REG - European Lithium Ltd - Response to ASX Query

European LithiumAnnouncement

18/05/2020 08:00

RNS Number : 1824N
  
European Lithium Limited
  
18 May 2020
  
 

European Lithium Ltd
("European Lithium", "EUR" or "the Company")
 
Response to ASX Query
 
European Lithium Limited (ASX: EUR, FRA: PF8, VSE: ELI, NEX: EUR) (the "Company") today responded to queries from the Australian Securities Exchange ("ASX"). A copy of the responses can be seen below and the full ASX announcement can be seen at: https://www.asx.com.au/asx/share-price-research/company/EUR
The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014
For further information please contact:




European Lithium Ltd


+61 861 819 792




Tony Sage


info@europeanlithium.com 




NEX Corporate Adviser


+44 207 220 1666




James Joyce


 




James Sinclair-Ford


 




Capitalised terms have the meaning given in the letter.
Below are ASX's queries and EUR's responses:




1. Does EUR consider the Bank Information to be information that a reasonable person would expect to have a material effect on the price or value of its securities?




No.




2. If the answer to question 1 is "no", please advise the basis for that view.




EUR is of the view that a reasonable person would not expect the Bank Information to, at the time EUR became aware of the Bank Information, have a material effect on the price or value of its securities.  This was because:
§ Winance had previously transferred funds to EUR under the facility, and had a track record in performing its obligations under its funding agreement with EUR; and
§ at the time Winance advised EUR that it had initiated the transfer (a copy of the swift transfer was provided on 9 March 2020) and that the delay in receiving funds was temporary and due to Winance's intermediary bank in London requiring additional information and staffing shortages due to COVID-19 restrictions in London.  See the responses to question 5 below for details of communications with Winance.
For those reasons, it was reasonable for EUR to expect that there was no basis to believe that the funds would not be received in due course, and for that reason EUR did not consider the Bank Information to be information that a reasonable person would expect to have a material effect on the price or value of EUR's securities. 




3. When did EUR first become aware of the Bank Information?




The Company first became aware of the Bank Information on 11 March 2020 when it had not received any funds from Winance.




4. If EUR first became aware of the Bank Information before 12 May 2020 (being the date of the Query Response), did EUR make any announcement prior to the 12 May 2020 which disclosed the information?  If so, please provide details.  If not, please explain why this information was not released to the market at an earlier time, commenting specifically on when you believe EUR was obliged to release the information under Listing Rule 3.1 and 3.1A and what steps EUR took to ensure that the information was released promptly and without delay.




Prior to 1 April 2020 no, for the reasons set out under questions 1 and 2.
By 1 April 2020 EUR had determined that the delays in receiving the funding was information that a reasonable person would expect to have a material effect on the price or value of its securities and for that reason on that day it announced to ASX that it was in communication with Winance who had confirmed its commitment to finalising the transaction as soon as practicable.
EUR provided a further update on 30 April 2020 when it announced to ASX that it was yet to receive Tranche 2 funding from Winance, and that it was in communication with Winance who had confirmed their commitment to finalising the transaction.




5. Commenting specifically on the Receipt of Funds Information, including clause 3.2 of the Facility which required Winance to transfer the Subscription Price by no later than the business day after EUR's formal request for A$2m (which EUR made on 4 March 2020):
5.1 Did EUR make any enquiries of Winance after 5 March 2020 to track the progress of the A$2m transfer?  In answering this question, please provide details of the enquiries made, including:
5.1.1 the date(s); and
5.1.2 a summary of the nature of the enquiry by EUR and the responses(s) by Winance, including any reason(s) for the delay in transferring the funds pursuant to the drawdown under the Facility.




Yes, the Company has been in constant contact with Winance regarding the convertible loan note facility and timing as to receipt of the funds to be advanced under the facility.  Below is a summary of the key dates and responses regarding the status of the funds transfer:
§ 9 March 2020 - Winance provides EUR with a SWIFT copy for the first tranche of the funds transfer.  Winance confirmed on 28 February 2020 that the funds would be remitted in two tranches which would be two days apart from each other.
§ 11 March 2020 - EUR requests an update from Winance regarding the status of the funds transfer.  Winance confirm that they are checking the status with their bank.  They confirm that they have initiated the funds transfer from their side.  Winance confirm that the funds are 'stuck' with the London based intermediary bank.
§ 13 March 2020 - EUR requests an update from Winance regarding the status of the funds transfer.  The Chairman has a 30-minute phone conversation with Winance who confirm that the funds have been sent. That day EUR announced its 31 December 2019 half yearly accounts.
§ 16 March 2020 - Winance confirm that the intermediary bank has rejected the funds and the funds will be returned to Winance.  Winance confirm that they will initiate the transfer as soon as funds are credited to their account.
§ 19 March 2020 - Winance confirms that their bank is the cause of being unable to transfer the funds.  Winance confirms that they are looking at other options to get the funds over to EUR.
§ 23 March 2020 - Winance request that the funds be transferred in USD and as such EUR provides USD bank account details.
§ 24 March 2020 - EUR informed Winance that USD funds have not been received.  Winance advise that the transfer is subject to review by the bank's compliance team due to previously returned transfer.  The bank confirms that all transfers are being delayed and as such they are unable to confirm timing as to when the transfer will proceed.
§ 25 March 2020 - Winance confirm that they are in contact with them bank to prioritise the transfer of funds.
§ 26 March 2020 - The Chairman of EUR holds several phone conversations with Winance.
§ 30 March 2020 - Winance informs EUR that the transfer is still with their bank's compliance team.
§ 3 April 2020 - Winance confirms to EUR that they are equally as frustrated with their bank and continue to follow it up.
§ 6 April 2020 - EUR advises Winance that they may need to seek alternative financing solutions if funding is not received imminently.
§ 8 April 2020 - Winance confirm that the bank has informed them that the reason for the delay as a result of additional compliance measures on its accounts.  Winance confirmed that they were seeking approval from the bank to continue with the transfer.
§ 16 April 2020 - Winance advise that they have had a change in CEO.  Winance confirm that once the transfer of authorisation from the CEO is complete that they will be in a better position to resolve and expedite the pending issues with banks and prime brokers.  Winance acknowledge that EUR is seeking alternative funding options however confirm their commitment to working with EUR.
§ In late April and early May 2020 Tony Sage (EUR's executive chairman0 had two conference calls with Waqas Ibrahim (Winance's chief financial officer) and Kapil Singh (of Kapital Global Company, broker).  During the calls Mr Ibrahim confirmed that Winance would proceed with the funding.




5.2 If the answer to question 5.1 is 'no', please explain why EUR did not make enquiries in circumstances where EUR lodged the Appendix 3B on 10 March 2020 and the Half Year Accounts on 13 March 2020.




Not applicable.




6. Please confirm that EUR is complying with the Listing Rules and, in particular, Listing Rule 3.1.




EUR confirms that it is in compliance with the Listing Rules, and in particular, Listing Rule 3.1.




7. Please confirm that EUR's responses to the questions above have been authorised and approved under its published continuous disclosure policy or otherwise by its board or an officer of EUR with delegated authority from the board to respond to ASX on disclosure matters.




EUR confirms that the above responses have gone through the required Board approval process.
 
 
Regards,
 
 
----------------------------------------------
For and on behalf of the EUR Board,
Tony Sage
Non-Executive Chairman
 
 


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