REG - European Lithium Ltd - Interim Financial Report

European LithiumAnnouncement

15/03/2019 11:55

RNS Number : 0459T
European Lithium Limited
15 March 2019
 


European Lithium Ltd
("European Lithium", "EUR" or "the Company")
Interim Financial Report
European Lithium is pleased to announce its audited interim financial report for the 6 months ended 31 December 2018.
The full report can be found on the company website:
https://wcsecure.weblink.com.au/pdf/EUR/02086868.pdf
DIRECTORS' REPORT
Your Directors submit the Interim Financial Report of European Lithium Limited (European Lithium or the Company) and its controlled entities (together the Group) for the half-year ended 31 December 2018.  In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:
Review of Operations
Corporate
Project Director Appointment
On 6 August 2018, the Company announced the appointment of Christian Heili as Project Director of the Company.  Mr Heili is a highly experienced mining engineer with more than 30 years' experience in business, project management and wide-ranging operations including underground and beneficiation processes within the mining industry. Mr Heili has an M.Sc. (Eng) from Montan-University of Leoben, Austria, and an MBA from Henley Management College, UK.  Mr Heili commenced his position as Project Director in November 2018.
Financing Facility
On 7 September 2018, the Company entered into a convertible note agreement with MEF I, L.P. (Magna) to fast-track the completion of a DFS at the Wolfsberg Lithium Project in Austria.  As at 31 December 2018, the Company has drawn down A$2.5 million (Tranche A) from the A$10 million facility and a further A$7.5 million is available in tranches upon the Company meeting key milestones relating to the DFS process and standard conditions precedent.
Capital Raisings and Movements
On 7 September 2018, the Company issued 600,672 fully paid ordinary shares to Magna representing the Tranche A commitment fee of 4% of the investment amount payable in shares.
On 20 September 2018, the Company released 101,978,820 fully paid ordinary shares and 200,000,000 options with an exercise price of $0.10 exercisable on or before 30 June 2020 from ASX imposed escrow.
On 1 November 2018, the Company issued 1,550,824 fully paid ordinary shares to Magna following their election to convert some of the funds borrowed under the convertible loan agreement into fully paid ordinary shares of the Company.
On 6 December 2018, the Company issued 350,000 fully paid ordinary shares to the Company's Project Director Mr Christian Heili as a sign-on bonus pursuant to a contracting agreement.
On 11 December 2018, the Company issued 11,250,000 unlisted options to Directors as approved at the Company's 2018 AGM.  The options are exercisable at $0.15 each on or before 31 May 2019 and were issued in consideration for the Company completing its Pre-Feasibility Study (PFS).
On 11 December 2018, the Company issued 2,500,000 unlisted options to Empire Capital as approved at the Company's 2018 AGM.  The options are exercisable at $0.20 each on or before 11 December 2021 and were issued for services provided in establishing the Magna financing facility.
On 14 December 2018, the Company issued 1,695,515 fully paid ordinary shares to Magna following their election to convert some of the funds borrowed under the convertible loan agreement into fully paid ordinary shares of the Company.
NEX Listing
On 26 November 2018, the Company announced that it had been admitted to the NEX Exchange Growth Market (NEX).  Trading on the NEX commenced on 26 November 2018.
Vienna Listing
On 10 September 2018, the Company announced that it is investigating listing on the Prime Market of the Vienna Stock Exchange (VSE). 
Brandl & Talos Rechtsanwälte GmbH, one of the leading law firms in Austria has been engaged to support the Company with the listing process, as well as Metrum Communications GmbH, a leading strategic communications consulting company in the fields of financial and corporate communications in Austria, on the communication side.
The Company will remain listed on the ASX for the foreseeable future. Any changes that the Board approves will be subject to all the required regulatory approvals in both countries, including shareholder approval.
Sale of Paynes Find Gold Project
The Company previously entered into a binding terms sheet with Cervantes Gold Pty Ltd, a wholly owned subsidiary of Cervantes Corporation Limited (ASX: CVS) (CVS) for the sale of its 100% owned Paynes Find Gold Project located in Western Australia (the Transaction).
Consideration for the Transaction consisted of $500,000 cash (of which $420,000 had been received as at 30 June 2018) and $500,000 share capital in CVS. 
On 5 July 2018, the Company announced that it had agreed to settle the remaining cash consideration of $80,000 through the issue of 7,000,000 shares in CVS shares as well as the issue of one free attaching unquoted option for every two shares issued which are exercisable at 1.5 cents each on or before 30 June 2020.
Wolfsberg Lithium Project - Austria
Drilling
Mobilisation of equipment onto site has been completed for the drilling program to convert the Zone 1 10.98mt JORC resource into Measured and Indicated category.  Applications for the drilling have been lodged with the relevant authorities and drilling collar locations and pads for the 31-drill hole programme totalling 11,330 metres have been surveyed by a licensed surveyor.  Approval from the authorities is expected to be received in Q2 2019 following which drilling will commence immediately.
Definitive-Feasibility Study (DFS)
During the period, The Mineral Corporation (TMC) completed the definition of the scope of work for the DFS, based on the results of the PFS being published in April 2018.
The PFS had identified areas in geology, hydrogeology, mining, metallurgy, land access and environmental to be investigated for the DFS so that design changes during the DFS will be minimised.
As outlined above, a drilling program is underway to convert the 10.98mt JORC resource into Measured and Indicated category.  The Zone 1 drilling programme to increase the Measured and Indicated Resource would allow the DFS to be undertaken at the envisaged higher mining rate of max. 800,000tpa.
During the period, TMC together with DRA Global (DRA) completed the scope of works for the DFS project engineering design and integration of third-party studies into the DFS.  SRK Consulting (SRK) has also prepared the scope of work for the optimised mine design and increased declaration of mineral reserves, based on the PFS and current drilling program results when completed.
In December 2018, the Company awarded to Dorfner/Anzaplan the contract for complex metallurgical test work and pilot processing with work commenced immediately.  The awarding of this contract is a key milestone in order to complete the DFS in a timely manner.
The Company has sent a 300t sample with 150 t each for Amphiboltite Hosted Pegmatite (AHP) and Micaschist Hosted Pegmatite (MHP) to Dorfner Anzaplan's German testing facilities to commence the detailed metallurgical process studies through the pilot plant.  This testing is to ensure a high-quality final product (LithiumHydroxide) is produced using the most efficient and competitive metallurgical processes from the beginning of the production cycle.
Land Access
As previously announced, the arbitration on the validity of the agreement reached on 15 April 2011 granting ECM lithium AT GmbH access to and use of Glock Gut property ruled in June 2017 that the agreement remained in full force.  On 5 December 2018 another arbitration hearing was held in Vienna to determine the further procedural steps of the proceeding.  It is expected that a follow up and final arbitration hearing will be held in June 2019 with the outcome of these hearings to be awarded in October 2019.
Environmental
During the half-year Umweltbüro conducted and completed additional Biotope mapping and presented the final reports covering possible sensitive flora and fauna species.  Also during the period, Umweltbüro completed a base line study for the road transport including the quality and impact along the different routes from the mine site to the expected logistical discharge points.  Monitoring of water flows and quality from the mine continue.
Hydrogeology
The Company continues to monitor hydrogeological baseline activities as follows:
·    Weekly: measuring the water level in surface and underground measuring sides including drill holes and creeks
·    Monthly: measuring specific chemical and physical parameters (e.g., temperature, pH-value, conductivity, redox potential) at the surface and underground measuring sides
·    Quarterly: taking samples from the mine and surface water measuring sides and sending them to Agrolab, an Austrian lab specialized in water analysis. Agrolab is analyzing the samples based on the criteria of the Austrian drinking water ordinance
Data from the above activities is fed into a water measuring database from which an annual report is produced.
Marketing
The marketing study undertaken by Benchmark Minerals Intelligence as part of the PFS projected that lithium hydroxide prices in Europe would continue to increase from the present level to a peak in 2022 and then decline to stabilise.  Taking recent global lithium industry developments into account, the strategy for the Company remains unchanged and focuses on the supply of lithium hydroxide to the nascent lithium battery plants of Europe.  The Company is in discussion with a number of these regarding future off-take contracts and good progress has already been made in the advanced discussions with potential off-take partners.
Horizon 2020
The Company's 100% owned subsidiary ECM Lithium AT GmbH (ECM) has been invited to participate in the European Union funded Horizon 2020 - GREENPEG programme.  The Horizon 2020 - GREENPEG project aims to develop innovative exploration toolsets and proprietary technologies in order to secure the sustainable supply of lithium and other critical raw materials to Europe by increasing their resources and reducing the import dependency of these raw materials.  ECM is currently preparing to submit the first of the two-stage submission process which will outline suggested and planned works.
Auditor's Independence Declaration
Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the Company with an Independence Declaration in relation to the review of the half-year financial report.  This Independence Declaration is set out on page 5 and forms part of this Directors' report for the half-year ended 31 December 2018.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306(3) of the Corporations Act 2001.




____________________________
Antony Sage
Non-Executive Chairman
15 March 2019
 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER 2018







Note


For the six months ended
31 December 2018
$


For the six months ended
31 December 2017
$


 




Continuing operations














 




Revenue and other income


3


23,817


659,252


 




Employee benefits expense


4


(98,000)


(117,548)


 




Loss on fair value of financial assets through profit or loss


6


(81,000)


-


 




Depreciation and amortisation expense






(1,440)


(1,181)


 




Finance costs


4


(27,715)


(4,232)


 




Transaction costs relating to the issue of convertible note facility


7


(100,000)


-


 




Difference between transaction price of convertible note and fair value at initial recognition


 
7


 
(318,115)


 
-


 




Fair value loss on remeasurement of convertible note


7


(46,754)


-


 




Impairment of deferred exploration and evaluation expenditure


5


(330)


(29,333)


 




Consulting fees






(327,212)


(267,778)


 




Travel expenses






(251,250)


(121,866)


 




Regulatory and compliance costs


4


(584,492)


(126,030)


 




Share based payments


8


(435,258)


-


 




Other expenses


4


(21,589)


(169,241)


 




Loss before income tax






(2,269,338)


(177,957)


 




Income tax expense






-


-


 




Loss after tax from continuing operations






(2,269,338)


(177,957)
























 




Other comprehensive income, net of income tax














 




Items that may be reclassified to profit or loss














 




Exchange differences on translation of foreign operations






529,387


569,662


 




Other comprehensive income for the period, net of income tax






529,387


569,662


 




















 




Total comprehensive loss for the period






(1,739,951)


391,705


 




















 




















 




Loss per share for the period














 




Basic loss per share (cents per share)


9


(0.41)


(0.04)


 




Diluted loss per share (cents per share)


9


(0.41)


(0.04)


 











 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018







Note


31 December
2018
$


30 June 2018
$


 




ASSETS














 




Current Assets














 




Cash and cash equivalents






3,044,331


3,258,892


 




Trade and other receivables






483,154


599,840


 




Total Current Assets






3,527,485


3,858,732


 




















 




Non-Current Assets














 




Property, plant and equipment






6,270


4,880


 




Deferred exploration and evaluation expenditure


5


29,285,916


27,465,305


 




Restricted cash and other deposits






31,593


30,935


 




Financial assets


6


224,000


225,000


 




Total Non-Current Assets






29,547,779


27,726,120


 




 
TOTAL ASSETS






33,075,264


31,584,852


 




















 




LIABILITIES














 




Current Liabilities














 




Trade and other payables






487,025


656,789


 




Convertible note


7


2,557,453


-


 




Total Current Liabilities






3,044,478


656,789


 




















 




TOTAL LIABILITIES






3,044,478


656,789


 




















 




NET ASSETS






30,030,786


30,928,063
























 




EQUITY














 




Issued capital


8


17,160,514


16,711,098


 




Reserves






6,947,690


6,025,045


 




Retained earnings






5,922,582


8,191,920


 




















 




TOTAL EQUITY






30,030,786


30,928,063


 



 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2018







Note


31 December
2018
$


31 December
2017
$


 




Cash flows from operating activities














 




Payments to suppliers and employees






(1,478,111)


(951,580)


 




Payments for exploration






(1,149,251)


(1,362,857)


 




Finance costs






(27,715)


(4,232)


 




Increase in restricted cash balances






-


222,184


 




Interest received






23,817


363


 




VAT Refund






(6,752)


233,138


 




Net cash used in operating activities






(2,638,012)


(1,862,984)
























 




Cash flows from investing activities














 




Proceeds from the sale of exploration tenements






-


150,000


 




Payment for property, plant and equipment






(2,716)


-


 




Net cash provided by/(used in) investing activities






(2,716)


150,000


 




















 




Cash flows from financing activities














 




Proceeds from capital raisings






-


8,377,309


 




Payment for share issue costs






-


(451,375)


 




Proceeds from convertible note facility






2,500,000


-


 




Transaction costs related convertible note facility


7


(75,000)


-


 




Net cash provided by financing activities






2,425,000


7,925,934


 




















 




Net increase/(decrease) in cash and cash equivalents






(215,728)


6,212,950


 




Cash and cash equivalents at beginning of year






3,258,892


549,855


 




Effects on exchange rate fluctuations on cash held






1,167


4,871


 




Cash and cash equivalents at end of year






3,044,331


6,767,676


 



The above statements are to be read in conjunction with the notes to the Financial Statements in the full report.
- END -
 
For further information please contact:



European Lithium Ltd


+61 861 819 792




Tony Sage


info@europeanlithium.com
 
 




NEX Corporate Adviser


+44 207 220 1666




James Joyce








James Sinclair-Ford


















Tavistock (UK PR & IR Adviser)








Emily Fenton / Oliver Lamb


+44 207 920 3150
+44 778 855 4035



 
 




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