Lifezone continues to progress its Kabanga Nickel Project, located
in north-west Tanzania, through a strategic partnership with the Government of Tanzania and BHP. Kabanga is believed to be one of the
world’s largest and highest-grade undeveloped nickel sulfide deposits. In addition, Lifezone continues to advance its partnership with
Glencore to recycle platinum, palladium and rhodium in the United States.
Mr. Showalter stated: “Completing the design and engineering
phase of the Definitive Feasibility Study for the Kabanga Nickel Project marks a pivotal milestone, bringing us another step closer to
our goal of establishing a fully integrated mine-to-metal operation in Tanzania. We are dedicated to continuing our collaboration with
BHP and the Government of Tanzania to drive sustainable development and prosperity.”
More than 2 million hours worked without lost time injury at the Kabanga
Nickel Project
Lifezone operates with safety as an ongoing, front-of-mind initiative
at every level. Achieving 2 million hours worked without LTI reflects Lifezone’s commitment to create a safe working culture, promoting
and implementing comprehensive workplace health and safety measures, which include rigorous monitoring and reporting systems.
Kabanga’s Definitive Feasibility Study progresses towards completion
in September
In June, Lifezone completed the design and engineering phase of the
Definitive Feasibility Study for the Kabanga Nickel Project, meaning that the Project’s flowsheet parameters and specifications
are now final for the Study and not open for additional revisions. This includes the sizing of critical pieces of equipment, such as underground
mining fleet, crushers and mills, flotation tanks and autoclaves. With these technical requirements locked in, Lifezone is now focused
on reviewing equipment and services suppliers, finalizing the operating cost model and optimizing capital expenditures.
The two-phased development plan for the Kabanga Nickel Project was
finalized in Q1 2024 and forms the basis of the mine plan and ultimately the Definitive Feasibility Study. The plan calls for a 1.7 million
tonne per year Phase 1 underground mining rate, with an additional 1.7 million tonne per year Phase 2 expansion, for an expected 3.4 million
tonne per year operation in the aggregate. Operating cash flows from Phase 1 operations are expected to help cover the capital requirements
for Phase 2.
Figure 1: 3D model of the Kabanga Concentrator showing the grinding
and flotation circuits and settling tanks. Phase 1 shown in color and Phase 2 in white. The box cut for the underground access portal
is shown with terraces into the hillside on the left.
Figure 2: Satellite map with the 3D Model of the Hydromet refinery
superimposed, located at the site of Barrick Gold’s past-producing Buzwagi gold mine, near Kahama, Tanzania. Phase 1 shown in color
and Phase 2 in white.
Finished nickel, copper and cobalt metal cathode samples produced at
Lifezone’s laboratory
As announced in July, Lifezone has produced nickel, copper and cobalt
cathode samples via the semi-continuous pilot scale refinery test work underway at the Company’s Simulus Laboratory in Perth, Australia.
The metals were produced from flotation concentrate derived from borehole core samples at the Kabanga. This milestone marks the first
metal ever produced from Kabanga mineralization since the deposit’s initial discovery in 1975 by the United Nations Development
Program.
Figure 3: Nickel, copper and cobalt samples produced by Hydromet
from Kabanga source material through pilot test work completed at Lifezone’s laboratory in Perth, Australia.
Tanzanian infrastructure build-out – progress in rail connectivity
and clean hydropower generation
Kabanga stands to benefit from significant investments being made into
Tanzanian infrastructure. Recently, notable progress was demonstrated in both rail and power.
Inaugural Standard Gauge Railway service began in June between the
port city of Dar es Salaam on the Indian Ocean and the city of Morogoro, covering approximately 300 kilometers. This marked the completion
of Phase 1 of the Standard Gauge Rail construction project. The Phase 2 project was completed in late-July, connecting Morogoro to Makutupora,
located just outside Tanzania’s capital city of Dodoma, adding another approximately 420 kilometers. The Standard Gauge Rail project
is a nation-wide upgrade of the existing metre gauge rail system connecting Dar es Salaam to the city of Mwanza, located on the shore
Lake Victoria in northern Tanzania.
Construction of Tanzania’s Standard Gauge Rail is comprised of
six total construction phases, with a scheduled end-date in 2026. The Standard Gauge Railway system uses electric locomotives to move
trains carrying cargo and passengers that can travel at a speed of 160 kilometers per hour (~100 miles per hour). The Kabanga Nickel
Project stands to significantly benefit from this important national project, which will connect the Hydromet refinery at Kahama to the
port of Dar es Salaam. The Definitive Feasibility Study will contemplate truck transport of concentrate from the Kabanga site
to the Hydromet refinery in Kahama, a distance of approximately 350 kilometers, with the produced refined nickel, cobalt and copper being
sent via rail to the port of Dar es Salaam.
Future expansions of the Standard Gauge Rail system could include a
branch to the neighboring country of Burundi, which would likely pass near to the Kabanga site and potentially eliminate the need for
road haulage between Kabanga and the Hydromet refinery at Kahama.
Figure 4: Map showing the planned Standard Gauge Rail network.
Phase 1 Dar es Salaam to Morogoro was completed in June (image source: TanzaniaInvest; Kabanga and Kahama Hydromet Refinery locations
added by Lifezone).
The Tanzania Electric Supply Company Limited (“TANESCO”)
is now generating surplus electricity at the Julius Nyerere Hydro Power Project after switching on Turbine #7. Under construction since
2019, the Julius Nyerere Hydro Power Project began generating clean hydroelectric power in Q1 2024. It is now nearing completion with
a total of nine turbines set to generate approximately 2.4 gigawatts of green electricity into the national power grid.
Figure 5: Aerial view of the Julius Nyerere Hydro Power Project
(image source: IPP Media – The Guardian).
Regular access to clean, green and reliable power is important for
the Kabanga Nickel Project, with the Julius Nyerere Hydro Power Project being one of three hydroelectric plants that form part of Tanzania’s
Power System Master Plan. In addition, there is the 80-megawatt Rusumo Hydroelectric Power Station (commissioned in Q4 2023) and the 88-megawatt
Kakono Hydroelectric Power Station (scheduled for late-2028).
As announced in Q1 2024, TANESCO completed construction and installation
of a 33-kilovolt power line connecting the Kabanga Nickel Project operations camp to the national power grid. With reliable grid electricity,
Kabanga has been able to end its reliance on more emissions-intensive diesel generators.
Figure 6: Map showing the locations of the Julius Nyerere Hydro
Power Project (2.4 gigawatts; Turbine #7 recently commissioned), Rusumo Hydroelectric Power Station (80 megawatts) and Kakono Hydroelectric
Power Station (88 megawatts; expected 2028).
Close collaboration with all Kabanga Nickel Project partners and stakeholders
continues
Key to moving the Kabanga Nickel Project forward is close collaboration
amongst all project partners and stakeholders. To this end, regular meetings have been held between Lifezone, BHP and the Government of
Tanzania from May to finalize the Joint Financial Model. This is based on the technical parameters determined through the Definitive Feasibility
Study, and forms the basis of the sharing of the economic benefits between Lifezone and BHP, as the funding shareholders, and the Government
of Tanzania – as outlined in the Framework Agreement signed in January 2021. It is also the basis for the valuation of BHP’s
potential T2 option earn-in post Definitive Feasibility Study completion.
The Government of Tanzania has a 16% free-carried interest, while BHP
currently has a 14.3% indirect interest in the Kabanga Nickel Project with an option increase its indirect ownership to 51% following
completion of the Definitive Feasibility Study and the Joint Financial Model.
Figure 7: Map showing the location of the Kabanga Special Mining
Licence area.
Compensation payments largely completed to those persons affected by
the Kabanga Nickel Project
With the future construction of the Kabanga Nickel Project, within
the Special Mining Licence 349 local households will be physically impacted (i.e., houses and land title impacted) and 990 will likely
be economically impacted (i.e., land title impacted). In 2023, Lifezone worked proficiently to update and improve a previous 2013 Relocation-Resettlement
Action plan, and the Lifezone Resettlement Action Plan was submitted to the Tanzanian Ministry of Minerals in August 2023.
By the end of 2023, Lifezone achieved key resettlement milestones,
including obtaining the Tanzanian Chief Government Valuer sign-off on the compensation schedule and valuation for land acquisition and
relocation.
The initiation of compensation payments to affected households commenced
on November 6th, 2023, and payments are 95% complete to date, with the aim to complete the remaining affected households as soon as possible.
To date, a total of TZS 26.7 billion (US$10.5 million) was paid to 1,260 affected households. Our community team is actively engaged in
identifying and supporting community members who have not received their payments, often related to missing documentation. The completion
of compensation payments will give Lifezone legal surface title to the entire ~4,300 hectares of the Kabanga Special Mining Licence area.
In June, the resettlement model houses showcase began, and five model
houses have been built following discussions with affected persons. Households that will be physically displaced by the Kabanga Nickel
Project are entitled to select from one of two different styles of replacement house. Those who will be affected have participated in
a process of balloting for preferred resettlement sites, as well as selecting and influencing the housing materials, structures and design.
Feedback following the initial showcase is being addressed ahead of final construction and relocation. Lifezone will build approximately
410 new houses for resettlement at land selected in cooperation with government and local working groups.
Figure 8:Residents of Nyabihungo in Rwinyana village, visited
the Mukubu Model House in Muganza Ward - June 2024.
Figure 9: An exclusive feedback session on the model houses with
women who will be physically affected by the Kabanga Nickel Project, hosted in Nangeli, Rwinyana - July 2024.
Figure 11:Attending to the tree-nurseries at Ndovu Camp. Once
matured, these trees will be used to rehabilitate completed exploration drill pads.
Figure 12: Lifezone’s Chief Operating Officer Gerick Mouton
and members of the Lifezone team visiting a local café, Shuku Catering & Bar, that was recently constructed by a person that
will be physically displaced by the Kabanga Nickel Project using proceeds from their resettlement compensation.
Figure 13: Elivila Frederick, from Rwinyana Village, Bugarama
Ward, working on camp upgrades at the Kabanga Nickel Project - July 2024.
Figure 14: Digna Isdory, Senior Environmental Officer, instructing
Rwinyana Primary School students on the correct way to plant trees – June 2024.
As of June 30, 2024, Lifezone Metals had unaudited interim consolidated
cash and cash equivalents of $63.5 million, a decrease of $16.1 million from $79.6 million as of March 31, 2024. The decrease reflects
cash usage of $21.0 million, partially offset by $4.9 million of proceeds from the 2024 convertible debenture placement that were received
in April.
As of June 30, 2024, a total of $10.4 million was spent on compensation
payments for those households that will be physically or economically displaced by the Kabanga Nickel Project. This activity started in
November 2023, with $2.2 million spent to December 31, 2023 and $8.2 million spent from January 1, 2024 to June 30, 2024, resulting in
94% of the compensation payments completed by the end of Q2 2024. Since H1, an additional compensation payment has been made and as of
August 19, 2024, total compensation since initiation amounted to $10.5 million, taking compensation payments to 95% complete.
The Company invites shareholders, investors, and members of the media
to join the executive team for a virtual presentation and discussion of Lifezone’s recent activities, H1 financial statements and
outlook. The presentation will be followed by a Q&A session where participants can engage directly with senior management.
The presentation slides will be available on Lifezone’s website.
The webcast will be archived and accessible for replay for a limited time after the event.
If you would like to sign up for Lifezone Metals news alerts, please
register here.
At Lifezone Metals (NYSE: LZM), our mission is to provide cleaner and
more responsible metals production and recycling. Using a scalable platform underpinned by our Hydromet Technology, we offer the potential
for lower energy, lower emission and lower cost metals production compared to traditional smelting.
Our Kabanga Nickel Project in Tanzania is believed to be one of the
world’s largest and highest-grade undeveloped nickel sulfide deposits. By pairing with our Hydromet Technology, we are working to unlock
a new source of LME-grade nickel, copper and cobalt for the global battery metals markets, to empower Tanzania to achieve full in-country
value creation and become the next premier source of Class 1 nickel. A Definitive Feasibility Study for the project is due for completion
in Q3 2024.
Through our US-based, platinum, palladium and rhodium recycling partnership,
we are working to demonstrate that our Hydromet Technology can process and recover platinum group metals from responsibly sourced spent
automotive catalytic converters in a cleaner and more efficient way than conventional smelting and refining methods.
Certain statements made herein are not historical facts but may be
considered “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended and the “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995 regarding,
amongst other things, the plans, strategies, intentions and prospects, both business and financial, of Lifezone Metals Limited and its
subsidiaries.
Generally, statements that are not historical facts, including statements
concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to
projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,”
“would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,”
“outlook” or the negatives of these terms or variations of them or similar terminology or expressions that predict or indicate
future events or trends or that are not statements of historical matters; provided that the absence of these does not mean that a statement
is not forward-looking. These forward-looking statements include, but are not limited to, statements regarding future events, the estimated
or anticipated future results of Lifezone Metals, future opportunities for Lifezone Metals, including the efficacy of Lifezone Metals’
hydrometallurgical technology (Hydromet Technology) and the development of, and processing of mineral resources at, the Kabanga Project,
and other statements that are not historical facts.
These statements are based on the current expectations of Lifezone
Metals’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative
purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction
or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ
from assumptions. Many actual events and circumstances are beyond the control of Lifezone Metals and its subsidiaries. These statements
are subject to a number of risks and uncertainties regarding Lifezone Metals’ business, and actual results may differ materially.
These risks and uncertainties include, but are not limited to: general economic, political and business conditions, including but not
limited to the economic and operational disruptions; global inflation and cost increases for materials and services; reliability of sampling;
success of any pilot work; capital and operating costs varying significantly from estimates; delays in obtaining or failures to obtain
required governmental, environmental or other project approvals; changes in government regulations, legislation and rates of taxation;
inflation; changes in exchange rates and the availability of foreign exchange; fluctuations in commodity prices; delays in the development
of projects and other factors; the outcome of any legal proceedings that may be instituted against the Lifezone Metals; our ability to
obtain additional capital, including use of the debt market, future capital requirements and sources and uses of cash; the risks related
to the rollout of Lifezone Metals’ business, the efficacy of the Hydromet Technology, and the timing of expected business milestones;
the acquisition of, maintenance of and protection of intellectual property; Lifezone’s ability to achieve projections and anticipate
uncertainties (including economic or geopolitical uncertainties) relating to our business, operations and financial performance, including:
expectations with respect to financial and business performance, financial projections and business metrics and any underlying assumptions;
expectations regarding product and technology development and pipeline and market size; expectations regarding product and technology
development and pipeline; the effects of competition on Lifezone Metals’ business; the ability of Lifezone Metals to execute its
growth strategy, manage growth profitably and retain its key employees; the ability of Lifezone Metals to reach and maintain profitability;
enhancing future operating and financial results; complying with laws and regulations applicable to Lifezone Metals’ business; Lifezone
Metals’ ability to continue to comply with applicable listing standards of the NYSE; the ability of Lifezone Metals to maintain
the listing of its securities on a U.S. national securities exchange; our ability to comply with applicable laws and regulations; stay
abreast of accounting standards, or modified or new laws and regulations applying to our business, including privacy regulation; and other
risks that will be detailed from time to time in filings with the U.S. Securities and Exchange Commission (SEC).
The foregoing list of risk factors is not exhaustive. There may be
additional risks that Lifezone Metals presently does not know or that Lifezone Metals currently believes are immaterial that could also
cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Lifezone
Metals’ expectations, plans or forecasts of future events and views as of the date of this communication. Lifezone Metals anticipates
that subsequent events and developments will cause Lifezone Metals’ assessments to change.
These forward-looking statements should not be relied upon as representing
Lifezone Metals’ assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not
be placed upon the forward-looking statements. Nothing herein should be regarded as a representation by any person that the forward-looking
statements set forth herein will be achieved or that any of the contemplated results in such forward-looking statements will be achieved.
You should not place undue reliance on forward-looking statements in this communication, which are based upon information available to
us as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. In all cases where
historical performance is presented, please note that past performance is not a credible indicator of future results.
Except as otherwise required by applicable law, we disclaim any obligation
to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data,
or methods, future events, or other changes after the date of this communication.
Exhibit
99.2
LIFEZONE
METALS LIMITED
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS
for
the three and six months ended June 30, 2024
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
for
the three and six months ended June 30, 2024, and June 30, 2023
| | |
| |
Three months ended | | |
Six months ended | |
| | |
| |
June 30 | | |
June 30 | |
| | |
Note | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Revenue | |
5 | |
| 8,261 | | |
| 11,061 | | |
| 49,650 | | |
| 506,748 | |
| (Including related party revenues of $Nil and $Nil, $Nil and $495,048 for the three months end and six months ended June 30, 2024, and 2023, respectively) | |
| |
| | | |
| | | |
| | | |
| | |
| Cost of sales | |
| |
| (1,308 | ) | |
| - | | |
| (12,252 | ) | |
| - | |
| Gross profit | |
| |
| 6,953 | | |
| 11,061 | | |
| 37,398 | | |
| 506,748 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Loss (gain) on foreign exchange | |
9 | |
| 107,265 | | |
| 5,660 | | |
| (60,475 | ) | |
| 86,547 | |
| General and administrative expenses | |
9 | |
| (5,490,832 | ) | |
| (5,780,632 | ) | |
| (9,559,603 | ) | |
| (13,412,649 | ) |
| Operating loss | |
| |
| (5,376,614 | ) | |
| (5,763,911 | ) | |
| (9,582,680 | ) | |
| (12,819,354 | ) |
| Interest income | |
6 | |
| 904,429 | | |
| 139,606 | | |
| 1,361,638 | | |
| 269,800 | |
| Fair value loss on embedded derivatives | |
19 | |
| (356,000 | ) | |
| - | | |
| (356,000 | ) | |
| - | |
| Interest expense | |
7 | |
| (2,268,204 | ) | |
| (43,670 | ) | |
| (2,364,345 | ) | |
| (91,668 | ) |
| Loss before tax | |
| |
| (7,096,389 | ) | |
| (5,667,975 | ) | |
| (10,941,387 | ) | |
| (12,641,222 | ) |
| Income tax | |
| |
| - | | |
| - | | |
| - | | |
| - | |
| Loss for the financial period | |
| |
| (7,096,389 | ) | |
| (5,667,975 | ) | |
| (10,941,387 | ) | |
| (12,641,222 | ) |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Other comprehensive loss | |
| |
| | | |
| | | |
| | | |
| | |
| Other comprehensive loss that may be
reclassified to profit or loss in subsequent periods (net of tax): | |
| |
| | | |
| | | |
| | | |
| | |
| Exchange loss on translation of foreign operations | |
| |
| (87,495 | ) | |
| (1,976 | ) | |
| (21,873 | ) | |
| (84,291 | ) |
| Total other comprehensive loss for
the period | |
| |
| (87,495 | ) | |
| (1,976 | ) | |
| (21,873 | ) | |
| (84,291 | ) |
| | |
| |
| | | |
| | | |
| | | |
| | |
| Total other comprehensive loss for the period | |
| |
| (7,183,884 | ) | |
| (5,669,951 | ) | |
| (10,963,260 | ) | |
| (12,725,513 | ) |
| Net loss for the period: | |
| |
| | | |
| | | |
| | | |
| | |
| Attributable to ordinary shareholders of the company | |
| |
| (6,750,125 | ) | |
| (4,367,422 | ) | |
| (10,699,490 | ) | |
| (10,403,600 | ) |
| Attributable to non-controlling interests | |
| |
| (346,264 | ) | |
| (1,300,553 | ) | |
| (241,897 | ) | |
| (2,237,622 | ) |
| | |
| |
| (7,096,389 | ) | |
| (5,667,975 | ) | |
| (10,941,387 | ) | |
| (12,641,222 | ) |
| Total comprehensive loss: | |
| |
| | | |
| | | |
| | | |
| | |
| Attributable to ordinary shareholders of the company | |
| |
| (6,837,620 | ) | |
| (4,369,398 | ) | |
| (10,721,363 | ) | |
| (10,487,891 | ) |
| Attributable to non-controlling interests | |
| |
| (346,264 | ) | |
| (1,300,553 | ) | |
| (241,897 | ) | |
| (2,237,622 | ) |
| | |
| |
| (7,183,884 | ) | |
| (5,669,951 | ) | |
| (10,963,260 | ) | |
| (12,725,513 | ) |
| Net loss per share: | |
| |
| | | |
| | | |
| | | |
| | |
Basic & diluted net loss per ordinary share | |
23 | |
| (0.09 | ) | |
| (0.07 | ) | |
| (0.14 | ) | |
| (0.18 | ) |
Ingo
Hofmaier Chief Financial Officer
Date:
August 19, 2024
See
accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
as
of June 30, 2024, and December 31, 2023
| | |
Note | |
June 30,
2024 | | |
December 31,
2023 | |
| | |
| |
$ | | |
$ | |
| Assets | |
| |
| | |
| |
| Non-current assets | |
| |
| | |
| |
| Goodwill | |
14 | |
| 9,020,813 | | |
| 9,020,813 | |
| Exploration and evaluation assets and mining data | |
16 | |
| 97,678,667 | | |
| 69,810,603 | |
| Patents | |
15 | |
| 643,694 | | |
| 615,103 | |
| Other intangible assets | |
15 | |
| 252,302 | | |
| 299,101 | |
| Property and equipment | |
13 | |
| 5,352,576 | | |
| 6,000,357 | |
| Right-of-use assets | |
13 | |
| 1,456,928 | | |
| 1,693,512 | |
| | |
| |
| 114,404,980 | | |
| 87,439,489 | |
| Current assets | |
| |
| | | |
| | |
| Inventories | |
11 | |
| 281,434 | | |
| 100,780 | |
| Trade and other receivables | |
12 | |
| 2,637,811 | | |
| 3,822,214 | |
| Related party receivables | |
21 | |
| 562,330 | | |
| 1,508,243 | |
| Cash and cash equivalents | |
10 | |
| 63,492,965 | | |
| 49,391,627 | |
| | |
| |
| 66,974,540 | | |
| 54,822,864 | |
| Total assets | |
| |
| 181,379,520 | | |
| 142,262,353 | |
| | |
| |
| | | |
| | |
| Liabilities and equity | |
| |
| | | |
| | |
| | |
| |
| | | |
| | |
| Equity | |
| |
| | | |
| | |
| Share capital | |
22 | |
| 7,829 | | |
| 7,828 | |
| Share premium | |
22 | |
| 178,718,812 | | |
| 178,686,328 | |
| Shared based payment reserve | |
22 | |
| 265,558,785 | | |
| 265,558,785 | |
| Warrant reserves | |
22 | |
| 15,017,257 | | |
| 15,017,257 | |
| Other reserves | |
22 | |
| (5,314,302 | ) | |
| (6,814,302 | ) |
| Foreign currency translation reserve | |
22 | |
| 56,060 | | |
| 77,933 | |
| Redemption reserve | |
22 | |
| 280,808 | | |
| 280,808 | |
| Accumulated deficit | |
22 | |
| (418,864,652 | ) | |
| (408,165,162 | ) |
| Total Shareholders’ equity | |
| |
| 35,460,597 | | |
| 44,649,475 | |
| Non-controlling interests | |
22 | |
| 83,422,155 | | |
| 83,664,052 | |
| Total equity | |
| |
| 118,882,752 | | |
| 128,313,527 | |
See
accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
as
of June 30, 2024, and December 31, 2023
| | |
Note | |
June 30,
2024 | | |
December 31,
2023 | |
| | |
| |
$ | | |
$ | |
| Non-current liabilities | |
| |
| | |
| |
| Lease liabilities | |
18 | |
| 926,588 | | |
| 1,185,145 | |
| | |
| |
| 926,588 | | |
| 1,185,145 | |
| Current liabilities | |
| |
| | | |
| | |
| Lease liabilities | |
18 | |
| 656,935 | | |
| 602,557 | |
| Trade and other payables | |
17 | |
| 6,608,378 | | |
| 8,335,464 | |
| Convertible debentures and embedded derivatives | |
19 | |
| 50,409,506 | | |
| - | |
| Deferred consideration liability | |
20 | |
| 3,851,611 | | |
| 3,693,612 | |
| Related party payables | |
21 | |
| 43,750 | | |
| 132,048 | |
| | |
| |
| 61,570,180 | | |
| 12,763,681 | |
| | |
| |
| | | |
| | |
| Total liabilities | |
| |
| 62,496,768 | | |
| 13,948,826 | |
| | |
| |
| | | |
| | |
| Total equity and liabilities | |
| |
| 181,379,520 | | |
| 142,262,353 | |
Ingo
Hofmaier
Chief
Financial Officer
Date:
August 19, 2024
See
accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
for
the six months ended June 30, 2024, and June 30, 2023
| | |
Note | |
Share
Capital | | |
Share
Premium | | |
Shared
Based
Payment
Reserve | | |
Warrant
Reserves | | |
Other
Reserves | | |
Foreign
currency
translation
reserve | | |
Redemption
Reserve | | |
Accumulated
Deficit | | |
Total
Shareholders’
equity | | |
Non-
controlling
Interest | | |
Total
equity | |
| At January 1,
2023 | |
| |
| 3,101 | | |
| 25,436,656 | | |
| 25,483,348 | | |
| - | | |
| (15,495,254 | ) | |
| 115,864 | | |
| 280,808 | | |
| (44,290,602 | ) | |
| (8,466,079 | ) | |
| 84,452,884 | | |
| 75,986,805 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total loss for the interim
financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10,403,600 | ) | |
| (10,403,600 | ) | |
| (2,237,622 | ) | |
| (12,641,222 | ) |
| Total
other comprehensive income for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (84,291 | ) | |
| - | | |
| - | | |
| (84,291 | ) | |
| - | | |
| (84,291 | ) |
| At
June 30, 2023 | |
| |
| 3,101 | | |
| 25,436,656 | | |
| 25,483,348 | | |
| - | | |
| (15,495,254 | ) | |
| 31,573 | | |
| 280,808 | | |
| (54,694,202 | ) | |
| (18,953,970 | ) | |
| 82,215,262 | | |
| 63,261,292 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| At January 1, 2024 | |
| |
| 7,828 | | |
| 178,686,328 | | |
| 265,558,785 | | |
| 15,017,257 | | |
| (6,814,302 | ) | |
| 77,933 | | |
| 280,808 | | |
| (408,165,162 | ) | |
| (44,649,475 | ) | |
| 83,664,052 | | |
| 128,313,527 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Transactions with shareholders | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of ordinary shares | |
| |
| 1 | | |
| 32,484 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 32,485 | | |
| - | | |
| 32,485 | |
| Glencore
contribution in US Recycling LLC | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,500,000 | | |
| - | | |
| - | | |
| - | | |
| 1,500,000 | | |
| - | | |
| 1,500,000 | |
| Total
transactions with shareholders | |
| |
| 1 | | |
| 32,484 | | |
| - | | |
| - | | |
| 1,500,000 | | |
| - | | |
| - | | |
| - | | |
| 1,532,485 | | |
| - | | |
| 1,532,485 | |
| Total loss for the interim
financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10,699,490 | ) | |
| (10,699,490 | ) | |
| (241,897 | ) | |
| (10,941,387 | ) |
| Total
other comprehensive income for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (21,873 | ) | |
| - | | |
| - | | |
| (21,873 | ) | |
| - | | |
| (21,873 | ) |
| At
June 30, 2024 | |
22 | |
| 7,829 | | |
| 178,718,812 | | |
| 265,558,785 | | |
| 15,017,257 | | |
| (5,314,302 | ) | |
| 56,060 | | |
| 280,808 | | |
| (418,864,652 | ) | |
| 35,460,597 | | |
| 83,422,155 | | |
| 118,882,752 | |
See
accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
for
the six months ended June 30, 2024, and June 30, 2023
| | |
| |
June 30, | | |
June 30, | |
| | |
Note | |
2024 | | |
2023 | |
| | |
| |
$ | | |
$ | |
| Cash flows from operating activities | |
| |
| | |
| |
| Consolidated loss for period | |
| |
| (10,963,260 | ) | |
| (12,725,513 | ) |
| Adjustments for: | |
| |
| | | |
| | |
| Share-based compensation expense | |
22 | |
| 32,454 | | |
| - | |
| Interest income | |
6 | |
| (1,361,638 | ) | |
| (269,800 | ) |
| Amortization of intangibles | |
15 | |
| 90,248 | | |
| 38,301 | |
| Foreign exchange (gain) loss | |
| |
| 42,011 | | |
| (86,547 | ) |
| Loss of disposal on property and equipment | |
| |
| 3,377 | | |
| - | |
| Impairment for VAT receivable | |
9 | |
| 839,758 | | |
| - | |
| Fair value loss on embedded derivatives | |
19 | |
| 356,000 | | |
| - | |
| Interest expense | |
7 | |
| 2,364,345 | | |
| 91,668 | |
| Depreciation of property and equipment and right-of-use assets | |
13 | |
| 835,514 | | |
| 169,721 | |
| Operating loss before working capital changes | |
| |
| (7,761,191 | ) | |
| (12,782,170 | ) |
| Changes in trade and other receivables | |
| |
| (810,622 | ) | |
| (1,072,573 | ) |
| Changes in related party receivables | |
21 | |
| 945,913 | | |
| (1,374,175 | ) |
| Changes in inventories | |
| |
| (180,654 | ) | |
| (17,206 | ) |
| Changes in other current assets | |
| |
| 655,739 | | |
| (2,202,145 | ) |
| Changes in prepaid mining license | |
| |
| 499,555 | | |
| 499,903 | |
| Changes in related party payables | |
21 | |
| (88,298 | ) | |
| - | |
| Changes in trade and other payables | |
15 | |
| (1,597,354 | ) | |
| 10,892,071 | |
| Net cash used in operating activities | |
| |
| (8,336,912 | ) | |
| (6,056,295 | ) |
| Cash flows from investing activities | |
| |
| | | |
| | |
| Interest received from bank | |
6 | |
| 1,361,638 | | |
| 262,959 | |
| Patent costs incurred | |
15 | |
| (72,039 | ) | |
| (49,047 | ) |
| Expenditure on property and equipment | |
13 | |
| (82,674 | ) | |
| (253,505 | ) |
| Expenditure on other intangible assets | |
15 | |
| - | | |
| - | |
| Investment in exploration and evaluation assets | |
16 | |
| (27,957,059 | ) | |
| (17,465,815 | ) |
| Net cash used in investing activities | |
| |
| (26,750,135 | ) | |
| (17,505,408 | ) |
| Cash flows from financing activities | |
| |
| | | |
| | |
| Issue of share capital | |
22 | |
| 1 | | |
| - | |
| Proceeds from loans and borrowings, net of transaction cost | |
19 | |
| 49,250,000 | | |
| - | |
| Payment of debenture interest | |
19 | |
| (1,203,515 | ) | |
| - | |
| Payment of lease liabilities | |
18 | |
| (316,090 | ) | |
| (62,775 | ) |
| Proceeds from receipt of subscription receivable, net of costs | |
22 | |
| 1,500,000 | | |
| 47,500,000 | |
| Net cash provided by (used in) financing activities | |
| |
| 49,230,395 | | |
| (47,437,225 | ) |
| Net increase in cash and cash equivalents | |
| |
| 14,143,349 | | |
| 23,875,522 | |
| Cash and cash equivalents | |
| |
| | | |
| | |
| Effect of exchange rate changes in cash | |
| |
| (42,011 | ) | |
| - | |
| Beginning of period | |
| |
| 49,391,627 | | |
| 20,535,210 | |
| End of period | |
| |
| 63,492,965 | | |
| 44,410,732 | |
See
accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
1. Corporate and Group information
1.1. General information
Lifezone
Metals Limited (the Company, individually and together with its controlled subsidiaries “Lifezone”) is a limited company
incorporated and domiciled in the Isle of Man, whose shares have publicly traded on the New York Stock Exchange (“NYSE”)
since July 6, 2023, under the trading symbol LZM. Lifezone’s warrants trade on the NYSE under the symbol LZMW.
The
Company’s registered office is located at Commerce House, 1 Bowring Road, Ramsey, IM8 2LQ, Isle of Man.
The
Unaudited Condensed Consolidated Interim Financial Statements of Lifezone for the six months ended June 30, 2024, were authorized for
release in accordance with a resolution of the Directors of Lifezone on August 17, 2024.
1.2.
Business overview
Lifezone
aims to provide cleaner metals solutions for the global supply chain through the development, patenting, and licensing of its hydrometallurgical
processing technology (“Hydromet Technology”), which has applicability to the extractive metallurgy, minerals, and
metals recycling industries.
Lifezone’s
primary metals asset is the Kabanga Nickel Project in Tanzania, believed to be one of the world’s largest and highest-grade undeveloped
nickel sulfide deposits.
Lifezone’s
management has technical expertise in hydrometallurgical refining, a track record of building and operating mines and commercial capabilities
to finance projects of this scale.
1.3.
Hydromet Technology overview
Lifezone’s
Hydromet Technology is amenable to processing and refining metals from sulfide minerals containing nickel, copper, cobalt, platinum,
palladium, rhodium and gold. As of June 30, 2024, Lifezone has 6 active patent families comprising 162 granted patents in a total of
67 countries. Within the same patent families, Lifezone has an additional 102 patent applications pending across multiple countries.
Compared
to traditional pyrometallurgical smelting and refining technologies, Lifezone’s Hydromet Technology is expected to produce less
carbon dioxide emissions per ton of metal produced with zero sulfur dioxide emissions, be more capital and operating cost efficient,
have faster processing times and enable fully traceable refined LME-grade metals to enable enhanced supply chain transparency.
On
July 18, 2023, Lifezone acquired The Simulus Group (“Simulus”), a leading hydrometallurgical laboratory and engineering
company located in Perth, Australia. Prior to the acquisition, Simulus generated revenue by providing external hydrometallurgical test
work and engineering services to a broad range of clients in the mining industry, including Lifezone. As of June 30, 2024, the primary
activity at the Simulus laboratory has been the construction and operation of two Hydromet pilot plants at its premises in Perth, that
will substantiate the applicability of Lifezone’s Hydromet Technology for its two core commercial projects, the Kabanga Nickel
Project and the recycling of platinum, palladium and rhodium (together, “platinum group metals” or “PGMs”)
from salvaged automotive catalytic converters.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
1.
Corporate and Group information (continued)
1.3.
Hydromet Technology overview (continued)
Lifezone
is focused on commercializing its Hydromet Technology across the metals and mining industry. Research and development are continuous
alongside the broadening of Lifezone’s intellectual property portfolio through applications for additional patents to be applied
to new opportunities in other metal groups and deposit types. Lifezone seeks to ensure that its Hydromet Technology remains protected
through patent applications. In addition, Simulus is expected to have capacity in the future to provide revenue-generating bespoke test
work and engineering services for external clients.
1.4.
Kabanga Nickel Project
Lifezone’s
primary metals asset is the Kabanga deposit in north-west Tanzania. Approximately 340 kilometers from Kabanga, a refinery is anticipated
to be constructed that will utilize Lifezone’s Hydromet Technology to unlock a new source of fully traceable LME-grade nickel,
copper and cobalt for the global battery metals markets, to empower Tanzania to achieve full in-country value creation and become the
next premier source of Class 1 nickel. The refinery is expected to be located at a brownfield site in Kahama with existing infrastructure,
a trained workforce and nearby rail, roads and airstrip. The results of the ongoing study work for the Kabanga Nickel Project are expected
to be completed in Q3 2024.
In
October 2021, the government of Tanzania issued the Special Mining License (“SML”) over the Kabanga deposit area,
and in March 2024, a Refining License was issued at the proposed refinery location in Kahama. The Government of Tanzania is a 16% shareholder
in the Kabanga Nickel Project with a non-dilutable interest via its holding in Tembo Nickel Corporation Limited (“TNCL”).
The remaining 84% in TNCL is owned by Kabanga Nickel Limited (“KNL”), whose shareholders are Lifezone (83.0%) and
BHP Billiton (UK) DDS Ltd (“BHP”) (17.0%) – the largest mining company in the world by market capitalization.
In
December 2021, BHP invested $40.0 million into KNL in return for an 8.9% shareholding and $10.0 million into Lifezone Limited. In October
2022, BHP invested an additional $50.0 million into KNL increasing its stake to 17.0% and concurrently signed an investment option agreement
to take its stake in KNL to 60.7% pending delivery of the Kabanga Nickel Project definitive feasibility study (“DFS”)
and other conditions. BHP holds approximately 1.2 million shares in Lifezone representing a 1.5% shareholding.
Lifezone
is engaged in commercial discussions with global customers to monetize its portion of marketing rights with an offtake transaction. The
end users of finished products from Kabanga are expected to be involved in the supply chain of battery electric vehicles that will support
the global energy transition towards decarbonization.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
1.
Corporate and Group information (continued)
1.5.
Platinum, palladium and rhodium recycling project in the United States
Lifezone’s
Hydromet Technology intellectual property was initially conceived from test work on PGM mineral concentrates, and it’s the first
test work and scoping study was undertaken in 2014 to demonstrate the successful recovery of PGMs from spent automotive catalytic converters
(“autocats”). Today, over 20% of global PGM supply is derived from the secondary autocat recycling market.
Recycling
is expected to play an important role as an alternative supply of critical metals. However, current recycling practices, involving conventional
smelting and refining, compound the carbon dioxide emissions intensity of metal units. Through the application of its Hydromet Technology,
Lifezone intends to break this energy-intensive and pollutive recycling chain by providing a cleaner, lower-emissions and responsibly
sourced recycling solution.
Through
Lifezone’s partnership with Glencore, a major and diversified participant in global commodities, the Company is evaluating the
design and construction of a commercial-scale Hydromet PGM recycling facility in the United States to recycle PGMs from autocat material.
In
January 2024, Lifezone and Glencore each funded $1.5 million into a newly established US Lifezone group entity with proceeds designated
towards the pilot program and the completion of a feasibility study currently underway at Simulus. The results are expected to demonstrate
the effectiveness of Lifezone’s Hydromet Technology to recover and refine PGMs from autocats and will form the basis of Glencore
and Lifezone’s final investment decision to construct the first Hydromet PGM recycling facility in the US. The feasibility study
is expected to be completed in Q4 2024. Following its initial $1.5 million investment, Glencore holds a 6% interest in the Project.
2.
Significant transactions
This
section provides additional information which will outline how changes in the Lifezone group structure have impacted the financial position
and performance of Lifezone as a whole, and the events that have occurred in the last two years impacting the financial position and
performance of the periods presented in this report.
2.1.
BHP investments
On
December 24, 2021, KNL entered into a $40.0 million convertible loan agreement with BHP and Lifezone Limited under the Lifezone Subscription
Agreement in relation to the Kabanga Nickel Project. Following the conversion of convertible loans on July 1, 2022, BHP held an 8.9%
interest in KNL, reflected within non-controlling interest. On October 14, 2022, BHP ns, BHP’s interest in KNL increased from 8.9% to 17.0%, effective February 15, 2023.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
2.
Significant transactions (continued)
2.2.
SPAC Transaction
On
December 13, 2022, Lifezone and GoGreen Investments Corporation (“GoGreen”), an exempted special purchase acquisition
company (“SPAC”) incorporated under the laws of the Cayman Islands and formerly listed on the NYSE, entered into a
business combination agreement (“BCA”) with GoGreen Sponsor 1 LP, a Delaware limited partnership (the “Sponsor”),
Aqua Merger Sub, a Cayman Islands exempted company (the “Merger Sub”), and Lifezone Holdings.
Lifezone
Holdings Limited (“Lifezone Holdings”) was formed as a holding company for Lifezone Limited and acquired 100% of the
equity interest (including outstanding options and restricted stock units) in Lifezone Limited on June 24, 2022, in consideration for
issuing shares of Lifezone Holdings on a 1:1 basis to Lifezone Limited shareholders at the time (following a 1:200 split of shares of
Lifezone Limited) (the “Lifezone Holdings Transaction”). Also, on June 24, 2022 (just prior to the Lifezone Holdings
Transaction), the shareholders of KNL, other than Lifezone Limited and BHP, exchanged their shares of KNL for shares of Lifezone Holdings
on a 1:1 basis (the “Flip-Up”). The KNL options were also exchanged for options in Lifezone Holdings on a 1:1 basis
as part of the Flip-Up.
The
Company, Lifezone Holdings and GoGreen consummated the SPAC Transaction pursuant to the BCA on July 6, 2023 (the “Closing”
and the “Closing Date” respectively). The transaction was unanimously approved by GoGreen’s Board of Directors
and was approved at the extraordinary general meeting of GoGreen’s shareholders held on June 29, 2023, together with all other
proposals put to GoGreen shareholders. As a result of the SPAC Transaction, the Merger Sub, as the surviving entity after the SPAC Transaction,
and Lifezone Holdings each became wholly owned subsidiaries of the Company. Lifezone is considered the accounting acquirer, as Lifezone
shareholders hold the majority of shares in the combined entity following the acquisition. Lifezone’s key management personnel
continues to direct the combined business and Lifezone set the direction of the board composition.
The
SPAC Transaction was accounted for as a capital reorganization (“Reorganization”). Under this method of accounting,
GoGreen was treated as the “acquired” company for financial reporting purposes, with Lifezone being the accounting acquirer
and accounting predecessor. Accordingly, the Reorganization was treated as the equivalent of the Company issuing shares at Closing of
the Reorganization for the net assets of GoGreen, accompanied by a recapitalization via a Private Investment in Public Equity (“PIPE”)
transaction. The Reorganization, which was not within the scope of IFRS 3 since GoGreen did not meet the definition of a business in
accordance with IFRS 3, was accounted for within the scope of IFRS 2. In accordance with IFRS 2, Lifezone recorded a one-time non-cash
expense of $76.9 million recognized as a SPAC transaction expense, based on the excess of the fair value of Lifezone shares issued at
a value of $10 per share over the fair value of GoGreen’s identifiable net assets acquired.
The
BCA was signed concurrent to the closing of the PIPE transaction, which raised $70.2 million of gross proceeds.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
2.
Significant transactions (continued)
2.2.
SPAC Transaction (continued)
Cash
inflows from the SPAC transaction amounted to $16.5 million GoGreen cash (post redemptions, but before paying all existing GoGreen liabilities),
along with $70.2 million gross proceeds from the PIPE transaction consummated substantially simultaneously resulting in $86.6 million
gross proceeds for Lifezone before listing and equity issuance costs.
Prior
to the Closing, the SPAC incurred 94.47% of redemptions from public shareholders following a redemption vote deadline of June 27, 2023,
leaving 1,527,554 residual shares in trust. At the Closing, Lifezone acquired GoGreen and former GoGreen shareholders received the number
of Lifezone shares and warrants equal to their former holdings of GoGreen shares and warrants. The outstanding warrants formerly associated
with GoGreen will therefore be recognized in Lifezone future reported financial position.
Following
the Closing, Lifezone shareholders comprised all prior shareholders of Lifezone Holdings, prior shareholders of GoGreen (including its
public shareholders post-redemptions and Sponsor shareholders) plus all PIPE investors resulting in Lifezone having a total of 77,693,602
shares issued and outstanding.
Pursuant
to earnout arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional Lifezone shares if the
daily volume-weighted average price of Lifezone shares equals or exceeds (i) $14.00 per share for any 20 trading days within a 30-trading
day period (“Trigger Event 1”) and (ii) $16.00 for any 20 trading days within a 30-trading day period (“Trigger
Event 2”). Of the total shares issued and outstanding, 1,725,000 shares are issued but in escrow and relate to the Sponsor
earnouts, which are subject to the occurrence of the two trigger events. Further information on the accounting earnouts is provided in
Note 22.
Lifezone’s
Form F-1 registration statement became effective on September 29, 2023, registering the resale of certain Lifezone Metals shares and
(private) warrants owned by certain previous Lifezone Holdings shareholders, the Sponsor shareholders (including its limited partners),
PIPE investors and the sellers of the Simulus business. Pursuant to the BCA, a 180-day lock-up period following the Closing Date applied
to (i) 5,133,600 Lifezone shares, and 667,500 warrants received by the Sponsor shareholders and (ii) the Lifezone shares received by
the previous Lifezone Holdings shareholders who owned 1.5% or more of the outstanding Lifezone Holdings shares prior to the Closing Date,
in each case, subject to certain exceptions. 1,335,000 Lifezone Metals shares received by the Sponsor shareholders were subject to a
60-day lock-up from the Closing Date.
2.3.
Simulus acquisition
On
March 3, 2023, Lifezone Asia-Pacific Pty Ltd, a wholly owned subsidiary of Lifezone, signed a share sale agreement with the owners of
The Simulus Group, a leading hydrometallurgical laboratory and engineering company located in Perth, Australia.
The
transaction formally closed on July 18, 2023, for a total consideration of $14.5 million comprising a $1.0 million deposit paid on March
27, 2023, a cash consideration of $7.5 million paid on closing and 500,000 shares in Lifezone.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
2.
Significant transactions (continued)
2.4.
Platinum, palladium and rhodium recycling project in the United States
On
January 10, 2024, Lifezone signed a subscription agreement and completion of funding for Phase 1 of partnership with a wholly owned subsidiary
of Glencore plc (LSE: GLEN) for a PGM recycling project which will utilize Lifezone’s Hydromet Technology.
Phase
1 of the project implementation is already underway and involves a confirmatory pilot program and feasibility study at Simulus in Perth,
Australia. Following successful completion of Phase 1, Phase 2 will involve the Company and Glencore jointly funding the capital expenditures
required to construct a commercial-scale PGM recycling facility in the United States.
The
signing of the Subscription Agreement, along with the completion of Phase 1 funding, means the estimated $3.0 million required for the
confirmatory pilot project cost has now been finalized. The Company and Glencore have contributed $1.5 million each to the project. Phase
1 is expected to be completed in Q4 2024.
2.5.
Issuance of unsecured convertible debentures
On
March 27, 2024, Lifezone completed a $50.0 million non-brokered private placement of unsecured convertible debentures. These debentures
have been issued to a consortium of marquee mining investors, led by Harry Lundin (Bromma Asset Management Inc.) and Rick Rule.
Further
information on the accounting of the convertible debenture transaction is provided in Note 19.
3.
Basis of preparation, significant accounting policies and estimates
3.1.
Basis of preparation
Lifezone’s
Unaudited Condensed Consolidated Interim Financial Statements for the six months ended June 30, 2024, have been prepared in accordance
with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” under the
International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”)
and are reported in U.S. dollars (“USD” or “$”).
These
Unaudited Condensed Consolidated Interim Financial Statements should be read in conjunction with the Company’s Audited Consolidated
Financial Statements contained on its Form 20-F for the year ended December 31, 2023, as some disclosures from the annual consolidated
financial statements have been condensed or omitted.
These
Unaudited Condensed Consolidated Interim Financial Statements incorporate the financial statements of the Company and its controlled
subsidiaries as of June 30, 2024. Control exists when the Company has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts
of the Company and its subsidiaries. Intercompany balances, transactions, income and expenses are eliminated on consolidation.
The
information furnished herein reflects all normal recurring entries, that are in the opinion of management, necessary for a fair statement
of the results for the interim periods reported.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.1.
Basis of preparation (continued)
Operating
results for the six-month period ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year
ending December 31, 2024.
The
Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a historical cost basis unless otherwise stated.
3.2.
Going concern
The
management of Lifezone has assessed the going concern assumptions of Lifezone during the preparation of these Unaudited Condensed Consolidated
Interim Financial Statements. As of June 30, 2024, Lifezone had consolidated cash and cash equivalents of $63.5 million, an increase
of $14.1 million from $49.4 million as of December 31, 2023. The increase reflects gross proceeds received from the $50.0 million non-brokered
unsecured convertible debentures, $1.5 million proceeds received from Glencore relating to the partnership to recycle platinum, palladium
and rhodium in the United States, offset by cash usage of $35.1 million during the period.
The
Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a going concern basis which contemplates the continuity
of normal business activities, the realization of assets and discharge of liabilities in the ordinary course of business. Lifezone has
not generated significant revenues from operations and, as common with many exploration-stage mining companies, Lifezone raises financing
for its exploration, study and research and development activities in discrete tranches. Based on Lifezone’s current and anticipated
liquidity and funding requirements, Lifezone will need additional capital in the future to fund its operations and project developments.
In the event Lifezone issues additional equity in the future, shareholders could face significant dilution in their holdings.
Lifezone’s
future operating losses and capital requirements may vary materially from those currently planned and will depend on many factors including
Lifezone’s growth rate, the execution of various growth projects, and the demand for the Hydromet Technology, exploration and evaluation
cost and capital costs in relation to the Kabanga Nickel Project, and the demand and prices for the minerals we envision extracting in
our metals extraction business and as well as for Lifezone’s working capital requirements.
To
enhance our liquidity position and increase our cash reserve for existing operations and future investments, we continue to explore arrangements
with potential customers for the offtake of the metals that we expect to produce in the future from the Kabanga Nickel Project, and we
may in the future seek equity, mezzanine, alternative or debt financing. Additionally, we may receive the proceeds from any exercise
of any warrants in cash. Each Lifezone warrant represents the right to purchase one ordinary Lifezone share at a price of $11.50 per
share in cash.
We
believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive
is dependent upon the market price of our Lifezone ordinary shares. On August 16, 2024, the market price for our Lifezone ordinary shares
was $6.65. When the market price for our Lifezone ordinary shares is less than $11.50 per share (i.e., the warrants are “out
of the money”), we believe warrant holders will be unlikely to exercise their warrants. If all the warrants are exercised, an additional
14,391,141 Lifezone ordinary shares would be outstanding.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.2.
Going concern (continued)
In
the event that Lifezone is unable to secure sufficient funding, it may not be able to fully develop its projects, and this may have a
consequential impact on the carrying value of the related exploration and evaluation assets and the investment in its subsidiaries as
well as the going concern status of Lifezone. Given the nature of Lifezone’s current activities, it will remain dependent on equity,
mezzanine, alternative or debt funding or monetizing the offtake from the Kabanga Nickel Project until such time as the Lifezone becomes
self-financing from the commercial production of metals and minerals and royalties received from intellectual property rights linked
to its Hydromet Technology. To the extent that Lifezone foresees increasing financing risks, jeopardizing the existence of Lifezone,
Lifezone can accelerate the reduction of costs and aim for smaller, more targeted capital raises.
3.3.
Accounting pronouncements
The
accounting policies adopted in the preparation of the Unaudited Condensed Consolidated Interim Financial Statements are consistent with
those followed in the preparation of the annual consolidated financial statements of the Company for the year ended December 31, 2023,
except for the adoption of new standards effective as of January 1, 2024.
Lifezone
has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Several
amendments apply for the first time in 2024, but do not have an impact on Unaudited Condensed Consolidated Interim Financial Statements
of the Company, as follows:
| ● | Lease
Liability in a Sale and Leaseback – Amendments to IFRS 16 Leases. |
| ● | Classification
of liabilities as Current or Non-Current and Non-current Liabilities with Covenants –
Amendments to IAS 1 Presentation of Financial Statements. |
| ● | Amendments
to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments:
Disclosures – Supplier Finance Arrangements. |
Management
anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement.
New IFRS, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material
impact on the Lifezone’s financial statements.
3.4.
Basis of consolidation
Consolidation
of a subsidiary begins when Lifezone obtains control over the subsidiary and ceases when Lifezone loses control of the subsidiary.
Profit
or loss and each component of other comprehensive income are attributed to the equity holders of the Company as the parent entity of
Lifezone and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with Lifezone’s accounting
policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of
Lifezone are eliminated on full consolidation.
A
change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If Lifezone loses
control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest, and other
components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment remains recognized at fair value.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.4.
Basis of consolidation (continued)
Lifezone
attributes total comprehensive income or loss of subsidiaries between the owners of the Company as the parent entity and the non-controlling
interests based on their respective ownership interests.
The
Unaudited Condenses Consolidated Interim Financial Statements comprise the financial statements as of June 30, 2024, of the following
19 subsidiaries.
| | | | | | | Principal | | Percentage (%) | |
| | | Principal | | Country of | | place of | | Ownership | | | NCI | | | Ownership | | | NCI | |
| Name of subsidiary | | activities | | incorporation | | Business | | 2024 | | | 2024 | | | 2023 | | | 2023 | |
| Aqua Merger Sub (dissolved April 8, 2024) | | Holding company | | Cayman Islands | | Cayman Islands | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone Holdings Limited | | Holding company | | Isle of Man | | United Kingdom | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone Limited | | Holding company | | Isle of Man | | United Kingdom | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone US Holdings Limited | | Holding company | | United Kingdom | | United Kingdom | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone Holdings US, LLC | | Holding company | | United State of America | | United State of America | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone Services US, LLC | | Service company | | United State of America | | United State of America | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Lifezone Recycling US, LLC | | Recycling | | United State of America | | United State of America | | | 94.0 | % | | | 6.0 | % | | | 100.0 | % | | | 0.0 | % |
| LZ Services Limited | | Service company | | United Kingdom | | United Kingdom | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Kabanga Holdings Limited | | Holding company | | Cayman Islands | | Cayman Islands | | | 83.0 | % | | | 17.0 | % | | | 83.0 | % | | | 17.0 | % |
| Kabanga Nickel Company Limited | | Holding company | | Tanzania | | Tanzania | | | 83.0 | % | | | 17.0 | % | | | 83.0 | % | | | 17.0 | % |
| Kabanga Nickel Limited | | Holding company | | United Kingdom | | United Kingdom | | | 83.0 | % | | | 17.0 | % | | | 83.0 | % | | | 17.0 | % |
| Kagera Mining Company Limited | | Mining | | Tanzania | | Tanzania | | | 83.0 | % | | | 17.0 | % | | | 83.0 | % | | | 17.0 | % |
| Lifezone Asia-Pacific Pty Ltd | | Service company | | Australia | | Australia | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| The Simulus Group Pty Limited | | Holding company | | Australia | | Australia | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Simulus Pty Limited | | Laboratory and Engineering | | Australia | | Australia | | | 100.0 | % | | | 0.0 | % | | | 100.0 | % | | | 0.0 | % |
| Romanex International Limited | | Holding company | | Canada | | Canada | | | 83.0 | % | | | 17.0 | % | | | 83.0 | % | | | 17.0 | % |
| Tembo Nickel Corporation Limited | | Mining | | Tanzania | | Tanzania | | | 69.7 | % | | | 30.3 | % | | | 69.7 | % | | | 30.3 | % |
| Tembo Nickel Mining Company Limited | | Mining | | Tanzania | | Tanzania | | | 69.7 | % | | | 30.3 | % | | | 69.7 | % | | | 30.3 | % |
| Tembo Nickel Refining Company Limited | | Refining | | Tanzania | | Tanzania | | | 69.7 | % | | | 30.3 | % | | | 69.7 | % | | | 30.3 | % |
Lifezone
Holdings US, LLC, Lifezone US Holdings LLC and Lifezone Recycling US, LLC were incorporated on September 15, 2023, in the state of Delaware,
USA. Lifezone US Holdings Limited was incorporated on September 12, 2023, in England and Wales. Excluding Lifezone Recycling US, LLC
and Lifezone Services US, LLC, investments in these other entities as of June 30, 2023, reflect the nominal share value.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.5.
Foreign Private Issuer status
Given
the Company is incorporated in the Isle of Man, it is considered a Foreign Private Issuer (“FPI”) under the securities
laws of the U.S. and the rules of the NYSE.
In
our capacity as an FPI, we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural
requirements for proxy solicitations under Section 14 of the Exchange Act. Moreover, we are not required to file periodic reports and
financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange
Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.
NYSE listing rules include certain accommodations in the corporate governance requirements that allow FPI, such as us, to follow “home
country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of NYSE.
FPIs
may prepare their financial statements using US GAAP; or IFRS pursuant to Regulation S-X Rule 4-01(a)(2). In the case of FPIs that use
the English-language version of IFRS as issued by the International Accounting Standards Board, or IASB IFRS, no reconciliation to US
GAAP is needed.
We
may take advantage of these exemptions until such time as we are no longer an FPI. We are required to determine our status as an FPI
on an annual basis at the end of each second fiscal quarter.
We
would cease to be an FPI at such time as more than 50% of our outstanding voting securities are held by United States residents and any
of the following three circumstances applies:
| 1. | the
majority of our executive officers or directors are United States citizens or residents. |
| 2. | more than 50% of our assets are located in the United States; or |
| 3. | our
business is administered principally in the United States. |
If
we lose our FPI status we would be required to comply with Exchange Act reporting and other requirements applicable to U.S. domestic
issuers, which are more detailed and extensive than the requirements for FPIs.
FPI
status requires implementing procedures and processes to address public company regulatory requirements and customary practices. Management
expects to incur additional annual expenses as a public company.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.6.
Emerging Growth Company status
We
are an Emerging Growth Company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the (“JOBS
Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not EGCs. This includes, but is not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act” or “SOX”),
reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements and exemptions from the
requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments
not previously approved.
We
will continue to qualify as an EGC until the earliest to occur of:
| 1. | the last day of the fiscal year during which we had total annual gross revenues of US$1,235,000,000 (as such amount is indexed for inflation every 5 years by the SEC or more; |
| 2. | the
last day of our fiscal year following the fifth anniversary of the date of the first sale
of equity securities pursuant to an effective registration statement under the Securities
Act; |
| 3. | the date on which we have, during the previous 3-year period, issued more than US$1,000,000,000 in non-convertible debt; or |
| 4. | the date on which we are deemed to be a “Large Accelerated Filer”, as defined in Exchange Act Rule 12b-2. Lifezone would become a Large Accelerated Filer if Lifezone has a public float of greater than $700.0 million, has been filing periodic reports for at least 12 months, has previously filed at least one annual report, and is not a smaller reporting company. |
| 5. | Section
103 of the JOBS Act provides that an EGC is not required to comply with the requirement to
provide an auditor’s report on ICFR under Section 404(b) of the Sarbanes-Oxley Act.
An EGC still has to perform management’s assessment of internal control over financial
reporting (SOX 404(a)) and the disclosure requirement of Item 308(a) of Regulation S-K).
As Lifezone is a newly public company, a SOX phase-in exception applies whereby the management
report is not required until the second annual report. |
On
September 21, 2023, Lifezone engaged Mazars LLP, a specialist SOX compliance knowledge and internal controls expert to support the implementation
of SOX compliance requirements to assist Lifezone to be SOX compliant by December 31, 2024.
We
expect to continue to be an EGC for the foreseeable future.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
3.
Basis of preparation, significant accounting policies and estimates (continued)
3.7.
Functional and reporting currency
These
Unaudited Condensed Consolidated Interim Financial Statements are presented in USD, which is Lifezone’s functional currency, and
all values are rounded to the nearest USD, except where otherwise indicated. The functional currency is the currency of the primary economic
environment in which the entity operates. Accordingly, Lifezone measures its financial results and financial position in USD, expressed
as $ in this document.
Lifezone
incurs transactions mainly in USD, British Pounds (“GBP”), Australian Dollars (“AUD”) and Tanzanian
Shillings (“TZS”).
The
subsidiaries LZ Services Limited (“LZSL”) a company incorporated in England and Wales, and Lifezone Asia-Pacific Pty
Ltd, a company incorporated in Australia, are both wholly-owned subsidiaries of Lifezone Limited, and have functional currencies as GBP
and AUD respectively. Simulus and its subsidiary Simulus Pty Limited, both companies incorporated in Australia, are wholly owned subsidiaries
of Lifezone Asia-Pacific Pty Ltd and have functional currencies of AUD.
3.8.
Significant accounting judgements, estimates and assumptions
The
preparation of Lifezone’s Unaudited Condensed Consolidated Interim Financial Statements requires management to make judgements,
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, including contingent assets
and liabilities, and the accompanying disclosures. Actual results may differ from these estimates and uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in
the future period.
Except
as described below, the judgements, estimates and assumptions applied in these Unaudited Condensed Consolidated Interim Financial Statements,
including the key sources of estimation uncertainty, were the same as those applied in Lifezone’s last annual financial statements
for the year ended December 31, 2023.
Hybrid
Financial Instruments: Convertible debentures with embedded derivatives
Lifezone
has issued convertible debentures with embedded derivatives, classified as hybrid financial instruments, which are initially measured
at fair value and adjusted for transaction costs.
The
host debt instrument is classified and measured at amortized cost, while the embedded derivatives are accounted for separately at FVTPL.
On
initial recognition, Lifezone uses the residual value method to allocate the principal amount of the convertible debentures between the
two components: host debt instrument and embedded derivatives. The fair value with gains or losses recognized in profit or loss of the
embedded derivative liability is valued first, followed by the residual amount assigned to the host debt instrument.
The
effective interest method is a method for calculating the amortized cost of a financial liability, and for allocating the interest expenses
throughout the relevant credit period. The effective interest rate is the rate which accurately discounts the forecasted future cash
flows over the financial liability’s expected lifetime to its’ carrying value, or, when appropriate, over a shorter period.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
4.
Segment information
For
management purposes, Lifezone is organized into business units based on the main types of activities and has two reportable operating
segments, as follows:
| ● | Metals
extraction and refining business; and |
| ● | Intellectual
property (“IP”) licensing business. |
The
Metals extraction and refining segment of the business consists of Lifezone’s interest in KNL, comprising the Kabanga Nickel Project
in Tanzania. The IP segment comprises patents residing within Lifezone’s subsidiary, Lifezone Limited, and managed by a team of
highly trained engineers and scientists based in Lifezone’s Simulus laboratory based in Perth, a strategic partnership with Sedibelo
and Industrial Development Corporation (“IDC”) regarding the development of the potential Kell-Sedibelo-Lifezone Refinery
and the agreement between the Company and Glencore plc to recycle platinum, palladium and rhodium in the United States.
The
Chief Executive Officer ensures that the corporate strategy is being implemented and he manages Lifezone on a day-to-day basis, monitors
the operating results of its two business units separately for the purpose of making decisions about resource allocation and performance
assessment. He is Lifezone’s Chief Operating Decision Maker. Segment performance is evaluated based on cash flows, operating profit
or loss before taxes and is measured with operating profit or loss in the Unaudited Condensed Consolidated Interim Financial Statements.
However,
Lifezone’s financing and treasury operations are managed by a corporate center based in London.
Inter-segment
eliminations and transactions are identified separately, and the combined segments’ information is reconciled to the Statement
of Financial Position and Statement of Comprehensive Income.
Inter-segment
revenues are eliminated upon consolidation and reflected in the ‘Inter-segment eliminations’ column.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
4.
Segment information (continued)
The
results for the six months ending June 30, 2024, and June 30, 2023, respectively are shown below.
| | |
Intellectual | | |
Metals | | |
| | |
Inter-Segment | | |
| |
| | |
Property | | |
Extraction | | |
Corporate (1) | | |
eliminations | | |
Total | |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| For the six months ended June 30, 2024 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 1,360,160 | | |
| 1,842,429 | | |
| 1,082,151 | | |
| (4,235,090 | ) | |
| 49,650 | |
| Cost of Sales | |
| (473,337 | ) | |
| - | | |
| - | | |
| 461,085 | | |
| (12,252 | ) |
| Gain (loss) on foreign exchange | |
| (149,743 | ) | |
| 100,316 | | |
| (11,048 | ) | |
| - | | |
| (60,475 | ) |
| General and administrative expenses | |
| (2,987,232 | ) | |
| (4,725,235 | ) | |
| (5,621,141 | ) | |
| 3,744,005 | | |
| (9,559,603 | ) |
| Interest income | |
| 832,426 | | |
| 504 | | |
| 1,065,351 | | |
| (536,644 | ) | |
| 1,361,638 | |
| Fair value loss on embedded derivatives | |
| - | | |
| - | | |
| (356,000 | ) | |
| - | | |
| (356,000 | ) |
| Interest expense | |
| (14,211 | ) | |
| (716,310 | ) | |
| (2,170,468 | ) | |
| 536,644 | | |
| (2,364,345 | ) |
| Loss before tax | |
| (1,431,936 | ) | |
| (3,498,296 | ) | |
| (6,011,155 | ) | |
| - | | |
| (10,941,387 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| For the period ended June 30, 2024 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Segment assets | |
| 89,530,847 | | |
| 201,479,407 | | |
| 186,736,426 | | |
| (296,367,161 | ) | |
| 181,379,519 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Segment liabilities, excluding Group debt | |
| (5,503,999 | ) | |
| (422,765,420 | ) | |
| (4,688,928 | ) | |
| 420,871,087 | | |
| (12,087,260 | ) |
| Convertible debentures and embedded derivative | |
| - | | |
| - | | |
| (50,409,506 | ) | |
| - | | |
| (50,409,506 | ) |
| Segment liabilities | |
| (5,503,999 | ) | |
| (422,765,420 | ) | |
| (55,098,434 | ) | |
| 420,871,087 | | |
| (62,496,766 | ) |
| | |
Intellectual | | |
Metals | | |
| | |
Inter-Segment | | |
| |
| | |
Property | | |
Extraction | | |
Corporate (1) | | |
eliminations | | |
Total | |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| For the six months ended June 30, 2023 | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 4,061,148 | | |
| 508,190 | | |
| 814,173 | | |
| (4,876,763 | ) | |
| 506,748 | |
| Gain (loss) on foreign exchange | |
| (55,988 | ) | |
| 136,254 | | |
| 6,281 | | |
| - | | |
| 86,547 | |
| General and administrative expenses | |
| (6,843,952 | ) | |
| (4,153,889 | ) | |
| (7,291,571 | ) | |
| 4,876,763 | | |
| (13,412,649 | ) |
| Interest income | |
| 67,010 | | |
| 202,610 | | |
| 180 | | |
| - | | |
| 269,800 | |
| Interest expense | |
| - | | |
| (91,668 | ) | |
| - | | |
| - | | |
| (91,668 | ) |
| Loss before tax | |
| (2,771,782 | ) | |
| (3,398,503 | ) | |
| (6,470,937 | ) | |
| - | | |
| (12,641,222 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| For the period ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Segment assets | |
| 16,680,372 | | |
| 94,240,787 | | |
| 12,495,550 | | |
| (30,593,658 | ) | |
| 92,823,051 | |
| Segment liabilities | |
| (19,919,301 | ) | |
| (26,715,324 | ) | |
| (1,615,054 | ) | |
| 18,687,919 | | |
| (29,561,759 | ) |
Included
within general and administrative expenses in 2023 are non-recurring listing and capital raising costs of $8.0 million, which relate
to professional services costs in relation to the business combination with GoGreen and the listing on the NYSE and have been allocated
non-operating segment “Corporate”.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
5.
Revenue
| | |
Three
months ended June
30, | | |
Six
months ended June
30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Kellplant Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 129,680 | |
| Kelltechnology SA Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 365,368 | |
| Consulting and management fee with affiliated companies | |
| - | | |
| - | | |
| - | | |
| 495,048 | |
| Non-affiliated company revenue | |
| 8,261 | | |
| 11,061 | | |
| 49,650 | | |
| 11,700 | |
| | |
| 8,261 | | |
| 11,061 | | |
| 49,650 | | |
| 506,748 | |
Revenue
is attributable to Hydromet consulting related to mineral beneficiation operations of affiliated companies and technical and laboratory
services provided by Simulus. The affiliated entities invoiced in 2023 are joint venture entities of Lifezone. Lifezone Limited has a
50% interest in Kelltech Limited, a joint venture with Sedibelo Resources Limited. Lifezone Limited has an indirect 33.33% interest in
Kelltechnology SA Proprietary Ltd (“KTSA”), a subsidiary of Kelltech Limited, and Kellplant Proprietary Ltd (“Kellplant”),
a wholly owned subsidiary of KTSA as disclosed in detail in Note 25.
Non-affiliated
company revenue of $8,261 and $49,650 for the three months and six months ending June 30, 2024, respectively, relates to third party
customers of Simulus.
6.
Interest income
| | |
Three
months ended June
30, | | |
Six
months ended June
30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Interest on shareholder loans | |
| - | | |
| 2,903 | | |
| - | | |
| 6,841 | |
| Interest on treasury deposits | |
| 904,429 | | |
| 136,703 | | |
| 1,361,638 | | |
| 262,959 | |
| | |
| 904,429 | | |
| 139,606 | | |
| 1,361,638 | | |
| 269,800 | |
Lifezone
manages interest generating opportunities through corporate treasury operations by investing group cash in overnight SOFR or term deposit
facilities provided by its two main international banks. Lifezone earned interest averaged 4.84-5.02% during the period on these two
types of deposits.
Interest
income from cash and cash equivalents amounted to $1,361,638 for the six months ended June 30, 2024 (six months ended June 30, 2023:
$262,959).
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for
the six months ended June 30, 2024
7.
Interest expense
| | |
| |
Three
months ended
June 30,
| | |
Six
months ended
June 30,
| |
| | |
Note | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| |
$ | | |
$ | | |
$ | | |
$ | |
| Interest accretion on deferred consideration | |
20 | |
| 79,921 | | |
| 39,763 | | |
| 157,999 | | |
| 79,104 | |
| Interest accretion on lease liability | |
18 | |
| 16,942 | | |
| 6,126 | | |
| 35,005 | | |
| 12,564 | |
| Debenture interest | |
19 | |
| 2,170,468 | | |
| - | | |
| 2,170,468 | | |
| - | |
| Other interest expenses | |
| |
| 873 | | |
| 2,219 | | |
| 873 | | |
| - | |
| | |
| |
| 2,268,204 | | |
| 43,670 | | |
| 2,364,345 | | |
| 91,668 | |
Interest
accretion on deferred consideration liability relates to the KNL acquisition. For the six months ended June 30, 2024, this amounted to
$157,999 (six months ended June 30, 2023: $79,104).
Interest
on leases relate to Tanzania and Australia subsidiaries leased office and warehouse premises as disclosed in detail in Note 18. For the
six months ended June 30, 2024, this amounted to $35,005 (six months ended June 30, 2023: $12,564). This is higher due to additional
leases taken on as part of the Simulus acquisition on July 18, 2023, along with an additional lease in Tanzania since June 2023.
Debenture
interest relates to the convertible debenture instruction as Debenture interest as disclosed in detail in Note 19: for the six months
ended June 30, 2024, this amounted to $2,170,468 (six months ended June 30, 2023: $Nil).
8. Fair value loss on embedded derivatives
| | |
Three months ended
June 30, | | |
Six months ended
June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Fair value loss on embedded derivatives | |
| 356,000 | | |
| - | | |
| 356,000 | | |
| - | |
| | |
| 356,000 | | |
| - | | |
| 356,000 | | |
| - | |
On
June 30, 2024, the embedded derivative liability component of the convertible debentures as disclosed in detail in Note 19, was reassessed
to be $25.5 million using the same valuation methods and approach as on initial recognition. The increase of $356,000 is largely due
to market credit spreads increasing, resulting in a more likely occurrence for a conversion to occur reflected in the higher conversion
value. The resulting $356,000 fair value increase has been recognized as a charge to the profit or loss.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9.
General and administrative expenses
| | |
Six months ended June 30, | | |
Six months ended change | |
| | |
2024 | | |
2023 | | |
| |
| | |
$ | | |
$ | | |
$ | | |
% | |
| Wages & employee benefits | |
| 1,917,963 | | |
| 1,816,542 | | |
| 101,421 | | |
| 6 | % |
| Professional & Legal fees | |
| 1,650,061 | | |
| 882,855 | | |
| 767,206 | | |
| 87 | % |
| Consultancy fees | |
| 1,336,019 | | |
| 1,772,010 | | |
| (435,992 | ) | |
| (25 | )% |
| Non-recurring listing and equity raising costs | |
| - | | |
| 8,003,016 | | |
| (8,003,016 | ) | |
| (100 | )% |
| Directors' fees | |
| 360,984 | | |
| 86,500 | | |
| 274,484 | | |
| 317 | % |
| Depreciation of property and equipment | |
| 577,062 | | |
| 107,692 | | |
| 469,370 | | |
| 436 | % |
| Depreciation of right of use asset | |
| 169,457 | | |
| 62,029 | | |
| 107,428 | | |
| 173 | % |
| Amortization of intangible assets | |
| 90,247 | | |
| 38,301 | | |
| 51,946 | | |
| 136 | % |
| Audit & accountancy fees | |
| 130,976 | | |
| 81,751 | | |
| 49,225 | | |
| 60 | % |
| Rent | |
| 226,332 | | |
| 172,584 | | |
| 53,748 | | |
| 31 | % |
| Insurance | |
| 911,013 | | |
| 6,953 | | |
| 904,060 | | |
| 13,002 | % |
| Laboratory costs | |
| 638,822 | | |
| - | | |
| 638,822 | | |
| 0 | % |
| Impairment of VAT receivables | |
| 839,758 | | |
| - | | |
| 839,758 | | |
| 0 | % |
| Travel | |
| 251,306 | | |
| 364,781 | | |
| (113,475 | ) | |
| (31 | )% |
| Share based payments expense | |
| 32,457 | | |
| - | | |
| 32,457 | | |
| 0 | % |
| Other administrative expenses | |
| 427,147 | | |
| 17,635 | | |
| 409,512 | | |
| 2,322 | % |
| Total general administrative expenses | |
| 9,559,603 | | |
| 13,412,649 | | |
| (3,853,046 | ) | |
| (29 | )% |
Net wages and employee benefits amounted to $1.9
million for the six months ending June 30, 2024 (six months ended June 30, 2023, $1.8 million). The wages and employee benefits for the
six months ended June 30, 2024, include Simulus related expenses of $474,414, with no expenses incurred in the six months ending June
30, 2023, as Simulus was not yet part of Lifezone. In the six months ending June 30, 2024, the Company paid bonuses of $538,113 to employees
(six months ended June 30, 2023, $91,478), reflecting a one-month bonus paid to all employees (and consultants) in May 2024 for achievements
in 2023. The balance relates to pension payments, accrued holidays (largely in Australia), national insurance contributions and payments
to temporary staff. Above amounts are the net amounts expensed, after capitalization.
During the six months ending June 30, 2024, $8.8
million of the gross total general and administrative expenses (six months ended June 30, 2023, $5.7 million) was capitalized to exploration
and evaluation assets as part of the Kabanga Nickel Project.
Professional and legal fees amounted to $1.7 million
for the six months ending June 30, 2024 (six months ended June 30, 2023, $882,855), with the largest positions being $239,532 (six months
ended June 30, 2023: $Nil) for advisory services relating to the PGM recycling project and SOX advisory costs of $137,973 (six months
ended June 30, 2023: $Nil). Professional fees also include broking fees and other investor and public relations costs. Legal fees amounted
to $657,074, with large positions covering registration filing updates and general legal works, commercial work related to off-take agreements
and legal fees not capitalized relating to the convertible debenture transaction as covered in Note 19.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9.
General and administrative expenses (continued)
Consultancy fees costs of $1.3 million for the
six months ending June 30, 2024 (six months ended June 30, 2023, $1.8 million), were lower by $435,992 due to lower consultant bonuses
of $189,665 paid in the six months ending June 30, 2024 (six months ended June 30, 2023, $512,542), as well as two people who were previously
consultants as of June 30, 2023, are employees of Lifezone as at June 30, 2024.
Non-recurring listing and equity raising costs
(including transaction listing cost) of $8.0 million for the six months ending June 30, 2023, related to the business combination with
GoGreen associated with the SPAC and PIPE transactions, which were completed on July 6, 2023.
Directors’ fees for the Company covering the seven
paid directors out the total eight directors of Lifezone Metals, totaled $360,984 for the six months ending June 30, 2024 (six months
ended June 30, 2023, $86,500), have increased as a result of quarterly meetings since listing on July 6, 2023.
Depreciation of property and equipment and depreciation
of right of use assets are higher by $469,370 and $107,428 respectively, compared to the six months ending June 30, 2023, due to additional
leases and acquired assets from the Simulus acquisition on July 18, 2023.
Insurance cost increase largely reflects the impact
of higher D&O insurance premiums taken out following our listing on the NYSE. The annual D&O premium was pre-paid in July 2023
and was expensed over 12-months, with a pre-payment asset of $835,117 remaining as of December 31, 2023, and released in the six months
ending June 30, 2024. A new D&O insurance policy was taken out effective July 2024 with improved commercial terms, including a reduction
in premiums of around 40% and a 50% decrease in retention.
Laboratory costs relate to consumables incurred
by Simulus amounting to $638,822 (six months ended June 30, 2023: $Nil) not directly attributable to cost of sales.
The “Impairment of VAT receivable”
reflects the full impairment of the Tanzanian VAT receivable amounting to $839,758 as at June 30, 2024, following TNCL’s receipt
of a letter from the Tanzanian Revenue Authority (“TRA”) dated November 30, 2023, rejecting TNCL’s application
for VAT refunds accumulated in relation to goods and services purchased for the Kabanga Nickel Project for the period covering August
1, 2021 – July 31, 2023. Lifezone will continue to monitor the situation closely and TNCL has objected to the decision by the TRA.
TNCL believes the rejection of the VAT refund claim has no basis as the purchases were made in course of undertaking economic activities
in Tanzania with the clear intention to produce goods (and services) in the future, in this case to develop the Kabanga Nickel Project
and to produce and export metals. Lifezone is also lobbying the government of Tanzania.
Other administrative expenses are higher by $409,511
compared to the six months ending June 30, 2023, partly due to the inclusion of a $350,000 provision relating to litigation and associated
costs, which was subsequently resolved, and payments have been made at the time of this report. Lifezone incurred Regulatory and Compliance
Fees of $73,454 during the six months ending June 30, 2024 (June 30, 2023: $Nil), following listing on July 6, 2023, and $102,639 in expenses
relating to Simulus operations (June 30, 2023: $Nil), offsetting these increases are reductions in other administration expenses.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9.
General and administrative expenses (continued)
Total general administrative expenses for the
six months ending June 30, 2024, include the impact of the Simulus operations, amounting to $1.5 million (six months ended June 30, 2023:
$Nil) following the acquisition of the business on July 18, 2023. Notable expenses in the six months ending June 30, 2024, include wages
and employee benefits of $474,414 (six months ended June 30, 2023: $Nil), which included $106,161 of bonuses (June 30, 2023: $Nil), rent
of $56,711 (six months ended June 30, 2023: $Nil) and laboratory costs of $638,822 (six months ended June 30, 2023: $Nil) and Depreciation
of property and equipment and depreciation of right of use assets $619,292 (six months ended June 30, 2023: $Nil).
10.
Cash and cash equivalents
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| USD – United States dollar | |
| 62,068,360 | | |
| 46,129,886 | |
| GBP – Sterling | |
| 106,915 | | |
| 792,017 | |
| EUR – EURO | |
| 6,483 | | |
| 148,519 | |
| AUD – Australian dollar | |
| 727,675 | | |
| 1,769,872 | |
| ZAR – South African Rand | |
| 2,322 | | |
| 50,587 | |
| TZS – Tanzania Shilling | |
| 581,210 | | |
| 500,746 | |
| Cash and cash equivalents | |
| 63,492,965 | | |
| 49,391,627 | |
| | |
| | | |
| | |
| Made up of: | |
| | | |
| | |
| Cash at banks and on hand | |
| 43,372,498 | | |
| 44,369,748 | |
| Short-term deposits | |
| 20,120,467 | | |
| 5,021,879 | |
| Cash and cash equivalents | |
| 63,492,965 | | |
| 49,391,627 | |
11.
Inventories
| | |
June 30, | | |
December 31 | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Raw materials and consumables | |
| 200,967 | | |
| - | |
| Fuel | |
| 80,467 | | |
| 100,780 | |
| | |
| 281,434 | | |
| 100,780 | |
Raw materials and consumables are consumed in
the ordinary course of business during the rendering of services by Simulus.
Fuel is used by vehicles, machinery and for power
generation in relation to the Kabanga Nickel Project and stored at the Kabanga camp site. These are attributable to exploration and evaluation
activity and capitalized to exploration and evaluation assets as consumed.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
12.
Trade and other receivables
Other receivables consist of the following:
| | |
| |
June 30, | | |
December 31, | |
| | |
| |
2024 | | |
2023 | |
| | |
| |
$ | | |
$ | |
| VAT/GST receivables | |
| |
| 385,110 | | |
| 513,334 | |
| Other receivables | |
| |
| 796,082 | | |
| 696,968 | |
| Prepayments | |
| |
| 1,113,184 | | |
| 1,768,923 | |
| Prepaid mining license | |
| |
| 343,434 | | |
| 842,989 | |
| | |
| |
| 2,637,811 | | |
| 3,822,214 | |
VAT / GST receivables are short term and receivable
within twelve months following applicable VAT refund application in the local tax jurisdiction. Lifezone has net VAT receivables (after
the Tanzanian VAT impairment as described in Note 9) with the United Kingdom, and Australian tax authorities amounting to $385,110 (2023:
$513,334). As of June 30, 2024, UK entities accounts for $262,734 and Australian entities $122,377 of this balance.
Prepayments include a $400,000 non-refundable
deposit paid on September 12, 2022, in relation to a non-binding term sheet between Lifezone Limited, Harmony Minerals Limited and Dutwa Minerals
Limited for the acquisition of all the tangible assets and all registered and unregistered IP relating to the Dutwa Nickel Project (excluding
the Ngasamo deposit in the Dutwa Nickel Project area). The Dutwa Nickel Project hosts a laterite nickel deposit located
in northern Tanzania. It is envisioned that excess sulfuric acid generated by future processing of Kabanga mineralization could be used
in processing the laterite mineralization at Dutwa, providing potential synergies between both operations. On April 27, 2023, the
term sheet was amended, and exclusivity expired on July 27, 2023. As disclosed in our December 31, 2023, annual audited accounts, discussions
are ongoing, including between the Government of Tanzania and the sellers of the Dutwa Project, with closing being subject to
the parties entering into definitive documentation and the fulfilment of various conditions.
Prepayments have decreased in the six months ended
June 30, 2024, mainly due to the release of the $835,117 D&O insurance. The annual D&O covers June to July each year, with the
D&O premium for the first-year post listing totaling $1.67 million.
The prepaid mining license relates to TNCL’s
requirement to pay an annual fee to maintain its mining license with the Tanzanian Mining Commission. The prepaid portion of the fee was
$343,434 as of June 30, 2024 (2023: $842,989).
All other receivables are short term in nature.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
13.
Property and equipment and right-of-use assets
Lifezone’s property and equipment and right-of-use assets
include building, transportation equipment, and office and computer equipment. The carrying amounts for the reporting periods can be analyzed
as follows:
| | |
Buildings | | |
Transportation equipment | | |
Office and computer equipment | | |
Laboratory and testing equipment | | |
Total Property and equipment | | |
Right-of-use assets | | |
Total | |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| Cost | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| As at January 1, 2023 | |
| 677,277 | | |
| 123,952 | | |
| 238,216 | | |
| - | | |
| 1,039,445 | | |
| 469,743 | | |
| 1,509,188 | |
| Additions from acquisitions | |
| - | | |
| - | | |
| 220,698 | | |
| 4,704,783 | | |
| 4,925,481 | | |
| 464,264 | | |
| 5,389,745 | |
| Foreign exchange impact | |
| - | | |
| - | | |
| 1,419 | | |
| 16,664 | | |
| 18,082 | | |
| - | | |
| 18,082 | |
| Additions | |
| - | | |
| 75,551 | | |
| 621,732 | | |
| 148 | | |
| 697,431 | | |
| 1,230,792 | | |
| 1,928,222 | |
| As at December 31, 2023 | |
| 677,277 | | |
| 199,503 | | |
| 1,082,064 | | |
| 4,721,595 | | |
| 6,680,439 | | |
| 2,164,799 | | |
| 8,845,238 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated depreciation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As at January 1, 2023 | |
| (36,781 | ) | |
| (44,412 | ) | |
| (73,930 | ) | |
| - | | |
| (155,123 | ) | |
| (117,436 | ) | |
| (272,559 | ) |
| Exchange adjustments | |
| - | | |
| - | | |
| (300 | ) | |
| - | | |
| (300 | ) | |
| - | | |
| (300 | ) |
| Charge for the period | |
| (22,068 | ) | |
| (66,839 | ) | |
| (42,298 | ) | |
| (393,454 | ) | |
| (524,659 | ) | |
| (353,851 | ) | |
| (878,510 | ) |
| As at December 31, 2023 | |
| (58,849 | ) | |
| (111,251 | ) | |
| (116,528 | ) | |
| (393,454 | ) | |
| (680,082 | ) | |
| (471,287 | ) | |
| (1,151,369 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cost | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As at January 1, 2024 | |
| 677,277 | | |
| 199,503 | | |
| 1,082,064 | | |
| 4,721,595 | | |
| 6,680,439 | | |
| 2,164,799 | | |
| 8,845,238 | |
| Additions | |
| - | | |
| - | | |
| 80,494 | | |
| 2,180 | | |
| 82,674 | | |
| - | | |
| 82,674 | |
| Disposals | |
| - | | |
| - | | |
| (4,858 | ) | |
| (5,189 | ) | |
| (10,047 | ) | |
| - | | |
| (10,047 | ) |
| Lease reassessments | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 139,489 | | |
| 139,489 | |
| Foreign exchange impact | |
| - | | |
| - | | |
| (8,682 | ) | |
| (119,874 | ) | |
| (128,555 | ) | |
| (31,444 | ) | |
| (160,000 | ) |
| As at June 30, 2024 | |
| 677,277 | | |
| 199,503 | | |
| 1,149,018 | | |
| 4,598,712 | | |
| 6,624,510 | | |
| 2,272,843 | | |
| 8,897,354 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated depreciation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As at January 1, 2024 | |
| (58,849 | ) | |
| (111,251 | ) | |
| (116,528 | ) | |
| (393,454 | ) | |
| (680,082 | ) | |
| (471,287 | ) | |
| (1,151,369 | ) |
| Charge for the period | |
| (14,693 | ) | |
| (18,250 | ) | |
| (89,164 | ) | |
| (454,975 | ) | |
| (577,082 | ) | |
| (258,432 | ) | |
| (835,514 | ) |
| Disposals | |
| | | |
| | | |
| 1,480 | | |
| | | |
| 1,480 | | |
| | | |
| 1,480 | |
| Lease reassessments | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (88,997 | ) | |
| (88,997 | ) |
| Foreign exchange impact | |
| - | | |
| - | | |
| (20,466 | ) | |
| 4,216 | | |
| (16,250 | ) | |
| 2,800 | | |
| (13,449 | ) |
| As at June 30, 2024 | |
| (73,542 | ) | |
| (129,501 | ) | |
| (1,140,325 | ) | |
| (844,213 | ) | |
| (1,271,934 | ) | |
| (815,915 | ) | |
| (2,087,849 | ) |
| Net book value: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| As at December 31, 2023 | |
| 618,428 | | |
| 88,252 | | |
| 965,536 | | |
| 4,328,141 | | |
| 6,000,357 | | |
| 1,693,512 | | |
| 7,693,869 | |
| As at June 30, 2024 | |
| 603,735 | | |
| 70,002 | | |
| 924,340 | | |
| 3,754,499 | | |
| 5,352,576 | | |
| 1,456,928 | | |
| 6,809,505 | |
There was no new lease agreement entered into
during the six months ended June 30, 2024. The reassessment was triggered by an increase in lease payments.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
14. Goodwill
| Cost | |
| |
| As at January 1, 2023 | |
- | |
| Acquired through business combination | |
| 9,020,813 | |
| As at December 31, 2023 | |
| 9,020,813 | |
| As at June 30, 2024 | |
| 9,020,813 | |
| | |
| | |
| Accumulated impairment | |
| | |
| As at January 1, 2023 | |
| - | |
| As at December 31, 2023 | |
| - | |
| As at December 31, 2023 | |
| 9,020,813 | |
| As at June 30, 2024 | |
| 9,020,813 | |
Goodwill relates to the acquisition of Simulus,
a leading hydrometallurgical laboratory and engineering company located in Perth, Australia by Lifezone Asia-Pacific Pty Ltd on July 18,
2023, as disclosed in Note 1.
For the purpose of annual impairment testing,
goodwill is allocated to the operating segments expected to benefit from the synergies of the business combinations in which the goodwill
arises as set out below, and is compared to its recoverable value:
| Goodwill allocated to cash generating unit | |
| |
| Goodwill | |
| 9,020,813 | |
| As at December 31, 2023 | |
| 9,020,813 | |
| As at June 30, 2024 | |
| 9,020,813 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
15.
Patents and Other Intangibles
| | |
Patents | | |
Software | | |
Total | |
| | |
$ | | |
$ | | |
$ | |
| Cost | |
| | |
| | |
| |
| As at January 1, 2023 | |
| 899,413 | | |
| 92,096 | | |
| 991,509 | |
| Additions during the period | |
| 90,978 | | |
| 291,410 | | |
| 382,388 | |
| As at December 31, 2023 | |
| 990,391 | | |
| 383,506 | | |
| 1,373,897 | |
| | |
| | | |
| | | |
| | |
| Accumulated amortization | |
| | | |
| | | |
| | |
| As at January 1, 2023 | |
| (296,546 | ) | |
| - | | |
| (296,546 | ) |
| Charge for the period | |
| (78,742 | ) | |
| (84,405 | ) | |
| (163,147 | ) |
| As at December 31, 2023 | |
| (375,288 | ) | |
| (84,405 | ) | |
| (459,693 | ) |
| Carrying amount at December 31, 2023 | |
| 615,103 | | |
| 299,101 | | |
| 914,204 | |
| | |
| | | |
| | | |
| | |
| Cost | |
| | | |
| | | |
| | |
| As at January 1, 2024 | |
| 990,391 | | |
| 383,506 | | |
| 1,373,897 | |
| Additions during the period | |
| 72,040 | | |
| - | | |
| 72,040 | |
| As at June 30, 2024 | |
| 1,062,431 | | |
| 383,506 | | |
| 1,445,937 | |
| | |
| | | |
| | | |
| | |
| Accumulated amortization | |
| | | |
| | | |
| | |
| As at January 1, 2024 | |
| (375,288 | ) | |
| (84,405 | ) | |
| (459,693 | ) |
| Charge for the period | |
| (43,449 | ) | |
| (46,799 | ) | |
| (90,248 | ) |
| As at June 30, 2024 | |
| (418,737 | ) | |
| (131,204 | ) | |
| (549,941 | ) |
| Carrying amount at June 30, 2024 | |
| 643,694 | | |
| 252,302 | | |
| 895,996 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
16.
Exploration and evaluation assets and mining data
| | |
Mining Data | | |
Exploration and
evaluation assets | | |
Total | |
| | |
$ | | |
$ | | |
$ | |
| Cost | |
| | |
| | |
| |
| As at January 1, 2023 | |
| 12,746,135 | | |
| 5,709,171 | | |
| 18,455,306 | |
| Additions during the period | |
| - | | |
| 51,355,297 | | |
| 51,355,297 | |
| Carrying amount as at December 31, 2023 | |
| 12,746,135 | | |
| 57,064,468 | | |
| 69,810,603 | |
| | |
| | | |
| | | |
| | |
| Cost | |
| | | |
| | | |
| | |
| As at January 1, 2024 | |
| 12,746,135 | | |
| 57,064,468 | | |
| 69,810,603 | |
| Additions during the period | |
| - | | |
| 27,868,064 | | |
| 27,868,064 | |
| Carrying amount as at June 30, 2024 | |
| 12,746,135 | | |
| 84,932,532 | | |
| 97,678,667 | |
The capitalization of exploration and evaluation
costs assumes that there is a reasonable prospect that the project can be developed into a profitable mining operation and that the exploration
and evaluation expenditure and study work relating to a mineral resource within a valid license area could result in cash in-flows over
time, either via sale or development.
An assessment relating to the capitalization is
performed yearly by management, based on confidence in the level of exploration and study work for each project. Grass-roots exploration
work and indirect costs might be expensed, especially if the financial viability cannot be assessed via an integrated financial model
that supports the economic development of the mineral property based on latest mining and processing plans or are otherwise difficult
to prove to be recoverable.
Given that Lifezone made material progress in
2023 in advancing the DFS for the Kabanga Nickel Project, including completing its planned drilling program, releasing a new Mineral Resource
Update and incorporating in its integrated financial model the new development plan and all trade-off decisions, management decided to
start the capitalization of all costs related to the Kabanga Nickel Project and the Kabanga DFS.
Exploration and evaluation expenditures are recognized
and measured at cost and the exploration and evaluation assets are classified as intangible assets.
Where Lifezone is unsuccessful in acquiring or
being granted a tenement area, any such costs are immediately expensed. All costs incurred prior to securing the legal right to undertake
exploration activities on a project are written-off as incurred.
Lifezone assesses on a project-by-project basis
if the exploration and evaluation phase has concluded. At the earliest, an exploration asset gets reclassified as a development asset
when a current and positive feasibility study describing the development path for the mineral resource was released and is available publicly.
That is usually also the time when a mineral reserve gets declared. A reclassification will happen at the latest when an exploration asset
gets approved for development.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
16.
Exploration and evaluation assets and mining data (continued)
Additions during the period are essentially capitalized
expenditure incurred in the exploration and evaluation of the Kabanga Nickel Project, with costs including compensation payments made
to project affected communities, fees paid to DFS consultants and engineering firms, the owners team and attributable technical and administrative
overheads.
Lifezone assesses exploration assets yearly for
impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
17.
Trade and other payables
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Trade payables | |
| 3,533,585 | | |
| 2,529,751 | |
| VAT payable | |
| - | | |
| 852,479 | |
| Accrued expenses | |
| 3,074,793 | | |
| 4,953,234 | |
| | |
| 6,608,378 | | |
| 8,335,464 | |
All amounts are short-term. The carrying value
of trade payables and accrued expenses are considered to be a reasonable approximation of their fair value.
18.
Lease liabilities
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| At January 1 | |
| 1,787,702 | | |
| 395,880 | |
| Additions | |
| 76,906 | | |
| 1,677,918 | |
| Interest accretion on lease liability | |
| 35,005 | | |
| 52,075 | |
| Payments | |
| (316,090 | ) | |
| (338,171 | ) |
| At December 31 | |
| 1,583,523 | | |
| 1,787,702 | |
| | |
| | | |
| | |
| Current | |
| 656,935 | | |
| 602,557 | |
| Non-current | |
| 926,588 | | |
| 1,185,145 | |
| | |
| 1,583,523 | | |
| 1,787,702 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
18.
Lease liabilities (continued)
Shown below is the maturity analysis of the undiscounted minimum lease
payments:
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| Undiscounted future lease payments | |
$ | | |
$ | |
| | |
| | |
| |
| Less than 1 year | |
| 619,420 | | |
| 678,051 | |
| More than 1 year but less than 5 years | |
| 981,833 | | |
| 1,236,050 | |
| | |
| 1,601,253 | | |
| 1,914,101 | |
Lifezone has lease contracts through its Tanzanian
and Australian subsidiaries. The average remaining term of Group leases was 1 year and 10 months remaining as at six months ended June
30, 2024. Lifezone or group subsidiaries’ obligations under their leases are secured by lessor’s title to the leased assets.
| Entity | | Country | | Lease use | | Lease term
start | | Lease term
end | | Remaining
term | | Third
Party |
| TNCL | | Tanzania | | Office space | | December 31,
2022 | | September 30,
2026 | | 2 years 3 months | | Cordula Limited |
| TNCL | | Tanzania | | Office space | | October 1,
2021 | | September 30,
2026 | | 2 years 3 months | | Cordula Limited |
| TNCL | | Tanzania | | Camp accommodation | | March 1, 2023 | | February 28,
2026 | | 1 years 7 months 29 days | | AKO Group Limited |
| Lifezone Asia-Pacific Pty Ltd | | Australia | | Office space | | August 1, 2022 | | July 31, 2025 | | 1 years 1 months 1 day | | Trustees of the Christian Brothers, Australia |
| Simulus Pty Limited | | Australia | | Office and warehouse space | | April 28, 2022 | | April 27, 2026 | | 1 years 9 months 28 days | | Seattle Investments Pty Ltd |
| Simulus Pty Limited | | Australia | | Office and warehouse space | | August 1, 2023 | | July 31, 2025 | | 1 years 1 months 1 day | | Nowa Pty Ltd Australia |
| Simulus Pty Limited | | Australia | | Office and warehouse space | | August 1, 2023 | | July 31, 2025 | | 1 years 1 months 1 day | | Nowa Pty Ltd Australia |
19. Hybrid
Financial Instruments: Convertible debentures with embedded derivatives
On March 27, 2024, Lifezone completed a $50.0
million non-brokered private placement of unsecured convertible debentures. These unsecured convertible debentures have been issued to
a consortium of marquee mining investors, led by Harry Lundin (Bromma Asset Management Inc.) and Rick Rule. Proceeds of the unsecured
convertible debentures will be used to advance the Kabanga Nickel Project and for general corporate and administrative purposes.
The unsecured convertible debentures bear interest
over a 48-month term, payable quarterly, at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 4.0% per annum,
subject to a SOFR floor of 3.0%. The unsecured convertible debentures can be redeemed early by Lifezone, subject to the achievement of
certain conditions, at a price of 105% plus interest otherwise payable to the maturity date March 27, 2028. Interest is payable quarterly
via initial cash, then a mix of shares and a payment-in-kind accrual of the outstanding principal amount during the first two years and
all in cash during the last two years.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19.
Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
Interest is payable in cash until Lifezone has
a Form F-3 registration statement declared effective by the US Securities and Exchange Commission. The Form F-3 was declared effective
on August 16, 2024. Following the effectiveness of the Form F-3, one third of the applicable interest payment will be made by the issue
of the equivalent value in shares (the “Interest Shares”) at a price per Interest Share equal to a 7.5% discount to
the VWAP for the five trading days preceding the quarterly interest payment date. In the event that the VWAP for the five trading days
preceding the applicable calculation date is $4.00 or below, Lifezone shall satisfy its obligation to pay interest on the unsecured convertible
debentures in cash. The remaining two thirds of the applicable interest payment is a payment-in-kind accrual of the outstanding principal
amount. Upon the second anniversary of the unsecured convertible debentures, all outstanding accrued interest is to be repaid in cash
to the holders. Lifezone paid interest for the first time at the end of June 2024 for the period March 27, 2024, to June 30, 2024, amounting
to $1,203,515.
The unsecured convertible debentures are convertible
into common shares of Lifezone at the option of the holder at a price of $8.00 per share and are subject to customary adjustments (the
“Conversion Right”). The conversion price was determined on the closing date based on the lesser of a 30% premium to
a trailing period VWAP and $8.00 per share. Mandatory conversion might occur if Lifezone’s share price is greater than 50% above
the conversion price for any 15 trading days within a 30 consecutive trading days period.
The unsecured convertible debentures were determined
to be a hybrid financial liability, comprising a host debt instrument and two embedded derivatives, the Conversion Right and the Interest
Shares, with both having economic characteristics and risks different to the host debt instrument. In other words, they are not closely
related to the non-derivative host debt instrument given their value changes with the value of Lifezone shares, while the host liability
changes in relationship to a reference borrowing index (in this case SOFR).
The host debt instrument is classified and measured
at amortized cost, while the embedded derivatives are accounted for separately at fair value through profit or loss.
On initial recognition, the Company used the residual
value method to allocate the principal amount of the debentures between the two components: host debt instrument and embedded derivatives.
The fair value of the embedded derivative liability was valued first, followed by the residual amount assigned to the host debt instrument.
Transaction costs are required to be apportioned
between the host debt instrument and the embedded derivatives in proportion to their value, with the share of transaction costs linked
to the host debt instrument subtracted from the carrying amount at initial recognition. Transaction costs comprised an issuance discount
of $750,000 equal to 1.5% of the aggregate principal amount of the unsecured convertible debentures and $352,348 of legal costs paid by
Lifezone. As the unsecured convertible debentures were unbrokered, no success fees were payable. 49.6% of the total transaction costs
related to the embedded derivatives were expensed on recognition to the statement of comprehensive loss. The remaining transaction costs
relating to the host debt instrument are included in the carrying amount of the liability component and are amortized over the life of
the convertible debentures using the effective interest method.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19.
Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
The fair value of the Conversion Right was estimated
using the Finite Difference Method and the Share Interest feature was estimated using the Monte Carlo Simulations.
Key Inputs
| Valuation Date | March 27, 2024 |
| Maturity Date | March 27, 2028, term of 4 years |
| Risk-free Rate | Zero coupon curve based on United States Dollar Swap rates as of March 27, 2024 |
| Share Price | $7.75, based on Lifezone’s March 27, 2024, closing share price on the NYSE |
| Equity Volatility | 65%, selected based on review of the volatility (rounded) of a group of peer companies |
| Dividend Yield | Assumed at 0% as Management does not expect dividends to be distributed during the term of the Debenture |
| Interest Rate | Forward SOFR + 4.0%, subject to a SOFR floor of 3.0%, 30/360 basis |
| Conversion Price | $8.00 |
| Conversion Cap | $12.00 |
| Credit Spread | 19.0% based on an estimated market-based unsecured rate for the Company and consideration of calibrating the FV of the Debentures to 98.5% of par |
At initial recognition, the $50.0 million was
bifurcated into its host debt instrument and the two embedded derivative liability components. The embedded derivative liability component
was assessed to be $25.2 million, with the large majority of the value linked to the Conversion Right. The remaining $24.8 million are
thus ascribed to the host debt instrument, before adjustment for transaction costs. During the life of the convertible debenture, it can
be expected that the volatility of the Lifezone stock leads to changes in the value of combined derivative liability, potentially resulting
in a significantly higher and more volatile expense pattern in profit or loss. Both components are recorded as a liability with the debt
host portion recorded on an amortized cost basis using an effective interest rate of 31.6%.
The high value of the combined embedded derivative
liability and the resulting high effective interest rate are driven by, among other factors, the share price trading close to the conversion
price at inception, an assumed volatility of 65% and a long (4-year) term.
The effective interest rate is the rate that exactly
discounts the estimated future cash flows (interest and principal payments) over the 4-year term of the financial instrument to the net
carrying amount of the financial liability. The amortization of the host debt instrument is included in finance costs in the statement
of profit and loss and other comprehensive income.
The conversion feature may be exercised by the
holder at any time, meaning that the Company does not have the right to defer settlement of the liability, including any unpaid interest,
for more than twelve months from the date of this report. Consequently, all liability elements of the unsecured convertible debentures
are classified as current, irrespective of how many years are left until maturity of the instrument.
On June 30, 2024, the embedded derivative liability
component was reassessed to be $25.5 million, with the large majority of the value linked to the Conversion Right. The increase of
$356,000 is largely due to market credit spreads increasing, resulting in a more likely occurrence for a conversion to occur reflected
in the higher conversion value. The resulting $356,000 fair value increase has been recognized as a charge to the profit or loss.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19.
Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
| Debenture host debt instrument | |
$ | |
| | |
| |
| At January 1, 2024 | |
| - | |
| Additions | |
| (24,807,000 | ) |
| OID and Transaction issuance cost | |
| 546,919 | |
| Interest | |
| (564,862 | ) |
| Accretion of issuance cost | |
| (35,563 | ) |
| At June 30, 2024 | |
| (24,860,506 | ) |
| Embedded derivatives | |
$ | |
| | |
| |
| At January 1, 2024 | |
| - | |
| Additions | |
| (25,193,000 | ) |
| Fair value reassessment | |
| (356,000 | ) |
| At June 30, 2024 | |
| (25,549,000 | ) |
| Total Convertible debentures with embedded derivatives | |
| (50,409,506 | ) |
20.
Deferred consideration liability
In April 2021, KNL completed the acquisition of
all shares of Kabanga Holdings Limited from Barrick International (Barbados) Corporation and Glencore Canada Corporation (“GCC”)
and all shares of Romanex International Limited from GCC and Sutton Resources Limited for a total consideration of $14.0 million, to acquire
the physical assets and all historical IP related to the Kabanga Nickel Project. The IP relates to a significant amount of data and exploration
and study expenses that earlier owners invested into the Kabanga Nickel Project.
Of the $14.0 million, $8.0 million was paid by
KNL to the previous owners before completion of the acquisition, with the remaining $6.0 million due to the sellers in stage payments
as below:
| ● | The
first tranche amounting to $2.0 million: payable at the earlier of completion of feasibility study and 3rd anniversary of
the contract from date of signing. |
| ● | The
second tranche amounting to $4.0 million: payable at the earlier of the completion of feasibility study or the 5th anniversary
of the contract from date of signing. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
20.
Deferred consideration liability (continued)
On December 15, 2022, KNL made the first tranche
payment amounting to $2.0 million. The remaining $4.0 million is expected to be paid at the completion of a DFS or on December 9, 2024,
whatever is earlier.
The present value of the outstanding balance of
deferred consideration liability as of June 30, 2024, has been reported on the Statement of Financial Position at $3,851,611 (December
31, 2023: $3,693,612).
The carrying amounts for the reporting periods
can be analyzed as follows:
| Gross carrying amount | |
$ | |
| | |
| |
| At January 1, 2023 | |
| 3,689,755 | |
| Remeasurement gain | |
| (156,047 | ) |
| Accretion of interest | |
| 159,904 | |
| At December 31, 2023 | |
| 3,693,612 | |
| Accretion of interest | |
| 157,999 | |
| At June 30, 2024 | |
| 3,851,611 | |
The discounted % reflects a 2-year facility appropriately priced market
comparable commercial loan offered by the company bank.
21.
Significant related party transactions
Related Party relationships with shareholders
with significant influence
Keith Liddell, Chris von Christierson, and Peter
Smedvig are the founding shareholders of Lifezone and they and members of their immediate family are related parties, some with significant
influence over the affairs of Lifezone. The three founding shareholders (including the members of their immediate families) are long-term
financial supporters of the business and are not considered to be related to each other and are not considered to control or jointly control
the financial and operating policy decisions of Lifezone. Lifezone has no commercial relationships to Peter Smedvig beyond his shareholding
in Lifezone and no compensation or transfer of resources took place during the reporting period with Peter Smedvig and known family members.
The Liddell family holdings are in aggregate approximately
30.3% of all outstanding Lifezone shares as of June 30, 2024, making Keith Liddell and members of his immediate family related parties
with significant influence over the affairs of the Company. Keith Liddell is a director at various group companies and was the Chair of
Lifezone Holdings until the listing on the NYSE, when he became the Chair of Lifezone. Mr. Liddell is also retained as a consultant to
provide metallurgical engineering services to Lifezone in matters related to metals recovery and advice in respect of design, engineering,
commissioning, and operation of Lifezone’s metal and mineral projects. This commercial agreement between Lifezone and Keith Liddell
replaced an earlier agreement with Keshel Consult Limited (terminated on June 30, 2023) and is between Lifezone Limited and Keith Liddell
directly, with effect from July 1, 2023.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21.
Significant related party transactions (continued)
Related Party relationships with shareholders
with significant influence
Keith Liddell is the father of Natasha Liddell
and Simon Liddell and the stepfather of Charles Liddell, who is the owner / partner in the Australian company Integrated Finance Limited.
Simon Liddell is an employee of Lifezone Asia-Pacific Pty Ltd. He was also a director of Lifezone Asia-Pacific Pty Ltd. and resigned from
his role with effect from July 1, 2024. Natasha Liddell was an employee of Lifezone Asia-Pacific Pty Ltd and a member of the Executive
Committee and departed from her role as Chief Sustainability Officer of Lifezone, effective February 16, 2024. Keith Liddell holds his
shares jointly with his wife Shelagh Jane Liddell, who has not received compensation during the reporting period and has no commercial
agreement with Lifezone.
Chris von Christierson was a director at various
group companies but resigned as a non-executive director from the boards of Lifezone Holdings, Lifezone Limited and KNL with effect from
August 31, 2023. He no longer holds any directorships with any group company and received no compensation in the six months ending June
30, 2024.
The holdings in trusts where family members of
Chris von Christierson are beneficiaries are classified as true trust holdings managed by professional trustees, making Chris von Christierson
and close family members not related parties with significant influence. His son, Anthony von Christierson, is employed by Lifezone.
Director Compensation
Keith Liddell was appointed on July 6, 2023, as
a director of the Company. The Company has a director service contract agreement with Keith Liddell as a director of the Company. For
the six months ending June 30, 2024, Keith Liddell, was paid $55,000 (January to June 2023: $Nil).
Directorships
| Name of entity |
|
Type |
|
Keith Liddell |
|
Simon Liddell |
| Lifezone Asia-Pacific Pty Ltd |
|
Subsidiary |
|
● |
|
●* |
| Simulus Pty Ltd |
|
Subsidiary |
|
● |
|
|
| The Simulus Group Pty Ltd |
|
Subsidiary |
|
● |
|
|
| Kabanga Holdings Limited |
|
Subsidiary |
|
● |
|
|
| Romanex International Limited |
|
Subsidiary |
|
● |
|
|
| Tembo Nickel Mining Company Limited |
|
Subsidiary |
|
● |
|
|
| Tembo Nickel Refining Company Limited |
|
Subsidiary |
|
● |
|
|
| Tembo Nickel Corp. Limited |
|
Subsidiary |
|
● |
|
|
Resignations and appointments for the six months
ended June 30, 2024
There were no resignations and appointments for
the six months ended June 30, 2024.
| * | Simon Liddell resigned from Lifezone Asia-Pacific Pty Ltd
with effect from July 1, 2024. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21.
Significant related party transactions (continued)
Transactions with significant shareholders
and their extended families
Lifezone had a commercial agreement with Keshel
Consult Limited for the engagement of Keith Liddell as a technical consultant of Lifezone Limited. This commercial agreement between Lifezone
Limited and Keshel Consult Limited was terminated on June 30, 2023, and replaced with a commercial agreement between Lifezone Limited
and Keith Liddell directly with effect from July 1, 2023. For the six months ending June 30, 2024, $395,878 was paid or payable to Keith
Liddell (June 30, 2023: $Nil). As of June 30, 2024, $43,750 was unpaid (June 30, 2023: $Nil).
Mr. Charles Liddell (stepson of Mr. Keith Liddell)
is the owner / partner in the Australian company Integrated Finance Limited. For the six months ending June 30, 2024, Integrated Finance
Limited was paid or payable $3,465 (June 30, 2023: $63,163) for the provision of information technology services to KNL. The total amount
outstanding as of June 30, 2024, is $Nil (June 30, 2023: $Nil). This commercial agreement between KNL and Integrated Finance Limited was
terminated on December 31, 2023. The $3,465 amount paid for the six months ending June 30, 2024, was in relation to Integrated Finance
Limited final Q4 2023 consultancy invoices.
Ms. Natasha Liddell (the daughter of Mr. Keith
Liddell) was a paid employee of Lifezone Asia-Pacific until February 16, 2024. For the six months ending June 30, 2024, Ms. Natsha Liddell
was paid $85,111 (June 30, 2023: $146,224). On April 30, 2024, KNL engaged Atlas Sustainability in relation to the creation of parts of
the ESG sections of the Kabanga Nickel Project DFS. The work is undertaken by Natasha Liddell as principal consultant of Atlas Sustainability.
For the period January 2024 and ending on June 30, 2024, Atlas Sustainability was paid $21,048 (June 30, 2023: $Nil).
Mr. Simon Liddell (the son of Mr. Keith Liddell)
is a paid employee of Lifezone Asia-Pacific Pty Ltd, a wholly owned subsidiary of Lifezone. For the six months ending June 30, 2024, Mr.
Simon Liddell was paid $133,343 (June 30, 2023: $144,904), including short-term bonuses and pension payments. He is VP Mining and has
extensive underground mining experience, having joined from Gold Fields in Australia in 2022.
Related Party Loans
Following the listing on the NYSE listing Lifezone
has had a policy not to provide personal loans to directors or members of the Executive Committee.
Lisa Smith, an employee and shareholder, but not
considered holding significant influence over Lifezone, has a loan of $75,000 with KNL. As at June 30, 2024 this was outstanding and is
expected to be repaid before March 31, 2025.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21.
Significant related party transactions (continued)
Related party receivables
Lifezone had receivables due from related parties
as follows.
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Balances with affiliated entities | |
| | |
| |
| BHP Billiton (UK) DDS Limited | |
| 8,772 | | |
| - | |
| Kelltechnology SA Proprietary Ltd | |
| 478,558 | | |
| 1,433,243 | |
| | |
| 487,330 | | |
| 1,433,243 | |
| | |
| | | |
| | |
| Balances with management personnel | |
| | | |
| | |
| Related party receivables - Interest free | |
| 75,000 | | |
| 75,000 | |
| | |
| 75,000 | | |
| 75,000 | |
| | |
| 562,330 | | |
| 1,580,243 | |
Receivables from affiliated entities relate to
short-term services and payments on behalf of affiliated entities.
In 2020, Lifezone provided loans to shareholders
and employees who were working for Lifezone amounting to $375,000. As of June 30, 2024, only the loan to Lisa Smith of $75,000 was still
outstanding. The loans with employees and consultants of Lifezone were interest free and repayable on demand and were not considered arm’s
length.
Balances with key management personnel
There are no balances with key management as at June 30, 2024.
Related party payable
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Balances with management personnel | |
| | |
| |
| Related party payables | |
| 43,750 | | |
| 132,048 | |
| | |
| 43,750 | | |
| 132,048 | |
Relate to short-term services payments and are
considered provided at arm’s length. The amount above relates to services provided by Keith Liddell to Lifezone Limited for the
month of June 2024 not paid as at June 24, 2024 and services provided by Keith Liddell to Lifezone Limited for the period September to
December 2023 not paid as at December 31, 2023.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21.
Significant related party transactions (continued)
Remuneration of key management personnel
| | |
Three months ended June 30, | | |
Six months ended June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Cash compensation for services | |
| 1,106,733 | | |
| 914,697 | | |
| 2,091,902 | | |
| 1,584,740 | |
| Short-term bonuses | |
| 305,497 | | |
| 512,524 | | |
| 305,497 | | |
| 512,524 | |
| Pension and medical benefits | |
| 25,586 | | |
| 24,010 | | |
| 50,419 | | |
| 32,135 | |
| Total key management compensation | |
| 1,497,815 | | |
| 1,451,231 | | |
| 2,447,818 | | |
| 2,129,399 | |
Cash compensation for services covers payments
to employees and consultants considered key management personnel.
Short-term bonuses for the six months ending June
30, 2024, were $305,497, reflecting a one-month bonus paid to all employees and consultants in May
2024 for achievements in 2023, including their contributions to the listing at the NYSE and major progress made in relation to
our two key projects. For the six months ending June 30, 2023, $512,524 related to bonuses to Chris Showalter and Dr Michael Adams.
The increase in total compensation paid to key
management personnel reflects a 5% cost of living increase applied in May 2024 across the organization as an inflationary adjustment for
2023 and the first half of 2024.
The amounts disclosed in the previous page table
are the amounts recognized as an expense during the reporting period related to key management personnel as listed below.
| Keith Liddell | | Chair |
| Chris Showalter | | Chief Executive Officer |
| Ingo Hofmaier | | Chief Financial Officer (joined June 29, 2023) |
| Dr Michael Adams | | Chief Technology Officer |
| Gerick Mouton | | Chief Operating Officer |
| Benedict Busunzu | | Tembo Nickel Chief Executive Officer |
| Spencer Davis | | Group General Counsel (joined March 1, 2023) |
| Anthony von Christierson | | Senior Vice President: Commercial and Business Development |
| Evan Young | | Senior Vice President: Investor Relations and Capital Markets (joined October 10, 2023) |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant
related party transactions (continued)
Related
party revenue
Lifezone had sales to related parties as follows for the period ending:
| | |
Three months ended June 30, | | |
Six months ended June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Kellplant Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 129,680 | |
| Kelltechnology SA Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 365,368 | |
| Consulting and management fee with affiliated companies | |
| - | | |
| - | | |
| - | | |
| 495,048 | |
Related party revenue is attributable to Lifezone’s
principal activity of hydromet consulting related to mineral beneficiation operations of affiliated companies primarily based in South
Africa as discussed in Note 5. These affiliated entities are joint venture entities.
Lifezone Limited has a 50% interest in Kelltech
Limited, a joint venture with Sedibelo Resources Limited. Lifezone Limited has a 33.33% interest in KTSA, a joint venture of Kelltech
Limited. Lifezone Limited has an indirect 33.33% interest in Kellplant, a wholly owned subsidiary of KTSA, as disclosed in detail in Note
25.
There were no related party revenue transactions
with Kellplant Proprietary Ltd and Kelltechnology SA Proprietary Ltd in the six months ending June 30, 2024, further details disclosed
in detail in Note 25.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity
Lifezone was incorporated on December 8, 2022,
as a holding company for Lifezone Holdings and acquired 100% of the equity interest in Lifezone Holdings on July 6, 2023.
| | |
June 30, 2024 | | |
December 31, 2023 | |
| | |
Number of
Shares | | |
$ | | |
Number of Shares | | |
$ | |
| Share capital | |
| | |
| | |
| | |
| |
| Lifezone Metals Limited | |
| | |
| | |
| | |
| |
| Number of ordinary shares in issue | |
| 78,275,357 | | |
| | | |
| 78,269,952 | | |
| | |
| Nominal average value per ordinary per share | |
| | | |
| 0.0001 | | |
| | | |
| 0.0001 | |
| Nominal value of ordinary total shares: | |
| | | |
| 7,829 | | |
| | | |
| 7,828 | |
Share capital
Share capital reflects the par value of shares issued as shown in the
Unaudited Condensed Consolidated Interim Financial Position in the presentational currency USD.
Share premium
Share premium reflects the excess of consideration
received, net of equity issuance fees, over par value of shares.
Other reserve
Other reserves reflect revaluation of share-based
payments and restricted stock units.
Foreign currency translation reserve
The assets and liabilities of Lifezone’s
foreign subsidiaries are translated into USD using the exchange rates in effect on the balance sheet dates. Equity accounts are translated
at historical rates, except for the change in earnings during the year, which is the result of the period as shown in the Unaudited Condensed
Consolidated Interim Statement of Comprehensive Income. Revenue and expense accounts are translated using the weighted average exchange
rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in
Lifezone’s consolidated foreign currency translation reserve. Lifezone has subsidiaries with functional currency in GBP and AUD.
Accumulated deficit
This includes all current and prior period accumulated
losses of Lifezone.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity (continued)
Reconciliation of Shareholders’ equity
movement
| | |
June 30, 2024 | | |
Movements | | |
December 31, 2023 | |
| | |
Number of Shares | | |
$ | | |
Number of Shares | | |
$ | | |
Number of Shares | | |
$ | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Share capital, beginning | |
| | |
| | |
| | |
| | |
| | |
| |
| Exchanged for Issue of Lifezone Metal Limited shares | |
| 62,680,131 | | |
| 6,268 | | |
| - | | |
| - | | |
| 62,680,131 | | |
| 6,268 | |
| Previous GoGreen Sponsor shareholders | |
| 6,544,950 | | |
| 655 | | |
| - | | |
| - | | |
| 6,544,950 | | |
| 655 | |
| Previous GoGreen public shareholders | |
| 1,527,554 | | |
| 153 | | |
| - | | |
| - | | |
| 1,527,554 | | |
| 153 | |
| PIPE Investors | |
| 7,017,317 | | |
| 702 | | |
| - | | |
| - | | |
| 7,017,317 | | |
| 702 | |
| Simulus Vendors | |
| 500,000 | | |
| 50 | | |
| - | | |
| - | | |
| 500,000 | | |
| 50 | |
| Issue of Lifezone Metal Limited shares | |
| 78,269,952 | | |
| 7,828 | | |
| - | | |
| - | | |
| 78,269,952 | | |
| 7,828 | |
| Transactions with shareholders | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issue of shares from RSU awards | |
| 5,405 | | |
| 1 | | |
| 5,405 | | |
| 1 | | |
| - | | |
| - | |
| Total transactions with shareholders | |
| 5,405 | | |
| 1 | | |
| 5,405 | | |
| 1 | | |
| - | | |
| - | |
| Share capital, ending | |
| 78,275,357 | | |
| 7,829 | | |
| 5,405 | | |
| 1 | | |
| 78,269,952 | | |
| 7,828 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Share premium | |
| | | |
| 184,642,791 | | |
| | | |
| 32,484 | | |
| | | |
| 184,610,307 | |
| Equity issuance fees | |
| | | |
| (5,923,979 | ) | |
| | | |
| - | | |
| | | |
| (5,923,979 | ) |
| Total share premium | |
| | | |
| 178,718,812 | | |
| | | |
| 32,484 | | |
| | | |
| 178,686,328 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Previous Lifezone Holdings shareholders earnouts | |
| | | |
| 248,464,035 | | |
| | | |
| - | | |
| | | |
| 248,464,035 | |
| Previous Sponsor earnouts | |
| | | |
| 17,094,750 | | |
| | | |
| - | | |
| | | |
| 17,094,750 | |
| Total shared-base payment reserve | |
| | | |
| 265,558,785 | | |
| | | |
| - | | |
| | | |
| 265,558,785 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Warrant reserves | |
| | | |
| 15,017,257 | | |
| | | |
| - | | |
| | | |
| 15,017,257 | |
| Other reserves | |
| | | |
| (5,314,302 | ) | |
| | | |
| 1,500,000 | | |
| | | |
| (6,814,302 | ) |
| Translations reserve | |
| | | |
| 56,060 | | |
| | | |
| (21,873 | ) | |
| | | |
| 77,933 | |
| Redemption reserve | |
| | | |
| 280,808 | | |
| | | |
| - | | |
| | | |
| 280,808 | |
| Accumulated deficit | |
| | | |
| (418,864,652 | ) | |
| | | |
| (10,699,490 | ) | |
| | | |
| (408,165,162 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total Shareholders’ equity | |
| | | |
| 35,460,597 | | |
| | | |
| (9,188,878 | ) | |
| | | |
| 44,649,475 | |
NOTES TO THE UNAUDITED
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity (continued)
Non-controlling Interest
In January 2021, KNL and the Government of Tanzania
established TNCL, a Tanzanian company in order to develop, process and refine future products from the Kabanga Nickel Project. Through
the Treasury Registrar, the Government of Tanzania owns a non-dilutable free-carried interest representing 16% of the issued share capital
of TNCL. The government’s 16% interest in the arrangement is presented as a non-controlling interest in the Audited Consolidated
Financial Statements of Lifezone.
In October 2022, BHP also agreed to invest a further
$50.0 million into KNL in the form of equity under the Tranche 2 Subscription Agreement, as described in detail in Note 1. KNL satisfied
substantially all the closing conditions and received the $50.0 million on February 15, 2023, and issued a stock certificate on the same
day, bringing BHP’s interest in KNL from 8.9% as of December 31, 2022, to 17.0%, effective February 15, 2023. Associated with this
transaction KNL paid $2.5 million equity issuance cost.
Earnouts
Following the SPAC Transaction, as described in
detail in Note 2.2, pursuant to earnout arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional
Lifezone shares if the daily volume-weighted average price of Lifezone shares equals or exceeds (i) $14.00 per share for any 20-trading
days within a 30- trading day period (“Trigger Event 1”) and (ii) $16.00 for any 20 trading days within a 30-trading
day period (“Trigger Event 2”). Of the total shares issued and outstanding, 1,725,000 shares are issued but in escrow
and relate to the Sponsor earnouts, which are subject to the occurrence of the two trigger events.
Classification
Management has assessed how the BCA earnout should be valued and
classified in accordance with and have listed below key conditions under the agreements in the application IAS 32: Financial Instruments:
Presentation and IFRS 2 Share-based Payments,
| ● | Management have assessed IAS 32 paragraph 4 exceptions
for Financial Instruments and concluded the stated exceptions do not apply to the BCA earnout share agreements, therefore IFRS
2 Share-based Payment rules need to be applied. |
| ● | Furthermore, in accordance with IFRS 2, paragraph
2, as a result of the obligations created throughout the ancillary agreements attached to the BCA, management has concluded that IFRS
2 does apply to the BCA earnout share provisions. |
| ● | The earnout triggering events are representative
of market conditions as defined within paragraph 21 of IFRS 2. No other vesting conditions are present. |
| ● | In accordance with IFRS 2, market conditions
constitute non-vesting conditions. As a result of the non-vesting conditions, the Company is required to recognize the share-based payment
at inception, irrespective of whether the market condition has been met which in this case is considered to be representative of both
the measurement and grant date. |
| ● | Although the term “non-vesting condition”
is not explicitly defined in IFRS 2, it is inferred to be any condition that does not meet the definition of a vesting condition (IFRS
2 BC364). |
| ● | Non-vesting conditions are all requirements that
do not represent service or performance conditions, but which have to be met in order for the counterparty to receive the share-based
payment. |
| ● | The company has recognised the goods or services
have been received in accordance with IFRS 2 paragraphs 10–22. |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity (continued)
Earnouts (continued)
Accordingly, the BCA earnouts were recognized
as equity at the acquisition date of July 6, 2023.
The fair value of earnouts has been independently
valued based on a Monte Carlo simulation model. The assumptions used in the stock option pricing model were as below:
| | | Inputs | |
| | | | |
| Valuation Date | | | July 6, 2023 | |
| Stock Price as of Measurement Date / BCA Date | | $ | 10.32 | |
| Equity Volatility (Pre BCA) | | | n/a | |
| Equity Volatility (Post BCA assumption) | | | 94.0 | % |
| Risk-Free Rate (5.00 Years) | | | 4.28 | % |
| Share Price Earnout Tranches | | Beginning | | Expiration | | Share Price Hurdle | |
| Sale Threshold Price for Tranche 1 - Triggering Event I | | 07/06/2023 | | 07/06/2028 | | $ | 14.00 | |
| Sale Threshold Price for Tranche 2 - Triggering Event II | | 07/06/2023 | | 07/06/2028 | | $ | 16.00 | |
| Days Above Threshold Price | | | | | | | 20 | |
| Days Above Measurement Period | | | | | | | 30 | |
| Change of Control Provisions | | | | | | | Estimate | |
| Change of Control Date | | | | | | | n/a | |
| Probability of Change of Control | | | | | | | 0 | % |
The following table illustrates the number and
fair value of earnouts granted as at June 30, 2024.
There were no earnouts granted in the six months
ended June 30, 2024.
| | |
Share Options | | |
Fair value per Option | | |
Fair value $ | |
| Granted - Lifezone Holdings ($14.00 per Share) | |
| 12,536,026 | | |
$ | 9.98 | | |
| 125,109,539 | |
| Granted – Lifezone Holdings ($16.00 per Share) | |
| 12,536,026 | | |
$ | 9.84 | | |
| 123,354,496 | |
| Outstanding as at June 30, 2024 | |
| 25,072,052 | | |
| | | |
| 248,464,035 | |
| | |
Share Options | | |
Fair value per Option | | |
Fair value
$ | |
| Granted – Sponsor shareholders ($14.00 per Share) | |
| 862,500 | | |
$ | 9.98 | | |
| 8,607,750 | |
| Granted – Sponsor shareholder ($16.00 per Share) | |
| 862,500 | | |
$ | 9.84 | | |
| 8,487,000 | |
| Outstanding as at June 30, 2024 | |
| 1,725,000 | | |
| | | |
| 17,094,750 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity (continued)
Warrant reserve
Lifezone’s Form F-1 registration statement
became effective on September 29, 2023, resulting in registering the resale of certain Lifezone Metals shares and (private) warrants owned
by certain previous Lifezone Holdings and the Sponsor shareholders (including its limited partners).
Each Lifezone warrant represents the right to
purchase one ordinary Lifezone share at an exercise price of $11.50 per share in cash. Pursuant to the BCA, a 180-day lock-up period following
the Closing Date applied to 667,500 warrants received by the Sponsor shareholders.
Classification
The warrants are classified as either a liability
or equity on inception, depending on the terms of the agreement. Warrants are only classified as equity when they are settled by the entity
delivering a fixed number of its own equity instruments and receiving a fixed amount of cash or another financial asset. The Company assesses
the appropriate classification of warrants at the time of inception.
Management has assessed how both the Public
Warrants and Private Placement Warrants should be valued and classified in accordance with IAS 32: Financial Instruments: Presentation.
Management have assessed IAS 32 paragraph 4 exceptions for Financial Instruments and assessed the warrants do not meet the exceptions
allowed, therefore IAS 32 has been applied.
Management have reviewed the warrant agreement
and the warrant assumption agreement’s, the mechanics of exercise to determine the accounting treatment, and have listed below key
conditions under the agreements in the application of IAS 32, in particular to paragraphs 16A and 16B and 16C and 16D.
| ● | The agreements are representative of a contractual
obligation, arising from a derivative financial instrument, that will or may result in the future receipt or delivery of the issuer’s
own equity instruments |
| ● | The agreements are not representative
of a puttable instrument as the issuer has the choice but not the obligation to repurchase or redeem the Warrant
instrument for cash or another financial asset |
| ● | The Private Warrants are identical to the Public
Warrants |
| ● | The Warrant agreement requires the Group to issue
a fixed number of shares for a fixed amount of cash |
| ● | Exercise of the Warrants will be on a gross basis
or on a cashless basis per the terms |
| ● | The Company may require the Warrant holders to
exercise on a “cashless” basis while the agreement explicitly stated that the Company will not be in a position to net settle
in cash. |
Accordingly, the warrants were recognized
as equity.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22.
Equity (continued)
Warrant reserve (continued)
The fair value of warrants was independently valued
based on a Black-Scholes option pricing model. The assumptions used in the stock option pricing model were as below:
| Valuation Date – date of warrant assumption | | July 5, 2023 | |
| Unit Issuance Date | | October 21, 2021 | |
| Announcement Date | | December 13, 2022 | |
| Business Combination Date | | July 5, 2023 | |
| Exercise Date | | August 4, 2023 | |
| Expiration Date | | July 5, 2028 | |
| First Trading Date | | December 13, 2021 | |
| Stock Price as of Measurement Date | | $ | 11.44 | |
| Strike Price | | $ | 11.50 | |
| Risk-Free Rate (5.00 Years) | | | 4.16 | % |
| Redemption Threshold Price | | $ | 18.00 | |
| Days Above Threshold Price (Automatic Redemption) | | | 20 | |
| Days Above Measurement Period | | | 30 | |
| Probability of Acquisition | | | 100 | % |
Outputs
The fair value of outstanding Public Warrants has been valued at $1.05
per warrant unit at the Valuation Date.
The fair value of outstanding Private Warrants was valued at $0.57
per warrant unit at Valuation Date. The number of warrants and fair value of outstanding Public Warrants as at June 30, 2024, was as follows:
| | |
Number of Warrants | | |
Fair value $ | |
| Balance as at January 1, 2023 | |
| - | | |
| - | |
| Public Warrants ($11.50 per warrant) | |
| 13,800,000 | | |
| 14,490,000 | |
| Exercised | |
| (76,350 | ) | |
| (80,168 | ) |
| Outstanding as at December 31, 2023 | |
| 13,723,650 | | |
| 14,409,833 | |
| Outstanding as at June 30, 2024 | |
| 13,723,650 | | |
| 14,409,833 | |
On October 19, 2023, Lifezone received $878,025 from the exercise of
76,350 warrants.
There were no warrants exercised in the six months
ended June 30, 2024.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Warrant reserve (continued)
The number of warrants and fair value of outstanding Private Warrants
as at June 30, 2024, was as follows:
| | |
Number of
Warrants | | |
Fair value $ | |
| Balance as at January 1, 2023 | |
| - | | |
| - | |
| Private Warrants ($11.50 per warrant) | |
| 667,500 | | |
| 607,425 | |
| Outstanding as at December 31, 2023 | |
| 667,500 | | |
| 607,425 | |
| Outstanding as at June 30, 2024 | |
| 667,500 | | |
| 607,425 | |
23. Loss per share (LPS)
Basic LPS is calculated by dividing the loss for
the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the
year.
Diluted LPS is calculated by dividing the loss
attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued
on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table sets forth the reconciliation
of the numerator and denominator used in the computation of basic and diluted loss per common share for the three and six months ended
June 30, 2024, and June 30, 2023.
| | |
Three months ended | | |
Six months ended | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Numerator: | |
| | |
| | |
| | |
| |
| Net loss used for basic earnings per share | |
| (6,750,125 | ) | |
| (4,367,422 | ) | |
| (10,699,490 | ) | |
| (10,403,600 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Denominator: | |
| | | |
| | | |
| | | |
| | |
| Basic weighted-average outstanding common shares | |
| 78,275,354 | | |
| 58,300,082 | | |
| 78,274,404 | | |
| 58,300,082 | |
| Effect of dilutive potential common shares resulting from options | |
| - | | |
| 2,819,653 | | |
| - | | |
| 2,819,653 | |
| Effect of dilutive potential restricted stock units | |
| - | | |
| 1,696,867 | | |
| - | | |
| 1,696,867 | |
| Effect of dilutive potential warrants units | |
| 14,391,150 | | |
| - | | |
| 14,391,150 | | |
| - | |
| Effect of dilutive potential earnout stock units | |
| 26,797,052 | | |
| - | | |
| 26,797,052 | | |
| - | |
| Weighted-average shares outstanding - diluted | |
| 119,463,556 | | |
| 62,816,602 | | |
| 119,462,606 | | |
| 62,816,602 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss per common share: | |
| | | |
| | | |
| | | |
| | |
Basic & diluted loss per share | |
| (0.09 | ) | |
| (0.07 | ) | |
| (0.14 | ) | |
| (0.18 | ) |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
23. Loss per share (LPS) (continued)
The number of shares and nominal average value
have been adjusted to retrospectively reflect the impact of the Flip-Up in accordance with the predecessor value method of accounting
for the business combination under common control as disclosed in detail in Note 1.
Where a loss has occurred, basic and diluted loss
per share is the same because the outstanding share options are anti-dilutive. Accordingly, diluted loss per share equals the basic loss
per share. Earnouts and warrants outstanding as at June 30, 2024, totaling 41,188,202 (2023: Nil) and Options and RSU outstanding as at
June 30, 2024, totaling Nil (2023: 4,516,520) are considered dilutive.
24. Acquisitions of subsidiaries
Acquisitions during the current period
There were no acquisitions in the current reporting
interim period.
Acquisitions during the prior period
There were no acquisitions in the prior comparative
reporting interim period.
25. Joint ventures
The nature of the activities of all the Lifezone’s joint ventures
is trading in and operation of industrial scale the metals extraction and metals refining investments, which are seen as complementing
the Lifezone’s operations and contributing to achieving the Lifezone’s overall strategy.
Details of each of Lifezone’s joint ventures
at the end of the reporting period are as follows:
| | | Country of | | Principal
place of | | Percentage of
Ownership (%) | |
| JV Equity Entities: | | incorporation | | Business | | 2024 | | | 2023 | |
| Kelltech Limited | | Mauritius | | Mauritius | | | 50 | % | | | 50 | % |
| Kelltechnology South Africa (RF) Proprietary Ltd | | South Africa | | South Africa | | | 33 | % | | | 33 | % |
| Kellplant Proprietary Ltd | | South Africa | | South Africa | | | 33 | % | | | 33 | % |
Lifezone has a 50% interest in Kelltech Limited,
a joint venture between Sedibelo Resources Limited and Lifezone Limited, pursuant to which Lifezone Limited granted an exclusive license
to Kelltech Limited to use the Hydromet Technology in the Southern African Development Community (“SADC”), which is
a regional economic community comprising 16 states; Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar,
Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic of Tanzania, Zambia and Zimbabwe (the “SADC
License Area” and the license is the “Kell License”). The Kell License relates to Lifezone Limited’s
Hydromet Technology applicable to just precious metals projects and the SADC Licence Area.
Kelltech Limited owns 66.67% of KTSA and has further
exclusively sub-licensed the Kell License to KTSA. The remaining 33.33% interest in KTSA is held by the Industrial Development Corporation
of South Africa, a South African national development finance institution. Lifezone has an indirect 33.33% interest in KTSA.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
25. Joint ventures (continued)
Kellplant is a wholly owned subsidiary of KTSA
with Lifezone having an indirect 33.33% interest in Kellplant. Kellplant plans to develop, own and operate a refinery at Sedibelo Resources
Pilanesberg Platinum Mines operations in South Africa that will utilize Lifezone Limited’s Hydromet Technology to process and refine
PGMs, other precious metals and base metals.
At the time of the release of this document, the
development of the Hydromet refinery at Sedibelo Resources’ Pilanesberg Platinum Mines operations is on hold and will need to be
rescoped following Sedibelo Resources’ decision to update its mine plan and re-scope the refinery to process its underground mining
operations, which have not yet been developed.
Although Lifezone holds the joint ownership in
these companies, Lifezone does not have ultimate control as all major decisions have to be agreed unanimously by all parties before they
can be actioned. Management therefore considered it appropriate to account for these entities as joint ventures.
All joint ventures are accounted for using the equity method.
Lifezone has recognized its 50% share in Kelltech Limited share capital
of $1,000, which is fully impaired.
26. Financial risk review
This note presents information about Lifezone’s
exposure to financial risks and the group’s management of capital. Lifezone’s risk management is coordinated by its directors
and Lifezone does not operate any hedging operations or does not buy or sell any financial derivatives. The most significant financial
risks to which Lifezone is exposed are described below.
a) Market risk
Market risk is the risk that the fair value of
future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate
risk, risks related to the price of equity instruments, commodity price risk and foreign exchange rates.
Market risks affecting Lifezone are comprised
of interest rate risk and foreign exchange rate risk. Financial instruments affected by market risk include deposits, trade receivables,
related party receivables, trade payables, accrued liabilities, deferred consideration liability, and long-term rehabilitation provision.
The sensitivity analysis in the following sections
relates to the positions as of June 30, 2024, and December 31, 2023.
The sensitivity analysis is intended to illustrate
the sensitivity to changes in market variables on Lifezone’s financial instruments and show the impact on profit or loss and shareholders’
equity, where applicable.
The analysis excludes the impact of movements
in market variables on the carrying value of provisions.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
a) Market risk (continued)
The following assumptions have been made in calculating
the sensitivity analysis:
| ● | The
Statement of Financial Position sensitivity relates to foreign currency-denominated trade
payables, |
| ● | The
sensitivity of the relevant profit before tax item and/or equity is the effect of the assumed
changes in respective market risks. This is based on the financial assets and financial liabilities
held at June 30, 2024 and December 31, 2023; and |
| ● | The
impact on equity is the same as the impact on profit before tax. |
b) Credit risk
Credit risk is the risk that one party to a financial
instrument will cause a financial loss for the other party by failing to discharge an obligation. Lifezone’s revenue is currently
concentrated with two primary customers, KTSA and Kellplant, both affiliated entities, and accordingly Lifezone is exposed to the possibility
of loss if such customers default. Lifezone addresses this risk by monitoring its commercial relationship with such customers and by seeking
to develop additional patented technology and entering into new partnerships.
Loan credit was extended to Lisa Smith for $75,000
as shown in Note 21. Credit risk is therefore regarded as low. The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was $75,000.
Lifezone evaluated the collectability of its consolidated
loan receivables of $75,000 and determined that no allowance loss is required.
Set out in the following page is the information
about the credit risk exposure of Lifezone’s financial assets as at June 30, 2024 and December 31, 2023.
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| Cash and cash equivalents | |
| 63,492,965 | | |
| 49,391,627 | |
| Other receivables | |
| 796,082 | | |
| 696,968 | |
| Receivables from affiliated entities | |
| 487,330 | | |
| 1,433,243 | |
| Related party receivables | |
| 75,000 | | |
| 75,000 | |
| | |
| 64,851,377 | | |
| 51,596,838 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
b) Credit risk (continued)
| | |
Days past due | |
| |
Current | | |
31-60 | | |
61-90 | | |
91-120 | | |
>120 | | |
Impairment | | |
Total | |
| At June 30, 2024 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Cash and cash equivalent | |
| 63,492,965 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 63,492,965 | |
| Other receivables | |
| 195,439 | | |
| 600,643 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 796,082 | |
| Receivable from affiliated entities | |
| 487,330 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 487,330 | |
| Related party receivables | |
| 75,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 75,000 | |
| | |
| 64,250,734 | | |
| 600,643 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 64,851,377 | |
| | |
Days past due | |
| |
Current | | |
31-60 | | |
61-90 | | |
91-120 | | |
>120 | | |
Impairment | | |
Total | |
| At December 31, 2023 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Cash and cash equivalent | |
| 49,391,627 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 49,391,627 | |
| Other receivables | |
| 98,836 | | |
| 598,132 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 696,968 | |
| Receivable from affiliated entities | |
| 1,433,243 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,433,243 | |
| Related party receivables | |
| 75,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 75,000 | |
| | |
| 50,998,706 | | |
| 598,132 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 51,596,838 | |
c) Liquidity risk
Liquidity risk arises from the possibility that
Lifezone will not be able to meet its financial obligations as they fall due. Lifezone has historically been supported financially by
its shareholders and the wider capital market. The risk of its shareholders discontinuing the provision of financing was historically
regarded as low. Lifezone expects to fund its capital requirements and ongoing operations through current cash reserves, equity, mezzanine,
debt funding or monetizing the offtake from the Kabanga Nickel project.
The below table reflects Lifezone liquidity risk
on Trade Payables, Lease Liabilities, Derivatives liabilities. Contingent payment liabilities, excluding provisions.
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
$ | | |
$ | |
| <=30 days | |
| 6,668,844 | | |
| 7,667,147 | |
| 30-60 days | |
| 50,953 | | |
| 104,240 | |
| 61-90 days | |
| 50,953 | | |
| 156,360 | |
| 91-120 days | |
| 3,913,522 | | |
| 208,480 | |
| >=121 days | |
| 51,786,472 | | |
| 5,392,901 | |
| Total | |
| 62,470,746 | | |
| 13,529,128 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
d) Foreign currency risk
Lifezone has financial instruments which are denominated
in currencies other than USD, its reporting currency. Lifezone mostly incurs expenditures for which it owes money denominated in non-U.S.
dollar currencies, including GBP, TZS, ZAR, and AUD. As a result, the movement of such currencies could adversely affect Lifezone’s
results of operations and financial position.
The following table includes financial instruments
which are denominated in foreign currencies:
| | |
June 30, | | |
December 31, | |
| | |
2024 | | |
2023 | |
| | |
GBP £ | | |
GBP £ | |
| Cash in banks | |
| 84,494 | | |
| 620,208 | |
| Prepaid expenses | |
| 109,804 | | |
| 134,828 | |
| Trade and other payables | |
| 432,901 | | |
| 489,117 | |
| | |
| | | |
| | |
| | |
| AUD | | |
| AUD | |
| Cash in banks | |
| 1,091,458 | | |
| 2,587,533 | |
| Trade receivables | |
| 3,297,139 | | |
| 112,069 | |
| Prepaid expenses | |
| 153,598 | | |
| 238,181 | |
| Trade and other payables | |
| 1,349,683 | | |
| 743,959 | |
| | |
| | | |
| | |
| | |
| EUR | | |
| EUR | |
| Cash in banks | |
| 6,047 | | |
| 133,685 | |
| | |
| | | |
| | |
| | |
| TZS | | |
| TZS | |
| Cash in banks | |
| 1,525,484,567 | | |
| 1,259,494,294 | |
| | |
| | | |
| | |
| | |
| ZAR | | |
| ZAR | |
| Cash in banks | |
| 42,633 | | |
| 937,684 | |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
Sensitivity analysis
The following table demonstrates the estimated
sensitivity to a reasonably possible change in the GBP, TZS, ZAR, and AUD exchange rates, with all other variables held constant. The
impact on Lifezone’s profit is due to changes in the fair value of monetary assets and liabilities. Lifezone’s exposure to
foreign currency changes for all other currencies is not considered material.
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | |
| Effect on Profit | |
| | |
| |
| Change in GBP Rate | |
| | |
| |
| 10% | |
| 10,691 | | |
| 79,202 | |
| -10% | |
| (10,691 | ) | |
| (79,202 | ) |
| | |
| | | |
| | |
| Change in AUD Rate | |
| | | |
| | |
| 10% | |
| (72,768 | ) | |
| (176,987 | ) |
| -10% | |
| 72,768 | | |
| 176,987 | |
| | |
| | | |
| | |
| Change in EUR Rate | |
| | | |
| | |
| 10% | |
| 648 | | |
| 14,858 | |
| -10% | |
| (648 | ) | |
| (14,858 | ) |
| | |
| | | |
| | |
| Change in TZS Rate | |
| | | |
| | |
| 10% | |
| (58,121 | ) | |
| (50,079 | ) |
| -10% | |
| 58,121 | | |
| 50,079 | |
| | |
| | | |
| | |
| Change in ZAR Rate | |
| | | |
| | |
| 10% | |
| (232 | ) | |
| (5,058 | ) |
| -10% | |
| 232 | | |
| 5,058 | |
e) Capital management.
For the purpose of Lifezone’s capital management,
capital includes issued capital, share premium and other equity reserves attributable to the equity holders of the Company, as the parent
entity of Lifezone. The primary objective of Lifezone’s capital management is to maximize the shareholder value.
Management assesses Lifezone’s capital requirements
in order to maintain an efficient overall financing structure while avoiding excessive leverage. Lifezone manages the capital structure
and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order
to maintain or adjust its capital structure, Lifezone expects to fund its capital requirements and ongoing operations through current
cash reserves, equity, mezzanine, alternative or debt funding or monetizing the offtake from the Kabanga Nickel Project.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
27. Contingent liabilities
The two legacy tax cases of Kabanga Nickel Company
Ltd, a Tanzanian subsidiary of Lifezone, filed with the Tax Revenue Appeals Tribunal to dispute a tax assessment by the TRA regarding
withholding tax imposed on imported services, are ongoing as of June 30, 2024. The services received were provided by non-resident entities
between 2010 to 2012 and again from 2015 to 2016, while Kabanga Nickel Company Ltd was owned by previous owners, Barrick Gold and Glencore.
A court session was held at the Tanzanian Court of Appeal in early July, dealing with one of the cases, while our Tanzanian subsidiary
continues to engage with the TRA in order to resolve.
The combined principal of both cases is approximately
$3.4 million (TSZ 8.9 billion) using the closing foreign exchange rate as of June 30, 2024.
28. Subsequent events
Grant of new Restricted stock units
On July 1, 2024, Lifezone Metals Limited granted
2,800,000 restricted stock units (“RSUs”) awards under the 2023 Omnibus Incentive Compensation Plan (the Plan) each
representing the right for participants to receive 1 share in Lifezone Metals.
On July 1, 2024, 33.33% of the RSUs vested, with
the remaining 66.67% vesting under market price performance conditions of $14.50 per share and $16.00 per share (respectively) based on
daily VWAP of the shares for any 20 trading days. The vesting period is five years commencing on July 1, 2024. The transaction is assessed
and accounted for under IFRS 2: Share-based Payments.
There were no other significant events to note
subsequent to June 30, 2024, which require adjustments to, or disclosures in these Unaudited Condensed Consolidated Interim Financial
Statements.
Tax dispute
On July 30, 2024, the Tanzanian Court of Appeal
handed down a judgment covering the larger of the two legacy withholding tax cases, which was in favor of the TRA. The judgment
relates to a withholding tax amount claimed by the TRA in the sum of $3,210,434 (TZS 8,426,336,706) using the closing foreign
exchange rate as of June 30, 2024. Our Tanzanian subsidiary continues to engage with the TRA to negotiate a settlement agreement,
including the historic offset of bank funds received by the TRA. At the time of this report, no agreement was reached with
the TRA.
Item 2. Management’s Discussion and Analysis of financial
condition and results of operations
You should read the following discussion and analysis
of our financial condition and results of operations together with the Unaudited Condensed Interim Consolidated Financial Statements and
related notes included in Item 1 of Part I of this Interim Financial Statements for the six months of 2024 (this “Interim Report”)
and with our Audited Consolidated Financial Statements and the related notes for the fiscal year ended December 31, 2023 included in our
20-F filed with the SEC on April 1, 2024.
Special note regarding forward-looking statements
Certain statements made herein are not historical
facts but may be considered “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended and the “safe harbor” provisions under the Private Securities Litigation Reform
Act of 1995 regarding, amongst other things, the plans, strategies, intentions and prospects, both business and financial, of Lifezone
Metals Limited and its subsidiaries. These statements are based on the beliefs and assumptions of our management. Although we believe
that the plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure
you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed
future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements
may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “predicts,”
“projects,” “forecasts,” “may,” “might,” “will,” “could,” “should,”
“would,” “seeks,” “plans,” “scheduled,” “possible,” “continue,”
“potential,” “anticipates” or “intends” or similar expressions; provided that the absence of these
does not means that a statement is not forward-looking. Forward-looking statements contained or incorporated into this prospectus include,
but are not limited to, statements about our ability to:
| ● | anticipate
any event, change or other circumstances that could give rise to the termination of any agreement referred to herein; |
| ● | achieve
projections and anticipate uncertainties relating to our business, operations and financial
performance, including: |
| o | expectations with respect to financial and business performance,
including financial projections and business metrics and any underlying assumptions; |
| o | expectations regarding product and technology development
and pipeline; |
| o | expectations regarding market size; |
| o | expectations regarding the competitive landscape and the ability
to develop, design and sell products and services that are differentiated from those competitors; |
| o | expectations regarding future acquisitions, partnerships or
other relationships with third parties; |
| o | future capital requirements and sources and uses of cash,
including the ability to obtain additional capital in the future; |
Management’s Discussion and Analysis of financial condition
and results of operations
Special note regarding forward-looking statements
(continued)
| ● | comply
with applicable laws and regulations and stay abreast of modified or new laws and regulations
applying to its business, including privacy regulation; |
| ● | anticipate
the impact of, and response to, new accounting standards; |
| ● | anticipate
the significance and timing of contractual obligations; |
| ● | maintain
key strategic relationships with partners and customers; |
| ● | successfully
defend litigation; |
| ● | acquire,
maintain and protect intellectual property; |
| ● | meet
future liquidity requirements and comply with restrictive covenants related to long-term
indebtedness; and |
| ● | effectively
respond to general economic and business conditions. |
Forward-looking
statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof.
You should understand that the following important factors could affect the future results of Lifezone, and could cause those results
or other outcomes to differ materially from those expressed or implied in the forward-looking statements herein:
| ● | ability
to maintain the NYSE’s listing standards; |
| ● | inability
to recognize the anticipated benefits of the SPAC transaction consummated on July 6, 2023,
with Lifezone Holdings and GoGreen Investments Corporation, which may be affected by, among
other things, competition, the ability of Lifezone to grow and manage growth profitably,
maintain relationships with customers and suppliers and retain its management and key employees; |
| ● | litigation,
complaints and/or adverse publicity; |
| ● | changes
in applicable laws or regulations; |
| ● | possibility
that Lifezone may be adversely affected by other economic, business or competitive factors; |
| ● | volatility
in the markets caused by geopolitical and economic factors; |
| ● | privacy
and data protection laws, privacy or data breaches, or the loss of data; |
| ● | the
impact of changes in consumer spending patterns, consumer preferences, local, regional and
national economic conditions, crime, weather, demographic trends and employee availability;
and |
| ● | any
defects in new products or enhancements to existing products. |
Management’s Discussion and Analysis of financial condition
and results of operations
Special note regarding forward-looking statements
(continued)
The foregoing list of risk factors is not exhaustive.
There may be additional risks that Lifezone Metals presently does not know or that Lifezone Metals currently believes are immaterial that
could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements
provide Lifezone Metals’ expectations, plans or forecasts of future events and views only as of the date of this Interim Report.
These forward-looking statements should not be
relied upon as representing Lifezone Metals’ assessments as of any date subsequent to the date of this Interim Report. Accordingly,
undue reliance should not be placed upon the forward-looking statements.
Except as otherwise required by applicable law,
we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or
factors, new information, data, or methods, future events, or other changes after the date of this Interim Report.
Segments
See Note 4 of Lifezone’s Unaudited Condensed
Consolidated Interim Financial Statements for the six months ended June 30, 2024, for further details.
Business Overview and key activities in the first half of 2024
Our activities in H1 2024 focused on our two key
projects: the Kabanga Nickel Project and the PGM recycling partnership with Glencore.
Kabanga Nickel Project Definitive Feasibility
Study update
The two-phased development plan for the Kabanga
Nickel Project was finalized in Q1 2024 and forms the basis of the mine plan and ultimately the DFS. The plan calls for a 1.7 million
ton per year Phase 1, with an additional 1.7 million ton per year Phase 2 expansion, for an expected 3.4 million ton per year operation
in the aggregate. Cash flows generated from Phase 1 operations are expected to help cover the capital requirements for Phase 2. Following
the release of our Updated Mineral Resource estimate late 2023, Lifezone is currently not undertaking any major exploration activities
in Tanzania. Drilling is undertaken in the context of hydrotechnical investigations and to assess consumables, like limestone, but no
resource drilling and assaying is currently taking place.
In June 2023, Lifezone completed the design and
engineering specifications for the DFS for the Kabanga Nickel Project, meaning that the Project’s concentrate and refinery test
work are completed, and flowsheet parameters and specifications are now final and not open for additional revisions. This includes the
sizing of critical pieces of equipment, such as underground mining fleet, crushers and mills, flotation tanks and autoclaves. All relevant
underground geotechnical investigations have been completed as well as the underground infrastructure design and estimating workstreams.
Concentrator engineering and estimating workstreams are nearing completion, with some final cost optimization activities forecast for
August.
With these technical requirements finalized, Lifezone
is now focused on reviewing equipment and services, suppliers, finalizing the operating cost model and optimizing capital expenditures.
Lifezone has completed 90% of the DFS as of the
end of June 2024, with the Project’s financial model currently being confirmed and chapter write-ups underway. The results of the
ongoing study work for the Kabanga Nickel Project are expected to be completed in Q3 2024.
Management’s Discussion and Analysis of financial condition
and results of operations
Business Overview and key activities in the first half of 2024 (continued)
PGM recycling project in partnership with Glencore
Our recycling partnership with Glencore progressed
well during the first half of 2024 and we anticipate completing the feasibility study by Q4 2024. Following the successful commissioning
of the pilot facility at our Simulus Laboratory, the related feasibility study and due diligence commenced during the second quarter of
2024. Project expenses of $1.3 million were incurred during six months ended June 30, 2024, in line with prior project guidance, with
$1.0 million related to work undertaken by our Simulus laboratory in Perth, the rest relating to general and administrative overheads
in the US. Under the terms of the agreement, expenses during the current project phase (Phase 1) are jointly funded (50:50).
Costs at Simulus pertain to labor and materials
associated with the pilot plant test work and the related feasibility study for the project. The work packages include the design, construction,
and operation of grinding, leaching, filtration, drying and heat treatment circuits and all associated utilities at our laboratory in
Perth, Australia. Construction is largely complete for the remaining pilot plant areas including solvent extraction, ion exchange and
acid recovery. To date, approximately 1mt of US sourced monolith has been prepared for the ongoing feasibility study. Engineering design
and drafting activities for the commercial scale plant are ongoing to support the feasibility study.
The venture
aims to utilise our patented Hydromet Technology to recycle platinum, palladium, and rhodium from responsibly sourced converter material
in a cleaner and more efficient manner compared to traditional smelting and refining processing options. Importantly, our Perth team has
already displayed a scalable and efficient process, and we have progressed to identifying a suitable site location in the US for commercialisation.
A final investment decision is anticipated by the end of 2024.
A broader
Business Overview is included in Note 1. - Corporate and Group Information above.
Significant components of results of operations
Revenue, Cost of Sales, and Gross Profit
Lifezone has generated significant losses from
its operations as reflected in Lifezone’s accumulated deficit of $418.9 million as of June 30, 2024 (December 31, 2023, $408.2 million).
Additionally, Lifezone has generated significant negative cash flows from operations and investing activities as we continue to support
the development of our business and the Kabanga Nickel Project. In addition to our capital expenditure for our two key projects, we expect
our operating expenses to increase for both workforce-related, other general and administrative and laboratory costs as we seek to expand
our patent portfolio, continue to invest in research and development activities, expand the market penetration of our Hydromet Technology
and continue develop the Kabanga Nickel Project.
Our revenue is generated from our IP licensing
business. Lifezone Limited has a 50% interest in Kelltech Limited, a joint venture between Sedibelo Resources Limited and Lifezone, which
Lifezone granted an exclusive license to use the Hydromet Technology SADC License Area and the license, the “Kell License”.
The Kell License relates to Lifezone Hydromet Technology applicable to just precious metals projects. In turn, Kelltech Limited has exclusively
sub-licensed the Kell License to KTSA (66.67% owned by Kelltech Limited). Kellplant is a wholly owned subsidiary of KTSA. For more information
refer to Note 25.
Management’s Discussion and Analysis of financial condition
and results of operations
Significant components of results of operations (continued)
Revenue, Cost of Sales, and Gross Profit (continued)
At the time of the release of this document, the
development of the Hydromet refinery at Sedibelo Resources’ Pilanesberg Platinum Mines operations is on hold and will need to be
rescoped following Sedibelo Resources’ decision to update their mine plan and re-scope the refinery to process its underground mining
operations, which have not been developed yet, as a result no IP licensing revenue has been received in 2024.
IP licensing revenue received by Lifezone Limited
under the Kell license is shown below.
| | |
Three months ended June 30, | | |
Six months ended June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Kellplant Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 129,680 | |
| Kelltechnology SA Proprietary Ltd | |
| - | | |
| - | | |
| - | | |
| 365,368 | |
| | |
| - | | |
| - | | |
| - | | |
| 495,048 | |
Lifezone has not generated any revenue from its
metals’ extraction and refining business, where the Kabanga Nickel Project is in the exploration and evaluation stage. We do not
expect to generate any revenue from our mining projects in the foreseeable future.
| | |
Six months ended June 30, | | |
Six months ended change | |
| | |
2024 | | |
2023 | | |
| | |
| |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| Revenue | |
| 49,650 | | |
| 506,748 | | |
| (457,098 | ) | |
| (90 | )% |
| Cost of sales | |
| (12,252 | ) | |
| - | | |
| (12,252 | ) | |
| 0 | % |
| Gross profit | |
| 37,398 | | |
| 506,748 | | |
| (469,350 | ) | |
| (93 | )% |
| Loss (gain) on foreign exchange | |
| (60,475 | ) | |
| 86,547 | | |
| (147,022 | ) | |
| (170 | )% |
| General and administrative expenses | |
| (9,559,603 | ) | |
| (13,412,649 | ) | |
| 3,853,046 | | |
| 29 | % |
| Operating loss | |
| (9,582,680 | ) | |
| (12,819,354 | ) | |
| 3,236,674 | | |
| 25 | % |
| Interest income | |
| 1,361,638 | | |
| 269,800 | | |
| 1,091,828 | | |
| 405 | % |
| Fair value loss on embedded derivatives | |
| (356,000 | ) | |
| - | | |
| (356,000 | ) | |
| 0 | % |
| Interest expense | |
| (2,364,345 | ) | |
| (91,668 | ) | |
| (2,272,677 | ) | |
| (2,479 | )% |
| Loss before tax | |
| (10,941,387 | ) | |
| (12,641,222 | ) | |
| 1,699,835 | | |
| 13 | % |
| Income tax | |
| - | | |
| - | | |
| - | | |
| - | |
| Loss for the financial period | |
| (10,941,387 | ) | |
| (12,641,222 | ) | |
| 1,699,835 | | |
| 13 | % |
| Other comprehensive loss | |
| | | |
| | | |
| | | |
| | |
| Exchange loss on translation of foreign operations | |
| (21,873 | ) | |
| (84,291 | ) | |
| 62,418 | | |
| 74 | % |
| Total other comprehensive loss for the period | |
| (21,873 | ) | |
| (84,291 | ) | |
| 62,418 | | |
| 74 | % |
| Total comprehensive loss for the financial period | |
| (10,963,260 | ) | |
| (12,725,513 | ) | |
| 1,762,253 | | |
| 14 | % |
Management’s Discussion and Analysis of financial condition
and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
Comparison of Lifezone’s combined unaudited
condensed consolidated results of operations for the six-month ended June 30, 2024, and for the six-month ended June 30, 2023.
Revenue
Revenue for the six-months ended June 30, 2024,
was $49,650, compared to $506,748 for the six-months ended June 30, 2023, a decrease of $457,098. The decrease in revenue was primarily
related to the Kellplant Hydromet Technology refinery project being put on hold. For the six months ended June 30, 2024, the fall in revenue
from the Kellplant Hydromet Technology refinery project was not offset by revenue attributable to technical and laboratory services provided
by Simulus, as Simulus was almost exclusively used for Lifezone’s own projects.
Cost of sales
Cost of sales for the six months ended June 30,
2024, was $12,252, compared to $Nil for the six months ended June 30, 2023. The increase is due to Simulus’s cost of sales reflected
in the group’s financials since acquisition in July 2023. Prior to the Simulus acquisition, the group’s revenue was in relation
to hydromet consulting related to mineral beneficiation operations of affiliated companies of which cost of sales were not attributed
to.
Exchange loss on translation of foreign operations
The loss on translation of foreign exchange for
the six months ended June 30, 2024, was $60,475 compared to a $86,547 gain in the six months ended June 30, 2023, a change of $147,022.
The movement in the foreign exchange account was primarily due to movements in exchange rates in subsidiary operations.
Interest income
Refer to Note 6 for detailed discussion.
Fair value loss on embedded derivatives
Refer to Note 8 for detailed discussion.
Interest expense
Refer to Note 7 for detailed discussion.
Management’s Discussion and Analysis of financial condition
and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
General and administrative expenses
| | |
Six months ended June 30, | | |
Six months ended change | |
| | |
2024 | | |
2023 | | |
| |
| | |
$ | | |
$ | | |
$ | | |
% | |
| Wages & employee benefits | |
| 1,917,963 | | |
| 1,816,542 | | |
| 101,421 | | |
| 6 | % |
| Professional & Legal fees | |
| 1,650,061 | | |
| 882,855 | | |
| 767,206 | | |
| 87 | % |
| Consultancy fees | |
| 1,336,019 | | |
| 1,772,010 | | |
| (435,992 | ) | |
| (25 | )% |
| Non-recurring listing and equity raising costs | |
| - | | |
| 8,003,016 | | |
| (8,003,016 | ) | |
| (100 | )% |
| Directors’ fees | |
| 360,984 | | |
| 86,500 | | |
| 274,484 | | |
| 317 | % |
| Depreciation of property and equipment | |
| 577,062 | | |
| 107,692 | | |
| 469,370 | | |
| 436 | % |
| Depreciation of right of use asset | |
| 169,457 | | |
| 62,029 | | |
| 107,428 | | |
| 173 | % |
| Amortization of intangible assets | |
| 90,247 | | |
| 38,301 | | |
| 51,946 | | |
| 136 | % |
| Audit & accountancy fees | |
| 130,976 | | |
| 81,751 | | |
| 49,225 | | |
| 60 | % |
| Rent | |
| 226,332 | | |
| 172,584 | | |
| 53,748 | | |
| 31 | % |
| Insurance | |
| 911,013 | | |
| 6,953 | | |
| 904,060 | | |
| 13,002 | % |
| Laboratory costs | |
| 638,822 | | |
| - | | |
| 638,822 | | |
| 0 | % |
| Impairment of VAT receivables | |
| 839,758 | | |
| - | | |
| 839,758 | | |
| 0 | % |
| Travel | |
| 251,306 | | |
| 364,781 | | |
| (113,475 | ) | |
| (31 | )% |
| Share based payments expense | |
| 32,457 | | |
| - | | |
| 32,457 | | |
| 0 | % |
| Other administrative expenses | |
| 427,147 | | |
| 17,635 | | |
| 409,512 | | |
| 2,322 | % |
| Total general administrative expenses | |
| 9,559,603 | | |
| 13,412,649 | | |
| (3,853,046 | ) | |
| (29 | )% |
Total general and administrative expenses for
the six months ending June 30, 2024, was $9.6 million compared to $13.4 million for the six months ended June 30, 2023, a decrease of
$3.8 million. The overall decrease was mainly due to the non-recurring general and administrative expenses incurred as part of the listing
on July 6, 2023, and the capitalization of technical and general overheads as evaluation expenditure.
Total general administrative expense for Simulus
operations amounted to $1.5 million for the six months ending June 30, 2024 (six months ended June 30, 2024: $Nil) since Simulus was acquired
on July 18, 2023, which includes wages and employee benefits of $474,414 for the six months ending June 30, 2024 (six months ended June
30, 2023: $Nil).
Refer to Note 9 for detailed discussion.
Management’s Discussion and Analysis of financial condition
and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
General and administrative expenses (continued)
Staff head count as of June 30, 2024, was 150
compared to 189 as of December 31, 2023, a decrease of 39 employees.
| | |
June 30, 2024 | | |
December 31, 2023 | | |
Six months ended change | |
| Company | |
| | |
| | |
| |
| Tembo Nickel Corporation Limited | |
| 88 | | |
| 125 | | |
| (37 | ) |
| Lifezone Asia-Pacific Pty Ltd | |
| 15 | | |
| 18 | | |
| (3 | ) |
| Simulus Pty Limited | |
| 25 | | |
| 20 | | |
| 5 | |
| Lifezone Limited | |
| - | | |
| 5 | | |
| (5 | ) |
| Lifezone Services US LLC | |
| 1 | | |
| - | | |
| 1 | |
| LZ Services Limited | |
| 18 | | |
| 17 | | |
| 1 | |
| Kabanga Nickel Limited | |
| 3 | | |
| 4 | | |
| (1 | ) |
| | |
| 150 | | |
| 189 | | |
| (39 | ) |
Liquidity, capital resources and capital requirements
Lifezone has recurring net losses and negative
operating and investing cash flows, and we expect that we will operate at a loss for the foreseeable future.
As at June 30, 2024, and December 31, 2023, we
had cash and cash equivalents of $63.5 million and $49.4 million, respectively.
We generate revenue from our IP licensing business,
including our laboratory business. Lifezone has not generated any revenue from its metals’ extraction and refining business, and
we do not expect to generate any revenue from our metals’ extraction and refining business in the foreseeable future. Revenue from
our IP licenses business, including testing and engineering services, are not expected to be sufficient to fund the development of our
two key projects.
We have funded our operations primarily through
the sale of our equity and convertible securities. Lifezone has no history of selling metals streams and royalties, and all our mining
and all prospecting licenses are free from commercial streaming and royalty arrangements.
As of June 30, 2024, Lifezone did not have any
material non-cancellable commitments relating to capital expenditures that it cannot cancel without a significant penalty.
Other than the $4.0 million contingent payment
due to the sellers of the Kabanga Nickel Project upon the earlier of the completion of the DFS and the fifth anniversary of the contract
from the date of signing, but no later than December 9, 2024, we did not have any material commitments or contingencies as at June 30,
2024.
Management’s Discussion and Analysis of financial condition
and results of operations
Liquidity, capital resources and capital requirements
(continued)
As at the date of this Interim Report, we believe
that we will have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to
need additional financing to further advance our projects and conduct our business. We have based these estimates on our current assumptions,
which may require future adjustments based on our ongoing business decisions. Accordingly, we may require additional cash resources earlier
than we currently expect or we may need to curtail currently planned activities. To enhance our liquidity position or increase our cash
reserve for future investments or operations, we may in the future seek further equity or debt financing. The issuance and sale of additional
equity would result in further dilution to our shareholders.
Quarterly net proceeds from financing activities
for 2023 and 2024
| Quarter ended, | |
$ | | |
|
| March 31, 2023 | |
| 47,500,000 | | |
BHP T1B subscription agreement proceeds (net of transaction cost). |
| June 30, 2023 | |
| - | | |
|
| September 30, 2023 | |
| 68,581,776 | | |
Proceeds from SPAC transaction (net of transaction cost), PIPE, Exercise of Warrants and Options. |
| December 31, 2023 | |
| - | | |
|
| Financial Year 2023 | |
| 116,081,776 | | |
|
| | |
| | | |
|
| March 31, 2024 | |
| 45,825,001 | | |
Proceeds from issuance of Convertible debenture notes (net of transaction cost), Subscriptions proceeds from Glencore in Lifezone Recycling US, LLC. |
| June 30, 2024 | |
| 4,925,000 | | |
Proceeds from issuance of Convertible debenture notes. |
| H1 Financial Year 2024 | |
| 50,760,001 | | |
|
In October 2022, BHP invested an additional $50.0
million into KNL increasing its stake to 17.0% and concurrently signed an investment option agreement to take its stake in KNL to 60.7%
pending delivery of the Kabanga Nickel Project DFS and other conditions. Under its option, BHP would subscribe for the required number
of KNL shares that, in aggregate with its existing KNL shareholding, would result in BHP indirectly owning 51% of the total voting and
economic equity rights in Tembo (the T2 Option). This is at a price to be determined through an independent expert valuation of 0.7x KNL
net asset value.
The extent of the capital resources required to
develop the Kabanga Nickel Project and the PGM recycling plant in the United States will be better understood after the release of the
respective feasibility studies. The final investment decision on the PGM recycling plant will be made after a positive feasibility study
and the availability of, among other things, final front-end engineering design results, permitting and the execution of financing strategy.
The incurrence of indebtedness would result in
increased fixed obligations and could result in operating covenants that would restrict our operations.
Management’s Discussion and Analysis of financial condition
and results of operations
Liquidity, capital resources and capital requirements
(continued)
Cashflow results
| | |
Three months ended June 30, | | |
Six months ended June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
$ | | |
$ | | |
$ | | |
$ | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Operating activities | |
| (4,185,639 | ) | |
| 311,383 | | |
| (8,336,912 | ) | |
| (6,056,295 | ) |
| Investing activities | |
| (15,463,568 | ) | |
| (14,596,893 | ) | |
| (26,750,135 | ) | |
| (17,505,408 | ) |
| Financing activities | |
| 3,585,565 | | |
| (31,387 | ) | |
| 49,230,396 | | |
| 47,437,225 | |
| Net increase in cash and cash equivalents | |
| (16,063,642 | ) | |
| (14,316,897 | ) | |
| 14,143,349 | | |
| 23,875,522 | |
Comparison of Lifezone’s results of operations
for the six-months ended June 30, 2024, and for the six-months ended June 30, 2023.
a) Cash flow from operating activities
Net cash used in operating activities of Lifezone
was $8.3 million for the six-month ended June 30, 2024, primarily consisting of $11.0 million of comprehensive loss for the period, adjusted
for (i) items such as expenses for share-based payments, interest income, movements in amortization of intangibles, foreign exchange loss,
interest expenses (including convertible debenture accretion interest expense), depreciation of property and equipment and right-of-use
assets cumulatively amounting to $3.2 million and (ii) working capital changes, primarily consisting of an increases in trade and other
receivables of $810,622, decrease in related party receivables of $945,913, increase in fuel and consumable inventories of $180,654, decrease
in prepaid expenses of $655,739, changes in prepaid mining license of $499,555, decrease in in related party payables of $88,298 and an
decrease in trade and other payables of $1,597,354.
Net cash used in operating activities of Lifezone
was $6.1 million for the six-month ended June 30, 2023, primarily consisting of $12.7 million of comprehensive loss for the period, adjusted
for (i) items such as interest income, amortization of intangibles, foreign exchange loss, interest expense and depreciation of property
and equipment and right-of-use assets cumulatively amounting to $56,657 and (ii) working capital changes, primarily consisting of an increase
in trade and other receivables of $1.1 million, increase in related party receivables of $1.4 million, increase in prepaid expenses of
$2.2 million, changes in prepaid mining license of $499,903 and an increase in trade and other payables of $10.9 million.
b) Cash
flow from investing activities
Net cash used in investing activities of Lifezone
was $26.8 million, for the six months ended June 30, 2024, of which $28.0 million related to the investment in exploration and evaluation
assets, expenditures relating to the acquisition of property and equipment amounting to $82,674 and patent costs incurred amounting to
$72,040, which were partially offset by interest received from banks amounting to $1,361,638.
Net cash used in investing activities of Lifezone
was $17.5 million for the six-months ended June 30, 2023, relating to the investment in exploration and evaluation assets amounting to
$17.5 million, expenditures on property and equipment amounting to $253,505 and patent costs incurred amounting to $49,047, which were
partially offset by interest received from banks amounting to $262,959.
Management’s Discussion and Analysis of financial condition
and results of operations
Liquidity, capital resources and capital requirements (continued)
Cashflow results (continued)
Land acquisition and the Resettlement Action Plan
(“RAP”) spending amounted to $9.6 million during the six months ended June 30, 2024. The amount spent can be broken
down by the $8.3 million spent on compensation payments for the six months ended June 30, 2024, and $1.3 million for all resettlement
related management costs. In total, we have paid $10.4 million in the form of compensation payments since November 6, 2023, to June 30,
2024.
The RAP relates not only to the replacement or
resettlement of affected communities, but also includes the restoration of their livelihoods and living conditions. The RAP outlines the
steps and measures that will be taken to ensure that the affected communities are adequately compensated, and their needs are addressed
during the resettlement process.
A total of $8.8 million for the six-months ended
June 30, 2024, was spent on supporting activities onshore and offshore for the Kabanga Nickel Project.
c) Cash flow from financing
activities
Net cash provided by financing activities of Lifezone
was $49.2 million for the six-months ended June 30, 2024, primarily on account of the $49.3 million net proceeds received from the unsecured
convertible debenture, net of Offer Issuance Discount (“OID”) costs of $750,000, net cash from proceeds from share
subscription of $1.5 million, offset by lease payments of $316,090 and interest payments to the holders of the unsecured convertible debenture
of $1.2 million.
Net cash provided by financing activities of Lifezone
was $47.4 million for the six-months ended June 30, 2023, due to the Tranche 2 Investment by BHP in KNL $47.5 million (net of issuing
costs of $2.5 million), offset by the payment of lease liabilities of $62,775.
The capital expenditure relates largely to exploration
and evaluation activities, transportation, office, and computer equipment and Lifezone costs relating to legal and professional services
required to expand and maintain Lifezone Limited’s six active IP patent families.
Management’s Discussion and Analysis of financial condition
and results of operations
Capital expenditures
Lifezone’s capital expenditure for the six-months
ended June 30, 2024, was $28.1 million compared to $17.8 million for the six-months ended June 30, 2023.
The capital expenditure relates largely to exploration
and evaluation activities, transportation, office, and computer equipment and Lifezone costs relating to legal and professional services
required to expand and maintain Lifezone Limited’s six active IP patent families.
Research and development, patents, and licenses
Existing IP and the experience of an internal
technical team of skilled chemical engineers and metallurgists is a core competence of Lifezone’s ability to successfully commercialize
its proprietary Hydromet Technology for the Kabanga Nickel Project, other projects and cross-broader downstream metals processing industry
as a cleaner and cheaper alternative to smelting.
Research and development costs for the six months
ended June 30, 2024, were $72,039 (June 30, 2023: $49,047) which focused on the application of the Lifezone’s Hydromet Technology
to process and recover nickel derived from lateritic mineralization and recovering platinum group metals from spent autocatalytic converters,
as well as optimization and value engineering of primary nickel sulfide and PGM applications.
We estimate that our IP licensing business will
require capital expenditure over the next 24 months for research and development, patent applications and laboratory equipment.
Through Lifezone’s Tanzanian subsidiary,
TNCL, Lifezone currently holds an SML over the Kabanga Nickel deposit project area with an approximate area of 201.85 square kilometers.
An SML is the type of license required to develop large-scale mining operations in Tanzania defined as requiring a capital investment
of not less than $100 million.
The SML was issued on October 25, 2021, and will
remain valid for a period of the productive life of the deposit indicated in a feasibility study report or such period as the applicant
may request unless it is cancelled, suspended, or surrendered in accordance with the law.
The SML carries an annual rent of $1,009,250 (2023
$1,009,250). In addition, Lifezone holds 5 Prospecting Licenses surrounding the Kabanga SML and an Environmental Impact Assessment certificate
was transferred from the legacy Kabanga acquisition entities to TNCL on June 16, 2021. Subsequently an updated Environmental and Social
Management Plan to national standards was submitted to the Tanzanian National Environmental Management Council and approved on June 19,
2023.
Management’s Discussion and Analysis of financial condition
and results of operations
Tabular disclosure of contractual arrangements
| | |
Total | | |
Less than 1
year | | |
1-3
years | | |
3-5
years | | |
More than
5 years | |
| Long-Term Debt Obligations | |
| 50,000,000 | | |
| - | | |
| - | | |
| 50,000,000 | | |
| - | |
| Operating Lease obligations | |
| 1,601,253 | | |
| 619,420 | | |
| 981,833 | | |
| - | | |
| - | |
| Purchase Obligations | |
| 2,628,015 | | |
| 2,628,015 | | |
| - | | |
| - | | |
| - | |
| Other Long-Term Liabilities | |
| 4,000,000 | | |
| 4,000,000 | | |
| - | | |
| - | | |
| - | |
| | |
| 58,299,268 | | |
| 7,247,435 | | |
| 981,833 | | |
| 50,000,000 | | |
| - | |
Long-Term Debt Obligations, Capital (Finance)
Leases, Operating Lease Obligations and Other Long-Term Liabilities are all IFRS required reporting disclosures. Lifezone does not have
contractual arrangements covering Capital (Finance) Leases.
Management defines Purchase Obligations as agreements
to purchase goods and services that are enforceable and legally binding across the business. Management assesses existing agreements by
focusing on the largest agreements in place at the end of the reporting period. Lifezone does not have take-or-pay agreements, long-term
constructions, or supply contracts in place as of June 30, 2024. Most of the agreements are for exploration services or technical services
related to the feasibility study for the Kabanga Nickel project and the majority of these contracts can be terminated by Lifezone and
its subsidiaries with four weeks’ notice, with the amount shown under Purchase Obligations reflecting that right based on historical
spending.
The Long-Term Debt Obligations comprise the unsecured
convertible debentures with a term of 4-years from issuance. Given their conversion feature, they are classified as current liabilities
in the balance sheet, as the debentures could convert into Lifezone shares within the next 12 months. Lifezone has no obligation to pay
cash to departure holders beyond interest payments before the debentures mature as shown above.
Off-balance sheet arrangements
As of June 30, 2024, Lifezone did not have or
was not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition,
results of operations, expenses, or liquidity and capital resources.
Related Party Transactions
Refer to Note 21 for detailed discussion.
Management’s Discussion and Analysis of financial condition
and results of operations
Management
Executive Officers and Directors
The following table lists the positions of individuals
who currently serve as directors and officers of Lifezone, as at June 30, 2024.
| Name |
|
Position(s) |
| Keith Liddell |
|
Chair, Director |
| Robert Edwards |
|
Lead Independent Director |
| Chris Showalter |
|
Chief Executive Officer, Director |
| John Dowd |
|
Director |
| Govind Friedland |
|
Director |
| Jennifer Houghton |
|
Director |
| Mwanaidi Maajar |
|
Director |
| Beatriz Orrantia |
|
Director |
| Dr. Mike Adams |
|
Chief Technical Officer |
| Ingo Hofmaier |
|
Chief Financial Officer (joined June 29, 2023) |
| Gerick Mouton |
|
Chief Operating Officer |
| Spencer Davis |
|
Group General Counsel (joined March 1, 2023) |
| Anthony von Christierson |
|
Senior Vice President: Commercial and Business Development |
| Evan Young |
|
Senior Vice President: Investor Relations and Capital Markets (joined October 10, 2023) |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
The certification requirements under either Section
13(a) or 15(d) of the Exchange Act apply to periodic quarterly reports on Forms 10-Q and 10-QSB, but not current reports on Form 6-K.
The Company has designed and maintains disclosure controls and procedures to enable the Company to make timely disclosure in current reports,
even though there is no specific certification requirement relating to this report.
PART
II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 26 – Contingent Liabilities.
Item 1A. Risk Factors
There have been no material changes to our risk factors previously
disclosed in Part I, Item 3D. “Risk Factors” of our 2023 Form 20-F.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
from Registered Securities
Unregistered Sales of Equity Securities
Not applicable
Use of Proceeds from Registered Securities
Not applicable
495048
0.07
0.09
0.14
0.18
This includes all current and prior period accumulated losses of Lifezone.
0.07
0.09
0.14
0.18
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