TIDMZNWD
RNS Number : 4188Q
Zinnwald Lithium PLC
26 February 2021
Zinnwald Lithium plc / EPIC: ZNWD.L / Market: AIM / Sector:
Mining
26 February 2021
Zinnwald Lithium plc ("Zinnwald Lithium" or the "Company")
Final Results
Zinnwald Lithium plc, the German focused lithium development
company, is pleased to announce its final audited results for the
year ended 31 December 2020.
The Company's Annual Report and Financial Statements for the
year ended 31 December 2020 will be posted to shareholders today
and will be available on its website www.zinnwaldlithium.com.
OVERVIEW
Advancing new strategy focused on becoming an important supplier
to Europe's fast-growing lithium sector
-- Completed acquisition of a 50% interest in Deutsche Lithium,
which is developing the high value Zinnwald Lithium Project in
Germany, from Bacanora Lithium Plc via an RTO in October 2020
-- Welcomed Bacanora Lithium Plc as a new major shareholder with a 44% stake
-- Restructured board to reflect the ongoing requirements of the
Project including appointment of Bacanora CEO, Peter Secker, who
has a deep understanding of the Project, as a Non-Executive
Director
-- Spun out the Loch Tay Gold Project to existing shareholders
and changed name from Erris Resources Plc to Zinnwald Lithium
Plc
-- Placed Irish and Swedish assets under care and maintenance
while seeking either a partner or purchaser for the assets
Late-stage Zinnwald Lithium Project represents a compelling
opportunity for investors to gain exposure to the European lithium
market
-- Attractive economics: c. EUR428 million pre-tax NPV
(discounted at 8%); 27.4% Internal Rate of Return; EUR58.5 million
average life of mine annual EBITDA (September 2020 Feasibility
Study)
-- Located in the heart of Europe's chemical and automotive industries
-- One of Europe's more advanced battery-grade lithium projects
-- Key work streams planned and underway to advance the Project to production
-- Disciplined approach to expenditure and well-funded for 2021
with a EUR4.8 million cash position at today's date
Strong market dynamics given increased investment in clean
electricity, which extends to the automotive industry
-- Lithium-ion battery most likely to lead the transition
-- Europe has set a target of becoming carbon neutral by 2050
-- European Commission prioritised the securing of critical metals in September 2020
CHAIRMAN'S STATEMENT
Despite the unprecedented challenges posed by the ongoing
Covid-19 pandemic, 2020 has been a year of significant activity for
Zinnwald Lithium Plc (the 'Company'). The assessment of the
COVID-19 situation will need continued attention and will evolve
over time. Undoubtedly, this will have some implications for the
operations of the Group in the future, for example through
restricting travel movements internationally and domestically and
therefore delaying exploration activities. Due to the nature of
present activities, the impact has been minimal. A core part of our
articulated strategy has always been the identification and
acquisition of a suitable asset meeting our criteria of being
sufficiently advanced and located in a suitable, low-risk
jurisdiction. We fulfilled this objective through the acquisition
of a 50% interest in Deutsche Lithium, which is developing the
Zinnwald Lithium Project in Germany. This transaction has
transformed the Company and has resulted in a revised strategy
focused on becoming an important supplier to Europe's fast-growing
lithium sector.
The transaction was completed at the end of October 2020 and was
achieved through a Reverse Takeover ('RTO') of Bacanora Lithium
Plc's interest in Deutsche Lithium. Simultaneously, the Loch Tay
Gold Project was spun out to existing shareholders and the
Company's name was changed from Erris Resources Plc to Zinnwald
Lithium Plc, reflecting the new focus. We also welcomed Bacanora
Lithium Plc as a new major shareholder with a 44% stake.
Central to the Company, as it is now constituted, is the
development of the Zinnwald Lithium Project (the 'Project') in
south eastern Germany. With attractive economics, this late-stage
lithium project located in the heart of Europe's chemical and
automotive industries is one of Europe's more advanced
battery-grade lithium projects. It therefore represents a
compelling opportunity for investors to gain exposure to the
European lithium market, which is growing rapidly thanks to long
term structural drivers.
You will no doubt already have a clear understanding of the
rapid change in emphasis underway within the energy sector, as
countries and governments worldwide have taken on the challenge to
switch from a reliance on fossil fuels to sustainable energy
systems as part of the drive to combat climate change. Underpinning
this shift to a decarbonised future is the delivery of clean
electricity, which extends to the automotive industry as
individuals try to reduce their own carbon footprints; this has
resulted in the rapid rise in number of electric vehicles ('EVs')
and research in/implementation of new battery technologies.
There are numerous smart technologies being developed in the
automotive space. However, the lithium-ion battery is currently the
most suitable energy storage device and therefore the most likely
to lead the transition given it fulfils many criteria that meet
consumer demands, such as high power and high-energy density, long
life, low cost and excellent safety, with minimal negative
environmental impact.
Europe has embarked on the same energy transition as the rest of
the world and has set a target of becoming carbon neutral by 2050.
However, a shortage of elements needed to make these batteries and
other renewable energy equipment could threaten this target. As a
result, in September 2020, the European Commission announced that
it was prioritising the securing of critical metals through
exploration, investment, and improved recycling. Its report
stated:
"For electric vehicle batteries and energy storage, the EU would
need up to 18 times more lithium and five times more cobalt in
2030, and almost 60 times more lithium and 15 times more cobalt in
2050, compared to the current supply to the whole EU economy. If
not addressed, this increase in demand may lead to supply
issues."
Accordingly, having spent many months searching for the right
project, we were delighted to be given the opportunity to play a
role in the EV revolution through developing the Zinnwald Lithium
Project. This project ticked many boxes for us:
-- Compelling market: lithium is an important component of
battery chemistry and demand for batteries is anticipated to grow
due to factors including a transition to EVs.
-- Flexible strategy: opportunity to produce several high-value,
battery-grade lithium products including LiF, Li2CO3 and
LiOH*H2O.
-- Strategic location: situated in Germany, which is host to
both a major automotive industry and several major chemical
producers.
-- World class attributes: a September 2020 Feasibility Study on
the Project estimated a pre-tax, NPV of approximately EUR428
million (discounted at 8%); an Internal Rate of Return of 27.4%;
and an average life of mine annual EBITDA of EUR58.5 million.
-- Robust mine plan: a 30-year Feasibility Study mine plan
equating to the extraction of less than 50% of the currently
identified resource and mining licence in place.
-- Available expertise: technical expertise in Germany at the
project level consisting of world-leading scientists, engineers and
geologists.
Our aim now is to advance the Project to production.
Accordingly, key work streams have been planned for 2021 to
position Zinnwald Lithium to make the transition from developer to
producer. These include engaging with potential off-take partners;
advancing discussions with potential financing partners; performing
the necessary testwork to assess the commercial viability of
producing a broader range of lithium compounds; undertaking
front-end engineering design work; finalising the selection of the
optimal chemical processing site location and completing the final
steps in the permitting process for the construction and operation
of the mine. We have already made steps towards achieving several
of these targets.
With regard to the other assets that remain within the Zinnwald
Lithium Plc group of companies (the "Group"), in Ireland, the
Company maintains ve prospecting licences ('PLs') over the
100%-owned Abbeytown Project, including the historic Abbeytown
mine, in County Sligo and renewed those PLs in August 2019 for a
further six years to August 2025. The Abbeytown Project is an
attractive asset but given the revised focus of the Group on the
Zinnwald Lithium Project and also challenging market conditions in
the zinc sector at the time, no work was carried out on the project
during 2020. While we continue to regard Abbeytown as a sound,
viable project, the focus in the near term is to seek either a
partner or purchaser for the asset.
In Sweden, the Company maintains the Brännberg gold project,
which consists of three core exploration permits in the Skellefte
Mining District. Gold mineralisation has been confirmed by drilling
which returned positive results. Mineralisation is open at depth
and extends from surface with best results including 17.2m @
1.93g/t Au and 0.26% Cu from 160.90m-178.10m in drill hole BB004.
These Swedish assets are available for acquisition or joint
venture.
Board and Corporate
As part of the Acquisition of Zinnwald, the Board was
restructured to reflect the ongoing requirements of the Project.
Jeremy Taylor-Firth stepped down as a Director and the Board would
like to thank him for all his assistance over recent years, as well
as his fundraising expertise during the original IPO and, after he
stepped down, as part of the Zinnwald related fundraise. Peter
Secker was appointed a Director as a representative for our new
largest shareholder, Bacanora Lithium and brings with him
invaluable experience and expertise in the lithium sector as we
continue to develop the Zinnwald Project towards construction.
Jeremy Martin returned to his previous role of Non-Executive
Chairman as Anton du Plessis retuned to the role of Executive
Director and CEO.
Financial Overview
The Company maintains a disciplined approach to expenditure and,
as such, is well funded for 2021 with a EUR4.8 million cash
position at today's date.
Outlook
Thanks to low capital costs, attractive economics and access to
strategic markets, Zinnwald has the potential to become a key
European lithium project. With Bacanora Lithium becoming a major
shareholder following the RTO, the addition of its CEO, Peter
Secker, who has a deep understanding of the Project, to the Board
as a Non-Executive Director, and with a healthy balance sheet
having raised over GBP3 million from new and existing investors,
the Company is well placed to realise this potential.
In closing, I would like to thank our shareholders for their
support and wish you all a very happy, sustainable and prosperous
2021.
Jeremy Martin
Non-Executive Chairman
25 February 2021
STRATEGIC REPORT
Extracts from the Company's Strategic Report are set out
below.
Company Overview - the Zinnwald Lithium Project
The Company now has a 50 per cent. interest in, and joint
operational control of, Deutsche Lithium, the principal asset of
which is the Zinnwald Lithium Project covering 256.5 ha and with a
30-year mining licence to 31 December 2047. The Project is located
in southeast Germany, some 35 km from Dresden and adjacent to the
border of the Czech Republic.
The Zinnwald Lithium Project is located in a granite hosted
Sn/W/Li belt that has been mined historically for tin, tungsten,
and lithium at different times over the past 300 years. With an
abundant supply of fluorspar/hydrofluoric acid available in the
immediate vicinity, Deutsche Lithium has chosen to focus on LiF
(Lithium Fluoride) which is used in the lithium-ion battery supply
chain. LiF is a high value downstream lithium product and one of
the two key components in the manufacturing process of LiPF6, which
is the most important conducting salt in lithium electrolytes and
serves as the "shuttle" in the lithium battery electrolyte which
"ships" the lithium ion between the cathode and the anode.
Approximately 95 per cent. of all lithium battery electrolytes use
LiPF6, and the percentage used in each cathode is increasing in
some of the newer battery types. The strategic location of the
Project allows access to the German automotive and downstream
chemical industries.
While the NI 43-101 Feasibility Study for the Project is based
solely on the production of LiF, Deutsche Lithium has established
the possibility of also producing battery-grade lithium carbonate
directly from the lithium mica concentrate with only minimal
modifications to the chemical plant circuits. Deutsche Lithium is
also undertaking testwork to determine if the same applies to
possible lithium hydroxide production.
In May 2019, Deutsche Lithium first announced the results of the
NI 43-101 Feasibility Study for the Project, which confirmed the
positive economics and favourable operating costs for the
production of 5,112 tpa (7,285 tpa LCE) of battery grade lithium
fluoride (LiF). With a long-life project of 30 years, the
Feasibility Study estimated a pre-tax project NPV of EUR428 million
(8 per cent. discount rate); an IRR of 27.4 per cent.; and
favourable LOM operating costs resulting in a 46 per cent. EBITDA
operating profit margin. The NPV is not a valuation for the
purposes of Rule 29 of the Takeover Code and should not be relied
upon as such.
The 30-year Feasibility Study mine plan equates to the
extraction of less than 50 per cent. of the currently identified
resource.
-- Measured plus Indicated Mineral Resource estimate containing
35.51 Mt at a grade of 3,519 ppm containing 124,974 t Li at cut-off
grade of 2,500 ppm Li
-- Represents approximately 665,000 tonnes of lithium carbonate
equivalent ('LCE'), comprising approximately 357,500 tonnes of LCE
in Measured Resources and approximately 307,500 tonnes of LCE in
Indicated Resources
-- Estimated Inferred Mineral Resources of 4.87 Mt at a grade of
3,549 ppm containing 17,266 t Li metal (approximately 92,000 tonnes
LCE)
In addition to the mining licence in relation to the Project,
Deutsche Lithium holds two other exploration licences; the
Falkenhain licence (covering 295.7 ha and with a five-year term to
31 December 2022); and the Altenberg licence (covering 4,225.3 ha
and with an approximately five-year term to 15 February 2024).
These exploration licences for lithium deposits may have the
potential to significantly increase Zinnwald's resource base and
Project life.
The mining operation for the Project is planned as an
underground mine development using a single decline ramp for access
to the mine and for ore transportation from the mine to the
surface. The mine technology will be a commonly used load-haul-dump
room and pillar technology with subsequent backfill using self-
hardening material. The processing operation will be based on a
conventional processing flow sheet using established sulphate route
processing technology. The proposed integrated plant is designed to
process approximately 570,000 tonnes of ore per year (assuming a
30-year mine plan, which equates to approximately 50 per cent. of
the total resource identified to date). However, in order to make
the Project more viable and to reduce the payback time for the
investment, the average mined tonnage of the first five years of
production is 522,000 tonnes at a grade of 3,400 ppm Li. The
Project has a capital cost estimate of approximately EUR160 million
which includes mining, processing plant, infrastructure, tailings
management and general administration costs and government grants
as well as the requisite contingencies.
At the present time a risk assessment has been undertaken to
identify risks that would inhibit the development of the mine. Any
technical risks due to historic mine workings and water drainage
pathways should be avoided by detailed technical planning. Further,
public acceptance of the planned mine seems to be sufficient and
risks are being evaluated.
It is anticipated that in addition to returns generated by the
sale of LiF, the Project also has the potential to produce up to
32,000 tpa of potassium sulphate ('SOP', 'K2SO4') for sale to the
European fertiliser industry. Further, it is expected that a
significant portion of the mined tailings may be sold for use as an
aggregate filler to local building companies.
The other 50% owner of Deutsche Lithium is SolarWorld AG, a
company which has been in administration since 1 August 2017. The
Company has a deed of adherence to the Deutsche Lithium JV
Agreement with SolarWorld AG which forms the basis on which the
parties work together in relation to the Project. The experience of
Bacanora Lithium Plc in its dealings with the administrator of
SolarWorld AG is that operational matters in relation to Deutsche
Lithium and the Zinnwald Lithium Project have been unaffected by
the status of SolarWorld AG being in administration.
The Deutsche Lithium JV Agreement sets out the rights and
obligations of Deutsche Lithium's shareholders. It restricts
shareholders in relation to (i) establishing a competing business
whilst they remain a shareholder of Deutsche Lithium and 12 months
thereafter; (ii) transferring their shares; and/or (iii) granting
encumbrances over their shares. The shareholders also agree to
abide by deadlock provisions in the instances of any disputes as to
how Deutsche Lithium is operated and managed. Each shareholder has
the right to appoint an appointee to the management board and
advisory board of Deutsche Lithium.
Under the terms of the second supplement agreement to the
Deutsche Lithium JV Agreement, the Company is obliged to provide
further additional funding to Deutsche Lithium to February 2022. At
the end of 2020, the amount outstanding under that commitment was
EUR770,000. In addition, the Company has undertaken to provide
further funding of EUR650,000 to Deutsche Lithium in conjunction
with the preparation of a lithium hydroxide (LiOH) NI 43-101
compliant technical report and additional detailed capital
expenditure design work.
Each shareholder in the Deutsche Lithium joint venture has
pre-emption rights and rights of first refusal in relation to any
proposed transfer or disposal of the other shareholder's share in
Deutsche Lithium. As a result, SolarWorld AG cannot transfer its
share in Deutsche Lithium without first offering these to the
Company (and vice versa). In the event that the Company
subsequently acquires the remaining shares in Deutsche Lithium from
SolarWorld AG, then the Deutsche Lithium JV Agreement will
terminate.
Company Strategy
The Zinnwald Lithium Project now forms the core of the Company
and is the primary focus of the Board and its strategy. The
Company, working with the management team at Deutsche Lithium, will
seek to advance the Zinnwald Lithium Project in a number of areas,
including:
-- Identification of and negotiation with off-take partners that
could include battery manufacturers, chemical producers or
commodity traders;
-- Identification of and negotiation with potential financing
partners that could include banks, national and trans-national
development organisations;
-- Expansion of the scope of the NI 43-101 Feasibility Study to
assess the commercial viability of producing a broader range of
lithium compounds, specifically lithium carbonate and lithium
hydroxide;
-- Front end engineering design work;
-- Finalisation of the selection of the optimal chemical processing site location; and
-- Completion of the final steps in the permitting process for
the construction and operation of the mine.
Part of this strategy with regard to the Zinnwald Lithium
Project will be to gain operational control of Deutsche Lithium.
The Company's board and management team is engaging with the
administrator of SolarWorld AG to advance these discussions.
The Board has put the Abbeytown Project on care and maintenance
due to the current challenging zinc and lead market conditions.
Planned spending on the Abbeytown Project by the Group in 2021 is
expected to total EUR30,000, all of which will be focussed on
maintaining the core licence PL 3735. The Group will also be
looking for partners to advance or acquire this project. The
Company will also only spend the minimum required to maintain its
licences at the Brännberg Gold Project, whilst it looks for funding
partners or an acquiror.
Operational review & outlook
Germany
During 2020, Deutsche Lithium has continued to progress the
project on both a corporate and operational level.
On a corporate level, in February 2020, Bacanora Lithium Plc and
the administrator for SolarWorld AG (the "Administrator") agreed to
a second amendment to the Deutsche Lithium JV Agreement that
removed the right of the Administrator to buy back Bacanora Lithium
Plc's stake for EUR1 in return for Bacanora Lithium Plc committing
to fund Deutsche Lithium for a further two years in the amount of
EUR1.35 million on a non-dilutionary basis. Deutsche Lithium
continues to have discussions with potential funding partners in
relation to future construction funding needs.
On an operational level, Deutsche Lithium has been working on
advancing the permitting status of the Zinnwald Lithium Project.
Deutsche Lithium obtained its mining licence for Zinnwald in 2017,
which is valid until 2047, but comes with the standard requirements
to apply for further permits for environmental and construction
aspects of the Project. Deutsche Lithium is currently undertaking
detailed environmental and community studies to continue to develop
the overall Zinnwald sustainability framework. Environmental
monitoring programmes are ongoing as well as the permitting process
for Zinnwald's mining and mineral processing plant. Deutsche
Lithium has also continued to evaluate the potential of the
exploration licences held over the adjacent areas in Falkenhain and
Altenberg.
In relation to the technical aspects already identified in the
Feasibility Study, Deutsche Lithium has continued to refine and
develop its operational plan. Deutsche Lithium is currently
undertaking testwork to evaluate the addition of lithium hydroxide
to its suite of potential end-products, which will require further
optimisation of the processing plant flow sheet design. Deutsche
Lithium has been working with engineering groups to finalise the
capital costs for the processing plant. It is optimising the scope
for the supply contracts for critical long-term contracts of both a
capital and operating cost nature. Deutsche Lithium has undertaken
further testwork for the usage of both the mining tailings and also
the potential chemical co-products. Deutsche Lithium is also
developing the required logistics framework to develop the Project
as a whole.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2020
31 December 31 December
2020 2019
Continuing operations Notes EUR EUR
Revenue 4 - 17,527
Cost of sales (56,540) (104,102)
Gross loss (56,540) (86,575)
Exploration projects impairment (592,465) -
Administrative expenses (690,357) (475,592)
RTO costs (839,940) -
Share based payments charge 26 (3,725) -
Operating loss 6 (2,183,027) (562,167)
Share of results of joint ventures 10 (32,579) -
Finance income 9 367 -
Loss before taxation (2,215,239) (562,167)
Tax on loss 12 - 30,648
Loss for the financial year 32 (2,215,238) (531,519)
Other comprehensive income - -
Total comprehensive loss for the
year (2,215,239) (531,519)
Earnings per share from continuing
operations attributable to
the owners of the parent company 13
Basic (cents per share) (3.51) (1.81)
Diluted (cents per share) (3.51) (1.81)
Total loss and comprehensive loss for the year is attributable to
the owners of the parent company.
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
31 December 31 December
2020 2019
Notes EUR EUR
Non-current assets
Intangible assets 14 1,546,111 2,002,334
Property, plant and equipment 15 3,662 -
Investments using equity
method 16 3,852,083 -
5,401,856 2,002,334
Current assets
Trade and other receivables 21 170,926 36,030
Cash and cash equivalents 4,846,527 1,497,277
5,017,453 1,533,307
Total assets 10,419,309 3,535,641
Current liabilities
Trade and other payables 22 58,833 43,130
58,833 43,130
Net current assets 4,958,620 1,490,177
Total liabilities 58,833 43,130
Net assets 10,360,476 3,492,511
Equity
Share capital 27 2,278,155 351,133
Share premium 29 7,362,699 4,151,045
Other reserves 30 814,821 811,077
Retained earnings 32 (95,200) (1,820,744)
Total equity 10,360,476 3,492,511
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
Share capital Share premium Other reserves Retained Total
account earnings
Notes EUR EUR EUR EUR EUR
Balance at 1
January
2019 351,133 4,151,045 827,376 (1,305,524) 4,024,030
Year ended 31 December
2019:
Loss and total
comprehensive
income for the
year - - - (531,519) (531,519)
Total comprehensive income
for the year - - - (531,519) (531,519)
Transfer of lapsed
share
options - - (16,299) 16,299 -
Total transactions
with
owners recognised
directly
in equity - - 16,299 16,299 -
Balance at 31 December
2019
and 1 January 2019 351,133 4,151,045 811,077 (1,820,744) 3,492,511
Year ended 31 December
2020:
Loss for the year - - - (2,215,239) (2,215,239)
Other comprehensive
income:
Currency
translation
differences - - 19 - 19
Total comprehensive income
for the year - - 19 (2,215,239) (2,215,220)
Conversion of share
premium
to retained profits - (4,431,671) - 4,431,671 -
Issue of share
capital 27 1,927,022 7,643,326 - - 9,570,348
Dividends in specie - - - (490,888) (490,888)
Credit to equity
for
equity settled
share-based
payments 26 - - 3,725 - 3,725
Total transactions with
owners
recognised directly in
equity 1,927,022 3,211,655 3,725 3,940,783 9,083,185
Balance at 31 December
2020 2,278,155 7,362,700 814,821 (95,200) 10,360,476
GROUP STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
Notes EUR EUR EUR EUR
Cash flows from operating activities
Cash used in operations 35 (1,711,087) (607,875)
Net cash outflow from operating
activities (1,711,087) (607,875)
Cash flows from investing
activities
Investment in Joint Ventures (199,000) -
Exploration expenditure (227,130) (257,214)
Purchase of property, plant and
equipment (3,885) -
Proceeds on disposal of
property, plant and equipment 5,300 -
Exploration expenditure utilising
funds from Strategic Alliance
Agreement - (222,154)
Interest received 367 -
Net cash used in investing
activities (424,348) (479,368)
Cash flows from financing activities
Proceeds from issue of shares 5,884,685 -
Funds received from Strategic
Alliance Agreements - 217,627
Equity subscription in Erris
Gold Resources (400,000) -
Net cash generated from
financing activities 5,484,685 217,627
Net increase/(decrease) in cash
and cash equivalents 3,349,250 (869,616)
Cash and cash equivalents at
beginning of year 1,497,277 2,366,893
Cash and cash equivalents at
end of year 4,846,527 1,497,277
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2020
1 Accounting policies
Company information
Zinnwald Lithium Plc ("the Company") is a public limited company
which is listed on the AIM Market of the London Stock Exchange
domiciled and incorporated in England and Wales. The registered
office address is 29-31 Castle Street, High Wycombe,
Buckinghamshire, United Kingdom, HP13 6RU.
The Company name was changed from Erris Resources Plc to
Zinnwald Lithium Plc by a special resolution approved by
shareholders at the General Meeting held on 26 October 2020.
The group consists of Zinnwald Lithium Plc and its subsidiaries
as detailed in Note 15.
1.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRIC
interpretations as adopted for use in the European Union and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS (except as otherwise stated).
The financial statements are prepared in euros, which is the
functional currency of the Company and the Group's presentation
currency, since the majority of its expenditure, including funding
provided to Deutsche Lithium, is denominated in this currency.
Monetary amounts in these financial statements are rounded to the
nearest EUR.
The consolidated financial statements have been prepared under
the historical cost convention. The principal accounting policies
adopted are set out below.
1.2 Basis of consolidation
The consolidated financial statements incorporate those of
Zinnwald Lithium Plc and all of its subsidiaries (i.e., entities
that the group controls when the group is exposed to, or has rights
to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity).
The Board has concluded that whilst it has significant influence
over Deutsche Lithium (50% shareholding, 1 of the 2 co-managing
directors and a casting vote on operational matters), it does not
have control over the company and consequently the investment is
accounted for using equity accounting rather than consolidated.
Zinnwald Lithium Plc was incorporated on 21 June 2017. On 1
December 2017, Zinnwald Lithium Plc acquired the entire issued
share capital of Erris Resources (Exploration) Ltd by way of a
share for share exchange. This transaction was treated as a group
reconstruction and accounted for using the reverse merger
accounting method.
All financial statements are made up to 31 December 2020. Where
necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with
those used by other members of the group.
All intra-group transactions, balances and unrealised gains on
transactions between group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred.
Subsidiaries are fully consolidated from the date on which
control is transferred to the group. They are deconsolidated from
the date on which control ceases.
1.3 Going concern
At the time of approving the financial statements, the directors
have a reasonable expectation that the group and company have
adequate resources to continue in operational existence for the
foreseeable future. The Company had a cash balance of EUR4.85m at
the year end and keeps a tight control over all expenditure. In
relation to Deutsche Lithium, the total outstanding commitments
entered into by the Company amounts to EUR1.386m at the end of
2020. Thus, the going concern basis of accounting in preparing the
Financial Statements continues to be adopted.
The Directors have reviewed the ongoing situation with COVID-19
and do not consider its effects to have a material impact on the
Group's and Company's going concern.
1.4 Revenue
Revenue is recognised at the fair value of the consideration
received or receivable for services provided over time in the
normal course of business and is shown net of VAT and other sales
related taxes.
Recognised in revenue are charges that were invoiced to the
group's former joint venture partner, Centerra Gold. These were
based upon costs together with management fees incurred in
connection with exploration programmes carried out under joint
venture arrangements and in which the group acts as principal.
Revenue from providing services is recognised in the accounting
period in which the services are rendered.
1.5 Intangible fixed assets other than goodwill
Capitalised Exploration and Evaluation costs
Capitalised Exploration and Evaluation Costs consist of direct
costs, licence payments and fixed salary/consultant costs,
capitalised in accordance with IFRS 6 "Exploration for and
Evaluation of Mineral Resources". The Group and Company recognises
expenditure in Exploration and Evaluation assets when it determines
that those assets will be successful in finding specific mineral
assets. Exploration and Evaluation assets are initially measured at
cost. Exploration and Evaluation Costs are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
asset may exceed its recoverable amount. Any impairment is
recognised directly in profit or loss.
1.6 Property, plant and equipment
Property, plant and equipment are initially measured at cost and
subsequently measured at cost, net of depreciation and any
impairment losses.
Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their useful
lives on the following bases:
Plant and equipment 25% on cost
Fixtures and fittings 25% on cost
Computers 25% on cost
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale proceeds and the
carrying value of the asset and is recognised in the income
statement.
1.7 Non-current investments
In the parent company financial statements, investments in
subsidiaries and joint ventures are initially measured at cost and
subsequently measured at cost less any accumulated impairment
losses.
1.8 Impairment of non-current assets
At each reporting period end date, the group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Intangible assets not yet ready to use and not yet subject to
amortisation are reviewed for impairment whenever events or
circumstances indicate that the carrying value may not be
recoverable.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
1.9 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks.
1.10 Financial assets
Financial assets are recognised in the group's and company's
statement of financial position when the group and company become
party to the contractual provisions of the instrument.
Financial assets are classified into specified categories at
initial recognition and subsequently measured at amortised cost,
fair value through other comprehensive income, or fair value
through profit or loss. The classification of financial assets at
initial recognition that are debt instruments depends on the
financial assets cash flow characteristics and the business model
for managing them.
Financial assets are initially measured at fair value plus
transaction costs. In order for a financial asset to be classified
and measured at amortised cost, it needs to give rise to cash flows
that are "solely payments of principal and interest SPPI" on the
principal amount outstanding.
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured
using the effective interest rate method and are subject to
impairment. The group's and company's financial assets at amortised
cost comprise trade and other receivables and cash and cash
equivalents.
Interest is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest
would be immaterial. The effective interest method is a method of
calculating the amortised cost of a debt instrument and of
allocating the interest income over the relevant period. The
effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the
debt instrument to the net carrying amount on initial
recognition.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at
each reporting end date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after the
initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected.
Derecognition of financial assets
Financial assets are derecognised only when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership to another entity.
Financial liabilities
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective
yield basis.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability to the net
carrying amount on initial recognition.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's
contractual obligations expire or are discharged or cancelled.
1.11 Equity instruments
Equity instruments issued by the group are recorded at the
proceeds received, net of direct issue costs.
1.12 Taxation
Income tax represents the sum of current and deferred tax.
Current tax
The tax currently payable is based on taxable profit or loss for
the period. Taxable profit or loss differs from net profit or loss
as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
group's and company's liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the
reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial information and the corresponding tax bases used
in the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt with in
equity. Deferred tax assets and liabilities are offset when the
company has a legally enforceable right to offset current tax
assets and liabilities and the deferred tax assets and liabilities
relate to taxes levied by the same tax authority.
1.13 Employee benefits
The costs of short-term employee benefits are recognised as a
liability and an expense, unless those costs are required to be
recognised as part of the cost of non-current assets.
The cost of any unused holiday entitlement is recognised in the
period in which the employee's services are received.
Termination benefits are recognised immediately as an expense
when the group and company is demonstrably committed to terminate
the employment of an employee or to provide termination
benefits.
1.14 Retirement benefits
Payments to defined contribution retirement benefit schemes are
charged as an expense as they fall due.
1.15 Equity
Share capital
Ordinary shares are classified as equity.
Share premium
Share premium represents the excess of the issue price over the
par value on shares issued. Incremental costs directly attributable
to the issue of new ordinary shares or options are shown in equity
as a deduction, net of tax, from the proceeds.
Merger reserve
A merger reserve was created on purchase of the entire share
capital of Erris Resources (Exploration) Ltd which was completed by
way of a share for share exchange and which has been treated as a
group reconstruction and accounted for using the reverse merger
accounting method.
Share-based payment reserve
The share-based payment reserve is used to recognise the fair
value of equity-settled share-based payment transactions.
1.16 Share-based payments
Equity-settled share-based payments with employees and others
providing services are measured at the fair value of the equity
instruments at the grant date. Fair value is measured by use of an
appropriate pricing model. Equity-settled share-based payment
transactions with other parties are measured at the fair value of
the goods and services, except where the fair value cannot be
estimated reliably, in which case they are valued at the fair value
of the equity instrument granted.
The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the estimate
of shares that will eventually vest. A corresponding adjustment is
made to equity.
When the terms and conditions of equity-settled share-based
payments at the time they were granted are subsequently modified,
the fair value of the share-based payment under the original terms
and conditions and under the modified terms and conditions are both
determined at the date of the modification. Any excess of the
modified fair value over the original fair value is recognised over
the remaining vesting period in addition to the grant date fair
value of the original share-based payment. The share-based payment
expense is not adjusted if the modified fair value is less than the
original fair value.
Cancellations or settlements (including those resulting from
employee redundancies) are treated as an acceleration of vesting
and the amount that would have been recognised over the remaining
vesting period is recognised immediately.
1.17 Foreign exchange
Foreign currency transactions are translated into the functional
currency using the rates of exchange prevailing at the dates of the
transactions. At each reporting end date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting end date.
Gains and losses arising on translation are included in
administrative expenses in the income statement for the period.
The financial statements are presented in the functional
currency of Euros, since the majority of exploration expenditure is
denominated in this currency.
1.18 Exceptional items
Items are disclosed separately in the financial statements where
it is necessary to do so to provide further understanding of the
financial performance of the group. They are items that are
material, either because of their size or nature, or that are
non-recurring.
1.19 Joint Arrangements
The Group's core activities in relation to the Zinnwald Lithium
project are conducted through joint arrangements in which two or
more parties have joint control. A joint arrangement is classified
as either a joint operation or a joint venture, depending on the
rights and obligations of the parties to the arrangement.
Joint operations arise when the Group has a direct ownership
interest in jointly controlled assets and obligations for
liabilities. The Group does not currently hold this type of
arrangement.
Joint ventures arise when the Group has rights to the net assets
of the arrangement. For these arrangements, the Group uses equity
accounting and recognises initial and subsequent investments at
cost, adjusting for the Group's share of the joint venture's income
or loss, dividends received and other comprehensive income
thereafter. When the Group's share of losses in a joint venture
equals or exceeds its interest in a joint venture it does not
recognise further losses. The transactions between the Group and
the joint venture are assessed for recognition in accordance with
IFRS.
No gain on acquisition, comprising the excess of the Group's
share of the net fair value of the investee's identifiable assets
and liabilities over the cost of investment, has been recognised in
profit or loss. The net fair value of the identifiable assets and
liabilities have been adjusted to equal cost.
Joint ventures are tested for impairment whenever objective
evidence indicates that the carrying amount of the investment may
not be recoverable under the equity method of accounting. The
impairment amount is measured as the difference between the
carrying amount of the investment and the higher of its fair value
less costs of disposal and its value in use. Impairment losses are
reversed in subsequent periods if the amount of the loss decreases
and the decrease can be related objectively to an event occurring
after the impairment was recognised.
1.20 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Executive Officer, who is
considered to be the group's chief operating decision-maker
('CODM').
1.21 New standards, amendments and interpretations not yet adopted
The following standards and amendments were adopted by the group
and company during the year, none of none of which had a material
impact:
-- IFRS 16 - Leases
-- Amendments to IFRS 2 - Classification and Measurement of
Share-based Payment Transactions; and
-- Annual improvements to IFRS Standards 2015-2017 Cycle
At the date of approval of these financial statements, the
following standards and amendments were in issue but not yet
effective, and have not been early adopted:
-- IFRS 3 amendments - Business Combinations*,
-- IAS 1 amendments - Presentation of Financial Statements:
Classification of Liabilities as Current or Non-Current*,
-- IAS 1 & IAS 8 amendments - Definition of Material; and
-- Amendments to References to the Conceptual Framework in IFRS Standards.
*subject to EU endorsement
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the group or company.
2 Judgements and key sources of estimation uncertainty
In the application of the accounting policies, the directors are
required to make judgements, estimates and assumptions about the
carrying amount of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised where the revision
affects only that period, or in the period of the revision and
future periods where the revision affects both current and future
periods.
Critical judgements
The following judgements and estimates have had the most
significant effect on amounts recognised in the financial
statements.
Share-based payments
Estimating fair value for share based payment transactions
requires determination of the most appropriate valuation model,
which depends on the terms and conditions of the grant. This
estimate also requires determination of the most appropriate inputs
to the valuation model including the expected life of the share
option or appreciation right, volatility and dividend yield and
making assumptions about them. For the measurement of the fair
value of equity settled transactions with employees at the grant
date, the Group and Company use the Black Scholes model.
Joint venture investment
The Group applies IFRS 11 to all joint arrangements and
classifies them as either joint operations or joint ventures,
depending on the contractual rights and obligations of each
investor. The Group holds 50% of the voting rights of its joint
arrangement with SolarWorld AG. The Group has determined to have
joint control over this arrangement as under the contractual
agreements, unanimous consent is required from all parties to the
agreements for certain key strategic, operating, investing and
financing policies. The Group's joint arrangement is structured
through a limited liability entity, Deutsche Lithium GmbH, and
provides the Group and SolarWorld AG (parties to the joint venture
agreement) with rights to the net assets of Deutsche Lithium under
the arrangements. Therefore, this arrangement has been classified
as a joint venture.
The investment is assessed at each reporting period date for
impairment. An impairment is recognised if there is objective
evidence that events after the recognition of the investment have
had an impact on the estimated future cash flows which can be
reliably estimated. In addition, the assessment as to whether
economically recoverable reserves exist is itself an estimation
process.
Impairment of Capitalised Exploration Costs
Group capitalised exploration costs had a carrying value as at
31 December 2020 of EUR1,546,111 (2019: EUR2,002,334). Management
tests annually whether capitalised exploration costs have a
carrying value in accordance with the accounting policy stated in
note 1.5. Each exploration project is subject to an annual review
either by a consultant or senior company geologist to determine if
the exploration results returned to date warrant further
exploration expenditure and have the potential to result in an
economic discovery. This review takes into consideration long-term
metal prices, anticipated resource volumes and grades, permitting
and infrastructure as well as the likelihood of on-going funding
from joint venture partners. In the event that a project does not
represent an economic exploration target and results indicate that
there is no additional upside, or that future funding from joint
venture partners is unlikely, a decision will be made to
discontinue exploration.
In Ireland, the licenses were originally granted for 6 years in
2013 and in Q3 2019, Zinnwald extended them for a further 6 years.
The exploration work has identified excellent mineralisation in its
drill holes and the metallurgical review has shown a good quality
concentrate can be produced. The current Zinc market is at a low
point and Zinnwald is no longer focussed on Ireland, but the
Company still intends to find a JV Partner for at least the core
license. The Board's current intention is that it will only
undertake further exploration work on the core license (PL 3735) in
2021. Accordingly, the Board has concluded that an impairment
charge should be made in the 2020 accounts in regard to capitalized
costs from the non-core licenses, which has resulted in an
impairment of EUR477,595.
In Sweden, the Brännberg project now comprises only 3 licenses
(Brännberg 1 and 5 and Grundtrask 7) Brännberg 1 was renewed in
October 2019 and is valid from 28/10/2019 until 28/10/2022.
Brännberg 5 was renewed in May 2020 and is valid from 30/05/2020
until 30/05/2021. Grundtrask 7 was renewed in August 2018 and is
valid from 05/08/2018 until 05/08/2021. The exploration work funded
by Centerra showed good gold mineralisation, but not to the minimum
(1m Oz) size required by a company as large as Centerra. The
results may be of greater interest to a mid-tier Gold producer that
has a lower resource size requirement. The Board's current
intention is to try and find a JV partner for the Brännberg Project
in Q1 2021 but, if unsuccessful, will allow all 3 licenses to lapse
in 2021. Accordingly, the Board have recommended a full impairment
of the carrying value of EUR114,870 in 2020.
3 Financial Risk and Capital Risk Management
The Group's and Company's activities expose it to a variety of
financial risks: market risk (primarily currency risks), credit
risk and liquidity risk. The overall risk management programme
focusses on currency and working capital management.
Foreign Exchange Risk
The Company operates internationally and is exposed to foreign
exchange risk arising from one main currency exposure, namely GBP
for its Head Office costs and the value of its shares for
fund-raising and Euros for a material part of its operating
expenditure. The Group's Treasury risk management policy is
currently to hold most of its cash reserves in GBPs and to match as
promptly as possible its Euro expenditures on its commitments in
Germany.
Credit and Interest Rate Risk
The Group and Company have no borrowings and a low level of
trade creditors and have minimal credit or interest rate risk
exposure.
Working Capital and Liquidity Risk
Cashflow and working capital forecasting is performed in the
operating entities of the Group and consolidated at a Group level
basis for monthly reporting to the Board. The Directors monitor
these reports and rolling forecasts to ensure the Group has
sufficient cash to meet its operational needs. The Board has a
policy of maintaining at least a GBP 0.5m cash reserve headroom.
Aside from its commitments under the Deutsche Lithium Joint
Venture, the Group has no other material fixed cost overheads other
than Director costs
4 Revenue
An analysis of the Group's revenue is as follows:
Group
2020 2019
EUR EUR
Revenue analysed by class of business
Management fees - 17,527
2020 2019
EUR EUR
Other significant revenue
Interest income 367 -
All the management fees are received from Centerra Gold under
the terms of the Strategic Alliance Agreement, which was terminated
in December 2019. There were no unsatisfied performance obligations
at 31 December 2020 (2019 : none).
5 Segmental reporting
The Group operates principally in the UK, Ireland, Scotland, and
Scandinavia, with operations managed on a project-by-project basis
within each geographical area. Activities in the UK include the
Head Office corporate and administrative costs and the 50%
investment in Deutsche Lithium in Germany, whilst the activities in
Ireland and Scandinavia relate to exploration and evaluation work.
The reports used by the Board and management are based on these
geographical segments.
Ireland Scandinavia Others UK Total
2020 2020 2020 2020 2020
EUR EUR EUR EUR EUR
Revenues - - - - -
Cost of sales and administrative
expenses (43,667) (1,523) (19,168) (1,454,743) (1,519,101)
Share based payments charge - - - - -
Project Impairment (477,595) (114,870) - - (592,465)
Gain/loss on foreign exchange (3,241) (262) - (67,958) (71,461)
Profit/(loss) from operations
per reportable segment (524,503) (116,655) (19,168) (1,522,701) (2,183,027)
Reportable segment assets 1,564,848 181 - 8,854,280 10,419,309
Reportable segment liabilities - - - 58,833 58,833
Ireland Scandinavia Others UK Total
2019 2019 2019 2019 2019
EUR EUR EUR EUR EUR
Revenues - 17,527 - - 17,527
Cost of sales and administrative
expenses (63,326) - (19,698) (616,940) (699,964)
Share based payments charge - - - - -
Project Impairment - - - - -
Gain/loss on foreign exchange 11,527 3,043 - 105,700 120,270
Profit/(loss) from operations
per reportable segment (51,799) 20,570 (19,698) (511,240) (562,167)
Reportable segment assets 1,912,320 128,077 - 1,495,244 3,535,641
Reportable segment liabilities - - - 73,778 73,778
6 Operating loss
Group
2020 2019
EUR EUR
Operating loss for the year is stated after charging/(crediting):
Exchange losses/(gains) 71,461 (120,270)
Profit on disposal of property, plant and equipment (5,300) -
Exploration projects impairment 592,465 -
RTO costs 839,940 -
Share-based payments 3,725 -
Operating lease charges 40,942 36,598
Exploration costs expensed 64,358 83,024
7 Auditor's remuneration
2020 2019
Fees payable to the company's auditor and associates: EUR EUR
For audit services
Audit of group, parent company and subsidiary
undertakings 31,164 27,913
For other services
Taxation compliance services 3,799 5,292
Reporting accountant work for the Admission
Document 61,205 -
65,004 5,292
8 Employees
The average monthly number of persons (including directors)
employed by the group and company during the year
Group Company
2020 2019 2020 2019
Number Number Number Number
Directors 5 5 5 5
Employees 3 3 - -
8 8 5 5
Their aggregate remuneration comprised:
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
Wages and salaries 416,827 403,081 283,159 322,173
Social security costs 40,941 45,907 27,723 37,007
Pension costs 12,399 6,023 12,099 5,635
470,167 455,011 322,981 364,815
Aggregate remuneration expenses of the group include EUR150,583
(2019: EUR41,781) of costs capitalised and included within
non-current assets of the group. In 2020, EURnil (2019: EUR89,808)
aggregate remuneration expenses of the group have been reimbursed
by joint venture partners.
Aggregate remuneration expenses of the company include EUR3,397
(2019: EUR41,393) of costs capitalised and included within
non-current assets of the group.
Directors remuneration is disclosed in note 34.
9 Finance income
Group
2020 2019
EUR EUR
Interest income
Interest on bank deposits 367 -
10 Share of results in Joint Venture
Group
2020 2019
EUR EUR
Share of Loss in Joint Venture (32,579) -
(32,579) -
11 Impairments
Impairment tests have been carried out where appropriate and the
following impairment losses have been recognised in profit or
loss:
2020 2019
Notes EUR EUR
In respect of:
Intangible assets 14 592,465 -
Recognised in:
Administrative expenses 592,465 -
The impairment losses in respect of financial assets are
recognised in other gains and losses in the income statement.
12 Taxation
2020 2019
EUR EUR
Current tax
Adjustments in respect of prior periods - (30,648)
The actual charge/(credit) for the year can be reconciled to
the expected credit for the year based on the profit or loss
and the standard rate of tax as follows:
Group
2020 2019
EUR EUR
Loss before taxation (2,215,238) (562,167)
Expected tax credit based on the standard rate
of corporation tax in the UK of 19.00% (2019:
19.00%) (420,895) (106,812)
Unutilised tax losses carried forward 254,409 106,812
Disallowable expenses 166,486 -
Adjustments in respect of prior years - (30,648)
Taxation charge/(credit) for the year - (30,648)
Losses available to carry forward amount to EUR2,315,896 (2019:
EUR1,434,000). No deferred tax asset has been recognised on these
losses, as the probability of available future taxable profits
is not currently quantifiable.
13 Earnings per share
2020 2019
Number Number
Weighted average number of ordinary shares
for basic earnings per share 63,203,583 31,069,430
Effect of dilutive potential ordinary shares:
- Weighted average number of outstanding share
options 3,183,333 3,416,667
Weighted average number of ordinary shares
for diluted earnings per share 66,386,916 34,486,097
Earnings EUR EUR
Continuing operations
Loss for the period from continuing operations (2,215,238) (562,167)
Earnings for basic and diluted earnings per
share attributable to equity shareholders
of the company (2,215,238) (562,167)
Earnings per share for continuing operations
Basic and diluted earnings per share - -
Basic earnings per share (3.50) (1.81)
Diluted earnings per share (3.50) (1.81)
There is no difference between the basic and diluted earnings
per share for the period ended 31 December 2020 or 2019 as the
effect of the exercise of options would be anti-dilutive.
14 Intangible fixed assets
Group Ireland Sweden Total
Exploration Exploration
and Evaluation and Evaluation
costs costs
EUR EUR EUR
Cost
At 1 January 2019 1,645,118 100,000 1,745,118
Additions - group funded 250,214 7,002 257,216
At 31 December 2019 1,895,332 107,002 2,002,334
Additions - group funded 128,374 7,868 136,242
At 31 December 2020 2,023,706 114,870 2,138,576
Amortisation and impairment
At 1 January 2020 - - -
Project impairment 477,595 114,870 592,465
At 31 December 2020 477,595 114,870 592,465
Carrying amount
At 31 December 2020 1,546,111 - 1,546,111
At 31 December 2019 1,895,332 107,002 2,002,334
Intangible assets comprise capitalised exploration and
evaluation costs (direct costs, licence fees and fixed salary /
consultant costs) of the Ireland Zinc Projects and the Sweden Gold
Projects (excluding the amounts recovered from Centerra Gold as per
note 21).
More information on impairment movements in the year is given in
note 11.
Company Ireland Sweden Total
Exploration Exploration
and Evaluation and Evaluation
costs costs
EUR EUR EUR
Cost
A 1 January 2019 92,985 - 92,985
Additions - group funded 23,902 17,491 41,393
At 31 December 2019 116,887 17,491 134,378
Transfers to subsidiaries (116,887) (17,491) (134,378)
At 31 December 2020 - - -
Amortisation and impairment
At 1 January 2020 and 31 December 2020 - - -
14 Intangible fixed assets
Carrying amount
At 31 December 2020 - - -
At 31 December 2019 116,887 17,491 134,378
15 Property, plant and equipment
Group Plant and Fixtures Computers Total
equipment and fittings
EUR EUR EUR EUR
Cost
At 1 January 2020 2,605 3,307 4,951 10,863
Additions - - 3,906 3,906
At 31 December 2020 2,605 3,307 8,857 14,769
Depreciation and impairment
At 1 January 2020 2,605 3,307 4,951 10,863
Depreciation - - 244 244
At 31 December 2020 2,605 3,307 5,195 11,107
Carrying amount
At 31 December 2020 - - 3,662 3,662
Company Computers
EUR
Cost
At 1 January 2020 -
Additions 3,906
At 31 December 2020 3,906
Depreciation and impairment
At 1 January 2020 -
Depreciation charged in the year 244
At 31 December 2020 244
Carrying amount
At 31 December 2020 3,662
16 Fixed asset investments
Group Company
2020 2019 2020 2019
Notes EUR EUR EUR EUR
Investments in subsidiaries 17 - - 169,090 169,090
Investments in joint ventures 3,852,083 - 3,852,083 -
3,852,083 - 4,021,173 169,090
Investments in subsidiaries are recorded at cost, which is the
fair value of the consideration paid.
Movements in non-current investments
Group Shares in
group undertakings
and participating
interests
EUR
Cost
At 1 January 2020 -
Additions 3,884,662
Share of loss (32,579)
At 31 December 2020 3,852,083
Carrying amount
At 31 December 2020 3,852,083
At 31 December 2019 -
Movements in non-current investments
Company Shares in Other investments Total
group undertakings
EUR EUR EUR
Cost
At 1 January 2020 and 31 December 2020 169,090 - 169,090
Additions - 3,852,083 3,852,083
At 31 December 2020 169,090 3,852,083 4,021,173
Carrying amount
At 31 December 2020 169,090 3,852,083 4,021,173
At 31 December 2019 169,090 - 169,090
16.1 Investment in Deutsche Lithium
On 29 October 2020, the Company completed the acquisition of
Bacanora Lithium Plc's ("Bacanora") 50% shareholding in Deutsche
Lithium Gmbh ("DL"). Bacanora contributed its share in DL and
EUR1.35m in Cash in exchange for 90,619,170 new shares in the
Company at a price of 5p per share and a 2% Net Profits Royalty.
The Company thereafter took over the obligations due under the
Joint Venture Agreement and has made all payments due on a monthly
basis since October 2020.
The Table below shows the split of shares received by Bacanora
in return for its 50% shares in DL and the cash contributed by
Bacanora as part of the RTO process:
Bacanora - Split of shareholding % of Total No of Shares
Shares received for 50% shareholding
in DL EUR 3,685,662 73.2% 66,325,267
Shares received for cash contribution
to Zinnwald Group EUR 1,350,000 26.8% 24,293,902
Total EUR 5,035,662 90,619,170
The Company holds one of the 2 Managing Director positions and a
50% shareholding in DL, but only has a casting vote on purely
operational development matters. Therefore, management have
concluded that the Company has significant influence over DL and
not control.
Management reviewed the opening balance sheet as part of the
acquisition process and are comfortable with the completeness and
accuracy of the balance sheet. DL's accounting policies are in line
with the Company's policies and no adjustments have been made.
The Company follows the requirements of IAS 28 in applying the
equity method and increase or decrease the investment by
recognising its share of the profit or loss and other comprehensive
income from DL. The Company will ensure DL's accounting policies
are in line with its own and where material differences occur, make
appropriate adjustments. The Company management will review the
investment for indicators of impairment at least at each reporting
date.
The Table below shows the movements during the year and the
balances at year end:
Value of 50% share in DL acquired from
Bacanora on 29 October 2020 EUR 3,685,662
Funds provided under the terms of the
Joint Venture Agreement EUR 165,000
Additional committed funds for further
testwork EUR 34,000
Share of DL Loss for the period November
to December 2020 (EUR 32,579)
--------------
Carrying Value as at 31 December 2020 EUR 3,852,083
16.2 Commitments under the Deutsche Lithium JV Agreement
The Company signed a Deed of Adherence to abide by the terms of
the Joint Venture Agreement. The only outstanding financial
commitment was the 2nd Amendment entered into by Bacanora in
February 2020 by which it committed to fund DL with EUR1.35m in
monthly instalments over 2 years. At the date of completion of the
Acquisition by the Company, the amount outstanding was EUR0.935m
and at 31 December 2020 it was EUR0.770m.
Zinnwald also agreed with the Administrator to pay an additional
non-dilutionary amount of EUR0.65m for additional testwork over
2021. As at 31 December 2020 the amount outstanding was
EUR0.616m.
17 Subsidiaries
Details of the company's subsidiaries as at 31 December 2020 are
as follows:
% Held
Name of undertaking Registered Nature of business Class Direct Indirect
office of shares
held
Erris Resources (Exploration)
Ltd United Kingdom Exploration Ordinary 100.00 -
Erris Zinc Limited Ireland Exploration Ordinary 100.00 -
On 1 December 2017, Zinnwald Lithium Plc acquired the entire
issued share capital of Erris Resources (Exploration) Ltd ("ERL")
by way of a share for share exchange. This transaction has been
treated as a group reconstruction and accounted for using the
reverse merger accounting method. Its registered office address is
29-31 Castle Street, High Wycombe, Bucks, HP13 6RU.
On 26 February 2018, Erris Resources Plc acquired the entire
issued share capital of Erris Zinc Limited on incorporation. Erris
Zinc Limited is a company registered in Ireland. Its registered
office address is The Bungalow, Newport Road, Castlebar, Co. Mayo.
F23YF24.
On 12 December 2018, Erris Resources (Exploration) Ltd acquired
the entire issued share capital of Tulivuori Exploration OY shortly
after incorporation. Tulivuori Exploration OY is a company
registered in Finland and was renamed Erris Finland. In January
2020, the directors of Zinnwald decided to cease exploration in
Finland and started the process of winding up this company. The
process was completed in November 2020.
On 10 August 2020, the Company incorporated a wholly owned
subsidiary, Erris Gold Resources Ltd and transferred all
capitalised expenses, contracts and permits for the Loch Tay
Project and Norway projects to that company. On 29 October 2020,
the shares in Erris Gold Resources Ltd were distributed to the
Company's shareholders via a dividend in specie. Accordingly, Erris
Gold Resources Ltd does not form part of the consolidation at the
year end.
18 Trade and other receivables - credit risk
Fair value of trade and other receivables
The directors consider that the carrying amount of trade and
other receivables is equal to their fair value.
No significant balances are impaired at the reporting end
date.
19 Financial instruments
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
Financial assets at amortised
cost
Trade and other receivables 133,459 14,340 1,904,269 1,436,239
Cash and bank balances 4,846,527 1,497,277 4,842,854 1,453,687
4,979,986 1,511,617 6,747,123 2,889,926
Financial liabilities at amortised
cost
Trade and other payables 58,833 43,130 53,022 38,404
58,833 43,130 53,022 38,404
20 Security held over cash
Under the terms of the Deed of Adherence with Bacanora Lithium
Plc, entered into on 29 October 2020, Bacanora holds a secured
charge over a cash amount equal to the amount outstanding under the
Deutsche Lithium JV Agreement. As at 31 December 2020, this secured
amount was EUR770,000, which forms a part of the total cash balance
of the Group of EUR4,846,527.
21 Trade and other receivables
Group Company
2020 2019 2020 2019
Amounts falling due within EUR EUR EUR EUR
one year:
Amounts owed by group undertakings - - 1,792,292 1,430,110
Other receivables 133,459 14,340 111,977 6,129
Prepayments and accrued income 37,467 21,690 37,467 21,690
170,926 36,030 1,941,736 1,457,929
Other receivables primarily comprise VAT recoverable, which were
received following the year end.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
Group Company
2020 2019 2020 2019
Euros 19,672 6,903 - -
British Pounds 151,254 29,127 1,941,736 1,457,929
170,926 36,030 1,941,736 1,457,929
22 Trade and other payables
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
Trade payables 14,108 2,666 12,767 2,666
Accruals and deferred income 44,725 40,464 40,255 35,738
58,833 43,130 53,022 38,404
All Trade payables have been settled since the year end. As with
previous periods, the majority of the accruals relate to audit and
accounting fees relating to the period.
The carrying amounts of the Group and Company's current
liabilities are denominated in the following currencies:
Group Company
2020 2019 2020 2019
Euros 914 200 914 -
British Pounds 57,919 42,930 52,108 38,404
58,833 43,130 53,022 38,404
23 Amounts owed to Strategic Alliance partner
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
Amounts owing to Centerra
Gold Inc - - - -
On 1 January 2016, the company entered into a strategic alliance
with Centerra Gold to explore for gold in Sweden and subsequently
expanded into Finland in 2019. Under the terms of this agreement,
Centerra had the right to make an election ("Election") in respect
of any or all of the designated project areas ("DPA" or "DPAs") in
the AOI and on any rights subsequently acquired by Zinnwald during
the first two years after initial grant of the permit. Over the
course of the agreement, Centerra funded generative exploration on
more than 30 exploration permits and drilling on three DPAs at
Brännberg, Klippen and Karingberget. During this time, the total
expenditure on Centerra Gold projects was approximately US$3.4M on
which Erris earned consultancy fees of 10% for managing this
exploration work. In the year to 31 December 2018, Centerra made
the decision not to proceed further with any of the three DPAs. In
the year to 31 December 2019, Centerra continued with its
generative exploration in Sweden and Finland. In December 2019,
Centerra decided to terminate this Strategic Alliance and both
parties agreed that no amounts remain outstanding by either side.
All rights and information relating to this exploration work
remains the property of Erris.
During the period, Centerra has spent a total of EURnil (2019:
EUR222,155), comprising reimbursed costs of EURnil (2019:
EUR204,628) and paid management fees of EURnil (2019:
EUR17,527).
A summary of the funding received from and costs incurred on
behalf of Centerra is analysed as follows:
Year ended 31 December Funding Exploration Management Net
2020 from Centerra expenditure and consultancy
fees
EUR EUR EUR EUR
Generative Sweden - - - -
Generative Finland - - - -
- - - -
Year ended 31 December Funding Exploration Management Net
2019 from Centerra expenditure and consultancy
fees
EUR EUR EUR EUR
Generative Sweden 42,245 40,813 2,728 (1,296)
Generative Finland 175,382 163,081 14,799 (2,498)
217,627 203,894 17,527 (3,794)
24 Retirement benefit schemes
2020 2019
Defined contribution schemes EUR EUR
Charge to profit or loss in respect of defined
contribution schemes 12,099 6,268
A defined contribution pension scheme is operated for all
qualifying employees. The assets of the scheme are held separately
from those of the group in an independently administered fund.
25 Share Options
25.1 Company Incentive schemes
The Directors believe that the success of the Group will depend
to a significant degree on the performance of the Group's senior
management team. The Directors also recognise the importance of
ensuring that the management team are well motivated and identify
closely with the success of the Group. The Company adopted an
initial Share Option Plan at the date of its original IPO in
December 2017 and will continue to issue options to certain
Directors and key personnel. As part of the RTO process in October
2020, the Company's shareholders approved two additional new
incentive schemes for certain executives. The key terms of each of
these schemes are as follows
Share Option Plan (2017)
-- Options vest 1/3 on date of issuance, 1/3 after 6 months and 1/3 after 12 months;
-- Options remain valid for five years; and
-- No subsequent performance criteria after issuance.
Short-Term Restricted Stock Unit ("RSU") Scheme:
-- Awards granted under the RSU Scheme will be subject to annual
performance criteria set by the Remuneration Committee each
financial year, relating to each eligible employee's performance
against personal, financial, strategic and 'Environmental, Social,
and Corporate Governance' ("ESG") metrics.
-- Any awards will be based on a percentage of base salary as
recommended by the Remuneration Committee at the start of each
performance period, being 60% for the initial period. The number of
RSUs issued will be based on the share price of the Company on
expiry of the RSU Initial Performance Period. Any RSUs issued will
be subject to a further 2-year vesting period.
-- Each eligible person will be set a (i) minimum performance
threshold which must be satisfied in order to trigger any issuance
of RSUs to them ("Threshold"). In addition, a base target
("Target") and maximum amount ("Maximum") will also be set.
-- The first performance period will run with an effective date
from 1 October 2020 until 31 December 2021, with subsequent
performance periods running annually from 1 January 2022
onwards.
Long-Term Performance Share Unit ("PSU") Scheme:
-- Awards granted under the PSU Scheme will be subject to
three-year performance criteria set by the Remuneration Committee
each financial year, relating to objective corporate metrics as
follows:
-- 'Relative Total Shareholder Return ("RTSR")' against the peer group; and
-- a significant corporate strategic goal set by the Company.
During the PSU initial performance period, this goal shall be the
Company gaining control of 100 per cent. of Deutsche Lithium.
-- he Company will calculate any awards under the PSU Scheme
based on a percentage of base salary as recommended by the
Remuneration Committee at the start of each performance period and
the share price at the start of the period. For the initial
performance period this shall be 100% and the RTO Price of 5p per
share. Any PSUs issued will be subject to a further 2-year vesting
period.
-- Performance criteria shall be assessed 50:50 between these
two corporate metrics. The assessment relating to RTSR shall be
calculated as Maximum being in the top quartile, Target being in
the top half and Threshold being in the third quartile. The
assessment relating to the corporate goal shall generally be binary
Yes or No, but with the Board or Remuneration Committee having sole
discretion to assess partial achievement.
-- The first performance period will be with an effective date
from 1 October 2020 to 31 December 2023 with subsequent three-year
performance periods starting from 1 January 2022.
25.2 Share Option Plan (2017)
Movements in the number of share options, under the Share Option
Plan (2017), outstanding and their related weighted average
exercise prices are as follows:
Year ended 31 December Year ended 31 December
2020 2019
Average Exercise Average Exercise
Price in GBP Price in
per Share Options Number GBP per Share Options Number
At beginning
of the period GBP0.09 3,150,000 GBP0.094 3,550,000
Granted GBP0.05 200,000 - -
Lapsed - - GBP0.085 (400,000)
At end of period GBP0.091 3,350,000 GBP0.094 3,150,000
Exercisable at
the period end 3,350,000 3,150,000
Weighted average
remaining exercise
period, years 1.96 2.96
Option Classification
Exercise Expiry
Issue Date No of Options Price Date
01-Mar-14 950,000 GBP0.08 20/12/2022
18-May-15 300,000 GBP0.10 20/12/2022
01-Feb-17 800,000 GBP0.10 20/12/2022
21-Dec-17 1,100,000 GBP0.10 20/12/2022
29-Oct-20 200,000 GBP0.05 28/10/2025
3,350,000 GBP0.913
25.3 RSU Scheme (2020)
The first awards of RSUs under the new scheme are expected to be
issued in Q1 2022, based on the initial performance period from 1
October 2020 to 31 December 2021
25.4 - PSU Scheme (2020)
The first awards of PSUs under the new scheme are expected to be
issued in Q1 2024, based on the initial performance period from 1
October 2020 to 31 December 2023.
26 Share-based payment transactions
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
Expenses recognised in the year
Arising from Options issued
under the Share Option Plan
(2017) 3,725 - 3,725 -
Awards made under the new RSU and PSU scheme will be expensed
over the relevant vesting periods for each scheme. The first awards
are only expected in 2022 and expenses will commence
thereafter.
27 Share capital
Group and company
2020 2019
Ordinary share capital EUR EUR
Issued and fully paid
204,455,957 ordinary shares of 1p each 2,278,155 351,133
2,278,155 351,133
The Group's share capital is issued in GBP GBP but is converted
into the functional currency of the Group (Euros) at the date of
issue of the shares.
Reconciliation of movements during the year:
Ordinary Ordinary
Number EUR
Ordinary shares of 1p each
At 1 January 2020 31,069,430 351,133
Issue of fully paid shares (cash subscription) 107,061,260 1,189,890
Issue of fully paid shares (consideration
for shares in DL) 66,325,267 737,132
At 31 December 2020 204,455,957 2,278,155
28 Disposals
On 31 October 2020 the group disposed of its 100% holding in
Tulivuori Exploration OY. Included in these financial statements
are profits of EUR158 arising from the company's interests in
Tulivuori Exploration OY up to the date of its disposal.
29 Share Premium
Share Premium Account
Group EUR
At 1 January 2019 4,151,045
Additions -
At 31 December 2019 4,151,045
Additions -
Issue of shares May 2020 280,626
Cancellation of share premium (4,431,671)
Issue of shares October 2020 7,362,699
At 31 December 2020 7,362,699
The Company's share premium account was cancelled by Special
Resolution and by Court Order on 15 September 2020 and the funds
were converted to retained earnings.
30 Other reserves
Merger reserve Share based Translation Total
payment reserve
reserve
Group EUR EUR EUR EUR
At 1 January 2019 688,732 138,644 - 827,376
Transfer of lapsed share options - (16,299) - (16,299)
At 31 December 2019 688,732 122,345 - 811,077
Additions - 3,725 19 3,744
At 31 December 2020 688,732 126,070 19 814,821
A merger reserve was created on purchase of the entire share
capital of Erris Resources (Exploration) Ltd which was completed by
way of a share for share exchange and which has been treated as a
group reconstruction and accounted for using the reverse merger
accounting method.
31 Financial commitments, guarantees and contingent liabilities
Bacanora Royalty Agreement
The Company and Bacanora entered into on completion of the
Acquisition a royalty agreement which provides, conditional on,
inter alia, completion of the Acquisition, that the Company agrees
to pay Bacanora a royalty of 2 per cent. of the net profit received
by the Company pursuant to its 50 per cent. shareholding in
Deutsche Lithium and earned in relation to the sale of lithium
products or minerals by Deutsche Lithium's projects on the Zinnwald
and Falkenhain licence areas. The royalty fee shall be paid in
Euros and paid by Deutsche Lithium half yearly. The agreement is
for an initial term of 40 years and shall automatically extend for
additional 20-year terms until mining and processing operations
cease at Deutsche Lithium's projects at the Zinnwald and Falkenhain
licence areas. The Company has undertaken to Bacanora to abide by
certain obligations in relation to Deutsche Lithium's projects at
the Zinnwald and Falkenhain licence areas such as complying with
applicable laws and ensure that these projects are operated in
accordance with the underlying licences and concessions granted to
Deutsche Lithium. The Company shall have the right, but not the
obligation, to extinguish at any time its right to pay a royalty
fee to Bacanora prior to the expiry of the term by paying a one-off
payment of EUR2,000,000. Whilst the Directors acknowledge this
contingent liability, at this stage, it is not considered that the
outcome can be considered probable or reasonably estimable and
hence no provision has been made in the financial statements.
Osisko Royalty Agreements
Erris Resources (Exploration) Ltd ("ERL") entered into Osisko
Royalty Agreement 1 with Osisko on 16 September 2016 pursuant to
which it granted a royalty to Osisko for a 1 per cent. net smelter
return on the sale or disposition of all minerals provided from the
Abbeytown Project. The royalty is based on published spot prices in
relation to minerals delivered for processing and actual amounts
received where raw ore or concentrates are sold. Osisko shall be
entitled to elect to receive the royalty on precious metals in kind
rather than cash. This royalty was granted to Osisko in
consideration of Osisko's payment of C$500,000 to ERL. The royalty
is perpetual and as such the agreement (and obligation on ERL to
pay the royalty) shall continue indefinitely. Whilst the Directors
acknowledge this contingent liability, at this stage, it is not
considered that the outcome can be considered probable or
reasonably estimable and hence no provision has been made in the
financial statements.
ERL entered into Osisko Royalty Agreement 2 with Osisko on 16
September 2016 pursuant to which it granted a royalty to Osisko for
a 1 per cent. net smelter return on the sale or disposition of all
minerals provided from the Swedish properties (originally including
Käringberget, Klippen, Nottjärn and Vaikijaur but, as at the date
of this document, only Brännberg) licensed by ERL. The royalty also
extends to any other mining rights ERL acquires or holds (or from
time to time comes to acquire or hold) in Sweden and so applies to
all exploration permits currently held in Sweden by ERL. The
royalty is based on published spot prices in relation to minerals
delivered for processing and actual amounts received where raw ore
or concentrates are sold. Osisko shall be entitled to elect to
receive the royalty on precious metals in kind rather than cash.
This royalty was granted to Osisko in consideration of Osisko's
payment of C$250,000 to Erris Resources UK. The royalty is
perpetual and as such the agreement (and obligation on ERL to pay
the royalty) shall continue indefinitely. Whilst the Directors
acknowledge this contingent liability, at this stage, it is not
considered that the outcome can be considered probable or
reasonably estimable and hence no provision has been made in the
financial statements.
Neither of the Osisko royalties apply to the Zinnwald Lithium
project.
Grundtrask Acquisition Agreement
On 13 October 2016, the Company entered into an asset purchase
agreement with Beowulf Mining Sweden AB ("Beowulf") pursuant to
which the Company purchased exploration rights for the areas known
as Grundsträsk nr 6 and Grundträsk nr 7 (together with all
information relating thereto) from Beowulf. The consideration of
US$200,000 will become payable subject to the Company announcing
JORC indicated resource of 100,000 troy ounces of gold, together
with a further amount of $2 per troy ounce on the announcement of
indicated resource subject to a JORC indicated resource of at least
1 million troy ounces. Pursuant to this agreement, the Company is
obliged to grant to Beowulf a royalty under which it is paid 1 per
cent. of the net smelting revenue generated by the Company on any
gold produced from the property. This royalty shall continue
indefinitely unless the Company "buys out" the royalty by payment
of US$2,000,000 to Beowulf. Whilst the Directors acknowledge this
contingent liability, at this stage, it is not considered that the
outcome can be considered probable or reasonably estimable and
hence no provision has been made in the financial statements.
In addition, the Company was obliged to abide by the terms of
the "2003 Data Access Agreement" which was entered into between
Beowulf, the Scanex Group ("Scanex") and Mirab Mineral Resources AB
("Mirab") on 14 November 2003 for a period of 15 years. Pursuant to
the terms of this agreement, Scanex and Mirab provided Beowulf with
data relating to past mining exploration in return for the granting
by Beowulf of a royalty to Scanex and Mirab for 1 per cent. of the
net smelting revenue generated by Beowulf in relation to the area
known as Grundträsk. Since the 15 years of this agreement has now
expired, the Company considers that its requirement to honour this
royalty has also expired.
Neither of the Beowulf, Scanex or Mirab royalties apply to the
Zinnwald Lithium project.
32 Retained earnings
Group Company
2020 2019 2020 2019
EUR EUR EUR EUR
At the beginning of the
year (1,820,744) (1,305,524) (1,447,843) (1,026,564)
Conversion of share premium 4,431,671 - 4,431,671 -
Loss for the year (2,215,238) (531,519) (1,503,479) (437,578)
Dividends in specie (490,888) - (490,888) -
Share based payment transactions
(net) - 16,299 - 16,299
At the end of the year (95,199) (1,820,744) 989,461 (1,447,843)
33 Events after the reporting date
The assessment of the COVID-19 situation continues to evolve, as
the changes to the COVID-19 virus and lock-down impacts continue.
The success of the long-term vaccination programme still makes it
difficult to predict the ultimate impact at this stage. This will
continue to have some implications for the operations of the Group
in the future, for example through restricting travel movements
internationally and domestically and therefore delaying development
activities. Due to the nature of present activities, the impact has
been minimal to date. Management will continue to assess the impact
of COVID-19 on the Group and Company, however, it is not possible
to quantify the impact, if any, at this stage.
34 Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2020 2019
Share Option Share Option
Remuneration Charge Remuneration Charge
EUR EUR EUR EUR
Anton du Plessis 118,453 1,863 152,688 -
Cherif Rifaat 78,969 1,862 68,710 -
Jeremy Martin 36,664 - 41,226 -
Graham Brown 28,767 - 27,484 -
Jeremy Taylor-Firth 20,306 - 27,484 -
Andrew Partington - - 4,581 -
Peter Secker - - - -
283,159 3,725 322,173 -
Transactions with related parties
During the year the group entered into the following
transactions with related parties:
Consultancy and expenses Management fees
2020 2019 2020 2019
EUR EUR EUR EUR
Group
Strategic Alliance
partner - - - 17,256
Key management personnel 50,648 71,690 - -
Company
Key management personnel 15,585 40,289 - -
Aggregate consultancy and expenses include EUR26,123 (2019:
EUR4,640) of costs capitalised and included within non-current
assets and EURnil (2019: EUR24,435) of costs reimbursed by joint
venture partners. There were no amounts outstanding at the year
end.
Strategic Alliance arrangements with Centerra Gold are disclosed
in note 11. During the period, Centerra reimbursed costs of EURnil
(2019: EUR222,155) and paid management fees of EURnil (2019:
EUR17,527). As at 31 December 2020 and 2019, there were no
outstanding debtor or creditor balances with Centerra Gold as the
joint venture relationship has terminated.
35 Cash (used in)/generated from group operations
2020 2019
EUR EUR
Loss for the year after tax (2,215,239) (531,519)
Adjustments for:
Taxation charged/(credited) - (30,648)
Investment income (367) -
Gain on disposal of property, plant and equipment (5,300) -
Impairment of intangible assets 592,465 -
Depreciation and impairment of property, plant
and equipment 243 -
Share of loss of Joint Venture 32,579 -
Equity-settled share-based payment expense 3,725 -
Movements in working capital:
(Increase)/decrease in trade and other receivables (135,628) 24,035
Increase/(decrease) in trade and other payables 16,435 (69,743)
Cash used in operations (1,711,087) (607,875)
36 Cash (used in) / generated from operations - company
2020 2019
EUR EUR
Loss for the year after tax (1,503,090) (437,578)
Adjustments for:
Investment income (367) -
Depreciation and impairment of property, plant
and equipment 243 -
Share of loss of Joint Venture 32,579 -
Equity-settled share-based payment expense 3,333 -
Movements in working capital:
(Increase) in trade and other receivables (507,134) (163,611)
Increase/(decrease) in trade and other payables 81,436 (13,044)
Cash used in operations (1,893,000) (614,233)
*ENDS*
For further information go to www.zinnwaldlithium.com or
contact:
Anton du Plessis Zinnwald Lithium plc info@zinnwaldlithium.com
Allenby Capital (Nominated
David Hart/Liz Kirchner Adviser) +44 (0) 20 3328 5656
------------------------------- -------------------------
Turner Pope Investments
Zoe Alexander/Andy (TPI) Ltd
Thacker (Broker) +44 (0) 20 3657 0050
------------------------------- -------------------------
Isabel de Salis/Beth St Brides Partners (Financial
Melluish PR) +44 (0) 20 7236 1177
------------------------------- -------------------------
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