TIDMEUR
RNS Number : 0516Z
European Lithium Limited
15 September 2020
European Lithium Ltd
("European Lithium", "EUR" or "the Company")
Annual Report 30 June 2020
European Lithium Limited (ASX:EUR, FRA:PF8, NEX:EUR, VSE:ELI)
(EUR or the Company) is pleased to announce its audited annual
report for the year ended 30 June 2020.
The full report can be found at:
https://europeanlithium.com/announcements/financial-reports/
Visit the Company's website (www.europeanlithium.com) to find
out more about the advanced Wolfsberg Lithium Project located in
Austria.
For further information please contact:
European Lithium Ltd +61 861 819 792
Tony Sage ir@europeanlithium.com
AQSE Corporate Adviser +44 207 220 1666
James Joyce
James Sinclair-Ford
DIRECTORS REPORT
Your directors present their report on European Lithium Limited
(Company or EUR) for the financial year ended 30 June 2020.
1. DIRECTORS
The names and details of the directors in office at any time
during or since the end of financial year are:
Antony Sage Non-Executive Chairman
Malcolm Day Non-Executive Director
Kimon Gkomozias Executive Director (appointed 2 September 2020)
Stefan Müller Non-Executive Director (retired 4 March 2020)
Tim Turner Non-Executive Director (appointed 4 March 2020,
resigned 2 September 2020)
2. COMPANY SECRETARY
The names and details of the company secretary in office at any
time during or since the end of financial year are:
Melissa Chapman Company Secretary
3. PRINCIPAL ACTIVITY
The principal activity of the Company during the financial year
was Lithium exploration in Austria.
4. OPERATING RESULTS
The Company reported a net loss of $3,257,923 for the financial
year (2019: $2,802,667 net loss).
5. DIVIDS PAID OR RECOMMED
The directors do not recommend the payment of a dividend and no
amount has been paid or declared by way of a dividend to the date
of this report.
6. SIGNIFICANT CHANGES IN STATE OF AFFAIRS
During the year there were no significant changes in the state
of affairs of the Company other than as disclosed in this report or
in the Financial Report.
7. EVENTS SINCE THE OF THE FINANCIAL YEAR
On 20 July 2020, the Company issued 3,636,363 shares to Winance
upon the conversion of 200 notes. On the same day, the Company
converted $90,909 of debt owing to Winance through the issue of
3,030,303 shares in relation to the Winance shortfall amount
payable (refer to the 2019 AGM notice of meeting for further
details).
On 31 July 2020, the Company announced that it had received the
balance of funding of A$1.0m (before expenses) from Winance in
relation to Tranche 2 funding (refer to note 16b for further
details).
On 2 September 2020, the Company announced the appointment of Mr
Kimon Gkomozias as Executive Director and the resignation of Mr
Turner Turner effective 2 September 2020. On the same day, the
Company announced its intention to undertake a placement at an
issue price of $0.045 with a 1 for 4 free attaching option (which
are exercisable at $0.05 on or before 31 July 2022) to raise
proceeds of up to AUD$2m.
No other matters or circumstances have arisen since the end of
the financial year which significantly altered or may significantly
alter the operations of the Company, the results of those
operations or the state of affairs of the Company in financial
years subsequent to 30 June 2020.
8. ENVIRONMENTAL REGULATIONS
The Company is aware of its environmental obligations with
regards to its exploration activities and ensures that it complies
with all regulations when carrying out any exploration work.
9. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Disclosure of information regarding likely developments in the
operations of the Company in future financial years and the
expected results of those operations is likely to result in
unreasonable prejudice to the Company. Therefore, this information
has not been presented in this report.
10. REVIEW OF OPERATIONS
Wolfsberg Lithium Project
COVID-19
Early in 2020, the Company temporarily suspended operational
activities at its Wolfsberg Lithium project in response to the
COVID-19 global pandemic. The situation is still highly uncertain
with governments, companies and individuals required to follow
recommendations to help in controlling the rate of infection at a
global scale. More recent times has seen some evidence of easing of
restrictions, continued restriction on travel specifically is
impacting the Company directly.
Drilling
GEO Unterweissacher and Mine-IT completed the lithological
models for Zones 1 and 2 in September 2018. SRK Consulting (UK)
(SRK) and its consultants assisted the Company to develop a
drilling program intended to convert 4.68 million tonnes of
Inferred resource in Zone 1 into Measured and Indicated category
and upgrade resources to 10.98mt with adherence to the JORC Code
(2012). Completion of this drilling program will allow the larger
resource to be used for the definitive feasibility study (DFS) and
support the envisaged higher mining rate of max. 800,000tpa than
that used for the PFS which was restricted to the current Measured
and Indicated Resource of 6.3 million tonne at 1.17% Li(2) O.
The drilling program was prioritised into two-stages, with stage
1 shallow drilling (<300m) and stage 2 deep holes
(>300m).
Shallow drilling program
During the year, five shallow drill holes of phase 1 with a
maximum depth of 290.0 m were completed in Zone 1. All five drill
holes show multiple pegmatite intersections. Three drill holes
contain pegmatite intersections with a true thickness up to 2m. The
phase 1 drillings confirm the suspected extension of pegmatite
veins with depth (see Sections).
Figure 1: Plan view of Lithium deposit Wolfsberg - area of
investigation with drill holes of Phases 1 and 2
The drill hole collar positions and properties are shown in
Table 1.
See
https://europeanlithium.com/wp-content/uploads/2020/09/EUR-Annual-Report-30-June-2020.pdf
Figure 1 : Section for drill hole P18-13
Drill hole P18-13 intercepted several pegmatite veins with most
remarkable one at 216.1m having 4.1m true thickness with more than
1.5% Li(2) O composited grade.
See
https://europeanlithium.com/wp-content/uploads/2020/09/EUR-Annual-Report-30-June-2020.pdf
Figure 2 : Section for drill hole P18-22
Drill hole P18-22 intercepted three major pegmatites veins
ranging from 0.85 to 1.17m of true thickness with lithium grade up
to 0.7 % Li(2) O.
See
https://europeanlithium.com/wp-content/uploads/2020/09/EUR-Annual-Report-30-June-2020.pdf
Figure 3 : Section for drill hole P18-26
Drill hole P18-26 intercepted four pegmatites with true
thickness ranging from 0.81m to over 2m with lithium up to 1% Li(2)
O.
See
https://europeanlithium.com/wp-content/uploads/2020/09/EUR-Annual-Report-30-June-2020.pdf
Drill holes P18-13, P18-22 and P18-26 were located between deep
drilling undertaken in 2017 and historical (MINEREX) drilling in
order to assist in the conversion of Inferred resources (2017) into
Indicated.
Drill holes P18-28 and P18-29 were exploration drill holes, and
they are projected to confirm continuity of the pegmatite vein
toward the west where the previous mapping identified outcropping
pegmatites at the area. Although P18-29 intercepted relative thin
spodumene-bearing pegmatite vein, the results proved that the
pegmatite veins remain open toward that area. Drill hole P18-28 is
located in the area between established Inferred resources (2017)
and P18-29. This drill hole confirms continuity of pegmatites veins
toward the west. Drill hole P18-28 intercepted at 82.7m 2.05m of
pegmatite containing more than 1.5 % Li(2) O.
Table 1: Drill hole collar positions and properties of phase 1
drilling
Drill core samples were assayed at ALS laboratory in Dublin,
Ireland where crushing, pulp and Li(2) O analysis was
completed.
Drill Measured Measured
Hole Pegmatite Pegmatite Thickness Dip Angle True Thickness
ID From (m) To (m) (m) (deg) (m)
P18-13 151.36 152.10 0.74 45 0.52
-------- ---------- ---------- ----------- ----------- ---------------
P18-13 201.20 202.39 1.19 45 0.84
-------- ---------- ---------- ----------- ----------- ---------------
P18-13 216.10 219.20 3.10 45 2.19
-------- ---------- ---------- ----------- ----------- ---------------
P18-13 219.80 222.50 2.70 45 1.91
-------- ---------- ---------- ----------- ----------- ---------------
P18-13 254.05 254.35 0.30 40 0.23
-------- ---------- ---------- ----------- ----------- ---------------
P18-13 270.20 270.80 0.60 35 0.49
-------- ---------- ---------- ----------- ----------- ---------------
P18-22 134.10 135.30 1.20 45 0.85
-------- ---------- ---------- ----------- ----------- ---------------
P18-22 192.00 193.25 1.25 30 1.08
-------- ---------- ---------- ----------- ----------- ---------------
P18-22 200.50 201.75 1.25 30 1.08
-------- ---------- ---------- ----------- ----------- ---------------
P18-22 203.70 204.10 0.40 20 0.38
-------- ---------- ---------- ----------- ----------- ---------------
P18-22 252.30 253.60 1.30 55 0.75
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 152.55 153.36 0.81 45 0.57
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 161.85 162.34 0.49 50 0.31
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 163.36 163.76 0.40 50 0.26
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 164.50 167.75 3.25 45 2.30
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 201.20 203.43 2.23 50 1.43
-------- ---------- ---------- ----------- ----------- ---------------
P18-26 239.40 240.00 0.60 40 0.46
-------- ---------- ---------- ----------- ----------- ---------------
P18-28 55.75 56.50 0.75 15 0.72
-------- ---------- ---------- ----------- ----------- ---------------
P18-28 57.70 58.10 0.40 25 0.36
-------- ---------- ---------- ----------- ----------- ---------------
P18-28 82.70 85.20 2.50 35 2.05
-------- ---------- ---------- ----------- ----------- ---------------
P18-29 32.82 33.15 0.33 20 0.31
-------- ---------- ---------- ----------- ----------- ---------------
P18-29 101.00 101.40 0.40 30 0.35
-------- ---------- ---------- ----------- ----------- ---------------
P18-29 226.57 227.03 0.46 20 0.43
---------- ---------- ----------- ----------- ---------------
Table 1 : Pegmatite intersection widths and calculated true
Proposed deep drilling program (>300m)
A deep drilling program is proposed and an application was
lodged at the Mining Authority in Leoben to convert Inferred
resources into Indicated as well as adding additional
Inferred/Indicated resources toward the east where drilling
completed last year confirmed the extension of mica schist (MHP) in
that area.
The deep drilling program (>300m) enveloped 20 drill holes
totalling 7740m. The drill holes are divided into two groups:
-- Proposed drill holes along forestry roads ("Abschnitt
Forstwegnutzung NEU - keine Waldeigenschaft") enveloping 11 drill
holes totalling 4720m and,
-- Proposed drill holes along the road in forestry property
(Abschnitt Forstwegnutzung NEU - Waldeigenschaft) enveloping nine
drill holes totalling 3020m.
The application for the deep holes, with more than 300m of depth
covering phase 2 of the drilling program in Zone 1, was lodged in
2019 with the Leoben Mining Authority. An official hearing at the
municipality involving compulsory public and private parties during
the approval process took place on 30 October 2019 and was
coordinated and moderated under the leadership of the Leoben Mining
Authority.
First decree for the deep holes with more than 300m of depth
covering phase 2 of the drilling program in Zone 1 has been
received by the forestry authority. This document is a prerequisite
for the final decree issued by the Mining Authority.
The Company anticipated receipt of the final decree for the deep
holes, with more than 300m of depth covering phase 2 of the
drilling program in Zone 1, during Q2/2020. Due to the foreseeable
reduction of activities by the Austrian Government related to the
COVID-19 pandemic, the timeline to issue the final decree by the
Mining Authority is uncertain and it remains pending. The Company
is in close contact with the Mining Authority to assist with a fast
track where applicable.
Hydrogeology
During the year, preparation work was undertaken by SRK, and the
geological consultant, GEO Unterweissacher, to ensure in-hole
hydrogeological test work has been completed appropriately and can
continue in the future.
The Company continues with hydrogeology monitoring programs on a
weekly, monthly, and quarterly time frame:
-- Weekly monitoring includes measuring the water level at the
surface and underground sites,
-- The monthly monitoring program includes sampling and
analysing defined chemical and physical parameters,
-- The quarterly monitoring program includes water sampling and
analysing water from previously defined field sites and analyses at
certified Austrian lab. The water samples are analysed according to
the Austrian state requirements for drinking water.
All hydrogeological data is stored and secured into the Company
database. Data from the above activities is fed into a water
measuring database from which an annual report is abbreviated.
Land Access
Necessary fieldwork at the Project concluded without further
obstruction by the landowner, based on the ruling of the
arbitrational tribunal from 26 June 2017, in favour of ECM Lithium
GmbH (ECM), validating the waiver agreement from 15 April 2011
(Waiver Agreement) which grants ECM the right to accede to and use
Glock Gut property.
Although the landowner made further attempts to terminate the
Waiver Agreement it constitutes an improper action in accordance
with the Waiver Agreement and the 2017 ruling of the arbitrational
tribunal and is now subject to possible future arbitration. ECM
expect this arbitration to close in its favour and remains in close
contact with all parties to find an amicable solution to the
matter.
Metallurgy
Dorfner Anzaplan, a leading independent consultant in lithium
and industrial minerals, carried out significant metallurgical test
work during the year to assess and optimize the process lines,
flowsheets, and layouts. This testing is to ensure a high-quality
final product (Lithium Hydroxide) is produced using the most
efficient and competitive metallurgical processes from the
beginning of the production cycle. The results and scope of work
have been reviewed and the remaining lock cycle tests remain
pending with delays due to the COVID-19 pandemic.
All metallurgical test work took place at the Wolfsberg Project
pilot plant at Dorfner/Anzaplan's testing facility in Hirschau,
Germany. The pending lock cycle tests will also take place in
Hirschau, Germany. A detailed technical report will be published
once this test work is completed and reviewed, dependant on the
Company returning to full operations on withdrawn of government
restrictions.
DRA Global has independently assessed and reviewed the
metallurgical test work to complete the research in a timely manner
and attended to all work stages at the testing facility in
Hirschau.
Marketing Activities
The Company remains focused on the supply of Lithium Hydroxide
to the nascent lithium battery plants of Europe. The Company is in
discussion with several industry players regarding future off-take
contracts and good progress has already been made in the advanced
discussions with potential off-take partners.
Horizon 2020 and GREENPEG
During the year, the Company's 100% owned subsidiary ECM Lithium
AT GmbH (ECM) successfully joined the European Union funded Horizon
2020 - GREENPEG programme.
The Company continued to work proactively in the already
approved and funded Horizon 2020 LithRef programme.
Continued participation shows the Company's abilities and
eligibility to contribute with EU-level support to the sustainable
supply of battery grade lithium, sourced and produced in
Europe.
Tenement Renewal
In Q4 2019 the company successfully renewed 54 exploration and
11 mining licenses. The decision of the Mining Authority is based
on the significant effort the Company has demonstrated to develop
the Wolfsberg Lithium Project. Exploration progress to increase the
resources and metallurgic test work to produce battery grade
Lithium Hydroxide to high level industrial purity has demonstrated
to the Mining Authority that the Company can develop the Wolfsberg
Lithium Project through the DFS and into production.
Corporate
Board Restructure
On 4 March 2020, the Company announced the appointment of Mr Tim
Turner and the resignation of Mr Müller as Non-Executive Director
of the Company. Mr Turner subsequently resigned as a Non-Executive
Director effective 4 September 2020.
Financing Facility - Magna
On 7 September 2018, the Company established a A$10m finance
facility with MEF I, L.P. (Magna or Investor) of which an initial
amount of A$2.5m was drawn down on 14 September 2018.
In July 2019 the Company established a new finance facility with
Winance Investment LLC replacing the facility with Magna.
On 13 September 2019, Magna agreed to extend the maturity date
of the convertible notes on issue from 7 September 2019 to 30
November 2019. In consideration for this extension, the Company
issued Magna 1,000,000 fully paid ordinary shares on 13 September
2019.
During the year, Magna converted 253,260 notes and redeemed
434,782 notes (each with a face value of US$1.10). As at 30 June
2020, Magna had nil convertible notes remaining.
Financing Facility - Winance
On 31 July 2019, the Company announced that it had secured an
A$10m finance facility with Winance Investment LLC (Winance) to
repay the residual amount owing to Magna, to fast-track the
completion of a DFS at the Company's Wolfsberg Lithium Project in
Austria and for general working capital purposes.
An initial amount of A$2.0m (2,000 notes) was drawn down on 20
September 2019 (Tranche 1). On 5 March 2020, the Company announced
that it had agreed to draw down a further A$2.0m (2,000 convertible
notes) under the Winance facility (Tranche 2). During the year, the
Company received Tranche 2 funding of A$1.0m (before expenses) and
subsequently 1,000 convertible notes were released from escrow.
Subsequent to the year end, the Company has received the final
Tranche 2 funding of A$1.0m and released the remaining 1,000
convertible notes from escrow.
Under the Winance facility, a further A$6.0m is available in
tranche of A$1.0m each upon full conversion of the notes from the
previous drawdown, subject to a cooling off period. Full terms and
conditions of the convertible securities are included in the
announcement released on 31 July 2019.
During the year, Winance converted 2,000 Tranche 1 notes and 300
Tranche 2 notes. As at 30 June 2020, Winance had 700 Tranche 2
convertible notes remaining.
Short Term Loan
On 20 January 2020, the Company entered into a short-term loan
agreement for $400k, secured by way of a fixed and floating charge
over the Company' assets (Loan). Under the terms of the Loan,
interest of $40k is payable at the repayment date of 20 February
2020 with penalty interest applying for the late repayment of
funds.
During the year, the Company agreed with the lender to convert
$370k of the Loan into equity (Loan Conversion). The Loan
Conversion was converted based on a share price of 4.5c with a free
attaching 1 for 1 unlisted option with an exercise price of 5c
expiring on 31 July 2022. In addition to the Loan Conversion, the
remaining Loan balance was paid in cash on 4 June 2020. At 30 June
2020, the Loan had been fully extinguished, and the associated
security released.
Conversion of Debt
During the year, the Company agreed with various creditors to
convert approximately $360k of debt into equity (Creditor
Conversions). Debts have been converted based on a share price of
4.5c with a free attaching 1 for 1 unlisted option with an exercise
price of 5c expiring on 31 July 2022.
The Creditor Conversion includes a portion of amounts owing to
Directors of the Company. The issue of 1,643,288 Shares and
1,643,288 unlisted options with an exercise price of 5c expiring on
31 July 2022 to Directors will be subject to shareholder approval
at the Company's next general meeting.
Placement
During the year the Company undertook a placement mainly to
European based sophisticated investors of 5,300,000 fully paid
ordinary shares at $0.09 per share and 5,000,000 fully paid
ordinary shares at $0.085 per share to raise cash funds of $902,000
(before costs) (Placement).
Talaxis Engagement
On 27 May 2020, the Company announced that it had entered into a
strategic engagement agreement with Talaxis Limited (Talaxis).
Talaxis, a wholly-owned subsidiary of Noble Holdings, is a global
leader in EV technology metals project development. Talaxis invests
and develops projects that are related to nickel, cobalt, lithium,
rare earths and other metals and materials that are key to the
energy transition. Talaxis will assist the Company in managing and
establishing commercial relationships and contract
negotiations.
Listing of Options
On 5 February 2020, the Company advised that it has listed
263,440,000 options on the ASX under the code EURO. The options
have an exercise price of $0.10 each and an expiry date of 30 June
2020.
Capital Movements
On 11 July 2019, the Company issued 983,548 shares to Magna upon
the conversion of 50,000 convertible notes and 2,000,000 shares
pursuant to the Placement.
On 1 August 2019, the Company issued 995,223 shares to Magna
upon the conversion of 50,000 convertible notes.
On 16 August 2019, the Company issued 1,016,411 shares to Magna
upon the conversion of 50,000 convertible notes.
On 13 September 2019, the Company issued 1,000,000 shares to
Magna as consideration for the extension of repayment date of the
convertible notes.
On 25 September 2019, the Company issued 285,714 shares issued
to Winance upon the conversion of 20 convertible notes.
On 30 September 2019, the Company issued 3,300,000 shares
pursuant to the Placement and 1,999,999 shares to Winance upon the
conversion of 140 convertible notes.
On 7 October 2019, the Company issued 819,917 shares to Magna
upon the conversion of 40,000 convertible notes.
On 11 October 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes
On 23 October 2019, the Company issued 1,428,570 shares issued
to Winance upon the conversion of 100 convertible notes
On 30 October 2019, the Company issued 2,857,142 shares issued
to Winance upon the conversion of 200 convertible notes
On 5 November 2019, the Company issued 5,000,000 shares pursuant
to the Placement.
On 12 November 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes.
On 19 November 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes.
On 26 November 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes
On 5 December 2019, the Company issued 853,289 shares to Magna
upon the conversion of 30,000 convertible notes.
On 9 December 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes.
On 11 December 2019, the Company issued 25,940,000 unlisted
options exercisable at 10c each on or before 30 June 2020 (as
approved at the Company's 2019 AGM held on 28 November 2019)
On 16 December 2019, the Company issued 950,026 shares issued to
Magna upon the conversion of 33,260 convertible notes.
On 17 December 2019, the Company issued 1,428,571 shares issued
to Winance upon the conversion of 100 convertible notes
On 6 and 7 January 2020, the Company issued 38,000,000 listed
options exercisable at $0.10 each on or before 30 June 2020 to
Helvetican in association with a proposed debt financing (refer ASX
announcement 30 December 2019). These options were subsequently
cancelled on 22 May 2020.
On 24 January 2020, the Company issued 8,333,333 shares issued
to Winance upon the conversion of 500 convertible notes. On the
same day, the Company issued 500,000 listed options exercisable at
$0.10 each on or before 30 June 2020 to Winance as compensation for
not issuing an event of default notice to the Company in respect to
the convertible note facility.
On 27 February 2020, the Company issued 7,333,333 shares issued
to Winance upon the conversion of 440 convertible notes. On the
same date, expiry of 2,000,000 unlisted options exercisable at
$0.125 each
On 31 March 2020, expiry of 2,394,444 unlisted options
exercisable at $0.05 each
On 29 May 2020, the Company issued 8,229,391 shares and
8,229,391 unlisted options with an exercise price of 5c expiring on
31 July 2022 pursuant to the Loan Conversion. In addition, the
Company issued 2,380,010 shares and 2,380,010 unlisted options with
an exercise price of 5c expiring on 31 July 2022 pursuant to the
Creditor Conversions. On the same day, the Company issued 2,000,000
shares and 2,000,000 unlisted options with an exercise price of 5c
expiring on 31 July 2022 issued to Empire Capital pursuant to a
corporate advisory mandate in respect to the Talaxis
engagement.
On 3 June 2020, the Company issued 5,626,183 shares and
5,626,183 unlisted options with an exercise price of 5c expiring on
31 July 2022 pursuant to the Creditor Conversions.
On 5 June 2020, the Company issued 5,454,544 shares issued to
Winance upon the conversion of 300 convertible notes and 3,712,122
shares issued to Winance for the conversion of debt in relation to
the Winance shortfall amount payable (refer to the 2019 AGM notice
of meeting for further details)
On 30 June 2020, expiry of 225,440,000 listed options
exercisable at $0.10 each
Competent Persons Statement
The information in this report pertaining to the Wolfsberg
Lithium Project, and to which this statement is attached, relates
to Project Development and Metallurgical Studies and is based on
and fairly represents information and supporting documentation
provided by the Company and its Consultants and summarised by
Dietrich Wanke who is a Qualified Person and is a Member of the
Australian Institution of Mining and Metallurgy (AusIMM) since 2006
with about 30 years' experience in the mining and resource
development industry. Dietrich Wanke has sufficient experience, as
to qualify as a Competent Person as defined in the 2012 edition of
the "Australian Code for Reporting of Mineral Resources and Ore
reserves". Dietrich Wanke consents to the inclusion in the report
of the matters based on information in the form and context in
which it appears. The company is reporting progress on project
development and metallurgical results under the 2012 edition of the
Australasian Code for the Reporting of Results, Minerals Resources
and Ore reserves (JORC code 2012).
11. INFORMATION ON DIRECTORS AND COMPANY SECRETARY
Mr Antony Sage Non-Executive Chairman
Qualifications Bachelor of Business. M r Sage is a Chartered
Accountant with over 30 years commercial experience.
Experience Mr Sage has in excess of 35 years' experience
in the fields of corporate advisory services,
funds management and capital raising. Mr Sage
is based in Western Australia and has been
involved in the management and financing of
listed mining and exploration companies for
the last 20 years.
Interest in shares 11,154,379 shares (6,245,379 shares are owned
and options in by Okewood Pty Ltd and 4,909,000 shares are
the Company owned by EGAS Superannuation Fund, in both
of which Mr Sage has a relevant interest).
Directorships of Cape Lambert Resources December 2000 to Present
listed companies Ltd June 2009 to 22 November
held within the Cauldron Energy Limited 2018
last 3 years Fe Limited August 2009 to Present
International Petroleum January 2006 to Present
Limited(1)
(1) Listed on the National Stock Exchange
of Australia
Mr Malcolm Day Non-Executive Director
Qualifications Bachelor of Applied Science in Surveying and
Mapping
Experience Mr Day was the founder and inaugural Managing
Director of Adultshop.com which listed on
ASX in June 1999. In October 2010 Adultshop.com
was privatised. Prior to founding Adultshop.com
in 1996, Mr Day worked in the civil construction
industry for 10 years, six of which were spent
in senior management as a Licensed Surveyor
and then later as a Civil Engineer. Whilst
working as a Surveyor, Mr Day spent three
years conducting mining and exploration surveys
in remote Western Australia. Mr Day is a Member
of the Australian Institute of Company Directors.
Interest in shares 14,496,951 shares (2,008,062 shares are owned
and options in by Goldshore Investments Pty Ltd, ATF The
the Company Goldshore Trust and the M R Day Superfund,
Hollywood Marketing Pty Ltd, companies of
which Mr Day is a director, 1,488,889 shares
are owned by Hollywood Marketing (WA) Pty
Ltd of which Mr Day is a director and 11,000,000
shares are owned by Delecta Limited, a company
of which Mr Day is a director).
Directorships of Delecta Limited 1999 to Present
listed companies
held within the
last 3 years
Mr Kimon Gkomozias Executive Director
Qualifications MFE, MPhys, CAIA , UK IOD
Experience Mr. Kimon Gkomozias is a finance professional
with considerable experience in the technology
metals and mining assets, energy storage and
renewable energy sectors. Kimon is currently
Head of Business Development (Technology Metals)
at Noble Group Holdings.
Mr. Gkomozias has significant expertise and
experience in dealing with US, European and
Asian Capital Markets, institutional investors,
private equity firms, hedge funds and family
offices. Kimon is the founder of Kyanos Capital
(London) and previously held key positions
at Barclays Bank, Wealth and Investment Management
division as well as Standard & Poor's Structured
Finance Group.
Kimon is a member of the Institute of Directors
(UK) and the Chartered Alternative Investment
Analyst Association (CAIA). He holds a Masters
in Financial Engineering (ICMA Centre, University
of Reading) and a Masters of Physics (University
of Sussex).
Interest in shares Nil
and options in
the Company
Directorships of Nil
listed companies
held within the
last 3 years
Ms Melissa Chapman Company Secretary
Qualifications Bachelor of Commerce (Accounting & Finance).
Ms Chapman is a member of CPA Australia, has
completed a Graduate Diploma of Corporate
Governance with the Governance Institute of
Australia and has completed the company directors
course with the Australian Institute of Company
Directors.
Experience Ms Chapman has over 16 years of experience
in the accounting profession. She has worked
in Australia and the United Kingdom for both
listed and private companies.
12. REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for
each key management person of European Lithium Limited in
accordance with the requirements of the Corporations Act 2001 and
its regulations. The information provided in this remuneration
report has been audited as required by Section 308(3c) of the
Corporations Act 2001.
The remuneration report is set out under the following main
headings:
A Remuneration Policy
B Details of remuneration
C Equity-based compensation
D Equity Instrument disclosures relating to key management personnel
E Other related party transactions
F Employment contracts of directors and senior executives
A Remuneration Policy
The remuneration policy of the Company has been designed to
align key management personnel objectives with shareholder and
business objectives by providing a fixed remuneration component and
offering specific long-term incentives based on key performance
areas affecting the Company's financial results. The Board of EUR
believes the remuneration policy to be appropriate and effective in
its ability to attract and retain the best key management personnel
to run and manage the Company, as well as create goal congruence
between directors, executives and shareholders.
The Board's policy for determining the nature and amount of
remuneration for key management personnel of the Company is as
follows:
-- The remuneration policy, setting the terms and conditions for
key management personnel, was developed and approved by the
Board.
-- All key management personnel receive a base salary (which is
based on factors such as length of service and experience),
superannuation, fringe benefits, options and performance
incentives.
-- Key management personnel can be employed by the Company on a
consultancy basis, upon Board approval, with remuneration and terms
stipulated in individual consultancy agreements.
-- The Board reviews key management personnel packages annually
based on market practices, duties and accountability. Currently
there is no link between remuneration and shareholder wealth or
Company performance. The Board may, however, approve at its
discretion, incentives, bonuses and options. The policy is designed
to attract the highest calibre of executives and reward them for
their performance that results in long-term growth in shareholder
wealth.
Key management personnel are also entitled to participate in the
employee share and option arrangements.
Key management personnel may receive a superannuation guarantee
contribution as required by the government, which is currently
9.5%, and do not receive any other retirement benefits. Individuals
may choose to sacrifice part of their salary to increase payments
towards superannuation.
All remuneration paid to key management personnel is valued at
the cost to the Company and expensed. Shares given to key
management personnel are valued as the difference between the
market price of those shares and the amount paid by key management
personnel. Unlisted options are valued using the Black-Scholes
methodology.
The Board believes that it has implemented suitable practices
and procedures that are appropriate for an organisation of this
size and maturity.
Remuneration Governance
During the year ended 30 June 2020, the Company did not have a
separately established nomination or remuneration committee.
Considering the size of the Company, the number of directors and
the Company's early stages of its development, the Board is of the
view that these functions could be efficiently performed with full
Board participation.
Voting and comments made at the Company's 2019 Annual General
Meeting
The Company's remuneration report for the 2019 financial year
was approved at the Annual General Meeting (AGM) of Shareholders.
The Company did not receive any specific feedback at the AGM or
throughout the year on its remuneration practices.
Remuneration Structure
In accordance with best practice corporate governance, the
structure of non-executive director and executive director
remuneration is separate and distinct.
Key Management Personnel Remuneration Policy
The remuneration structure for key management personnel is based
on a number of factors, including length of service, and particular
experience of the individual concerned. The contracts for service
between the Company and key management personnel are on a
continuing basis, the terms of which are not expected to change in
the immediate future.
B Details of Remuneration
Non-Executive Director Remuneration
Objective
The Board seeks to set aggregate remuneration at a level which
provides the Company with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost which is
acceptable to shareholders.
Structure
The Board's policy is to remunerate non-executive directors at
market rates for comparable companies for time, commitment and
responsibilities. The remuneration of non-executive directors is
reviewed annually, based on market practice, duties and
accountability. Independent external advice is sought when
required. Fees for non-executive directors are not linked to the
performance of the Company. However, to align directors' interests
with shareholders' interests, the directors are encouraged to hold
shares in the Company. The maximum aggregate fixed sum of fees that
can be paid to non-executive directors is subject to approval by
shareholders at the Annual General Meeting. The maximum aggregate
currently stands at $300,000 per annum and was approved by
shareholders at a Annual General Meeting on 29 November 2017.
Non-executive directors may also be remunerated for additional
specialised services performed at the request of the Board and
reimbursed for reasonable expenses incurred by directors on Company
business.
Executive Director Remuneration
Objective
The Company aims to reward executives with a level and mix of
remuneration commensurate with their position and responsibilities
within the Company and so as to:
-- Reward executives for individual performance against targets
set by reference to appropriate benchmarks;
-- Align the interests of executives with those shareholders;
and
-- Ensure total remuneration is competitive by market
standards.
Currently there is no link between remuneration and shareholder
wealth or Company performance.
Structure
Executive directors are provided to the Company on a consultancy
basis with remuneration and terms stipulated in individual
consultancy agreements.
Key Management Personnel Remuneration
The key management personnel (KMP) of the Company are the
directors during the year being:
Antony Sage Non-Executive Chairman
Malcolm Day Non-Executive Director
Stefan Muller Non-Executive Director (retired 4 March 2020)
Tim Turner Non-Executive Director (appointed 4 March 2020,
resigned 2 September 2020)
Details of the nature and amount of emoluments of each KMP
during the financial year are:
Short-term Long-term Benefits Post Total % of Remuneration
Benefits - Salary -Options Employment ($) Linked to
& Fees ($) Benefits - Performance
($) Superannuation (%)
($)
--------------- ------
Antony Sage 2020 120,000 81,038 (1) - 201,038 40%
Malcolm Day 2020 48,000 81,038 (2) - 129,038 63%
Stefan Muller 2020 31,820(4) 121,557 (3) - 153,377 79%
Tim Turner 2020 15,548(5) - - 15,548 0%
Total 2020 215,368 283,633 - 499,001 57%
--------------- ------ ------------------- -------------------- ------------------- -------- -------------------
(1) On 11 December 2019 Mr Sage was issued 5,000,000 unlisted
options, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
(2) On 11 December 2019 Mr Day was issued 5,000,000 unlisted
options, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
(3) On 11 December 2019 Mr Müller was issued 7,500,000 unlisted
option, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
Mr Muller retired on 4 March 2020. Includes commission of
$17,820 in respect to a Placement.
(5) Mr Turner was appointed 4 March 2020
C Equity-Based Compensation
Options Granted as Part of Remuneration
Options are issued to directors and executives as part of their
remuneration. The options are not issued based on performance
criteria, but are issued to increase goal congruence between
directors and shareholders.
On 11 December 2019, the Company issued 17,500,000 options
(which were exercisable at $0.10 each on or before 30 June 2019) to
Directors Tony Sage (5,000,000), Stefan Müller (7,500,000) and
Malcolm Day (5,000,000) in consideration for Director services and
efforts to advance the Company's Definitive Feasibility Study (DFS)
at the Company's Wolfsberg Project. These options lapsed on 30 June
2019.
D Equity Instrument Disclosures Relating to Key Management Personnel
Shareholdings
30 June 2020
Name Balance at Rights Issue / Shares Issued Purchase / Balance at Balance at
1-Jul-19 Options to Settle (Sale) Appointment / 30-Jun-20
Exercise Director Fees (Resignation)
Antony Sage 11,154,379 - - - - 11,154,379
--------------- --------------- --------------- ---------------- --------------- ---------------
Malcolm Day 14,496,951 - - - - 14,496,951
--------------- --------------- --------------- ---------------- --------------- ---------------
Stefan Muller 1,250,000 - - 100,000 (1,350,000) -
--------------- --------------- --------------- ---------------- --------------- ---------------
Tim Turner - - - - - -
--------------- --------------- --------------- ---------------- --------------- ---------------
Total 26,901,330 - - 100,000 (1,350,000) 25,651,330
--------------- --------------- --------------- ---------------- --------------- ---------------
Options
30 June 2020
Name Balance at Options Issued Expired Options Purchase / Balance at Balance at
1-Jul-19 as (Sale) Appointment / 30-Jun-20
remuneration (Resignation)
Antony Sage - 5,000,000 (1) (5,000,000) - - -
--------------- --------------- ---------------- --------------- --------------- ---------------
Malcolm Day 22,244,444 5,000,000 (2) (27,244,444) - - -
--------------- --------------- ---------------- --------------- --------------- ---------------
Stefan Muller - 7,500,000 (3) - - (7,500,000) -
--------------- --------------- ---------------- --------------- --------------- ---------------
Tim Turner - - - - - -
--------------- --------------- ---------------- --------------- --------------- ---------------
Total 22,244,444 17,500,000 (32,244,444) - (7,500,000) -
--------------- --------------- ---------------- --------------- --------------- ---------------
(1) On 11 December 2019 Mr Sage was issued 5,000,000 unlisted
options, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
(2) On 11 December 2019 Mr Day was issued 5,000,000 unlisted
options, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
(3) On 11 December 2019 Mr Müller was issued 7,500,000 unlisted
option, as approved at the 2019 AGM. These options expired on 30
June 2020. See C and D(a) below.
(a) Details relating to the issue of options to directors
On 11 December 2019, the Company issued 17,500,000 unlisted
options to Directors as approved at the Company's 2019 AGM. The
options were exercisable at $0.10 each on or before 30 June 2020
and were issued in consideration for Director services and efforts
to advance the Company's Definitive Feasibility Study (DFS) at the
Company's Wolfsberg Project . As at the date of the 2019 AGM (29
November 2019), the value of these shares and options were as
follows:
Number Grant date Expiry Exercise Value Total Vesting
of Options Date Price per option fair value date
at grant
date
------------ ------------ -------- --------- ------------ ------------ ------------
28 November 30 June 28 November
A Sage 5,000,000 2019 2020 $0.10 $0.0162 81,038 2019
28 November 30 June 28 November
M Day 5,000,000 2019 2020 $0.10 $0.0162 81,038 2019
28 November 30 June 28 November
S Muller 7,500,000 2019 2020 $0.10 $0.0162 121,557 2019
The fair value of the equity-settled share options granted was
estimated as at the date of grant using the Black and Scholes model
taking into account the terms and conditions upon which the options
were granted, as follows:
Assumption
Dividend yield 0.00%
Expected volatility 86%
Risk-free interest rate 0.79%
Expected life of options 0.59 years
Exercise price $0.10
Grant date share price
(date of AGM) $0.083
On 27 May 2020, the Company announced that it had agreed with
Directors of the Company to convert $73,948 of debt into equity.
Debts will be converted based on a share price of 4.5c with a free
attaching 1 for 1 unlisted option with an exercise price of 5c
expiring on 31 July 2022. The issue of 1,643,288 Shares and
1,643,288 unlisted options with an exercise price of 5c expiring on
31 July 2022 to Directors will be subject to shareholder approval
at the Company's next general meeting.
E Other Related Party Transactions
Sales and Purchases between Related Parties
Balances between the Company and its subsidiaries which are
related parties of the Company have been eliminated on
consolidation and are not disclosed in this note. Details of
percentage of ordinary shares held in subsidiaries are disclosed in
Note 25 to the financial statements.
Note 25 provides information about the group's structure
including the details of the subsidiaries and the holding company.
The following table provides the total amount of transactions and
outstanding balances that have been entered into with related
parties for the current year.
Sales Purchases Amounts Amounts
to from related owed owed to
Related parties by related related
Parties $ parties Parties
$ $ $
--------- -------------- ------------ ---------
Director related entities
Cape Lambert Resources Limited 2020 22,451 27,814 - -
FE Limited 2020 17,001 - - -
Okewood Pty Ltd 2020 - 9,150 - 9,150
Deutsche Gesellschaft Für
Wertpapieranalyse GmbH 2020 - 77,833 - 38,981
Frankfurt Capital Market Consulting 2020 - 25,500 - -
(FCM)
Mr Antony Sage is a director of Cape Lambert Resources Limited,
FE Limited, International Petroleum Ltd and Karratha Metals Group
Ltd. Sales to and purchases from director related entities are for
the reimbursement of employee, consultancy, occupancy, travel and
other costs.
During the year ended 30 June 2020, Frankfurt Capital Market
Consulting ( FCM ) received fees in relation to a Placement. FCM is
a subsidiary of DGWA which is controlled by Stefan Muller (previous
Director of the Company) .
F Employment Contracts of Directors and Senior Executives
Remuneration and other terms of employment for Executive
Directors are formalised in executive service agreements and
Non-Executive Directors are formalised in consultancy agreements
with the Company. Major provisions of the agreements relating to
remuneration are set out below.
Non-Executive Chairman - Mr Antony Sage
-- Term of Agreement - The consultancy agreement with Okewood
Pty Ltd to provide the services of Chairman of the Company
commenced on 9 September 2016 following the Company's acquisition
of European Lithium AT (Investments) Limited. The agreement is
ongoing unless terminated in accordance with the consultancy
agreement.
-- Remuneration of $120,000 per annum payable monthly.
Non-Executive Director - Mr Malcolm Day
-- Term of Agreement - The agreement commenced on 2 July 2012
for a term of twelve months, renewable annually, or until either
party gives 3 months written notice of termination or is otherwise
terminated in accordance with the consultancy agreement.
-- Remuneration of $40,000 per annum (until 30 September 2017)
and $48,000 per annum (from 1 October 2017), payable monthly to Mr
Malcolm Day or his nominee.
Non-Executive Director - Mr Tim Turner
-- Term of Agreement - The agreement commenced on 4 March 2020
and is ongoing (subject to the provisions of the Corporations
Act).
-- Remuneration of $48,000 per annum payable monthly.
----------------- End of audited remuneration report
-----------------
13. OPTIONS
As at the date of this report the unissued ordinary shares of
European Lithium Limited under option are as follows:
Date of Expiry Status Exercise Number of
Price Options
11/12/2021 Unlisted 20.0 cents 2,500,000
---------- ------------ -----------
31/07/2022 Unlisted 5.0 cents 18,235,584
---------- ------------ -----------
No person entitled to exercise these options had or has any
right by virtue of the option to participate in any share issue of
any other body corporate.
Shares issued on exercise of options
There were no options exercised during the year ended 30 June
2020.
Options exercised during the year ended 30 June 2019 are as
follows:
-- On 29 March 2019 1,000,000 unlisted options were exercised by
shareholders at $0.10 per shares
Since the end of the financial year, no ordinary shares have
been issued as a result of the exercise of options.
The following options expired in the year ended 30 June
2020:
-- 225,440,000 unlisted options (with an exercise price of $0.10
each expiring 30 June 2020)
-- 2,000,000 unlisted options (with an exercise price of $0.125
each expiring 27 February 2020)
-- 2,394,444 unlisted options (with an exercise price of $0.05
each expiring 31 March 2020)
14. MEETINGS OF DIRECTORS
The number of directors' meetings held during the financial year
and the numbers of meetings attended by each director were:
Directors' Meetings
--------------------
Number eligible Number attended
to attend
-------------------- ---------------- ----------------
Antony Sage 7 7
---------------- ----------------
Malcolm Day 7 7
---------------- ----------------
Stefan Müller 3 3
---------------- ----------------
Tim Turner 4 4
---------------- ----------------
15. INDEMNIFICATION OF AUDITORS AND OFFICERS
No indemnities have been given or insurance premiums paid,
during or since the end of the financial year, for any person who
is or has been an office or auditor of the Company.
16. NON-AUDIT SERVICES
During the year ended 30 June 2020, no fees were paid or payable
for non-audit services provided by the entity's auditors, HLB Mann
Judd (30 June 2019: nil).
17. AUDITOR INDEPENCE
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 audit of the financial
report. This Independence Declaration forms part of this Directors'
report for the year ended 30 June 2020.
18. PROCEEDINGS ON BEHALF OF COMPANY
No persons have applied for leave of court to bring proceedings
on behalf of the Company or intervene in any proceedings to which
the Company is a part for the purpose of taking responsibility on
behalf of the Company for all or any part of those proceedings. The
Company was not a party to any such proceedings during the
year.
Signed in accordance with a resolution of the directors:
-----------------------------------------
Tony Sage
Chairman
15 September 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2020
Note 2020 2019
$ $
------------- ---------------
Continuing operations
Revenue and other income 4 206,054 134,692
Employee benefits expense 5 (197,548) (192,000)
Depreciation and amortisation expense 10 (4,436) (3,565)
Depreciation expense - leased assets (24,817) -
Finance costs 5 (457,535) (34,808)
Transaction costs relating to the
issue of convertible note facility (240,000) (100,000)
Difference between transaction price
of convertible note and fair value
at initial recognition 16 (549,554) (318,115)
Fair value loss on remeasurement
of convertible note 16 256,194 (46,028)
Impairment of deferred exploration
and evaluation expenditure 11 - (330)
Consulting fees (400,661) (478,827)
Travel expenses (210,699) (442,793)
Regulatory and compliance costs 5 (860,645) (450,245)
Loss on fair value of financial assets
through profit or loss 13 - (177,000)
Share based payment expense 18e (530,996) (435,258)
Other expenses 5 (243,280) (258,390)
Loss before income tax (3,257,923) (2,802,667)
Income tax expense 7 - -
------------- ---------------
Loss after tax from continuing operations (3,257,923) (2,802,667)
------------- ---------------
Other comprehensive income, net of
income tax
Items that may be reclassified to
profit or loss
Exchange differences on translation
of foreign operations 205,992 483,133
Other comprehensive income for the
period, net of income tax 205,992 483,133
Total comprehensive income (loss)
for the year (3,051,931) (2,319,534)
------------- ---------------
Loss per share for the year
Basic loss per share (cents per share) 20 (0.53) (0.51)
Diluted loss per share (cents per
share) 20 (0.53) (0.51)
The above Consolidated Statement of Comprehensive Income is to
be read in conjunction with the
Notes to the Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2019
Note 2020 2019
$ $
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents 8 300,655 1,199,738
Trade and other receivables 9 219,098 309,918
Total Current Assets 519,753 1,509,656
----------- -----------
Non-Current Assets
Property, plant and equipment 10 4,736 7,030
Deferred exploration and evaluation
expenditure 11 36,499,437 33,004,593
Restricted cash and other deposits 12 31,869 31,517
Financial assets 13 128,000 128,000
Right of use asset 14 12,341 -
----------- -----------
Total Non-Current Assets 36,676,383 33,171,140
----------- -----------
TOTAL ASSETS 37,196,136 34,680,796
----------- -----------
LIABILITIES
Current Liabilities
Trade and other payables 15 1,800,534 1,028,183
Convertible note 16 831,592 1,078,136
Lease liabilities 17 10,676 -
Total Current Liabilities 2,642,802 2,106,319
----------- -----------
Non-Current Liabilities
Lease liabilities 17 2,098 -
----------- -----------
Total Non-Current Liabilities 2,098 -
TOTAL LIABILITIES 2,644,900 2,106,319
----------- -----------
NET ASSETS 34,551,236 32,574,477
=========== ===========
EQUITY
Issued capital 18 24,800,736 20,283,788
Reserves 19 7,619,170 6,901,436
Retained earnings 2,131,330 5,389,253
----------- -----------
TOTAL EQUITY 34,551,236 32,574,477
=========== ===========
The above Consolidated Statement of Financial Position is to be
read in conjunction with the
Notes to the Financial Statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2019
Attributable to equity holders
Issued Retained Share Foreign Total
Capital Earnings Based Currency Equity
Payments Translation
Reserve Reserve
$ $ $ $
$
----------- ------------ ---------- ------------- ------------
At 1 July 2018 16,711,098 8,191,920 4,539,764 1,485,281 30,928,063
Loss for the year - (2,802,667) - - (2,802,667)
Foreign currency exchange
differences arising on translation
from functional currency
to presentation currency - - - 483,133 483,133
----------- ------------ ---------- ------------- ------------
Total comprehensive income/(loss)
for the year - (2,802,667) - 483,133 483,133
Issue of shares - Placement
- Cash 1,638,000 - - - 1,638,000
Issue of shares - Placement
- Creditor Settlements 42,000 - - - 42,000
Issue of shares - Cleansing
Prospectus 1,786,007 - - - 1,786,007
Issue of shares - Directors
in lieu of fees 100,000 - - - 100,000
Issue of shares - Conversion
of Options 100,000 - - - 100,000
Share issue costs - Cash (93,317) - - - (93,317)
Share issue costs - options
issued to corporate advisor - 151,570 - 151,570
Options issued to corporate
advisor as share issue costs - - 241,688 - 241,688
----------- ------------ ---------- ------------- ------------
At 30 June 2019 20,283,788 5,389,253 4,933,022 1,968,414 32,574,477
=========== ============ ========== ============= ============
Loss for the year - (3,257,923) - - (3,257,923)
Foreign currency exchange
differences arising on translation
from functional currency
to presentation currency - - - 205,992 205,992
----------- ------------ ---------- ---------- ------------
Total comprehensive income/(loss)
for the year - (3,257,923) - 205,992 (3,051,931)
Issue of shares - Placement
- Cash 902,000 - - - 902,000
Issue of shares - Facilitator 90,000 - - - 90,000
Issue of shares - Magna
(conversion) 427,461 - - - 427,461
Issue of shares - Magna
(extension shares) 80,000 - - - 80,000
Issue of shares - Winance
(conversion) 2,300,000 - - - 2,300,000
Issue of shares - Conversion
of Debt 848,783 - - - 848,783
Share issue costs - Cash (60,550) - - - (60,550)
Options issued to corporate
advisor (70,746) - 228,110 - 157,364
Options issued to directors - - 283,632 - 283,632
At 30 June 2020 24,800,736 2,131,330 5,444,764 2,174,406 34,551,236
=========== ============ ========== ========== ============
The above Consolidated Statement of Changes in Equity is to be
read in conjunction with the
Notes to the Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2019
------------ ------------
Note 2020 2019
$ $
------------ ------------
Cash flows from operating activities
Payments to suppliers and employees (1,145,001) (1,913,566)
Finance costs (15,480) (34,808)
Interest paid (leased assets) (1,681) -
Interest received 3,479 34,246
VAT refund 61,178 (32,004)
Refund of legal costs - 281,017
Grants received 202,575 64,260
Net cash (used in) operating activities 22 (894,930) (1,600,855)
------------ ------------
Cash flows from investing activities
Proceeds from the sale of exploration - -
tenements
Payments for exploration and evaluation (2,826,195) (4,599,012)
Payment for property, plant and equipment (2,039) (5,637)
Net cash (used in) investing activities (2,828,234) (4,604,649)
------------ ------------
Cash flows from financing activities
Proceeds from capital raisings 902,000 1,638,000
Payment for share issue costs (136,151) (17,717)
Proceeds from the exercise of options - 100,000
Proceeds from convertible note facility 3,000,000 2,500,000
Repayment of convertible note facility (812,442) -
Transaction costs related to convertible
note facility (284,375) (75,000)
Proceeds from borrowings 400,000 -
Repayment of borrowings (200,000) -
Transaction costs related to borrowings (20,000) -
Repayment of lease liabilities (26,066) -
Net cash provided by financing activities 2,822,966 4,145,283
------------ ------------
Net increase/(decrease) in cash and
cash equivalents (900,198) (2,060,221)
Cash and cash equivalents at beginning
of year 1,199,738 3,258,892
Effects on exchange rate fluctuations
on cash held 1,115 1,067
------------ ------------
Cash and cash equivalents at end
of year 8 300,655 1,199,738
============ ============
The above Consolidated Statement of Cash Flows is to be read in
conjunction with the
Notes to the Financial Statements
1. CORPORATE INFORMATION
The financial report of European Lithium Limited (the Company)
and its controlled entities (the Group) for the year ended 30 June
2020 was authorised for issue in accordance with a resolution of
the directors on 15 September 2020.
European Lithium Limited is a public company incorporated in
Australia whose shares are publicly traded on the Australian
Securities Exchange. The nature of the operations and principal
activities of the Company are described in the Directors'
Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
The financial report is a general-purpose financial report,
which has been prepared in accordance with the requirements of the
Corporations Act 2001 and Australian Accounting Standards, which
include Australian equivalents to International Financial Reporting
Standards (AIFRS). Compliance with AIFRS ensures that the financial
report, comprising the financial statements and notes thereto,
complies with International Financial Reporting Standards (IFRS).
The Company is a for-profit entity for the purpose of preparing the
financial statements.
The financial report has also been prepared on the accruals
basis and historical cost basis with the exception of the Group's
listed investment and convertible note liabilities which are both
stated at fair value.
The accounting policies set out below have been applied
consistently to all periods presented in the financial report
except where stated.
b) Going concern
The financial statements have been prepared on a going concern
basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Company incurred an operating loss for the period ended 30
June 2020 of $3,257,923 (30 June 2019: $2,802,667 loss), had cash
and cash equivalents of $300,655 at 30 June 2020 (30 June 2019:
$1,199,738), had a net working capital deficit of $2,123,049 at 30
June 2020 (30 June 2019: $596,662 deficit) and a net cash outflow
from operating activities amounting to $3,721,125 (30 June 2019:
$6,199,867).
The Group's ability to continue as a going concern and to
continue to fund its planned expanded activities is dependent on
raising further capital and/or drawing down on the convertible note
facility and/or generating additional revenues from its operations
and/or reducing or deferring exploration expenditure or operational
costs.
The Directors believe the Group will continue as a going
concern, after consideration of the following factors:
-- The Group has successfully completed its pre-feasibility
study and work is underway on the Definitive-Feasibility Study
(DFS). The Company is in the process of seeking funding
options;
-- Directors have agreed to defer the payment of their Director
fees until the completion of a capital raising;
-- The Company has established the Winance convertible loan note
facility (refer note 16) allowing access to funds for the purposes
of working capital and project DFS; and
-- The Group is able to defer certain exploration-related
expenditures in order to retain a positive cash balance;
-- The Group is able to realise its financial assets if
required; and
-- The Group is in discussions with a number of entities
regarding future off-take contracts and is continuing efforts to
secure key customers in key markets and is confident of generating
additional sales revenue within the next 12 months.
However, should the fundraising above not be completed, or be
available on a sufficiently timely basis, there exists a material
uncertainty that may cast significant doubt as to where the Company
would continue as a going concern and therefore whether it will
realize its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the financial
report.
c) Application of new and revised accounting standards
Changes in accounting policies on initial application of
Accounting Standards
In the year ended 30 June 2020, the Directors have reviewed all
of the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Company and effective for the full
year reporting periods beginning on or after 1 July 2019. As a
result of this review, the Directors have applied all new and
amended Standards and Interpretations that were effective as at 1
July 2019 including:
Interpretation 23 Uncertainty over Income Tax Treatments
The Group has adopted Interpretation 23 with the date of initial
application being 1 July 2019.
The Interpretation clarifies the application of the recognition
and measurement criteria in AASB 112 Income Taxes when there is
uncertainty over income tax treatments. The Interpretation
specifically addresses the following:
-- Whether an entity considers uncertain tax treatments
separately
-- The assumptions an entity makes about the examination of tax
treatments by taxation authorities
-- How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates
-- How an entity considers changes in facts and
circumstances
At 1 July 2019 it was determined that the adoption of
Interpretation 23 had no impact on the Group.
AASB 2018-1 Australian Amendments to Australian Accounting
Standards - Annual Improvements 2015-2017 Cycle
The Group has adopted AASB 2018-1 with the date of initial
application being 1 January 2019.
The amendments clarify certain requirements in:
-- AASB 3 Business Combinations and AASB 11 Joint Arrangements -
previously held interest in a joint operation
-- AASB 112 Income Taxes - income tax consequences of payments
on financial instruments classified as equity
-- AASB 123 Borrowing Costs - borrowing costs eligible for
capitalisation.
At 1 July 2019 it was determined that the adoption of AASB
2018-1 had no impact on the Group.
AASB 16 Leases
The Group has adopted AASB 16 with the date of initial
application being 1 July 2019. AASB 16, which supersedes AASB 117
Leases (AASB 117) and related interpretations, sets out the
principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to account for most
leases under a single on-balance sheet model.
The Group has elected to apply the modified retrospective
approach available under AASB 16 when transitioning to the new
standard, whereby the Company has recorded a right of use asset at
the date of initial application of leases previously classified as
an operating lease applying AASB 117, and measures that right of
use asset at an amount equal to the lease liability, adjusted by
the amount of any prepaid or accrued lease payments relating to
that lease recognised in the statement of financial position
immediately before the date of initial application.
Refer to note 14 and 17 for details of lease accounting.
New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 30 June 2020 reporting periods
and have not been early adopted by the Group. The Group's
assessment of the impact of these new standards and interpretations
is set out below.
Conceptual The revised Conceptual Framework includes This standard 1 July 2020
Framework some new concepts, provides updated is not expected
for Financial definitions and recognition criteria to have
Reporting for assets and liabilities and clarifies a material
and relevant some important concepts. It is arranged impact on
amending in eight chapters, as follows: the Group's
standards * Chapter 1 - The objective of financial reporting financial
statements
and disclosures
* Chapter 2 - Qualitative characteristics of useful
financial information
* Chapter 3 - Financial statements and the reporting
entity
* Chapter 4 - The elements of financial statements
* Chapter 5 - Recognition and derecognition
* Chapter 6 - Measurement
* Chapter 7 - Presentation and disclosure
* Chapter 8 - Concepts of capital and capital
maintenance
Amendments to References to the Conceptual
Framework in IFRS Standards has also
been issued, which sets out the amendments
to affected standards in order to
update references to the revised Conceptual
Framework. The changes to the Conceptual
Framework may affect the application
of IFRS in situations where no standard
applies to a particular transaction
or event. In addition, relief has
been provided in applying IFRS 3 and
developing accounting policies for
regulatory account balances using
IAS 8, such that entities must continue
to apply the definitions of an asset
and a liability (and supporting concepts)
in the 2010 Conceptual Framework,
and not the definitions in the revised
Conceptual Framework.
---------------------------------------------------------- ----------------- ------------
AASB 2018-7 This Standard amends AASB 101 Presentation This standard 1 July 2020
Definition of Financial Statements and AASB 108 is not expected
of Material Accounting Policies, Changes in Accounting to have
(Amendments Estimates and Errors to align the a material
to AASB definition of 'material' across the impact on
101 and standards and to clarify certain aspects the Group's
AASB 108) of the definition. The amendments financial
clarify that materiality will depend statements
on the nature or magnitude of information. and disclosures
An entity will need to assess whether
the information, either individually
or in combination with other information,
is material in the context of the
financial statements. A misstatement
of information is material if it could
reasonably be expected to influence
decisions made by the primary users.
---------------------------------------------------------- ----------------- ------------
There are no other standards that are not yet effective and that
would be expected to have a material impact on the Group in the
current or future reporting periods and on foreseeable future
transactions.
d) Principles of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to
direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases. A
list of controlled entities is contained in Note 24 to the
financial statements.
All inter-group balances and transactions between entities in
the Group, including any unrealised profits or losses, have been
eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with those
adopted by the Parent Entity.
e) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often
determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of certain
assets and liabilities within the next annual reporting period
are:
Fair value of convertible note
Management has used valuation techniques to determine the fair
value of the convertible notes liability, which have involved
developing estimates and assumptions consistent with how these
instruments are normally valued.
Share based payment transactions
The Company measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value
is determined using a Black-Scholes option pricing model. The
Company measures the cost of cash-settled share based payments at
fair value at the grant date using the Black-Scholes formula taking
into account the terms and conditions upon which the instruments
were granted.
Deferred taxation
Potential future income tax benefits have not been brought to
account at 30 June 2020 because the Directors do not believe that
it is appropriate to regard realisations of future income tax
benefits as probable.
Deferred exploration and evaluation expenditure
The application of the Group's accounting policy for exploration
and evaluation expenditure requires judgement in determining
whether it is likely that future economic benefits are likely from
future exploitation or sale or where activities have not reached a
stage which permits a reasonable assumption of the existence of
reserves.
f) Borrowing costs
Borrowing costs are recognised as an expense when incurred,
except for borrowing cost relating to qualifying assets when the
interest is capitalised to the qualifying assets.
g) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand and short-term deposits with an
original maturity of six months or less.
For the purposes of the Statement of Cash Flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
h) Trade and other receivables
Trade receivables are initially recognised at their transaction
price and other receivables at fair value. Receivables that are
held to collect contractual cash flows and are expected to give
rise to cash flows representing solely payments of principal and
interest are classified and subsequently measured at amortised
cost. Receivables that do not meet the criteria for amortised cost
are measured at fair value through profit or loss.
The Group assesses on a forward looking basis the expected
credit losses associated with its debt instruments carried at
amortised cost. The amount of expected credit losses is updated at
each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument. The Group
always recognises the lifetime expected credit loss for trade
receivables carried at amortised cost. The expected credit losses
on these financial assets are estimated based on the Group's
historic credit loss experience, adjusted for factors that are
specific to the debtors, general economic conditions and an
assessment of both the current as well as forecast conditions at
the reporting date.
For all other receivables measured at amortised cost, the Group
recognises lifetime expected credit losses when there has been a
significant increase in credit risk since initial recognition. If
the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the
loss allowance for that financial instrument at an amount equal to
expected credit losses within the next 12 months.
The Group considers an event of default has occurred when a
financial asset is more than 120 days past due or external sources
indicate that the debtor is unlikely to pay its creditors,
including the Group. A financial asset is credit impaired when
there is evidence that the counterparty is in significant financial
difficulty or a breach of contract, such as a default or past due
event has occurred. The Group writes off a financial asset when
there is information indicating the counterparty is in severe
financial difficulty and there is no realistic prospect of
recovery.
i) Investments
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and equity securities
classified as fair value through other comprehensive income) is
based on quoted market prices at the reporting date. The quoted
market price used for financial assets held by the Group is the
current bid price, the appropriate quoted market price for
financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques. The
Group uses a variety of methods and makes assumptions that are
based on market conditions existing at each balance date. Quoted
market prices or dealer quotes for similar instruments are used for
long-term debt instruments held. Other techniques, such as
discounted cash flows, are used to determine fair value for the
remaining financial instruments.
j) Financial instruments
Debt and equity instruments are classified as either liabilities
or as equity in accordance with the substance of the contractual
arrangement. Transaction costs on the issue of equity instruments
are recognised directly in equity as a reduction of the proceeds of
the equity instruments to which the costs relate. Transaction costs
are the costs that are incurred directly in connection with the
issue of those equity instruments and which would not have been
incurred had those instruments not been issued.
Interest and dividends are classified as expenses or as
distributions of profit consistent with the statement of financial
position classification of the related debt or equity instruments
or component parts of compound instruments.
k) Impairment of assets
At each reporting date, the Company assesses whether there is
any indication that an asset may be impaired. Where an indicator of
impairment exists, the Company makes a formal estimate of
recoverable amount. Where the carrying amount of an asset exceeds
its recoverable amount the asset is considered impaired and is
written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to
sell and value in use. It is determined for an individual asset,
unless that asset's value in use cannot be estimated to be close to
its fair value less costs to sell and it does not generate cash
inflows that are largely independent of those from other assets or
group of assets. In which case, the recoverable amount is
determined for the cash-generating unit to which the asset
belongs.
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.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying value does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in prior years. A reversal of an impairment loss is
recognised in profit or loss immediately, unless the relevant asset
is carried at fair value, in which case the reversal of the
impairment loss is treated as a revaluation increase.
l) Income tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively
enacted by the reporting date.
Deferred tax is provided on all temporary differences at the
reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences except:
-- When the deferred tax liability arises from the initial
recognition of assets and liabilities (other than as a result of a
business combination) which affects neither the accounting profit
nor taxable profit or loss; or
-- When the taxable temporary difference arises from the initial
recognition of goodwill; or
-- When the taxable temporary difference is associated with
investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is
probable that sufficient taxable amounts will be available against
which the deductible temporary differences or unused tax losses and
tax offsets can be utilised, except:
-- When the deductible temporary difference giving rise to the
asset arises from the initial recognition of assets and liabilities
(other than as a result of a business combination) which affects
neither accounting profit nor taxable income; or
-- When the deductible temporary difference is associated with
investments in subsidiaries, associates or interests in joint
ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will
reverse in the foreseeable future and taxable profit will be
available against which the temporary difference can be
utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each
reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax assets and liabilities are offset when they relate
to the same taxation authority and the Company intends to settle
its current tax assets and liabilities on a net basis.
m) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of GST except:
-- When the GST incurred on a purchase of goods and services is
not recoverable from the taxation authority, in which case the GST
is recognised as part of the cost acquisition of the asset or as
part of the expense item as applicable; and receivables and
payables are stated with the amount of GST included.
-- The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a
gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or
payable to, the taxation authority are classified as operating cash
flows.
Commitments and contingencies are disclosed net of the amount of
GST recoverable from, or payable to, the taxation authority.
n) Leases
Group as Lessee - policy applied from 1 January 2019
The Group assesses at contract inception whether a contract is,
or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration.
Right of use asset
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Unless the
Group is reasonably certain to obtain ownership of the leased asset
at the end of the lease term, the recognised right-of-use assets
are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term. Right-of-use assets are
subject to impairment.
Lease Liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating a lease, if the
lease term reflects the Group exercising the option to terminate.
The variable lease payments that do not depend on an index or a
rate are recognised as expense in the period on which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses the incremental borrowing rate at the lease commencement date
if the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the
in-substance fixed lease payments or a change in the assessment to
purchase the underlying asset.
The Group has elected not to recognise right of use assets and
lease liabilities for short term leases and low value assets. For
these leases, the Group recognised the lease payments as an expense
on a straight line basis over the lease term.
Short-term leases and leases of low-value assets.
The Group applies the short-term lease recognition exemption for
those leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option. It also
applies the lease of low-value assets recognition exemption to
leases of plant and equipment that are considered of low value.
Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease
term.
Group as Lessee - policy applied prior to 1 January 2019
Leases are classified as finance leases when the terms of the
lease transfer substantially all the risks and rewards incidental
to ownership of the leased asset to the Company. All other leases
are classified as operating leases.
Finance leases are capitalised, recording an asset and a
liability equal to the fair value of the leased property or, if
lower, the present value of the minimum lease payments, including
any guaranteed residual values. Leased assets are depreciated on a
diminishing value basis over their estimated useful lives where it
is likely that the Company will obtain ownership of the asset or
over the term of the lease. Lease payments are allocated between
the reduction of the lease liability and the lease interest expense
for the period.
Operating lease payments are recognised as an expense in the
Consolidated Statement of Comprehensive Income on a straight-line
basis over the lease term.
o) Provisions and employee leave benefits
Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the
cashflows estimated to settle the present obligation, its carrying
value is the present value of those cashflows. When some or all of
the economic benefits required to settle a provision are expected
to be recovered from a third party, for example under an insurance
contract, the receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
Employee leave benefits
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in
respect of employees' services up to the reporting date. They are
measured at the amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at the rates
paid or payable.
p) Revenue recognition
Revenue is recognised to the extent that control of the good or
service provided has passed and it is probable that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
Interest revenue is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
q) Trades and other payables
Trade payables and other accounts payable are carried at
amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that
are unpaid and arise when the Group becomes obliged to make future
payments in respect of the purchase of those goods and
services.
r) Convertible notes
Convertible notes that do not contain an equity component are
accounted for as a financial liability through profit or loss with
a value equating to the total proceed/face value with no day one
gain or loss and subsequently value will change depending on the
changes in the share price/ redemption event and or accretion of
the value of the discount on the note. If the convertible note is
converted, the carrying amounts of the derivative and liability
components are transferred to share capital as consideration for
the shares issued. If the note is redeemed, any difference between
the amount paid and the carrying amounts of both components is
recognised in the statement of comprehensive income.
s) Exploration and evaluation expenditure
Exploration and evaluation expenditures in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
-- the rights to tenure of the area of interest are current;
and
-- at least one of the following conditions is also met:
-- the exploration and evaluation expenditures are expected to
be recouped 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 at the balance date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploratory
drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortised of assets used in
exploration and evaluation activities. General and administrative
costs are only included in the measurement of exploration and
evaluation costs where they are related directly to operational
activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount.
The recoverable amount of the exploration and evaluation asset (for
the cash generating unit(s) to which it has been allocated being no
larger than the relevant area of interest) is estimated to
determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable
amount, but only to the extent 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 in previous
years.
Where a decision has been made to proceed with development in
respect of a particular area of interest, the relevant exploration
and evaluation asset is tested for impairment and the balance is
then reclassified to development.
t) Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognised in the
profit or loss over the period of the borrowings using the
effective interest rate method. Fees paid on the establishment of
loan facilities are recognised as transaction costs of the loan to
the extent that it is probable that some or all of the facility
will be drawn down. In this case, the fee is deferred until the
draw down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
Borrowings are removed from the Statement of Financial Position
when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of
a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in other
income or other expenses.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
u) Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to the
issue of new shares or options for the acquisition of a business
are not included in the cost of the acquisition as part of the
purchase consideration.
v) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors who is
responsible for making strategic decisions.
3. SEGMENT INFORMATION
AASB 8 Operating Segments requires operating segments to be
identified on the basis of internal reports that are regularly
reviewed by the Chief Operating Decision Maker (CODM) to make
decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is
available. In the case of the Group the CODM are the executive
management team and all information reported to the CODM is based
on the consolidated results of the Group as one operating segment,
as the Group's activities relate to mineral exploration.
Accordingly, the Group has only one reportable segment and the
results are the same as the Group results.
a) Information by geographical region
The analysis of the location of non-current assets is as
follows:
2020 2019
$ $
----------- -----------
Australia 128,000 128,000
Austria 36,548,383 33,043,140
----------- -----------
36,676,383 33,171,140
----------- -----------
b) Revenue by geographical region
2020 2019
$ $
-------- --------
Australia 3,479 34,246
Austria 202,575 100,446
-------- --------
206,054 134,692
-------- --------
4. REVENUE AND OTHER INCOME
2020 2019
$ $
-------- --------
Interest revenue 3,479 34,246
Foreign exchange - 36,186
Grants received 202,575 64,260
206,054 134,692
-------- --------
5. EXPENSES FROM CONTINUING OPERATIONS
2020 2019
$ $
---------- ----------
Employee benefits expenses
Directors' remuneration & consulting (197,548) (192,000)
(197,548) (192,000)
---------- ----------
Finance expenses
Bank fees (15,480) (23,008)
Interest on short term loan (i) (170,323) -
Interest on leased assets (1,681) -
Provision for doubtful debts (7,494) -
Financing costs on extension to Magna facility (80,000) -
(note 18(a))
Financing costs short term loan facility (20,000) -
Shortfall on Winance conversion (note 18(a)) (118,182) -
Financing legal expenses (44,375) (11,800)
---------- ----------
(457,535) (34,808)
---------- ----------
Regulatory and compliance costs
ASX listing fees (136,944) (110,679)
NEX listing expenses (253,476) (152,529)
Vienna listing expenses (1,986) (44,107)
Legal expenses (ii) (383,032) (36,294)
Other regulatory and compliance expenses (85,207) (106,636)
---------- ----------
(860,645) (450,245)
---------- ----------
Other expenses
Other administrative expenses (243,280) (258,390)
(243,280) (258,390)
---------- ----------
(i) During the year, the Company entered into a short-term loan
agreement for $400k, secured by way of a fixed and floating charge
over the Company' assets (Loan). Under the terms of the Loan,
interest of $40k is payable at the repayment date with the balance
relating to penalty interest for the late repayment of funds. The
Company agreed with the lender to convert $370k of the Loan into
equity (Loan Conversion). The Loan Conversion was converted based
on a share price of 4.5c with a free attaching 1 for 1 unlisted
option with an exercise price of 5c expiring on 31 July 2022. In
addition to the Loan Conversion, the remaining Loan balance was
paid in cash on 4 June 2020. At 30 June 2020, the Loan had been
fully extinguished, and the associated security released.
(ii) Legal expenses incurred during the year related to amounts
paid to the Financial Market Authority and legal expenses in
respect to the Company's financing facilities.
6. AUDITOR'S REMUNERATION
2020 2019
$ $
-------- --------
Amounts paid or payable to:
HLB Mann Judd
Auditing services 31,775 30,600
Other services - -
31,775 30,600
-------- --------
7. INCOME TAX
2020 2019
$ $
----- -----
Major components of income tax expense
for the year are:
Income statement
Current income tax charge/(benefit) - -
Statement of changes in equity
Income tax expense reported in equity - -
A reconciliation of income tax expense/(benefit) applicable to
accounting profit/(loss) before income as at the statutory income
tax rate to income tax expense/(benefit) at the Company's effective
income tax rate for the year is as follows:
2020 2019
$ $
Loss from ordinary activities before income
tax expense (3,257,923) (2,802,667)
Prima facie tax benefit on loss from ordinary
activities at 27.5% (2019: 27.5%) (895,929) (770,733)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Non-temporary tax adjustments 818,194 658,644
Recognition of prior year unrecognised
DTA's (39,181) (81,316)
Tax rate differential (3,918) (8,840)
Current year DTA's (non-tax losses) not
recognised 120,834 202,245
------------ ------------
- -
------------ ------------
Unrecognised deferred tax assets have not been recognised in
respect of the following items:
2020 2019
$ $
---------- ----------
Unrecognised temporary differences
Deferred tax assets (at 27.5%) (2019: 27.5%)
Accrued expenses 1,127 715
Capital raising costs 49,920 57,973
Financial assets 48,675 48,675
Borrowing costs 12,712 -
Carry forward tax losses - revenue 4,505,071 3,411,102
Carry forward tax losses - capital 1,273,476 1,270,065
Other - 847
---------- ----------
5,890,981 4,789,377
---------- ----------
Deferred tax liabilities (at 27.5 %) (2019:
27.5%)
Prepayments - (568)
Net unrecognised deferred tax asset/(liability) 5,890,981 4,788,809
---------- ----------
Potential future income tax benefits arising from tax losses
have not been brought to account at 30 June 2020 because the
directors do not believe it is appropriate to regard realisation of
the future income tax benefits as probable. These benefits will
only be obtained if:
-- assessable income is derived of a nature and of amount
sufficient to enable the benefit from the deductions to be
realised;
-- the Company continues to comply with the conditions for
deductibility imposed by law; and
-- no changes in tax legislation adversely affect the
realisation of the benefit from the deductions.
8. CASH AND CASH EQUIVALENTS
2020 2019
$ $
-------- ----------
Cash at bank and in hand 300,655 1,199,738
-------- ----------
300,655 1,199,738
-------- ----------
Cash at bank earns interest at floating rates based on daily
bank deposit rates.
9. TRADE AND OTHER RECEIVABLES
2020 2019
$ $
-------- --------
Trade and other receivables 4,879 39,247
Security deposit 6,480 6,409
GST / VAT receivable 125,977 187,154
Prepayments 81,762 77,108
-------- --------
219,098 309,918
-------- --------
These amounts arise from the usual operating activities of the
Company and are non-interest bearing. The debtors do not contain
any overdue or impaired receivables.
10. PROPERTY, PLANT AND EQUIPMENT
2020 2019
$ $
--------- --------
Cost 16,250 14,054
Accumulated depreciation (11,514) (7,024)
--------- --------
4,736 7,030
--------- --------
Carrying value at beginning of period 7,030 4,880
Additions 2,039 5,637
Depreciation charge for the period (4,436) (3,565)
Foreign exchange 103 78
-------- --------
Carrying value at end of period 4,736 7,030
-------- --------
11. DEFERRED EXPLORATION AND EVALUATION EXPITURE
2020 2019
Exploration and evaluation phases: $ $
----------- -----------
Balance at beginning of period 33,004,593 27,465,305
Expenditure incurred 3,153,767 4,755,718
Foreign exchange movement 341,077 783,900
Impairment - (330)
----------- -----------
Balance at end of period 36,499,437 33,004,593
----------- -----------
The recoupment of costs carried forward in relation to areas of
interest in the exploration and evaluation phases is dependent upon
the successful development and commercial exploitation or sale of
the respective areas.
12. RESTRICTED CASH AND OTHER DEPOSITS
2020 2019
$ $
------- -------
Term deposits 31,869 31,517
------- -------
13. FINANCIAL ASSETS
2020 2019
$ $
-------- ----------
Balance at beginning of period 128,000 225,000
Acquisition of equity securities (listed)
(i) - 80,000
Gain/(loss) in fair value from revaluation - (177,000)
-------- ----------
Financial assets at fair value through
profit or loss at end of period 128,000 128,000
-------- ----------
(i) 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. 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.
Financial assets comprise investments in the ordinary issued
capital of various entities and are accounted for at fair value
through profit or loss.
The fair value of listed investments is calculated with
reference to current market prices at balance date. See note
23(h).
14. RIGHT OF USE ASSETS
2020 2019
$ $
--------- -----
Cost 37,022 -
Accumulated depreciation (24,681) -
--------- -----
12,341 -
--------- -----
Carrying value at beginning of period - -
Initial application of AASB 16 Leases 37,022 -
Depreciation charge for the period (24,681) -
Carrying value at end of period 12,341 -
---------
Leased assets are capitalised at the commencement date of the
lease and comprise of the initial lease liability amount, initial
direct costs incurred when entering into the lease less any lease
incentives received. On initial adoption of AASB 16 the Group has
adjusted the right-of-use assets at the date of initial application
by the amount of any provision for onerous leases recognised
immediately before the date of initial application. Following
initial application, an impairment review is undertaken for any
right of use lease asset that shows indicators of impairment and an
impairment loss is recognised against any right of use lease assets
that is impaired
15. TRADE AND OTHER PAYABLES
2020 2019
$ $
---------- ----------
Trade payables 1,767,697 781,164
Sundry payables and accruals 32,837 247,019
---------- ----------
1,800,534 1,028,183
---------- ----------
16. convertible note
2020 2019
$ $
------------ ------------
Balance at beginning of period 1,078,136 -
Funds borrowed under convertible loan agreement 3,000,000 2,500,000
Difference between transaction price of
convertible note and fair value at initial
recognition 549,553 318,115
Fair value loss on remeasurement of convertible
note (256,194) 46,028
Amounts repaid through redemption of notes (812,443) -
Amounts repaid through issue of shares (2,727,460) (1,786,007)
------------ ------------
Balance at end of period 831,592 1,078,136
------------ ------------
a) Magna
On 7 September 2018, the Company entered into a Convertible Note
Agreement with MEF I, L.P. (Magna) of which A$2.5m (1,840,500
convertible notes) was drawn down on 7 September 2018. At the time
of issuance, the difference between the fair value of the
convertible notes of $2,818,115 and the proceeds received of
A$2,500,000 being $318,115 was recorded in the statement of
comprehensive income.
The face value of each convertible note is US$1.10 and are
non-interest bearing. The notes are convertible to a variable
number of ordinary shares at the option of the holder of the notes
any time after issue. If not converted the notes mature and are
repayable twelve (12) months after the issue date. The conversion
price for each convertible note is the lower of $0.30 or a 15%
discount from the lowest VWAP over ten (10) days prior to the
conversion date, provided that the conversion price shall not in
any case be lower than $0.055 (revised floor price).
On 13 September 2019, Magna agreed to extend the maturity date
of the convertible notes on issue from 7 September 2019 to 30
November 2019. In consideration for this extension, the Company
issued Magna 1,000,000 fully paid ordinary shares on 13 September
2019.
During the year, Magna redeemed 434,782 notes for US$550,000
(AU$812,443). Magna also exercised its option to convert 253,260
notes borrowed under the convertible loan agreement into 5,618,413
fully paid ordinary shares of the Company.
At reporting date, the fair value of the convertible notes
(following conversion of 253,260 notes and redemption of 434,782
notes during the year) was $nil with the difference of $161,768
recorded in the statement of comprehensive income.
As at 30 June 2020, Magna had nil convertible notes
remaining.
b) Winance
On 31 July 2019, the Company entered into a Convertible Note
Agreement with Winance Investment LLC (Winance) of which A$2.0m
(2,000 convertible notes) was drawn down on 20 September 2019
(Tranche 1). On 5 March 2020, the Company announced that it had
agreed to a further draw down of A$2.0m. As a result, the Company
issued 2,000 convertible notes on 10 March 2020 which were held in
escrow pending the receipt of funds. On 2 June 2020, the company
received funding of A$1.0m and released 1,000 notes from escrow
(Tranche 2). Winance received a commitment fee of 3% of the
investment amount at the funding of each tranche.
The face value of each convertible note is AU$1,000 and are
non-interest bearing. The notes are convertible to a variable
number of ordinary shares at the option of the holder of the notes
any time after issue. If not converted the notes mature and are
repayable twenty-four (24) months after the issue date. The
conversion price for each convertible note is the lower of an 8%
discount from the lowest VWAP over ten (10) days prior to the
conversion date, provided that the conversion price shall not in
any case be lower than $0.055 (floor price).
At the time of issuance, the difference between the fair value
of the convertible notes of $2,363,883 and the proceeds received of
A$2,000,000 being $363,883 (Tranche 1) and the fair value of the
convertible notes of $1,185,671 and the proceeds received of
A$1,000,000 being $185,671 (Tranche 2) was recorded in the
statement of comprehensive income.
During the year, Winance exercised its option to convert 2,000
notes (Tranche 1) and 300 notes (Tranche 2) borrowed under the
convertible loan agreement into 36,264,061 fully paid ordinary
shares of the Company.
At reporting date, the fair value of Tranche 1 convertibles
notes (following conversion of 2,000 notes during the year) was
$nil with the difference of $363,683 recorded in the statement of
comprehensive income. At reporting date, the fair value of Tranche
2 convertible notes (following conversion 300 notes during the
year) was $831,592 with the difference of $54,079 recorded in the
statement of comprehensive income.
As at 30 June 2020, Winance had 700 convertible notes
remaining.
17. INTEREST BEARING LEASE LIABILITIES
2020 2019
$ $
------- -----
Current
Lease liability 10,676 -
------- -----
10,676 -
------- -----
Non-Current
Lease liability 2,098 -
------- -----
2,098 -
------- -----
Total 12,774 -
------- -----
In 2016, the Group entered into a lease arrangement for premises
in Wolfsberg for a lease period 1 January 2017 to 31 December 2019.
Under Austrian law, the lease automatically extends for one year
upon expiry.
18. ISSUED CAPITAL
a) Ordinary shares
2020 2019
$ $
----------- -----------
Opening balance 20,283,788 16,711,098
Issue of shares - Placement - Cash 902,000 1,638,000
Issue of shares - Conversion of debt (i) 848,784 -
Issue of shares - Conversion of Options - 100,000
Issue of shares - Magna commitment shares - 100,000
Issue of shares - Magna extension 80,000 -
Issue of shares - Magna conversion 427,461 1,786,007
Issue of shares - Winance conversion 2,300,000 -
Issue of shares - Project Director - 42,000
Issue of shares - Empire Capital 90,000 -
Capital raising costs - shares and options (70,746) -
issued to corporate advisor
Capital raising costs - cash (60,551) (93,317)
----------- -----------
Total issued capital 24,800,736 20,283,788
----------- -----------
2020 2019
No of shares No of shares
-------------- --------------
Issued shares:
Balance at beginning of period 587,163,028 545,724,526
Issue of shares - Placement - Cash 10,300,000 18,200,000
Issue of shares - Conversion of debt (i) 19,947,707 -
Issue of shares - Conversion of Options - 1,000,000
Issue of shares - Magna commitment shares - 600,672
Issue of shares - Magna extension (ii) 1,000,000 -
Issue of shares - Winance conversion (refer 36,264,061 -
note 16)
Issue of shares - Magna conversion (refer
note 16) 5,618,413 21,287,830
Issue of shares - Project Director - 350,000
Issue of shares - Empire Capital (iii) 2,000,000 -
Balance at end of period 662,293,209 587,163,028
-------------- --------------
(i) During the year the Company converted $730,601 of debt with
various creditors into equity ( Creditor Conversion ). Debts have
been converted based on a share price of 4.5c with a free attaching
1 for 1 unlisted option with an exercise price of 5c expiring on 31
July 2022. In addition, the Company converted $118,182 of debt
owing to Winance in relation to the Winance shortfall amount
payable (refer to the 2019 AGM notice of meeting for further
details).
(ii) the Company entered into a Convertible Note Agreement with
MEF I, L.P. ( Magna ) (refer note 16). On 13 September 2019, Magna
agreed to extend the maturity date of the convertible notes on
issue from 7 September 2019 to 30 November 2019. In consideration
for this extension, the Company issued Magna 1,000,000 fully paid
ordinary shares on 13 September 2019.
(iii) On 27 May 2020, the Company announced that it had entered
into a strategic engagement agreement with Talaxis Limited (
Talaxis ). The Talaxis engagement was introduced and managed by
corporate advisory firm, Empire Capital Partners ( Empire Capital
). On 29 May 2020, the Company issued 2,000,000 shares and
2,000,000 unlisted options with an exercise price of 5c expiring on
31 July 2022 (refer note 18(d)) issued to Empire Capital pursuant
to a corporate advisory mandate.
Terms and conditions of contributed equity
Fully paid ordinary shares have the right to receive dividends
as declared and, in the event of winding up the Company, to
participate in the proceeds from sale of all surplus assets in
proportion to the number of paid up shares held.
Fully paid ordinary shares entitle their holder to one vote,
either in person or by proxy, at any shareholders' meeting of the
Company.
b) Options
At 30 June 2020, the unissued ordinary shares of the Company
under option are as follows:
Date of Expiry Status Exercise Number of
Price Options
---------------- ---------- ------------ -----------
11/12/2021 Unlisted 20.0 cents 2,500,000
31/07/2022 Unlisted 5.0 cents 18,235,584
-----------
20,735,584
-----------
No person entitled to exercise these options had or has any
right by virtue of the option to participate in any share issue of
any other body corporate.
Shares issued on exercise of options
There were no options exercised during the year ended 30 June
2020.
Options exercised during the year ended 30 June 2019 are as
follows:
-- On 29 March 2019 1,000,000 unlisted options were exercised by
shareholders at $0.10 per shares
Since the end of the financial year, no ordinary shares have
been issued as a result of the exercise of options.
c) Capital management
Management controls the capital of the Company, comprising the
liquid assets held by the Company, in order to maintain an
appropriate debt to equity ratio, provide the shareholders with
adequate returns and ensure that the Company can fund its
operations and continue as a going concern. The Company's debt and
capital includes ordinary share capital and financial liabilities,
supported by financial assets. There are no externally imposed
capital requirements. Management effectively manages the Company's
capital by assessing the Company's financial risks and adjusting
its capital structure in response to changes in these risks and in
the market. These responses include the management of debt levels,
distributions to shareholders and share issues. There have been no
changes in the strategy adopted by management to control the
capital of the Company since the prior year.
d) Share based payments
The following options were issued as share-based payments
arrangements during the year:
Number Grant date Expiry Date Exercise Fair value Vesting
of Options Price at grant date
date
------------ ------------ ------------- --------- ----------- ------------
Options issued
to Directors 28 November 28 November
(1) 17,500,000 2019 30 June 2020 $0.10 $0.0162 2019
Options issued
to corporate 28 November 28 November
advisor 8,440,000 2019 30 June 2020 $0.10 $0.0162 2019
Options issued 24 January 24 January
to Winance 500,000 2020 30 June 2020 $0.10 $0.0167 2020
Options issued
to Empire
Capital 2,000,000 29 May 2020 31 July 2022 $0.05 $0.0415 29 May 2020
(1) 17,500,000 options in consideration for Director services
and efforts to advance the Company's Definitive Feasibility Study
(DFS) at the Company's Wolfsberg Project were issued to Directors
Tony Sage (5,000,000), Stefan Muller (7,500,000) and Malcolm Day
(5,000,000) upon receipt of shareholder approval at the 2019
AGM.
The fair value of the equity-settled share options granted is
estimated as at the date of grant using the Black and Scholes model
taking into account the terms and conditions upon which the options
were granted.
Assumption
Number options issued 17,500,000 8,440,000 500,000 2,000,000
Dividend yield 0.00% 0.00% 0.00% 0.00%
Expected volatility 86% 86% 84% 88%
Risk-free interest rate 0.79% 0.79% 0.76% 0.24%
Expected life of options 0.59 years 0.59 years 0.43 years 2.17 years
Exercise price $0.10 $0.10 $0.10 $0.05
Grant date share price $0.083 $0.083 $0.091 $0.072
The expected life of the options is based on historical data and
is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical
volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of options
granted were incorporated into the measurement of fair value.
The following options were issued as share-based payments
arrangements during the year ended 30 June 2019 to corporate
advisors:
Number Grant date Expiry Date Exercise Fair value Vesting
of Options Price at grant date
date
------------ ------------ ------------ --------- ----------- ------------
Options issued
to Directors 28 November 28 November
(1) 11,250,000 2018 31 May 2019 $0.15 $0.0215 2018
Options issued
to corporate 28 November 11 December 28 November
advisor 2,500,000 2018 2021 $0.20 $0.0606 2018
(1) 11,250,000 facilitator options pursuant to the December 2017
placement were issued to Directors Tony Sage (2,500,000), Stefan
Muller (6,250,000) and Malcolm Day (2,500,000) upon receipt of
shareholder approval at the 2018 AGM.
The fair value of the equity-settled share options granted is
estimated as at the date of grant using the Black and Scholes model
taking into account the terms and conditions upon which the options
were granted.
Assumption
-----------------------
Number options issued 11,250,000 2,500,000
Dividend yield 0.00% 0.00%
Expected volatility 114% 114%
Risk-free interest rate 2.04% 2.04%
Expected life of options 0.50 years 3.0 years
Exercise price $0.15 $0.20
Grant date share price $0.105 $0.105
The expected life of the options is based on historical data and
is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical
volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of options
granted were incorporated into the measurement of fair value.
e) Share based payments expense
2020 2019
$ $
-------- --------
Shares issued to Project Director - 42,000
Shares issued to Empire Capital 90,000 -
Options issued to Directors 283,632 241,688
Options issued to corporate advisor 157,364 151,570
-------- --------
Balance at end of period 530,996 435,258
-------- --------
19. RESERVES
2020 2019
$ $
---------- ----------
Share based payments reserve 5,444,764 4,933,022
Foreign currency translation reserve 2,174,406 1,968,414
---------- ----------
7,619,170 6,901,436
---------- ----------
Share based payments reserve
Balance at beginning of year 4,933,022 4,539,764
Issue of unlisted options 511,742 393,258
---------- ----------
Balance at end of year 5,444,764 4,933,022
---------- ----------
Foreign currency translation reserve
Balance at beginning of year 1,968,414 1,485,281
Foreign currency exchange differences arising
on translation of foreign operations 205,992 483,133
---------- ----------
Balance at end of year 2,174,406 1,968,414
---------- ----------
The foreign currency translation reserve is used to record
exchange differences arising from the translation of financial
statements of foreign subsidiaries.
The share based payment reserve records items recognised as
expenses on valuation of employee share options and options issued
to directors and consultants.
20. LOSS PER SHARE
2020 2019
$ $
------------ ------------
Loss used in the calculation of basic and
dilutive loss per share (3,257,923) (2,802,667)
2020 2019
Cents per Cents per
share share
----------- -----------
Loss per share:
Basic loss per share (cents per share) (0.53) (0.51)
Diluted loss per share (cents per share) (0.53) (0.51)
There are dilutive potential ordinary share on issue at balance
date. However given the Company has made a loss, there is no
dilution of earnings hence the diluted loss per share is the same
as for basic loss per share.
2020 2019
Number Number
------------ ------------
Weighted average number of shares 618,210,152 554,595,408
21. COMMITMENTS AND CONTINGENCIES
a) Exploration commitments
The Group has no minimum expenditure requirements in relation to
its exploration and mining licences at its Wolfsberg Project other
than minimal annual licence and mine safety fees.
b) Contingencies
The Company has provided bank guarantees to the value of
EUR20,000 in respect of any unrepaired damage to property at the
Wolfsberg project.
There has been no other change in contingent liabilities since
the last annual reporting date.
22. CASH FLOW INFORMATION
2020 2019
$ $
------------ ------------
Reconciliation from net loss after tax
to net cash used in operations
Net loss (3,257,923) (2,802,667)
Non cash flows included in operating loss:
Depreciation 4,435 3,565
Impairment - 330
Transaction costs relating to the issue
of convertible note facility 80,000 100,000
Shares issued in settlement of creditors 478,461 -
Shares issued Project Director - 42,000
Shares issued Empire Capital 90,000 -
Options issued to corporate advisor and
directors 511,742 393,258
Loss on fair value of financial assets
through profit and loss - 177,000
Difference between transaction price of
convertible note and fair value at initial
recognition 549,554 318,115
Fair value loss on remeasurement of convertible
note (256,194) 46,028
Forgiveness of related party loans - 12,403
Interest on short term loan 170,323 -
Expenditure classified as financing 260,128 (75,000)
Other expenses (136,656) (281,081)
Changes in assets and liabilities:
Decrease / (increase) in trade and other
receivables 90,820 326,107
(Decrease) / increase in trade and other
payables 520,380 139,087
------------ ------------
Net cash (used in) operating activities (894,930) (1,600,855)
------------ ------------
23. FINANCIAL INSTRUMENTS
a) Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which revenues and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 2 to the
financial statements.
b) Financial risk exposures and management
The main risks the Company is exposed to through its financial
instruments are credit risk, interest rate risk, and liquidity
risk.
c) Credit risk exposures
Credit risk represents the loss that would be recognised if the
counterparties default on their contractual obligations resulting
in financial loss to the Company. The Company has adopted the
policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral or other security where
appropriate, as a means of mitigating the risk of financial loss
from defaults. The Company measures credit risk on a fair value
basis.
d) Interest rate risk
The Group is exposed to movements in market interest rates on
cash. The policy is to monitor the interest rate yield curve out to
120 days to ensure a balance is maintained between the liquidity of
cash assets and the interest rate of return. The entire balance of
cash for the Group of $300,655 (30 June 2019: $1,199,738) is
subject to interest rate risk.
e) Liquidity risk
The Company manages liquidity risk by continuously monitoring
actual and forecast cash flows and matching the maturity profiles
of financial assets and liabilities. Surplus funds are generally
only invested in short term bank deposits.
Contractual maturities of financial liabilities
Less Between Between Total Carrying
than 6 - 1 and 2 and Over contractual amount
6 months 12 months 2 years 5 years 5 years cashflows of liabilities
$ $ $ $ $ $ $
---------- ----------- --------- --------- --------- ------------- ----------------
Financial
Liabilities
Trade & other
payables 2020 1,800,534 - - - - 1,800,534 1,800,534
2019 1,028,183 - - - - 1,028,183 1,028,183
Convertible
note 2020 831,592 - - - - 831,592 831,592
2019 1,078,136 - - - - 1,078,136 1,078,136
---------- ----------- --------- --------- --------- ------------- ----------------
Total 2020 2,632,126 - - - - 2,632,126 2,632,126
2019 2,106,319 - - - - 2,106,319 2,106,319
f) Net fair value
The carrying amount of financial assets and liabilities recorded
in the financial statements represents their respective fair values
determined in accordance with the accounting policies disclosed in
Note 2 of the financial statements.
g) Foreign currency risk
The Group operates internationally and is exposed to foreign
exchange risk arising from commercial transactions. The Group
converted assets and liabilities into the functional currency where
balances were denominated in a currency other than the Australian
dollar.
The Group also has transactional currency exposures. Such
exposure arises from sales or purchases by an operating entity in
currencies other than the functional currency.
h) Fair value measurement
The Group's financial assets comprise shares in Cervantes
Corporate Limited, an ASX listed company. This investment is a
Level 1 investment in the fair value hierarchy.
In calculating the fair value of the convertible note, the Group
engaged an independent valuer who has applied a Monte Carlo
valuation methodology based on a variety of significant variable
inputs. As a result, the valuation of the derivative liability
represents a level 2 measurement within the fair value hierarchy.
The key inputs to the valuation model were as follows:
Assumption
------------
Underlying share price $0.066
Expiry date 2 June 2022
Expected volatility 80%
Risk-free interest rate 0.2704%
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the Group as at 30 June
2020:
Fair value
At amortised Through Through
cost profit or other comprehensive
loss income
$ $ $
------------- ----------- ---------------------
Financial assets
Trade and other receivables 219,098 - -
------------- ----------- ---------------------
Total current 219,098 - -
Financial assets - 128,000 -
------------- ----------- ---------------------
Total non-current - 128,000 -
Total assets 219,098 128,000 -
------------- ----------- ---------------------
Financial liabilities
Trade and other payables 1,800,534 - -
Convertible note - 831,592 -
------------- ----------- ---------------------
Total current 1,800,534 831,592 -
Total liabilities 1,800,534 831,592 -
------------- ----------- ---------------------
Set out below is an overview of financial instruments, other
than cash and short-term deposits, held by the Group as at 30 June
2019:
Fair value
At amortised Through Through
cost profit or other comprehensive
loss income
$ $ $
------------- ----------- ---------------------
Financial assets
Trade and other receivables 309,918 - -
------------- ----------- ---------------------
Total current 309,918 - -
Financial assets - 128,000 -
------------- ----------- ---------------------
Total non-current - 128,000 -
Total assets 309,918 128,000 -
------------- ----------- ---------------------
Financial liabilities
Trade and other payables 1,028,183 - -
Convertible note - 1,078,136 -
------------- ----------- ---------------------
Total current 1,028,183 1,078,136 -
Total liabilities 1,028,183 1,078,136 -
------------- ----------- ---------------------
24. SUBSIDIARIES
Ownership Interest
Country of 2020 2019
Incorporation
% %
---------------- ------------------------ -----------------------
European Lithium Limited Australia 100 100
Subsidiaries
ECM Lithium AT GmbH Austria 100 100
ECM Lithium AT Operating GmbH Austria 100 100
European Lithium AT (Investments) British Virgin
Ltd Islands 100 100
25. RELATED PARTY DISCLOSURE
a) Sales and Purchases between Related Parties
Balances between the Company and its subsidiaries which are
related parties of the Company have been eliminated on
consolidation and are not disclosed in this note. Details of
percentage of ordinary shares held in subsidiaries are disclosed in
Note 24 to the financial statements.
Note 24 provides information about the group's structure
including the details of the subsidiaries and the holding company.
The following table provides the total amount of transactions and
outstanding balances that have been entered into with related
parties for the relevant year.
Sales Purchases Amounts Amounts
to from related owed owed to
Related parties by related related
Parties parties Parties
$ $ $
$
--------- -------------- ------------ ---------
Director related entities
Cape Lambert Resources Limited 2020 22,451 27,814 - -
Cape Lambert Resources Limited 2019 33,366 66,085 21,015 -
FE Limited 2020 17,001 - - -
FE Limited 2019 34,488 - 5,907 -
International Petroleum Ltd 2020 - - - -
International Petroleum Ltd 2019 2,525 - 2,525 -
Karratha Metals Group Ltd 2020 - - - -
Karratha Metals Group Ltd 2019 19,353 - 5,909 -
Okewood Pty Ltd 2020 - 9,150 - 9,150
Okewood Pty Ltd 2019 1,516 - - -
Deutsche Gesellschaft für
Wertpapieranalyse GmbH 2020 - 77,833 - 38,981
Deutsche Gesellschaft für
Wertpapieranalyse GmbH 2019 - 129,040 - 32,832
Frankfurt Capital Market Consulting 2020 - 25,500 - -
Frankfurt Capital Market Consulting 2019 - 73,302 - -
Mr Antony Sage is a director of Cape Lambert Resources Limited,
FE Limited, International Petroleum Ltd and Karratha Metals Group
Ltd. Sales to and purchases from director related entities are for
the reimbursement of employee, consultancy, occupancy, travel and
other costs.
During the year ended 30 June 2020 and 30 June 2019, Deutsche
Gesellschaft Für Wertpapieranalyse GmbH ( DGWA ) provided investor
relation consulting services to the Company. During the year ended
30 June 2019, DGWA received fees in relation to the May placement.
Mr Stefan Muller (previous Director of the Company) is a director
of DGWA.
During the year ended 30 June 2020, Frankfurt Capital Market
Consulting ( FCM ) received fees in relation to a Placement. During
the year ended 30 June 2019, FCM received expense reimbursements in
relation to investor relation activities undertaken during the
year. FCM is a subsidiary of DGWA which is controlled by Stefan
Muller (previous Director of the Company) .
26. KEY MANAGEMENT PERSONNEL DISCLOSURES
a) Key management personnel compensation
2020 2019
$
-------- --------
Short-term employee benefits 215,368 254,100
Post-employment benefits - -
Share based payments 283,633 241,688
499,001 495,788
-------- --------
Detailed remuneration disclosures are provided in the
Remuneration Report which forms part of the Directors' Report.
b) Equity instrument disclosures relating to key management personnel
Equity instrument disclosures relating to key management
personnel are included in the Remuneration Report which forms part
of the Directors' Report.
On 27 May 2020, the Company announced that it had agreed with
Directors of the Company to convert $73,948 of debt into equity.
Debts will be converted based on a share price of 4.5c with a free
attaching 1 for 1 unlisted option with an exercise price of 5c
expiring on 31 July 2022. The issue of 1,643,288 Shares and
1,643,288 unlisted options with an exercise price of 5c expiring on
31 July 2022 to Directors will be subject to shareholder approval
at the Company's next general meeting.
27. PARENT ENTITY FINANCIAL INFORMATION
a) Summary financial information
The individual financial statements of the parent entity show
the following aggregate amounts:
2020 2019
$ $
------------- -------------
Statement of financial position
Current assets 217,727 1,165,640
Total assets 15,977,191 14,154,259
Current liabilities 1,606,455 1,397,566
Total liabilities 1,606,455 1,397,566
------------- -------------
Net assets 14,370,736 12,756,693
------------- -------------
Shareholders Equity
Issued capital 36,303,205 31,786,257
Reserves 7,725,718 7,213,976
Accumulated losses (29,658,187) (26,243,540)
------------- -------------
Total equity 14,370,736 12,756,693
------------- -------------
Net loss for the year (3,414,647) (3,130,504)
Comprehensive loss (3,414,647) (3,130,504)
28. EVENTS AFTER THE REPORTING PERIOD
On 20 July 2020, the Company issued 3,636,363 shares to Winance
upon the conversion of 200 notes. On the same day, the Company
converted $90,909 of debt owing to Winance through the issue of
3,030,303 shares in relation to the Winance shortfall amount
payable (refer to the 2019 AGM notice of meeting for further
details).
On 31 July 2020, the Company announced that it had received the
balance of funding of A$1.0m (before expenses) from Winance in
relation to Tranche 2 funding (refer to note 16b for further
details).
On 2 September 2020, the Company announced the appointment of Mr
Kimon Gkomozias as Executive Director and the resignation of Mr
Turner Turner effective 2 September 2020. On the same day, the
Company announced its intention to undertake a placement at an
issue price of $0.045 with a 1 for 4 free attaching option (which
are exercisable at $0.05 on or before 31 July 2022) to raise
proceeds of up to AUD$2m.
No other matters or circumstances have arisen since the end of
the financial year which significantly altered or may significantly
alter the operations of the Company, the results of those
operations or the state of affairs of the Company in financial
years subsequent to 30 June 2020.
DIRECTORS' DECLARATION
1. In the opinion of the directors of European Lithium Limited (the 'Company'):
a. the accompanying financial statements and notes are in
accordance with the Corporations Act 2001 including:
i. giving a true and fair view of the Group's financial position
as at 30 June 2020 and of its performance for the year then ended;
and
ii. complying with Australian Accounting Standards, the
Corporations Regulations 2001, professional reporting requirements
and other mandatory requirements.
b. there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and
payable.
c. the financial statements and notes thereto are in accordance
with International Financial Reporting Standards issued by the
International Accounting Standards Board.
2. This declaration has been made after receiving the
declarations required to be made to the directors in accordance
with Section 295A of the Corporations Act 2001 for the financial
year ended 30 June 2020.
This declaration is signed in accordance with a resolution of
the board of directors.
Dated 15 September 2020
..............................................................
Tony Sage
Chairman
Perth, Western Australia
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END
NEXGPUQUBUPUGUA
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September 15, 2020 06:10 ET (10:10 GMT)
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