Bradda Head Lithium Ltd Announces Audited Annual Financial Statement

31
Bradda Head Lithium Ltd Announces Audited Annual Financial Statement

Annual report and consolidated financial statements

For the year ended 29 February 2024

BRITISH VIRGIN ISLANDS / ACCESSWIRE / June 27, 2024

Contents

Page

Management and Administration

3

Chairman’s Statement and Operational Review

4

Directors’ Report

10

Corporate Governance Statement

12

Audit, Risk and Compliance Committee Report

16

Report of the Remuneration Committee

18

Statement of Directors’ Responsibilities

20

Report of the Independent Auditors

21

Consolidated Statement of Comprehensive Income

29

Consolidated Statement of Financial Position

30

Consolidated Statement of Changes in Equity

31

Consolidated Statement of Cash Flows

33

Notes to the Consolidated Financial Statements

34

Management and Administration

Directors Ian Stalker – Executive Chairperson
Denham Eke – Finance Director and Company Secretary
James Mellon – Non-Executive Deputy Chairman
Euan Jenkins -Independent Non-Executive Director
Alex Borrelli – Independent Non-Executive Director

Secretary

Registered Office

Denham Eke
4 th Floor Viking House
Nelson Street, Douglas
Isle of Man IM1 2AH

Craigmuir Chambers, Road Town
Tortola, British Virgin Islands

Nominated Advisor Beaumont Cornish Limited
Building 3
566 Chiswick High Road
London W4 5YA
Joint UK Broker Shard Capital Partners LLP
23rd Floor
20 Fenchurch St
London EC3M 3BY
Panmure Gordon
40 Gracechurch St
London EC3V 0BT
Canadian Broker Red Cloud Securities Inc.
120 Adelaide Street W, Suite 1400
Toronto, ON M5H 1T1
Registrar UK
Computershare Investor Services (BVI) Limited
Woodbourne Hall
PO Box 3162 Road Town, Tortola
British Virgin Islands
Canada
Computershare
800, 324 8th Avenue SW
Calgary
AB, T2P 2Z2
Auditors PKF Littlejohn LLP
15 Westferry Circus
​London E14 4HD
​United Kingdom
Legal Advisors As to UK law
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London EC2A 2EW
As to USA law
Fennemore Law
2394 East Camelback Road
Suite 600, Phoenix
AZ 85016-3429
Depositary Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol BS13 8AE

Chairman’s Statement and Operational Review

It is my pleasure to present the Annual Report and the Audited Financial Statements for Bradda Head Lithium Limited (the “Company” or “Bradda Head”) for the year ended 29 February 2024. The 2023/2024 year has been both exciting and challenging in a tough Lithium Market space. However, as always it has been an extremely busy period for the Company, focussing on our key lithium in clay, pegmatite and oil brines projects.

As 2024 has unfolded, there is a growing optimism in the lithium pricing environment that should positively impact on market related values. Bradda Head is well positioned to take advantage of this rising tide within the lithium exploration and development space with the work undertaken in the last twelve months by our ‘American’ based team.

Operational Review

Arizona Sedimentary Hosted Lithium Projects
Basin Project

Our 2023 Basin drill programme finished during August 2023, with the drill results being fed into an updated Mineral Resource Estimate, released on 28 September 2023.

Based on 2,355.20m of sonic drilling completed as part of the 2023 Basin drill programme, Bradda Head added 729 kt of Lithium Carbonate Equivalent (“LCE”) to the Inferred Mineral Resource, for an updated total Inferred LCE content of 1.0 Mt. The total new Mineral Resource now comprises 17.0 million tonnes in the Indicated category at 940 ppm carrying 85kt LCE, and 210 million tonnes in the Inferred category at 900 ppm, carrying 1,000 kt LCE. This was a significant milestone for the Basin Project, with the first 1Mt LCE being achieved.

As per the Gross Overriding Royalty Agreement with the Lithium Royalty Company (“LRC”), this new contained LCE Tonnage, which exceeded the contracted threshold of 1 million tonnes LCE, enabled the Company to trigger the payment of US$ 2.5 million from LRC, which was received by the Company on 5 October 2023.

Mineral Resource Statement for Basin East, Basin East Extension and Basin North effective 1 September 2023

Classification

Domain

Tonnes

Mean Grade

Contained Metal

Mt

Li (ppm)

K (%)

LCE (kt)

K (kt)

Indicated

Upper Clay

11

720

3.5

42

380

Upper Clay HG

6

1350

3.2

43

190

Lower Clay

Sub Total

17

940

3.4

85

570

Inferred

Upper Clay

143

790

2.7

600

3,800

Upper Clay HG

48

1290

3.1

330

1,500

Lower Clay

19

690

2.8

70

530

Sub Total

210

900

2.8

1,000

5,800

Mineral Resource statement has an effective date of 1 September 2023.

The Mineral Resource is reported using a cut-off grade of 550 ppm Li and is constrained to an optimised open pit shell, which was generated using the following assumptions: lithium carbonate metal prices of 22,000 USD/tLCE; State of Arizona royalty (selling cost) of 6%; operating costs of 40 USD/ tore; Li recovery of 72%; mining dilution and recovery of 0% and 100%; and pit slope angle of 45°.

Tonnages are reported in metric units.

Rounding as required by reporting guidelines may result in apparent summation differences between tonnes, grade and contained metal content which are not considered material.

Conversion factor of Li metal to LCE = 5.323

The figures above are reported on a gross basis given Bradda Head’s 100% interest in the property

The average in situ grade of the Inferred Basin East Mineral Resource has increased from 694 to 900 ppm Li, a 30% increase.

Chairman’s Statement and Operational Review (continued)

The Mineral Resource Update analysis used a stringent approach to both the in-situ density measurement and the cut-off grade utilised. A lower in-situ density and higher cut-off grade than previously reported resulted in a more robust estimate. Both of these measures are currently under review for application into the next drilling campaign and resource expansion.

The recent drill results on Basin East Extension and Basin North solidify Bradda Head’s belief in a widespread and continuous lithium-rich stratigraphic sequence, with potential further into Basin North and across to Basin West that the Company believes will lead to significant resource growth and opportunity to become a Tier 1 lithium deposit.

Post year-end, the Company commenced drilling at its Basin North project during March 2024. A six-hole program has been designed to significantly expand the Company’s lithium in clay MRE, with the objective being to add a minimum of 1.5Mt LCE, surpassing the benchmark of 2.5Mt LCE which will trigger the final US$ 3 million royalty payment from LRC to Bradda Head. The drilling programme finished during May 2024, with assay results being fed into the updated MRE.

In late 2023, the Company completed a gravity survey, with post-processing revealing a significant gravity low over the Basin North area, interpreted as a deep, depositional centre for sedimentary rocks and a deep basement rock geological setting. The results of the gravity survey were very positive and field reconnaissance prompted the staking of 2.8km 2 of new lode and placer claims to the north on open BLM land, expanding the clay potential significantly.

Wikieup Project

On February 28, 2024, the Company announced the completion of the land exchange over the unpatented lode claims at the Wikieup clay project in Western Arizona. Bradda Head retained 66 new claims equating to 1,302 acres (5.27 km 2 ), which the Company staked in early 2019, and held in its subsidiary Zenolith (USA) LLC. In turn, Bradda Head transferred 55 unpatented lode claims to Arizona Lithium’s subsidiary, Big Sandy Inc., to the amount of roughly 1,136 acres (4.60 km 2 ), per the terms of this settlement.

Arizona Pegmatite Hosted Lithium Project
San Domingo Project

On 10 August 2023, the Company mobilised a drill rig for its Phase 3 drill programme at the San Domingo pegmatite district in Arizona, with drilling commencing later in the month. This represents the second large-scale drill programme conducted in less than one year at San Domingo, which underscores the Company’s commitment to exploring and unlocking the potential of the 33km 2 land package held within this highly prospective pegmatite district.

Drilling completed during December 2023, with final assay results being received during January 2024 which highlighted the encouraging results from the drill programme.

San Domingo, Morning Star and South Morning Star Drill Hole Highlights

Hole number

From (m)

To (m)

Int (m)

Li2O (%)

Sn (ppm)

Ta2O5 (ppm)

BeO (%)

Target

SD-DH23-088

28.80

31.09

2.28

0.41

620

0.06

Morning Star

28.80

45.63

16.82

0.19

164

39.26

42.15

2.90

0.46

872

0.23

46.51

49.62

3.11

223

48.77

49.62

0.85

0.49

259

75.74

102.02

21.45

0.03

75.74

81.08

5.34

477

SD-DH23-089

21.95

39.78

17.82

0.04

29.32

32.31

2.98

80

44.96

51.21

6.23

76

147

48.01

50.9

2.89

298

Chairman’s Statement and Operational Review (continued)

Hole number

From (m)

To

(m)

Int (m)

Li2O (%)

Sn (ppm)

Ta2O5 (ppm)

BeO

(%)

Target

SD-DH23-090

6.10

22.52

17.43

0.17

75

42

Morning Star

6.10

10.82

4.73

116

16.25

19.05

2.80

0.65

109

48

SD-DH23-091

43.28

55.17

7.45

0.06

91

61.57

63.58

2.01

1.84

404

SD-DH23-093

5.64

11.67

6.04

151

16.76

17.83

1.07

0.31

31.39

40.39

8.99

1.20

with

31.39

36.79

5.40

1.70

44.20

58.83

14.63

0.54

71

with

51.66

55.93

4.18

1.63

100

52

Morning Star

78.64

83.39

4.75

0.04

82

SD-DH23-094

17.22

23.16

5.93

0.07

52.12

53.80

1.68

0.89

80

80

66.75

72.09

5.33

0.05

SD-DH23-095

68.64

72.24

3.6

0.04

62

SD-DH23-096

48.37

56.39

7.05

0.03

SD-DH23-097

75.29

76.23

0.94

0.12

97.99

101.59

3.60

0.04

SD-DH23-098

78.46

90.22

11.75

0.05

Chairman’s Statement and Operational Review (continued)

SD-DH23-099

8.53

15.24

6.69

0.58

89

23

South Morning Star

26.27

27.37

1.10

0.10

160

266

31.03

36.58

5.55

1.03

99

SD-DH23-100

7.10

9.36

2.26

367

10.91

39.68

28.77

0.36

91

with

10.91

13.11

2.20

0.64

81

plus

16.15

19.20

3.05

0.68

123

and

32.92

39.68

6.76

0.82

145

SD-DH23-100

5.03

6.71

1.68

0.49

55

48

SD-DH23-101

13.56

15.85

2.29

0.30

80

58

18.80

20.85

1.37

0.12

58

SD-DH23-102

39.08

42.37

3.29

0.04

SD-DH23-103

7.32

14.02

6.70

0.07

77

41

SD-DH23-104

8.84

10.52

1.68

0.65

Morning Star

54.56

58.70

4.14

2.07

67

66.75

71.32

4.57

1.12

76

32

71.32

77.69

6.36

0.10

149

90.83

91.78

1.23

0.14

*All drill depths are from surface

Total drilled metres at San Domingo, from both drill programmes completed to date, is only 13,076 meters, covering less than 1% of the total property held.

Following positive results of soil sampling completed in February 2023 that identified further spodumene in outcrops at San Domingo, and in order to strengthen our land holding position, Bradda Head staked just under 8km 2 of new lode claims at its San Domingo asset. This is the 4th round of claim expansion at San Domingo, and the land holding has grown from c.13km 2 to now c.33km 2 since July 2021.

Nevada Brine Hosted Lithium Projects
Eureka and Wilson Salt Flat

No significant work has been undertaken on this project during the current year.

Environment, Social and Governance (“ESG”)

The Company aims to achieve outstanding performance in ESG related matters. For example, at each step of the process, both prior to and during drilling, the Company is in regular discussions with all related stakeholders in our claims, including local councils, tribal representatives, and government officials. With water scarcity being a key consideration in Arizona, the Company used sonic drilling at our Basin East drill programme, which minimised water consumption. A number of community-based programmes have been rolled out during 2023 and into 2024, including sponsorship of local rodeo events, water conservation studies, and other engagement events within our local communities.

Chairman’s Statement and Operational Review (continued)

The Company identified a water well in close proximity to the Basin project, greatly reducing the distance the water truck must travel to obtain water for drilling. This reduces our water truck carbon footprint by minimizing the distance of water source to the project, now only 4 miles as opposed to 50 miles distance and limits fugitive dust production. When necessary, the water truck will lay water on the dirt roads to reduce dust. The Company also looks to secure contracts with drillers whose equipment is new and modern, very compact, has efficient fuel consumption, in order to lower emissions and size of drill site construction.

When core drilling at any of our projects, sumps are made and lined with plastic to capture all fluids that in turn, are recycled in the drill hole, thus reducing water consumption.

Financial Review

For the year ended 29 February 2024, the Company recorded a net loss of US$ 1,503,858 (28 February 2022: US$ 3,887,588). The net loss is after receipt of the second tranche of royalty monies from the Lithium Royalty Company, the net amount being US$ 2,370,127 (2023: Nil).

As at year end, cash and cash deposit balances stood at US$ 1,666,662 (28 February 2023: US$ 7,746,519), capitalised deferred mining, exploration, licence, and permit costs stood at US$ 13,807,158 (28 February 2023: US$ 9,574,266), and total assets were US$ 15,848,063 (28 February 2023: US$ 18,198,559). The Company is in a net asset position of US$ 15,661,704 (28 February 2023: US$ 16,984,940).

In light of the challenging market conditions, the Company has streamlined its corporate overheads. The net effect of this effort means that we continue with our ‘steady as she goes’ approach with no superfluous costs and intend to move forward with the resource growth plan at our Basin Project.

Post yearend on 20 May 2024, the Company announced that it entered into a settlement agreement regarding the fraudulent payment made to an unidentified party, as disclosed in the prior year accounts. Pursuant to the settlement agreement, the Company has been partially reimbursed for the fraudulent funds transfer. The partial settlement is consistent with Company’s expectations at the time of initiating enforcement proceedings with gross recovery of approximately 40% of total misappropriated funds. Bradda Head confirms that the Agreement provides for no admission of liability by either party involved and the full commercial terms of the settlement are subject to strict confidentiality obligations on both parties so it will not be making any further comment on this matter.

Approach to Risk and Corporate Governance

“The Company’s general risk appetite is a moderate, balanced one that allows it to maintain appropriate growth, profitability and scalability, whilst ensuring full corporate compliance.”

The Group’s primary risk drivers include: –

Strategic, Reputational, Credit, Operational, Market, Liquidity, Foreign Exchange, Capital and Funding, Compliance and Conduct.

Our risk appetite is classified as High under an “impact” matrix defined as Zero, Low, Medium, and High. Appropriate steps have been taken and adequate controls implemented to monitor the risks of the Company, and the appropriate committees and reporting structures have been established to monitor risks facing the Company.

Our Corporate Governance Report outlining our adherence to the Quoted Companies Alliance Code is detailed on page 12.

Financing

With effect from January 1, 2024, the Company delisted its shares from trading on the US OTCQB Market, due to share trading liquidity expectations not having been met and cost saving in this current market environment.

The Company’s shares continue to trade on the London AIM Market and on the Canadian TSX Venture Exchange.

Chairman’s Statement and Operational Review (continued)

Strategy and Outlook

It is estimated that the United States has some of the world’s largest lithium deposits, but less than 1% of global lithium is currently mined there. Demand for lithium in the USA is growing exponentially, while access to secure supplies of lithium is becoming more challenging, and more importantly local sources of lithium are scarce. China dominates the global lithium-ion battery industry, with Chinese companies supplying 80% of the world’s battery cells and accounting for nearly 60% of the EV battery market.

Global demand for lithium-ion batteries is expected to increase from about 700 gigawatt hours (GWh) in 2022 to 4,700 GWh by 2030, mainly due to clean-energy policies that promote the adoption of electric vehicles, with the USA and Europe expected to experience the highest growth rates. Under the Joe Biden administration, lithium is vital to decarbonising the USA economy and meeting its goal of 50% electric vehicle adoption by 2030.

Regardless of the upcoming presidential election, IRA continuance is considered solid and expected to generate widespread investment into green energy throughout the USA. While the economy has slowed post-COVID and the US is teetering on recession, the long-term demand on EV’s is very positive over the next decade and will drive the resurgence of lithium prices.

It is hoped that the construction at Thacker Pass, leveraged by General Motors commitment and US Department of Energy loan, may help pave the path for development of large-scale lithium mines in the US.

Advances in DLE technology are proceeding well throughout the industry and will drive exploration and improve permitting timelines, something Bradda Head is poised to take advantage of with our brine projects. The entry by Exxon proves lithium extraction through DLE methods will form a unique niche in the overall lithium global market.

The Company, with its portfolio of assets covering all three main lithium deposit types, is strategically placed to leverage this demand growth in the USA. The projects held are in advantageous locations with respect to end-users, power, rail, and road transport, renewable electricity, and gas infrastructure.

With its current portfolio of assets, a highly experienced and motivated team, the Board believes it is in a strong position to unlock value from its projects and create value for shareholders.

Ian John Stalker
Executive Chair
26 June 2024

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SOURCE: Bradda Head Lithium Limited

View the original press release on accesswire.com

View the original press release on accesswire.com