirm mineralogy, X-ray
Diffraction ("XRD") was carried out on 8 samples from the intersections,
identifying spodumene and lepidolite in all holes.
The commencement of drilling followed positive results from a recent SRK 3D
mapping exercise, increasing potential pegmatite outcrops by 190%. Following
this, Bradda Head increased its staked claims at San Domingo by 75% (press
release dated 08 August 2022). This first programme is expected to be finished
in late January/early February 2023, with final assays expected back before
the end of March 2023.
In late November, the Company released the results from a soil sampling
programme, covering c.11% of the San Domingo pegmatite claims in Arizona.
Results identified highly prospective follow-up lithium targets over a 3km(2)+
strike, with the same elemental signatures that have been seen at known
lithium mineralisation locations globally. The soil geochemistry suggests that
the pegmatite swarm is largely of the lithium-caesium-tantalum (LTC)
mineralisation type, the most significant for lithium deposits and what is
commonly associated with economic occurrences of lithium and tantalum.
LCT-type pegmatites are found in the Western Australian pegmatite district,
like Tianqi and Albemarle's joint-venture Greenbushes lithium mine.
Bradda Head carried out the soil sampling programme covering just under 3km(2)
of the northern claim block at San Domingo to support future drill hole
targeting and to better understand our 23km(2) pegmatite district in Arizona.
Importantly, ratios present in the soils of elements associated with
pegmatites and lithium mineralization highlight targets for potential
follow-up. The maps below show the areas of interest and, crucially,
demonstrate a 9km(2) NE-SW trend, which may continue through the remainder of
the San Domingo 20km(2) of claims and state MEPs in Arizona, which have not
had detailed soil sampling.
Alongside the current drill programme, a follow-up field observation, soil
sampling, and channel sampling programme is now underway across the full
23km(2) San Domingo pegmatite district.
Nevada Lithium Brine Projects
Wilson Project
Planning is in place for an initial drill programme during the first half of
2023, with the Company lining up a hydrogeological specialist to review the
project before drilling commences.
Eureka Project
Planning is in place for an initial drill programme during 2023, and the
Company lining up a hydrogeological specialist to review the project before
drilling commences
Corporate Highlights
On 13 April 2022, the Company announced the completion of a successful
fundraise. Aggregate gross proceeds of US$ 12,304,100 was raised, issuing
73,195,560 new ordinary shares, at a price of £0.135 each. Investors who
participated in the raised also received one warrant for each ordinary shares,
with an exercise price of £0.21. The warrants expire two years after being
issued.
Issuance of Stock Options
On 20 April 2022, the Company announced that is awarded a total of 9,200,000
options to acquire ordinary shares (the "Options") at an exercise price of
£0.18 to management and certain Board members. Options for management and
directors, are subject to the following conditions:
- Options issued in three equal traches, with the initial tranche
vesting immediately;
- 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 held at November 30, 2022 Total shares held at November 30, 2022 Total diluted percentage holding at November 30, 2022
Ian Stalker 17,250,000 3,870,140 5.40%
Charles FitzRoy 10,000,000 13,265 2.56%
Total 27,250,000 3,883,405 7.96%
Selected Financial Information
The following table sets forth selected financial information with respect to
the Company for the years ended February 28, 2022, and February 28, 2021. 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, 2022 Year ended February 28, 2021
(Audited) (Audited)
(US$) (US$)
Statement of Operations:
Total Revenue 2,413,228 -
Total Operating Expenses (3,521,636) (633,188)
Net Finance costs (32,832) (88,761)
Net Loss (3,554,468) (721,949)
Loss per Share (cents) (2.855) (0.011)
Balance Sheet Data:
Cash & cash equivalents 7,327,303 86,972
Total Assets 13,354,840 2,649,118
Total long-term Liabilities 1,097,675 1,547,208
Total Liabilities 1,097,675 2,261,943
Accumulated Deficit 11,177,220 9,056,687
Total Shareholder's Equity 12,257,165 87,175
MANAGEMENT DISCUSSION AND ANALYSIS: Q3 2022
Introduction
This interim Management Discussion and Analysis (the "interim MD&A") should be read in conjunction with the unaudited condensed interim financial statements of the Company for the three and nine months ended November 30, 2022, and the audited financial statements for the year ended February 28, 2022 and related notes. This MD&A is made as of January 27, 2023.
Results of Operations for the nine-months ended November 30, 2022
The Company's net loss after tax for the nine-month period to November 30,
2022 was US$ 3,074,862, compared to US$ 2,705,148 for the comparative period
ended November 30, 2021. The major expenses for the three and nine-periods
ended November 30, 2022 were operational expenses incurred on the Company's
exploration projects, and are broken down in the respective projects as
follows:
Project Expensed Exploration Expenditure
Nine-Month Period ended November 30, 2022 Three-Month Period ended November 30, 2022
(Unaudited) (Unaudited)
US$ US$
Basin Project 990,246 305,955
Wikieup Project 84,905 10,633
San Domingo Project 762,149 353,498
Other projects 142,319 49,011
TOTAL 1,979,620 719,097
During this time period, the Company incurred and capitalised exploration
expenditures of US$1,728,158, compared to US$ 719,097 for the comparative
nine-month period to November 30, 2021.
The capitalied exploration costs for the three and nine-periods ended November
30, 2022 have been allocated amongst the Company's exploration projects in
approximately the following amounts:
Project Capitalisied exploration costs Capitalised expenditires for licences and permits
Nine-Month Period ended November 30, 2022 Three-Month Period ended November 30, 2022 Nine-Month Period ended November 30, 2022 Three-Month Period ended November 30, 2022
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$ US$ US$ US$
Basin Project 230,659 19,200 70,365 6,834
Wikieup Project * (207,387) 22,890 101,640 -
San Domingo Project 1,574,278 1,410,725 81,165 9,660
Other Project 130,609 - 453,122 -
TOTAL 1,728,158 1,452,815 706,292 16,494
* Note the negative amount for Wikieup is due to the transfer of the drilling
contractor deposit from deferred mining and exploration costs to the Deposits
Receivable balance sheet account.
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 nine-month period to Novemebr 30,
2022 totalled US$ 4,242,520 , compared to US$ 1,690,543 for the comparative
period to November 30, 2021. General and administrative expenses are broken
down as follows:
Project General and administrative expenditures
Nine-Month Period ended November 30, 2022 Three-Month Period ended November 30, 2022
(Unaudited) (Unaudited)
US$ US$
Auditors' fees 114,508 13,067
Directors and management fees and salaries 402,231 132,955
Legal and accounting 422,228 247,291
Contractor costs 1,979,619 719,097
Professional and marketing costs 942,495 332,928
Other administrative costs 381,439 245,205
TOTAL 4,242,520 1,690,543
During the nine-month periods to November 30, 2022 and November 30, 2021,
there have been no changes in financial performance or other elements that
relate to non-core buisness activities and operations.
Cash flows
During the nine-month period ended November 30, 2022, the Company had net cash
inflows of US$ 4,531,077, compared to inflows of US$ 5,536,420 during the
comparative nine-month period to November 30, 2021. The cashflows for the
two periods are shown below:
Nine-Month Period ended November 30, 2022 Three-Month Period ended November 30, 2022
(Unaudited) (Unaudited)
US$ US$
Statement of cashflows
Cash flows from operating activities (4,731,985) (989,785)
Cash flows from investing activities (2,493,122) (1,469,310)
Cash flows from financing activities 11,756,184 -
Net cash flows during the period 4,531,077 (2,459,095)
Cash balances at beginning of the period 7,327,303 14,006,137
Effect of foreign exchange on cash balances (1,255,343) (944,005)
Cash balances at the end of the period 10,603,037 10,603,037
Liquidity and Capital Resources
As at November 30, 2022 the Company had cash and cash equivalents of US$
10,603,037, and a working capital surplus of US$ 9,697,220. 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 November 30, 2022, the following securities were outstanding:
Shares 390,609,439
Warrants 81,698,305
Stock options 32,360,304
Fully diluted shares outstanding 504,668,048
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 nine-month period ended November 30, 2022, 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 (year
ended February 28, 2022: US$ 44,303), of which US$ 32,122 was prepaid as at
the period end (February 28, 2022: US$ 11,076).
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 November 30, 2022, the Company had incurred capitalised exploration
expenditures, including capitalised licence and permit costs, of US$
8,167,270. 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.
Condensed Interim Consolidated Statement of Comprehensive Income
for the period ended November 30, 2022
Nine-month period ended November 30, 2022 Nine-month period ended November 30, 2021 Three-month period ended November 30, 2022 Three-month period ended November 30, 2021
(unaudited) (unaudited) (unaudited) (unaudited)
Notes US$ US$ US$ US$
Expenses
General and administrative 2 (4,242,520) (2,391,522) (1,690,543) (764,201)
Share based payment and warrant expense 10 (1,285,743) (259,816) (91,539) (119,726)
Foreign exchange loss (1,255,343) (34,338) (944,005) (4,197)
──────── ──────── ──────── ────────
Operating loss (6,783,606) (2,685,676) (2,726,087) (888,124)
Other income
Warrant fair value re-measurement 11 3,711,264 - 880,920 -
Unrealised (loss) / gain on investment (2,520) 13,360 - 5,461
──────── ──────── ──────── ────────
Loss before finance costs (3,074,862) (2,672,316) (1,845,167) (882,663)
Finance costs - (32,832) - -
──────── ──────── ──────── ────────
Loss before income tax (3,074,862) (2,705,148) (1,845,167) (882,663)
Income tax expense - - - -
──────── ──────── ──────── ────────
Loss for the period (3,074,862) (2,705,148) (1,845,167) (882,663)
══════ ══════ ══════ ══════
Other comprehensive income - foreign currency translation reserve
- 186 - -
──────── ──────── ──────── ────────
Total comprehensive loss for the period (3,074,862) (2,704,962) (1,845,167) (882,663)
══════ ══════ ══════ ══════
Basic and diluted loss per share (US cents) 12 (0.81) (1.50) (0.49) (0.49)
The accompanying notes are an integral part of these consolidated interim
financial statements.
Condensed Interim Consolidated Statement of Financial Position
as at November 30, 2022
Notes November 30, 2022 February 28, 2022
(unaudited) (audited)
US$ US$
Non-Current assets
Deferred mining and exploration costs 3 5,911,902 4,183,744
Exploration permits and licences 4 2,255,368 1,549,076
Plant and equipment 8 89,134 54,170
Advances and deposits 6 507,906 88,594
Investment 51,436 53,957
─────── ───────
Total non-current assets 8,815,746 5,929,541
─────── ───────
Current assets
Cash and cash equivalents 10,603,037 7,327,303
Trade and other receivables 6 165,786 97,996
─────── ───────
Total current assets 10,768,823 7,425,299
─────── ───────
Total assets 19,584,569 13,354,840
═══════ ═══════
Equity
Share premium 9 30,467,820 23,434,385
Retained deficit (12,966,339) (11,177,220)
─────── ───────
Total equity 17,501,481 12,257,165
─────── ───────
Current liabilities
Trade and other payables 7 1,071,603 1,097,675
Warrant liability 11 1,011,485 -
─────── ───────
Total current liabilities 2,083,088 1,097,675
─────── ───────
Total equity and liabilities 19,584,569 13,354,840
═══════ ═══════
The accompanying notes are an integral part of these consolidated interim
financial statements.
These condensed interim consolidated financial statements were approved by the
Board of Directors on January 27, 2023 and were signed on their behalf by:
Denham
Eke
Director
Condensed Interim Consolidated Statement of Changes in Equity
for the period ended November 30, 2022
Share premium Retained deficit Total
US$ US$ US$
Balance at March 1, 2022 (audited) 23,434,385 (11,177,220) 12,257,165
Total comprehensive loss for the period
Loss for the period - (3,074,862) (3,074,862)
────── ─────── ───────
Total comprehensive loss for the period - (3,074,862) (3,074,862)
Transactions with owners of the Company
Issue of ordinary shares (note 9 and note 11) 7,581,351 - 7,581,351
Share issue costs capitalised (note 9) (547,916) - (547,916)
Equity settled share-based payments (note 10) - 1,285,743 1,285,743
────── ─────── ──────
Total transactions with owners of the Company 7,033,435 1,285,743 8,319,178
────── ─────── ──────
Balance at November 30, 2022 (unaudited) 30,467,820 (12,966,339) 17,501,481
═══════ ═══════ ═══════
The accompanying notes are an integral part of these consolidated interim
financial statements.
Condensed Interim Consolidated Statement of Changes in Equity
for the period ended November 30, 2022 (continued)
Share premium Retained deficit Foreign currency translation reserve Total
US$ US$ US$ US$
Balance at March 1, 2021 (audited) 9,443,676 (9,056,687) 186 387,175
Total comprehensive loss for the period
Loss for the period - (2,705,148) - (2,705,148)
────── ─────── ─────── ───────
Total comprehensive loss for the period - (2,705,148) - (2,705,148)
Transactions with owners of the Company
Issue of ordinary shares (note 8) 11,904,439 - - 11,904,439
Share issue costs capitalised (note 8) (413,731) - - (413,731)
Equity settled share-based payments (note 9) - 259,816 - 259,816
Transfer to retained deficit - 186 (186) -
────── ─────── ─────── ──────
Total transactions with owners of the Company 11,490,708 260,002 (186) 11,750,524
────── ─────── ─────── ──────
Balance at November 30, 2021 (unaudited) 20,934,384 (11,501,833) - 9,432,551
═══════ ═══════ ═══════ ═══════
The accompanying notes are an integral part of these consolidated interim
financial statements.
Condensed Interim Consolidated Statement of Cash Flows
for the period ended November 30, 2022
Nine-month period ended November 30, 2022 Nine-month period ended November 30, 2021 Three-month period ended November 30, 2022 Three-month period ended November 30, 2021
Notes (unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Cash flows from operating activities
Loss before income tax (3,074,862) (2,705,148) (1,845,167) (882,663)
Adjusted for non-cash and non-operating items:
Depreciation 8 23,708 - 9,532 -
Unrealised loss/(gain) on investment 2,520 (13,360) - (5,461)
Non-cash interest expense - 32,832 - -
Equity settled share based payments expense 10, 11 1,285,743 259,816 91,539 119,726
Warrant fair value re-measurement 11 (3,711,264) - (880,920) -
Unrealised FX adjustment on convertible loan note - - - -
Unrealised FX on cash balances 1,255,343 (34,338) 944,005 (4,197)
─────── ─────── ─────── ───────
(4,218,812) (2,460,198) (1,681,011) (772,595)
Change in trade and other receivables (487,103) 51,470 (26,609) 255,140
Change in trade and other payables (26,070) 341,132 717,835 226,133
─────── ─────── ─────── ───────
Net cash flows used by operating activities (4,731,985) (2,067,596) (989,785) (291,322)
Cash flows from investing activities
Amounts paid for deferred mining and exploration costs 3 (1,728,158) (1,121,721) (1,452,815) (964,459)
Amounts paid for licences and permits 4 (706,292) (519,455) (16,495) (112,018)
Equipment purchased 8 (58,672) - - -
─────── ─────── ─────── ───────
Net cash flows used by investing activities (2,493,122) (1,641,176) (1,469,310) (1,076,477)
Cash flows from financing activities
Short-term loan received - 60,000 - -
Cash received from shares and warrants issued 9, 11 12,304,100 9,598,923 - -
Share issue costs paid 9 (547,916) (413,731) - -
─────── ─────── ─────── ───────
Net cash flows from financing activities 11,756,184 9,245,192 - -
─────── ─────── ─────── ───────
Increase / (decrease) in cash and cash equivalents 4,531,077 5,536,420 (2,459,095) (1,367,799)
Cash and cash equivalents at beginning of period 7,327,303 86,972 14,006,137 7,021,332
Effect of foreign exchange on cash balances (1,255,343) 34,338 (944,005) 4,197
─────── ─────── ─────── ───────
Cash and cash equivalents at end of period 10,603,037 5,657,730 10,603,037 5,657,730
═══════ ═══════ ═══════ ═══════
The accompanying notes are an integral part of these consolidated interim
financial statements.
1 Reporting Entity and basis of preparation
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".
The Company is a lithium exploration Group focused on developing its projects
in the USA.
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting and should be read in conjunction with the last
annual consolidated financial statements as at and for the year ended February
28, 2022 ("last annual financial statements"). They do not include all of the
information required for a complete set of IFRS financial statements. However,
selected explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the Group's
financial position and performance since the last annual financial statements.
The financial information in this report has been prepared in accordance with
the Company's accounting policies and in consistency with the last annual
financial statements. Full details of the accounting policies adopted by the
Company are contained in the financial statements included in the Company's
annual report for the year ended February 28, 2022, which is available on the
Group's website: www.braddheadltd.com (http://www.braddheadltd.com) , and on
SEDAR at www.sedar.com. These unaudited condensed consolidated interim
financial statements should be read in conjunction with the audited
Consolidated Financial Statements for the year ended February 28, 2022.
2 General and administrative
The Group's general and administrative expenses include the following:
Nine-month period ended November 30, 2022 Nine-month period ended November 30, 2021 Three-month period ended November 30, 2022 Three-month period ended November 30, 2021
(unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Auditors' fees 114,508 62,067 13,067 35,466
Directors and management fees and salaries 402,231 310,653 132,955 120,942
Legal and accounting 422,228 510,218 247,291 83,665
Contractor costs 1,979,619 732,407 719,097 280,162
Professional and marketing costs 942,495 535,899 332,928 203,672
Other administrative costs 381,439 240,278 245,205 40,294
─────── ─────── ─────── ───────
Total 4,242,520 2,391,522 1,690,543 764,201
═══════ ═══════ ═══════ ═══════
3 Deferred mine exploration costs
The schedule below details the exploration costs capitalised to date:
Total
US$
Cost and net book value
At February 28, 2021 (audited) 1,767,274
Capitalised during the year 2,501,853
Disposal under the royalty agreement (85,383)
───────
At February 28, 2022 (audited) 4,183,744
───────
Capitalised during the period 1,728,158
───────
At November 30, 2022 (unaudited) 5,911,902
═══════
Cost and net book value
At November 30, 2022 (unaudited) 5,911,902
At February 28, 2022 (audited) 4,183,744
═══════
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 November 30, 2022. The
Board 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 during the period.
During the year ended February 28, 2022, an impairment charge of US$ Nil was
recognised.
4 Exploration permits and licences
The schedule below details the exploration permit and licence costs
capitalised to date:
Total
US$
Cost and net book value
At February 28, 2021 (audited) 691,465
Capitalised during the year 1,119,455
Disposal under the royalty agreement (31,614)
Impairment (230,230)
───────
At February 28, 2022 (audited) 1,549,076
Capitalised during the period 706,292
───────
At November 30, 2022 (unaudited) 2,255,368
═══════
Cost and net book value
At November 30, 2022 (unaudited) 2,255,368
At February 28, 2022 (audited) 1,549,076
═══════
The Group assessed the carrying amount of the licences and permits held for
impairment as at November 30, 2022. The Board 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 during the period.
During the year ended February 28, 2022, an impairment charge of US$ 230,230
was recognised as a result of project licences and permits that were not
renewed.
5 Investment in subsidiary undertakings
As at November 30, 2022 and February 28, 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
* Held directly by the Company. All other holdings are indirectly held
through Bradda Head Limited
The condensed interim consolidated financial statements include the results of
the subsidiaries for the full interim period from March 1, 2022 to November
30, 2022, and up to the date that control ceases.
6 Trade and other receivables and advances and deposits
Non-current
November 30, 2022 February 28, 2022
(unaudited) (audited)
US$ US$
Advances and deposits 507,906 88,594
══════ ══════
Current
November 30, 2022 February 28, 2022
(unaudited) (audited)
US$ US$
Prepayments and other debtors 165,786 97,996
══════ ══════
7 Trade and other payables
November 30, 2022 February 28, 2022
(unaudited) (audited)
US$ US$
Trade payables 950,402 1,019,175
Accrued expenses and other payables 121,201 78,500
────── ──────
1,071,603 1,097,675
══════ ══════
8 Plant and equipment
Motor vehicle Total
Cost US$ US$
As at March 1, 2021 (audited) - -
Additions during the year 55,718 55,718
────── ──────
As at February 28, 2022 (audited) 55,718 55,718
Additions during the period 58,672 58,672
────── ──────
As at November 30, 2022 (unaudited) 114,390 114,390
══════ ══════
8 Plant and equipment (continued)
Motor vehicle Total
Accumulated depreciation US$ US$
As at March 1, 2021 (audited) - -
Depreciation charge for the year (1,548) (1,548)
────── ──────
As at February 28, 2022 (audited) (1,548) (1,548)
Depreciation charge for the period (23,708) (23,708)
────── ──────
As at November 30, 2022 (unaudited) (25,256) (25,256)
══════ ══════
Carrying amount
As at November 30, 2022 (unaudited) 89,134 89,134
As at February 28, 2022 (audited) 54,170 54,170
══════ ══════
9 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 February 28, 2021 (audited) 75,040,282 - 9,443,676
═══════ ═══════ ═══════
Shares issued for cash 158,499,941 - 12,098,924
Shares issued to settle loans 48,618,529 - 2,159,722
Shares issued in lieu of Directors fees 3,037,362 - 145,794
Shares issued to Zenith Minerals Limited * 32,217,765 -
Share issue costs capitalised - - (413,731)
─────── ─────── ───────
At February 28, 2022 (audited) 317,413,879 - 23,434,385
═══════ ═══════ ═══════
Shares issued for cash (note 11) 73,195,560 - 7,581,351
Share issue costs capitalised - - (547,916)
─────── ─────── ───────
At November 30, 2022 (unaudited) 390,609,439 - 30,467,820
═══════ ═══════ ═══════
* In line with the agreement entered into with Zenith Minerals Limited
("Zenith"), shares were issued to Zenith to maintain their shareholding at
15%. Following the listing of the Company's shares on AIM in July 2021, the
anti-dilution protection held by Zenith no longer applies to any new issues of
shares.
10 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.
During the nine-month period ended November 30, 2022, outstanding fees due to
directors totaling US$ Nil were settled by the issue of shares (28 February
2022: US$Nil)
Options and warrants
The total number of share options and warrants in issue as at the period end
is set out below.
Recipient Grant Term Exercise Number at March 1, 2022 (audited) Number Issued Number Lapsed/ cancelled/expired Number Exercised Number at November 30, 2022 (unaudited) Fair value
Date in years Price
Options US$
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 - - - 4,000,000 314,962
Directors and Participants April 2022 5 £0.18 - 9,200,000 - - 9,200,000 1,122,876
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 12,444,331 - - 41,309,049 3,034,955
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
10 Equity settled share based payments (continued)
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.
Nine-month period ended November 30, 2022 Nine-month period ended November 30, 2021 Three-month period ended November 30, 2022 Three-month period ended November 30, 2021
(unaudited) (unaudited) (unaudited) (unaudited)
US$ US$ US$ US$
Share based payments charge 1,285,743 259,816 91,539 -
═══════ ═══════ ═══════ ═══════
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 2022 options
Award date and exercise price
Fair value at grant date £0.09308
Exercise price £0.180
Weight average expected volatility 81.90%
Weighted average expected life (years) 5
Risk-free interest rate (based on comparable companies) 1.52%
Terms of the issued options are as follows:
- 9,200,000 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.
April 2022 supplier warrants
Award date and exercise price
Fair value at grant date £0.06697
Exercise price £0.135
Weight average expected volatility 81.90%
Weighted average expected life (years) 2
Risk-free interest rate (based on comparable companies) 0.80%
Terms of the issued warrants are as follows:
- As part of the fundraise completed during April 2022, certain service
providers of the Company received warrants for services rendered. As a result,
3,244,331 warrants have been issued. All un-exercised warrants expire after a
period of 2 years from grant date. It is assumed that warrants are exercised
within 2 years from date of grant. The applied volatility is based on
historical volatility.
11 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 the nine-month period ended November 30, 2022, 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 March 1, 2022 (audited) Number of Warrants Issued Number of Warrants Lapsed/ cancelled/expired Number of Warrants Exercised Number of Warrants at November 30, 2022 (unaudited) Fair value
Date in years Price
Warrants US$
Shareholder warrants April 2022 2 £0.2100 - 73,195,560 - - 73,195,560 1,011,485
─────── ─────── ─────── ─────── ─────── ───────
- 73,195,560 - - 73,195,560 1,011,485
═══════ ═══════ ═══════ ═══════ ═══════ ═══════
The fair value applied to the shareholder warrants has been classified as a
financial liability. At period end, the warrant liability has been re-measured
to fair value, with a corresponding entry to profit and loss of US$ 3,711,264
(period ended November 30, 2021: Nil) within Warrant Fair Value
Re-Measurement.
Reconciliation of warrant liability fair value:
Fair value
US$
Balance at March 1, 2022 -
Warrants issued during the period 4,722,749
Fair value re-measurement (3,711,264)
───────
Balance at November 30, 2022 1,011,485
═══════
11 Warrants (continued)
April 2022 shareholder warrants
Grant date fair value Award date and exercise price
Fair value at grant date £0.0492
Exercise price £0.21
Weight average expected volatility 81.90%
Weighted average expected life (years) 2
Risk-free interest rate (based on comparable companies) 0.80%
November 30, 2022 fair value Award date and exercise price
Fair value £0.0118
Exercise price £0.21
Weighted average expected volatility 80.5%
Weighted average expected life remaining (years) 1.39
Risk-free interest rate (based on comparable companies) 4.38%
As part of the fundraise completed during April 2022, all participating
shareholders received a warrant on 1:1 basis for shares acquired. As a result,
73,195,560 warrants have been issued. All un-exercised warrants expire after a
period of 2 years from grant date. It is assumed that warrants are exercised
within 2 years from date of grant. The applied volatility is based on
historical volatility.
12 Basic and diluted loss per share
The calculation of basic profit per share of the Company is based on the loss
for the period of US$ 3,074,862 (nine-month period to November 30, 2021: loss
of US$ 2,052,489) and the weighted average number of shares of 379,122,544 (at
November 30, 2021: 147,618,936) in issue during the period.
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares such as warrants and options. An adjustment for the dilutive
effect of share options and warrants in the current period 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
period.
13 Related party transactions and balances
Edgewater Associates Limited ("Edgewater")
During the nine-month period ended November 30, 2022, Directors' and Officers'
insurance was obtained on an arms-length basis 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.
During the period, the premium payable on the policy was US$ 49,318 (year
ended February 28, 2022: US$ 44,303), of which US$ 32,122 was prepaid as at
the period end (February 28, 2022: US$ 11,076).
14 Commitments and contingent liabilities
The Group has certain obligations to expend minimum amounts on exploration
works on mining tenements in order to retain an interest in them, equating to
approximately US$ 415,454 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.
15 Events after the reporting date
On 21 December 2022, the Company awarded 500,000 ordinary share options each
to Euan Jenkins and Alex Borrelli, independent non-executive directors of the
Company.
ENDS
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