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Bradda Head Lithium Ltd Announces Unaudited Interim Financial Statements

Friday, 27 January 2023 05:30 AM

Bradda Head Lithium Limited

Topic:
Earnings

Unaudited Condensed Consolidated Interim Financial Statements
For the nine-month period ended November 30, 2022

Notice of No Auditor Review

BRITISH VIRGIN ISLANDS / ACCESSWIRE / January 27, 2023 / These unaudited condensed consolidated interim financial statements of Bradda Head Lithium Limited (the "Company") have not been reviewed by the auditors of the Company.

Condensed Interim Consolidated Statement of Comprehensive Income

Bradda Head Lithium Limited, Friday, January 27, 2023, Press release picture

for the period ended November 30, 2022

Nine-month period ended November 30, 2022

(unaudited)

Nine-month period ended November 30, 2021

(unaudited)

Three-month period ended November 30, 2022

(unaudited)

Three-month period ended November 30, 2021

(unaudited)

Notes

US$

US$

US$

US$

Expenses
General and administrative

2

(4,242,520)

(2,391,522)

(1,690,543)

(764,201)

Share based payment and warrant expense

10

(1,285,743)

(259,816)

(91,539)

(119,726)

Foreign exchange loss

(1,255,343)

(34,338)

(944,005)

(4,197)

────────

────────

────────

────────

Operating loss

(6,783,606)

(2,685,676)

(2,726,087)

(888,124)

Other income
Warrant fair value re-measurement

11

3,711,264

-

880,920

-

Unrealised (loss) / gain on investment

(2,520)

13,360

-

5,461

────────

────────

────────

────────

Loss before finance costs

(3,074,862)

(2,672,316)

(1,845,167)

(882,663)

Finance costs

-

(32,832)

-

-

────────

────────

────────

────────

Loss before income tax

(3,074,862)

(2,705,148)

(1,845,167)

(882,663)

Income tax expense

-

-

-

-

────────

────────

────────

────────

Loss for the period

(3,074,862)

(2,705,148)

(1,845,167)

(882,663)

══════

══════

══════

══════

Other comprehensive income - foreign currency translation reserve

-

186

-

-

────────

────────

────────

────────

Total comprehensive loss for the period

(3,074,862)

(2,704,962)

(1,845,167)

(882,663)

══════

══════

══════

══════

Basic and diluted loss per share (US cents)

12

(0.81)

(1.50)

(0.49)

(0.49)

The accompanying notes are an integral part of these consolidated interim financial statements.

Condensed Interim Consolidated Statement of Financial Position

as at November 30, 2022

Notes

November 30, 2022

(unaudited)

February 28, 2022

(audited)

US$

US$

Non-Current assets
Deferred mining and exploration costs

3

5,911,902

4,183,744

Exploration permits and licences

4

2,255,368

1,549,076

Plant and equipment

8

89,134

54,170

Advances and deposits

6

507,906

88,594

Investment

51,436

53,957

───────

───────

Total non-current assets

8,815,746

5,929,541

───────

───────

Current assets
Cash and cash equivalents

10,603,037

7,327,303

Trade and other receivables

6

165,786

97,996

───────

───────

Total current assets

10,768,823

7,425,299

───────

───────

Total assets

19,584,569

13,354,840

═══════

═══════

Equity
Share premium

9

30,467,820

23,434,385

Retained deficit

(12,966,339)

(11,177,220)

───────

───────

Total equity

17,501,481

12,257,165

───────

───────

Current liabilities
Trade and other payables

7

1,071,603

1,097,675

Warrant liability

11

1,011,485

-

───────

───────

Total current liabilities

2,083,088

1,097,675

───────

───────

Total equity and liabilities

19,584,569

13,354,840

═══════

═══════

The accompanying notes are an integral part of these consolidated interim financial statements.

These condensed interim consolidated financial statements were approved by the Board of Directors on January 27, 2023 and were signed on their behalf by:

Denham Eke

Director

Condensed Interim Consolidated Statement of Changes in Equity

for the period ended November 30, 2022

Share premium

Retained deficit

Total

US$

US$

US$

Balance at March 1, 2022 (audited)

23,434,385

(11,177,220)

12,257,165

Total comprehensive loss for the period

Loss for the period

-

(3,074,862)

(3,074,862)

──────

───────

───────

Total comprehensive loss for the period

-

(3,074,862)

(3,074,862)

Transactions with owners of the Company

Issue of ordinary shares (note 9 and note 11)

7,581,351

-

7,581,351

Share issue costs capitalised (note 9)

(547,916)

-

(547,916)

Equity settled share-based payments (note 10)

-

1,285,743

1,285,743

──────

───────

──────

Total transactions with owners of the Company

7,033,435

1,285,743

8,319,178

──────

───────

──────

Balance at November 30, 2022 (unaudited)

30,467,820

(12,966,339)

17,501,481

═══════

═══════

═══════

The accompanying notes are an integral part of these consolidated interim financial statements.

Condensed Interim Consolidated Statement of Changes in Equity

for the period ended November 30, 2022 (continued)

Share premium

Retained deficit

Foreign currency translation reserve

Total

US$

US$

US$

US$

Balance at March 1, 2021 (audited)

9,443,676

(9,056,687)

186

387,175

Total comprehensive loss for the period

Loss for the period

-

(2,705,148)

-

(2,705,148)

──────

───────

───────

───────

Total comprehensive loss for the period

-

(2,705,148)

-

(2,705,148)

Transactions with owners of the Company

Issue of ordinary shares (note 8)

11,904,439

-

-

11,904,439

Share issue costs capitalised (note 8)

(413,731)

-

-

(413,731)

Equity settled share-based payments (note 9)

-

259,816

-

259,816

Transfer to retained deficit

-

186

(186)

-

──────

───────

───────

──────

Total transactions with owners of the Company

11,490,708

260,002

(186)

11,750,524

──────

───────

───────

──────

Balance at November 30, 2021 (unaudited)

20,934,384

(11,501,833)

-

9,432,551

═══════

═══════

═══════

═══════

The accompanying notes are an integral part of these consolidated interim financial statements.

Condensed Interim Consolidated Statement of Cash Flows

for the period ended November 30, 2022

Notes

Nine-month period ended November 30, 2022

(unaudited)

Nine-month period ended November 30, 2021

(unaudited)

Three-month period ended November 30, 2022

(unaudited)

Three-month period ended November 30, 2021

(unaudited)

US$

US$

US$

US$

Cash flows from operating activities
Loss before income tax

(3,074,862)

(2,705,148)

(1,845,167)

(882,663)

Adjusted for non-cash and non-operating items:
Depreciation

8

23,708

-

9,532

-

Unrealised loss/(gain) on investment

2,520

(13,360)

-

(5,461)

Non-cash interest expense

-

32,832

-

-

Equity settled share based payments expense

10, 11

1,285,743

259,816

91,539

119,726

Warrant fair value re-measurement

11

(3,711,264)

-

(880,920)

-

Unrealised FX adjustment on convertible loan note

-

-

-

-

Unrealised FX on cash balances

1,255,343

(34,338)

944,005

(4,197)

───────

───────

───────

───────

(4,218,812)

(2,460,198)

(1,681,011)

(772,595)

Change in trade and other receivables

(487,103)

51,470

(26,609)

255,140

Change in trade and other payables

(26,070)

341,132

717,835

226,133

───────

───────

───────

───────

Net cash flows used by operating activities

(4,731,985)

(2,067,596)

(989,785)

(291,322)

Cash flows from investing activities
Amounts paid for deferred mining and exploration costs

3

(1,728,158)

(1,121,721)

(1,452,815)

(964,459)

Amounts paid for licences and permits

4

(706,292)

(519,455)

(16,495)

(112,018)

Equipment purchased

8

(58,672)

-

-

-

───────

───────

───────

───────

Net cash flows used by investing activities

(2,493,122)

(1,641,176)

(1,469,310)

(1,076,477)

Cash flows from financing activities
Short-term loan received

-

60,000

-

-

Cash received from shares and warrants issued

9, 11

12,304,100

9,598,923

-

-

Share issue costs paid

9

(547,916)

(413,731)

-

-

───────

───────

───────

───────

Net cash flows from financing activities

11,756,184

9,245,192

-

-

───────

───────

───────

───────

Increase / (decrease) in cash and cash equivalents

4,531,077

5,536,420

(2,459,095)

(1,367,799)

Cash and cash equivalents at beginning of period

7,327,303

86,972

14,006,137

7,021,332

Effect of foreign exchange on cash balances

(1,255,343)

34,338

(944,005)

4,197

───────

───────

───────

───────

Cash and cash equivalents at end of period

10,603,037

5,657,730

10,603,037

5,657,730

═══════

═══════

═══════

═══════

The accompanying notes are an integral part of these consolidated interim financial statements.

1 Reporting Entity and basis of preparation

Bradda Head Lithium Limited (the "Company") is a company domiciled in the British Virgin Islands. The address of the Company's registered office is Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. The Company and its subsidiaries together are referred to as the "Group".

The Company is a lithium exploration Group focused on developing its projects in the USA.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the last annual consolidated financial statements as at and for the year ended February 28, 2022 ("last annual financial statements"). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The financial information in this report has been prepared in accordance with the Company's accounting policies and in consistency with the last annual financial statements. Full details of the accounting policies adopted by the Company are contained in the financial statements included in the Company's annual report for the year ended February 28, 2022, which is available on the Group's website: www.braddheadltd.com, and on SEDAR at www.sedar.com. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended February 28, 2022.

2 General and administrative

The Group's general and administrative expenses include the following:

Nine-month period ended November 30, 2022

(unaudited)

US$

Nine-month period ended November 30, 2021

(unaudited)

US$

Three-month period ended November 30, 2022

(unaudited)

US$

Three-month period ended November 30, 2021

(unaudited)

US$

Auditors' fees

114,508

62,067

13,067

35,466

Directors and management fees and salaries

402,231

310,653

132,955

120,942

Legal and accounting

422,228

510,218

247,291

83,665

Contractor costs

1,979,619

732,407

719,097

280,162

Professional and marketing costs

942,495

535,899

332,928

203,672

Other administrative costs

381,439

240,278

245,205

40,294

───────

───────

───────

───────

Total

4,242,520

2,391,522

1,690,543

764,201

═══════

═══════

═══════

═══════

3 Deferred mine exploration costs

The schedule below details the exploration costs capitalised to date:

Total

US$

Cost and net book value

At February 28, 2021 (audited)

1,767,274

Capitalised during the year

2,501,853

Disposal under the royalty agreement

(85,383)

───────

At February 28, 2022 (audited)

4,183,744

───────

Capitalised during the period

1,728,158

───────

At November 30, 2022 (unaudited)

5,911,902

═══════

Cost and net book value

At November 30, 2022 (unaudited)

5,911,902

At February 28, 2022 (audited)

4,183,744

═══════

The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development and commercial exploitation or sale of the respective area of interest, as well as maintaining the assets in good standing. The Group assessed the DMEC relating to areas for which licenses and permits are held, for impairment as at November 30, 2022. The Board concluded that no facts and circumstances have been identified which suggest the recoverable amount of these assets would not exceed the carrying amount and, as such, no impairment was recognised during the period.

During the year ended February 28, 2022, an impairment charge of US$ Nil was recognised.

4 Exploration permits and licences

The schedule below details the exploration permit and licence costs capitalised to date:

Total

US$

Cost and net book value

At February 28, 2021 (audited)

691,465

Capitalised during the year

1,119,455

Disposal under the royalty agreement

(31,614)

Impairment

(230,230)

───────

At February 28, 2022 (audited)

1,549,076

Capitalised during the period

706,292

───────

At November 30, 2022 (unaudited)

2,255,368

═══════

Cost and net book value

At November 30, 2022 (unaudited)

2,255,368

At February 28, 2022 (audited)

1,549,076

═══════

The Group assessed the carrying amount of the licences and permits held for impairment as at November 30, 2022. The Board concluded that no facts and circumstances have been identified which suggest the recoverable amount of these assets would not exceed the carrying amount and, as such, no impairment was recognised during the period.

During the year ended February 28, 2022, an impairment charge of US$ 230,230 was recognised as a result of project licences and permits that were not renewed.

5 Investment in subsidiary undertakings

As at November 30, 2022 and February 28, 2022, the Group had the following subsidiaries:

Name of company

Place of incorporationOwnership interestPrincipal activity

Bradda Head Limited*

BVI100%Holding company of entities below

Zenolith (USA) LLC

USA100%Holds USA lithium licences and permits

Verde Grande LLC

USA100%Holds USA lithium licences and permits

Gray Wash LLC

USA100%Holds USA lithium licences and permits

* Held directly by the Company. All other holdings are indirectly held through Bradda Head Limited

The condensed interim consolidated financial statements include the results of the subsidiaries for the full interim period from March 1, 2022 to November 30, 2022, and up to the date that control ceases.

6 Trade and other receivables and advances and deposits

Non-current

November 30, 2022

(unaudited)

February 28, 2022

(audited)

US$

US$

Advances and deposits

507,906

88,594

══════

══════

Current

November 30, 2022

(unaudited)

February 28, 2022

(audited)

US$

US$

Prepayments and other debtors

165,786

97,996

══════

══════

7 Trade and other payables

November 30, 2022

(unaudited)

February 28, 2022

(audited)

US$

US$

Trade payables

950,402

1,019,175

Accrued expenses and other payables

121,201

78,500

──────

──────

1,071,603

1,097,675

══════

══════

8 Plant and equipment

Motor vehicle

Total

Cost

US$

US$

As at March 1, 2021 (audited)

-

-

Additions during the year

55,718

55,718

──────

──────

As at February 28, 2022 (audited)

55,718

55,718

Additions during the period

58,672

58,672

──────

──────

As at November 30, 2022 (unaudited)

114,390

114,390

══════

══════

8 Plant and equipment (continued)

Motor vehicle

Total

Accumulated depreciation

US$

US$

As at March 1, 2021 (audited)

-

-

Depreciation charge for the year

(1,548)

(1,548)

──────

──────

As at February 28, 2022 (audited)

(1,548)

(1,548)

Depreciation charge for the period

(23,708)

(23,708)

──────

──────

As at November 30, 2022 (unaudited)

(25,256)

(25,256)

══════

══════

Carrying amount

As at November 30, 2022 (unaudited)

89,134

89,134

As at February 28, 2022 (audited)

54,170

54,170

══════

══════

9 Share premium

Authorised

The Company is authorised to issue an unlimited number of nil par value shares of a single class.

Shares

Share capital

Share premium

Issued ordinary shares of US$0.00 each

US$

US$

At February 28, 2021 (audited)

75,040,282

-

9,443,676

═══════

═══════

═══════

Shares issued for cash

158,499,941

-

12,098,924

Shares issued to settle loans

48,618,529

-

2,159,722

Shares issued in lieu of Directors fees

3,037,362

-

145,794

Shares issued to Zenith Minerals Limited *

32,217,765

-

Share issue costs capitalised

-

-

(413,731)

───────

───────

───────

At February 28, 2022 (audited)

317,413,879

-

23,434,385

═══════

═══════

═══════

Shares issued for cash (note 11)

73,195,560

-

7,581,351

Share issue costs capitalised

-

-

(547,916)

───────

───────

───────

At November 30, 2022 (unaudited)

390,609,439

-

30,467,820

═══════

═══════

═══════

* In line with the agreement entered into with Zenith Minerals Limited ("Zenith"), shares were issued to Zenith to maintain their shareholding at 15%. Following the listing of the Company's shares on AIM in July 2021, the anti-dilution protection held by Zenith no longer applies to any new issues of shares.

10 Equity settled share based payments

The cost of equity settled transactions with certain Directors of the Company and other participants ("Participants") is measured by reference to the fair value at the date on which they are granted. The fair value is determined based on the Black-Scholes option pricing model.

During the nine-month period ended November 30, 2022, outstanding fees due to directors totaling US$ Nil were settled by the issue of shares (28 February 2022: US$Nil)

Options and warrants

The total number of share options and warrants in issue as at the period end is set out below.

Recipient

Grant

Date

Term

in years

Exercise

Price

Number at March 1, 2022 (audited)

Number Issued

Number Lapsed/ cancelled/expired

Number Exercised

Number at November 30, 2022 (unaudited)

Fair value

Options

US$

Directors and Participants

April 2018

5

US$ 0.15668

1,606,304

-

-

-

1,606,304

24,028

Directors and Participants

June 2021

5

US$ 0.048

18,000,000

-

-

-

18,000,000

1,110,556

Directors and Participants

September 2021

5

£0.09

4,000,000

-

-

-

4,000,000

314,962

Directors and Participants

April 2022

5

£0.18

-

9,200,000

-

-

9,200,000

1,122,876

Warrants
Supplier warrants

July 2021

5

£0.0550

1,818,182

-

-

-

1,818,182

124,482

Supplier warrants

July 2021

3

£0.0825

2,254,545

-

-

-

2,254,545

8,275

Shareholder warrants

December 2021

2

£0.0885

1,185,687

-

-

-

1,185,687

44,858

Supplier warrants

April 2022

2

£0.1350

-

3,244,331

-

-

3,244,331

284,918

───────

───────

───────

───────

───────

───────

28,864,718

12,444,331

-

-

41,309,049

3,034,955

═══════

═══════

═══════

═══════

═══════

═══════

10 Equity settled share based payments (continued)

The amount expensed in the income statement has been calculated by reference to the fair value at the grant date of the equity instrument and the estimated number of equity instruments to vest after the vesting period.

Nine-month period ended November 30, 2022

(unaudited)

US$

Nine-month period ended November 30, 2021

(unaudited)

US$

Three-month period ended November 30, 2022

(unaudited)

US$

Three-month period ended November 30, 2021

(unaudited)

US$

Share based payments charge

1,285,743

259,816

91,539

-

═══════

═══════

═══════

═══════

The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment plans issued during the period are as follows:

April 2022 options

Award date and exercise price

Fair value at grant date

£0.09308

Exercise price

£0.180

Weight average expected volatility

81.90%

Weighted average expected life (years)

5

Risk-free interest rate (based on comparable companies)

1.52%

Terms of the issued options are as follows:

- 9,200,000 options have been granted and are subject to the three independent vesting conditions for 1/3 of the entitlement, relating to the successful fund raising in respect of the Group's operational budget, commencement of a drilling program in respect of the San Domingo project and resolution of certain Wickieup project title claims. All un-exercised options expire after a period of 5 years from grant date. It is assumed that options are exercised within 5 years from date of grant. The applied volatility is based on historical volatility.

April 2022 supplier warrants

Award date and exercise price

Fair value at grant date

£0.06697

Exercise price

£0.135

Weight average expected volatility

81.90%

Weighted average expected life (years)

2

Risk-free interest rate (based on comparable companies)

0.80%

Terms of the issued warrants are as follows:

- As part of the fundraise completed during April 2022, certain service providers of the Company received warrants for services rendered. As a result, 3,244,331 warrants have been issued. All un-exercised warrants expire after a period of 2 years from grant date. It is assumed that warrants are exercised within 2 years from date of grant. The applied volatility is based on historical volatility.

11 Warrants

The cost of equity warrants granted during the period are measured by reference to the fair value at the date on which they are granted. The fair value is determined based on the Black-Scholes option pricing model.

During the nine-month period ended November 30, 2022, the Company awarded warrants to investors who participated in the fundraise completed during April 2022.

The total number of warrants in issue as at the period end is set out below.

Recipient

Grant

Date

Term

in years

Exercise

Price

Warrants at March 1, 2022 (audited)

Number of Warrants Issued

Number of Warrants Lapsed/ cancelled/expired

Number of Warrants Exercised

Number of Warrants at November 30, 2022 (unaudited)

Fair value

Warrants

US$

Shareholder warrants

April 2022

2

£0.2100

-

73,195,560

-

-

73,195,560

1,011,485

───────

───────

───────

───────

───────

───────

-

73,195,560

-

-

73,195,560

1,011,485

═══════

═══════

═══════

═══════

═══════

═══════

The fair value applied to the shareholder warrants has been classified as a financial liability. At period end, the warrant liability has been re-measured to fair value, with a corresponding entry to profit and loss of US$ 3,711,264 (period ended November 30, 2021: Nil) within Warrant Fair Value Re-Measurement.

Reconciliation of warrant liability fair value:

Fair value

US$

Balance at March 1, 2022

-

Warrants issued during the period

4,722,749

Fair value re-measurement

(3,711,264)

───────

Balance at November 30, 2022

1,011,485

═══════

11 Warrants (continued)

April 2022 shareholder warrants

Grant date fair value

Award date and exercise price

Fair value at grant date

£0.0492

Exercise price

£0.21

Weight average expected volatility

81.90%

Weighted average expected life (years)

2

Risk-free interest rate (based on comparable companies)

0.80%

November 30, 2022 fair value

Award date and exercise price

Fair value

£0.0118

Exercise price

£0.21

Weighted average expected volatility

80.5%

Weighted average expected life remaining (years)

1.39

Risk-free interest rate (based on comparable companies)

4.38%

As part of the fundraise completed during April 2022, all participating shareholders received a warrant on 1:1 basis for shares acquired. As a result, 73,195,560 warrants have been issued. All un-exercised warrants expire after a period of 2 years from grant date. It is assumed that warrants are exercised within 2 years from date of grant. The applied volatility is based on historical volatility.

12 Basic and diluted loss per share

The calculation of basic profit per share of the Company is based on the loss for the period of US$ 3,074,862 (nine-month period to November 30, 2021: loss of US$ 2,052,489) and the weighted average number of shares of 379,122,544 (at November 30, 2021: 147,618,936) in issue during the period.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares such as warrants and options. An adjustment for the dilutive effect of share options and warrants in the current period has not been reflected in the calculation of the diluted loss per share, as the effect would have been anti-dilutive, due the Company recognising a loss for the period.

13 Related party transactions and balances

Edgewater Associates Limited ("Edgewater")

During the nine-month period ended November 30, 2022, Directors' and Officers' insurance was obtained on an arms-length basis through Edgewater, which is a 100% subsidiary of Manx Financial Group ("MFG"). James Mellon and Denham Eke are Directors of both the Company and MFG.

During the period, the premium payable on the policy was US$ 49,318 (year ended February 28, 2022: US$ 44,303), of which US$ 32,122 was prepaid as at the period end (February 28, 2022: US$ 11,076).

14 Commitments and contingent liabilities

The Group has certain obligations to expend minimum amounts on exploration works on mining tenements in order to retain an interest in them, equating to approximately US$ 415,454 during the next 12 months. This includes annual fees in respect of licence renewals. These obligations may be varied from time to time, subject to approval and are expected to be filled in the normal course of exploration and development activities of the Company.

15 Events after the reporting date

On 21 December 2022, the Company awarded 500,000 ordinary share options each to Euan Jenkins and Alex Borrelli, independent non-executive directors of the Company.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

SOURCE: Bradda Head Lithium Limited

Topic:
Earnings
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