Lifezone Metals Ltd 6-K, filed Aug 19, 2024
Lifezone Metals Ltd (LZM)
About this 6-K
Lifezone Metals Ltd filed this 6-K on August 19, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August
Commission File Number:
NYSE ticker symbol “LZM”
Commerce House, 1 Bowring Road
Ramsey, Isle of Man, IM8 2LQ
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
On August 19, 2024,
Lifezone Metals Limited (the “Company”) announced the financial results for the six months ended
A copy of the Company’s Unaudited Condensed Consolidated Interim Financial Statements as of June 30, 2024, and for the six-month periods ending June 30, 2024, and June 30, 2023, are attached as Exhibit 99.2 to this report on Form 6-K. Exhibit 99.2 includes the Company’s management’s discussion and analysis of financial condition and results of operations for the period ended June 30, 2024.
The information in the attached Exhibits 99.2 and 99.2 shall be deemed to be incorporated by reference into the Company’s registration statements on Form F-3 (File Nos. 333-272865 and 333-281189) and Form S-8 (File No. 333-274449) and the related prospectuses, respectively as such registration statements and prospectuses may be amended from time to time, and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
The information in the attached Exhibit 91.3 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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EXHIBIT INDEX
| Exhibit | Description of Exhibit | |
| 99.1 | Press Release, dated, titled “Lifezone Metals Operations Update and Half-Year 2024 Financial Results.” | |
| 99.2 | Unaudited Condensed Consolidated Interim Financial Statements of Lifezone Metals Limited for the six months ended June 30, 2024. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Lifezone Metals Limited | ||
| Date: August 19, 2024 | By: | /s/ Ingo Hofmaier |
| Name: | Ingo Hofmaier | |
| Title: | Chief Financial Officer | |
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Exhibit 99.1
Lifezone Metals Operations Update and Half-Year 2024 Financial Results
Kabanga Definitive Feasibility Study Nearing Completion; Expected in September
Webcast Today at 10 AM ET
August 19, 2024
New York (United States) – Lifezone Metals Limited’s (NYSE: LZM) Chief Executive Officer, Chris Showalter, and Chief Financial Officer, Ingo Hofmaier, are pleased to provide an update on recent activities at Lifezone’s projects and its H1 2024 unaudited financial results.
Lifezone continues to progress its Kabanga Nickel Project, located in north-west Tanzania, through a strategic partnership with the Government of Tanzania and BHP. Kabanga is believed to be one of the world’s largest and highest-grade undeveloped nickel sulfide deposits. In addition, Lifezone continues to advance its partnership with Glencore to recycle platinum, palladium and rhodium in the United States.
Highlights:
| ● | +2 million hours worked at the Kabanga Nickel Project without a lost time injury. |
| ● | Design and engineering completed for the Kabanga Nickel Project Definitive Feasibility Study, which remains on track for completion by the end of September. |
| o | The Project’s capital and operating expenditures estimates are currently being finalized, based on an initial 1.7 million tonne per year Phase 1, plus additional 1.7 million tonne per year Phase 2 expansion, for a combined 3.4 million tonne per year underground mining operation, concentrator and Hydromet refinery. |
| o | The Kabanga Nickel Project is expected to be a fully integrated mine-to-metal operation that will enable a fully auditable supply chain with production of refined, LME-grade nickel, copper and cobalt metals in Tanzania. |
| ● | Production of first nickel, copper and cobalt metal cathode samples from Kabanga source material via the semi-continuous Hydromet pilot program at Lifezone’s Simulus Labs in Perth, Australia. |
| ● | Infrastructure build-out in Tanzania continues with notable recent developments, including: |
| o | Inaugural Standard Gauge Railway service between the port city of Dar es Salaam and the city of Morogoro began in June, and the upgraded rail connecting Morogoro to Tanzania’s capital city of Dodoma was completed in late-July. 1 |
| o | The Tanzania Electric Supply Company Limited (“TANESCO”) has started generating surplus electricity at the Julius Nyerere Hydro Power Project after switching on Turbine #7 at the facility, located in eastern Tanzania. Once all nine turbines are operational, it is expected to generate ~2.4 gigawatts of green electricity into the national grid.2 |
| ● | To date, Lifezone has achieved 95% completion of compensation payments to those persons physically and economically displaced by the Kabanga Nickel Project. |
| ● | Pilot work and Feasibility Study for the Phase 1 partnership with Glencore to recycle platinum, palladium and rhodium from spent automotive catalytic converters in the United States is progressing well with planned completion in Q4 2024. |
| ● | Healthy cash position of $63.5 million as at June 30, 2024. |
| ● | Basic and diluted loss per share of $0.14 for H1 2024, compared to basic and diluted loss per share of $0.18 in H1 2023. |
Mr. Showalter stated: “Completing the design and engineering phase of the Definitive Feasibility Study for the Kabanga Nickel Project marks a pivotal milestone, bringing us another step closer to our goal of establishing a fully integrated mine-to-metal operation in Tanzania. We are dedicated to continuing our collaboration with BHP and the Government of Tanzania to drive sustainable development and prosperity.”
| 1 | https://www.tanzaniainvest.com/transport/inaugural-sgr-train-service-dar-es-salaam-morogoro |
| 2 | https://www.ippmedia.com/the-guardian/news/local-news/read/tanesco-fields-700mw-surplus-as-jnhpp-switches-on-turbine-7-2024-06-22-040656 |
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More than 2 million hours worked without lost time injury at the Kabanga Nickel Project
Lifezone operates with safety as an ongoing, front-of-mind initiative at every level. Achieving 2 million hours worked without LTI reflects Lifezone’s commitment to create a safe working culture, promoting and implementing comprehensive workplace health and safety measures, which include rigorous monitoring and reporting systems.
Kabanga’s Definitive Feasibility Study progresses towards completion in September
In June, Lifezone completed the design and engineering phase of the Definitive Feasibility Study for the Kabanga Nickel Project, meaning that the Project’s flowsheet parameters and specifications are now final for the Study and not open for additional revisions. This includes the sizing of critical pieces of equipment, such as underground mining fleet, crushers and mills, flotation tanks and autoclaves. With these technical requirements locked in, Lifezone is now focused on reviewing equipment and services suppliers, finalizing the operating cost model and optimizing capital expenditures.
The two-phased development plan for the Kabanga Nickel Project was finalized in Q1 2024 and forms the basis of the mine plan and ultimately the Definitive Feasibility Study. The plan calls for a 1.7 million tonne per year Phase 1 underground mining rate, with an additional 1.7 million tonne per year Phase 2 expansion, for an expected 3.4 million tonne per year operation in the aggregate. Operating cash flows from Phase 1 operations are expected to help cover the capital requirements for Phase 2.
Figure 1: 3D model of the Kabanga Concentrator showing the grinding and flotation circuits and settling tanks. Phase 1 shown in color and Phase 2 in white. The box cut for the underground access portal is shown with terraces into the hillside on the left.
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Figure 2: Satellite map with the 3D Model of the Hydromet refinery superimposed, located at the site of Barrick Gold’s past-producing Buzwagi gold mine, near Kahama, Tanzania. Phase 1 shown in color and Phase 2 in white.
Finished nickel, copper and cobalt metal cathode samples produced at Lifezone’s laboratory
As announced in July, Lifezone has produced nickel, copper and cobalt cathode samples via the semi-continuous pilot scale refinery test work underway at the Company’s Simulus Laboratory in Perth, Australia. The metals were produced from flotation concentrate derived from borehole core samples at the Kabanga. This milestone marks the first metal ever produced from Kabanga mineralization since the deposit’s initial discovery in 1975 by the United Nations Development Program.
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Figure 3: Nickel, copper and cobalt samples produced by Hydromet from Kabanga source material through pilot test work completed at Lifezone’s laboratory in Perth, Australia.
Tanzanian infrastructure build-out – progress in rail connectivity and clean hydropower generation
Kabanga stands to benefit from significant investments being made into Tanzanian infrastructure. Recently, notable progress was demonstrated in both rail and power.
Rail
Inaugural Standard Gauge Railway service began in June between the port city of Dar es Salaam on the Indian Ocean and the city of Morogoro, covering approximately 300 kilometers. This marked the completion of Phase 1 of the Standard Gauge Rail construction project. The Phase 2 project was completed in late-July, connecting Morogoro to Makutupora, located just outside Tanzania’s capital city of Dodoma, adding another approximately 420 kilometers. The Standard Gauge Rail project is a nation-wide upgrade of the existing metre gauge rail system connecting Dar es Salaam to the city of Mwanza, located on the shore Lake Victoria in northern Tanzania.
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Construction of Tanzania’s Standard Gauge Rail is comprised of six total construction phases, with a scheduled end-date in 2026. The Standard Gauge Railway system uses electric locomotives to move trains carrying cargo and passengers that can travel at a speed of 160 kilometers per hour (~100 miles per hour). The Kabanga Nickel Project stands to significantly benefit from this important national project, which will connect the Hydromet refinery at Kahama to the port of Dar es Salaam. The Definitive Feasibility Study will contemplate truck transport of concentrate from the Kabanga site to the Hydromet refinery in Kahama, a distance of approximately 350 kilometers, with the produced refined nickel, cobalt and copper being sent via rail to the port of Dar es Salaam.
Future expansions of the Standard Gauge Rail system could include a branch to the neighboring country of Burundi, which would likely pass near to the Kabanga site and potentially eliminate the need for road haulage between Kabanga and the Hydromet refinery at Kahama.
Figure 4: Map showing the planned Standard Gauge Rail network. Phase 1 Dar es Salaam to Morogoro was completed in June (image source: TanzaniaInvest; Kabanga and Kahama Hydromet Refinery locations added by Lifezone).
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Power
The Tanzania Electric Supply Company Limited (“TANESCO”) is now generating surplus electricity at the Julius Nyerere Hydro Power Project after switching on Turbine #7. Under construction since 2019, the Julius Nyerere Hydro Power Project began generating clean hydroelectric power in Q1 2024. It is now nearing completion with a total of nine turbines set to generate approximately 2.4 gigawatts of green electricity into the national power grid.
Figure 5: Aerial view of the Julius Nyerere Hydro Power Project (image source: IPP Media – The Guardian).
Regular access to clean, green and reliable power is important for the Kabanga Nickel Project, with the Julius Nyerere Hydro Power Project being one of three hydroelectric plants that form part of Tanzania’s Power System Master Plan. In addition, there is the 80-megawatt Rusumo Hydroelectric Power Station (commissioned in Q4 2023) and the 88-megawatt Kakono Hydroelectric Power Station (scheduled for late-2028).
As announced in Q1 2024, TANESCO completed construction and installation of a 33-kilovolt power line connecting the Kabanga Nickel Project operations camp to the national power grid. With reliable grid electricity, Kabanga has been able to end its reliance on more emissions-intensive diesel generators.
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Figure 6: Map showing the locations of the Julius Nyerere Hydro Power Project (2.4 gigawatts; Turbine #7 recently commissioned), Rusumo Hydroelectric Power Station (80 megawatts) and Kakono Hydroelectric Power Station (88 megawatts; expected 2028).
Close collaboration with all Kabanga Nickel Project partners and stakeholders continues
Key to moving the Kabanga Nickel Project forward is close collaboration amongst all project partners and stakeholders. To this end, regular meetings have been held between Lifezone, BHP and the Government of Tanzania from May to finalize the Joint Financial Model. This is based on the technical parameters determined through the Definitive Feasibility Study, and forms the basis of the sharing of the economic benefits between Lifezone and BHP, as the funding shareholders, and the Government of Tanzania – as outlined in the Framework Agreement signed in January 2021. It is also the basis for the valuation of BHP’s potential T2 option earn-in post Definitive Feasibility Study completion.
The Government of Tanzania has a 16% free-carried interest, while BHP currently has a 14.3% indirect interest in the Kabanga Nickel Project with an option increase its indirect ownership to 51% following completion of the Definitive Feasibility Study and the Joint Financial Model.
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Figure 7: Map showing the location of the Kabanga Special Mining Licence area.
Compensation payments largely completed to those persons affected by the Kabanga Nickel Project
With the future construction of the Kabanga Nickel Project, within the Special Mining Licence 349 local households will be physically impacted (i.e., houses and land title impacted) and 990 will likely be economically impacted (i.e., land title impacted). In 2023, Lifezone worked proficiently to update and improve a previous 2013 Relocation-Resettlement Action plan, and the Lifezone Resettlement Action Plan was submitted to the Tanzanian Ministry of Minerals in August 2023.
By the end of 2023, Lifezone achieved key resettlement milestones, including obtaining the Tanzanian Chief Government Valuer sign-off on the compensation schedule and valuation for land acquisition and relocation.
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The initiation of compensation payments to affected households commenced on November 6th, 2023, and payments are 95% complete to date, with the aim to complete the remaining affected households as soon as possible. To date, a total of TZS 26.7 billion (US$10.5 million) was paid to 1,260 affected households. Our community team is actively engaged in identifying and supporting community members who have not received their payments, often related to missing documentation. The completion of compensation payments will give Lifezone legal surface title to the entire ~4,300 hectares of the Kabanga Special Mining Licence area.
In June, the resettlement model houses showcase began, and five model houses have been built following discussions with affected persons. Households that will be physically displaced by the Kabanga Nickel Project are entitled to select from one of two different styles of replacement house. Those who will be affected have participated in a process of balloting for preferred resettlement sites, as well as selecting and influencing the housing materials, structures and design. Feedback following the initial showcase is being addressed ahead of final construction and relocation. Lifezone will build approximately 410 new houses for resettlement at land selected in cooperation with government and local working groups.
Figure 8:Residents of Nyabihungo in Rwinyana village, visited the Mukubu Model House in Muganza Ward - June 2024.
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Figure 9: An exclusive feedback session on the model houses with women who will be physically affected by the Kabanga Nickel Project, hosted in Nangeli, Rwinyana - July 2024.
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Sustainability is a foundational consideration in all decisions taken by Lifezone
Lifezone’s sustainability strategy encompasses all global operations, including Tembo Nickel (Lifezone’s Tanzanian subsidiary), Lifezone Asia-Pacific and its subsidiary operations (in Perth, Australia), Lifezone Recycling (USA) and Lifezone’s corporate office in London. The primary focus has been on the environmental, social and development plans at the Kabanga Nickel Project.
In Tanzania, our shared goal is for in-country beneficiation, enabling Tanzania to achieve value creation and realize benefits from the full supply chain: from mining through to finished metal. With the application of Lifezone’s Hydromet Technology, the Kabanga Nickel Project is expected to produce a greener, cleaner metal product in Tanzania, by Tanzanians. Recent sustainability-related highlights include:
| ● | Early implementation of Sustainability Accounting Standards Board reporting, focusing on data gathering for the most relevant and material sustainability impacts. |
| ● | Continued monitoring of sustainability-linked risks and identification of opportunities. |
| ● | Lifezone has engaged Minviro Ltd. – a leading Life Cycle Assessment consulting firm, based in London, UK – to conduct a Life Cycle Assessment of the Kabanga Nickel Project utilising the data derived from the Feasibility Study. This will involve an analysis of the various project impacts, from planned extraction through to the production of finished metals. Additionally, Minviro will conduct a second Life Cycle Assessment of our planned platinum, palladium and rhodium recycling project in the US. The goal is to complete both Life Cycle Assessments in early 2025. |
| ● | The 2024 Social Investment and Corporate Social Responsibility plan for Kabanga was completed in Q2 2024 and has been submitted to the District Council in July 2024, with the signing ceremony planned for Q3 2024. This year’s Plan continues to specifically focus on health and education in project affected communities. |
| ● | The Tanzanian National Environment Management Council visited the Kabanga Nickel Project in June as part of their review of the Environmental Impact Assessment for proposed developments within the designated resettlement sites. Receipt of the approved Environmental Impact Assessment for resettlement is expected in Q3 2024. |
| ● | Eight water boreholes were drilled and completed at the resettlement sites, which have confirmed sufficient clean water is available for community use. Initial testing has indicated high water quality, and sampling and monitoring remains ongoing. |
| ● | The Local Skills and Supplier Mapping Roadshows completed in 2023 have provided Lifezone with a database of local skills and service providers within neighboring communities. Through the active use of this database, Lifezone has engaged and employed +420 local short-term workers in H1 2024. As a specific example, Lifezone facilitated a contract between two local farming cooperatives and the principal food vendor for the Kabanga camp. |
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Figure 10: Members of the Abashirahamwe Group Ltd., a local company from Bugarama Village, one of three business startups that have been supported by the Kabanga Nickel Project and provides goods and services to the Project.
Figure 11:Attending to the tree-nurseries at Ndovu Camp. Once matured, these trees will be used to rehabilitate completed exploration drill pads.
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Figure 12: Lifezone’s Chief Operating Officer Gerick Mouton and members of the Lifezone team visiting a local café, Shuku Catering & Bar, that was recently constructed by a person that will be physically displaced by the Kabanga Nickel Project using proceeds from their resettlement compensation.
Figure 13: Elivila Frederick, from Rwinyana Village, Bugarama Ward, working on camp upgrades at the Kabanga Nickel Project - July 2024.
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Figure 14: Digna Isdory, Senior Environmental Officer, instructing Rwinyana Primary School students on the correct way to plant trees – June 2024.
Healthy Financial Position
As of June 30, 2024, Lifezone Metals had unaudited interim consolidated cash and cash equivalents of $63.5 million, a decrease of $16.1 million from $79.6 million as of March 31, 2024. The decrease reflects cash usage of $21.0 million, partially offset by $4.9 million of proceeds from the 2024 convertible debenture placement that were received in April.
As of June 30, 2024, a total of $10.4 million was spent on compensation payments for those households that will be physically or economically displaced by the Kabanga Nickel Project. This activity started in November 2023, with $2.2 million spent to December 31, 2023 and $8.2 million spent from January 1, 2024 to June 30, 2024, resulting in 94% of the compensation payments completed by the end of Q2 2024. Since H1, an additional compensation payment has been made and as of August 19, 2024, total compensation since initiation amounted to $10.5 million, taking compensation payments to 95% complete.
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TODAY: webcast with Lifezone’s senior management at 10 AM ET
The Company invites shareholders, investors, and members of the media to join the executive team for a virtual presentation and discussion of Lifezone’s recent activities, H1 financial statements and outlook. The presentation will be followed by a Q&A session where participants can engage directly with senior management.
Event details:
| ● | Date: Monday, August 19, 2024 |
| ● | Time: 10:00 AM Eastern Time |
| ● | Location: Location: Virtual (please click the webcast registration link). |
The presentation slides will be available on Lifezone’s website. The webcast will be archived and accessible for replay for a limited time after the event.
Contact
|
Investor Relations – North America
Evan Young SVP: Investor Relations & Capital Markets evan.young@lifezonemetals.com |
Investor Relations – Europe
Ingo Hofmaier Chief Financial Officer ingo.hofmaier@lifezonemetals.com |
|
Media Enquiries
David Petrie Manager: Corporate Communications david.petrie@lifezonemetals.com |
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About Lifezone Metals
At Lifezone Metals (NYSE: LZM), our mission is to provide cleaner and more responsible metals production and recycling. Using a scalable platform underpinned by our Hydromet Technology, we offer the potential for lower energy, lower emission and lower cost metals production compared to traditional smelting.
Our Kabanga Nickel Project in Tanzania is believed to be one of the world’s largest and highest-grade undeveloped nickel sulfide deposits. By pairing with our Hydromet Technology, we are working to unlock a new source of LME-grade nickel, copper and cobalt for the global battery metals markets, to empower Tanzania to achieve full in-country value creation and become the next premier source of Class 1 nickel. A Definitive Feasibility Study for the project is due for completion in Q3 2024.
Through our US-based, platinum, palladium and rhodium recycling partnership, we are working to demonstrate that our Hydromet Technology can process and recover platinum group metals from responsibly sourced spent automotive catalytic converters in a cleaner and more efficient way than conventional smelting and refining methods.
www.lifezonemetals.com
Forward-Looking Statements
Certain statements made herein are not historical facts but may be considered “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended and the “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995 regarding, amongst other things, the plans, strategies, intentions and prospects, both business and financial, of Lifezone Metals Limited and its subsidiaries.
Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” or the negatives of these terms or variations of them or similar terminology or expressions that predict or indicate future events or trends or that are not statements of historical matters; provided that the absence of these does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements regarding future events, the estimated or anticipated future results of Lifezone Metals, future opportunities for Lifezone Metals, including the efficacy of Lifezone Metals’ hydrometallurgical technology (Hydromet Technology) and the development of, and processing of mineral resources at, the Kabanga Project, and other statements that are not historical facts.
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These statements are based on the current expectations of Lifezone Metals’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Lifezone Metals and its subsidiaries. These statements are subject to a number of risks and uncertainties regarding Lifezone Metals’ business, and actual results may differ materially. These risks and uncertainties include, but are not limited to: general economic, political and business conditions, including but not limited to the economic and operational disruptions; global inflation and cost increases for materials and services; reliability of sampling; success of any pilot work; capital and operating costs varying significantly from estimates; delays in obtaining or failures to obtain required governmental, environmental or other project approvals; changes in government regulations, legislation and rates of taxation; inflation; changes in exchange rates and the availability of foreign exchange; fluctuations in commodity prices; delays in the development of projects and other factors; the outcome of any legal proceedings that may be instituted against the Lifezone Metals; our ability to obtain additional capital, including use of the debt market, future capital requirements and sources and uses of cash; the risks related to the rollout of Lifezone Metals’ business, the efficacy of the Hydromet Technology, and the timing of expected business milestones; the acquisition of, maintenance of and protection of intellectual property; Lifezone’s ability to achieve projections and anticipate uncertainties (including economic or geopolitical uncertainties) relating to our business, operations and financial performance, including: expectations with respect to financial and business performance, financial projections and business metrics and any underlying assumptions; expectations regarding product and technology development and pipeline and market size; expectations regarding product and technology development and pipeline; the effects of competition on Lifezone Metals’ business; the ability of Lifezone Metals to execute its growth strategy, manage growth profitably and retain its key employees; the ability of Lifezone Metals to reach and maintain profitability; enhancing future operating and financial results; complying with laws and regulations applicable to Lifezone Metals’ business; Lifezone Metals’ ability to continue to comply with applicable listing standards of the NYSE; the ability of Lifezone Metals to maintain the listing of its securities on a U.S. national securities exchange; our ability to comply with applicable laws and regulations; stay abreast of accounting standards, or modified or new laws and regulations applying to our business, including privacy regulation; and other risks that will be detailed from time to time in filings with the U.S. Securities and Exchange Commission (SEC).
The foregoing list of risk factors is not exhaustive. There may be additional risks that Lifezone Metals presently does not know or that Lifezone Metals currently believes are immaterial that could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Lifezone Metals’ expectations, plans or forecasts of future events and views as of the date of this communication. Lifezone Metals anticipates that subsequent events and developments will cause Lifezone Metals’ assessments to change.
These forward-looking statements should not be relied upon as representing Lifezone Metals’ assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements. Nothing herein should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results in such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which are based upon information available to us as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. In all cases where historical performance is presented, please note that past performance is not a credible indicator of future results.
Except as otherwise required by applicable law, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data, or methods, future events, or other changes after the date of this communication.
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Exhibit 99.2
LIFEZONE METALS LIMITED
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS
for the three and six months ended June 30, 2024
1
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
for the three and six months ended June 30, 2024, and June 30, 2023
| Three months ended | Six months ended | |||||||||||||||||
| June 30 | June 30 | |||||||||||||||||
| Note | 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| 5 | ||||||||||||||||||
| (Including related party revenues of $Nil and $Nil, $Nil and $495,048 for the three months end and six months ended June 30, 2024, and 2023, respectively) | ||||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ||||||||||||||
| Gross profit | ||||||||||||||||||
| Loss (gain) on foreign exchange | 9 | ( | ) | |||||||||||||||
| General and administrative expenses | 9 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest income | 6 | |||||||||||||||||
| Fair value loss on embedded derivatives | 19 | ( | ) | ( | ) | |||||||||||||
| Interest expense | 7 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Loss before tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax | ||||||||||||||||||
| Loss for the financial period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other comprehensive loss | ||||||||||||||||||
| Other comprehensive loss that may be reclassified to profit or loss in subsequent periods (net of tax): | ||||||||||||||||||
| Exchange loss on translation of foreign operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other comprehensive loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other comprehensive loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss for the period: | ||||||||||||||||||
| Attributable to ordinary shareholders of the company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
| Total comprehensive loss: | ||||||||||||||||||
| Attributable to ordinary shareholders of the company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
| Net loss per share: | ||||||||||||||||||
| 23 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| /s/ Ingo Hofmaier |
Ingo Hofmaier Chief Financial Officer
Date: August 19, 2024
See accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
2
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
as of June 30, 2024, and December 31, 2023
| Note | June 30, 2024 | December 31, 2023 | ||||||||
| $ | $ | |||||||||
| Assets | ||||||||||
| Non-current assets | ||||||||||
| Goodwill | 14 | |||||||||
| Exploration and evaluation assets and mining data | 16 | |||||||||
| Patents | 15 | |||||||||
| Other intangible assets | 15 | |||||||||
| Property and equipment | 13 | |||||||||
| Right-of-use assets | 13 | |||||||||
| Current assets | ||||||||||
| Inventories | 11 | |||||||||
| Trade and other receivables | 12 | |||||||||
| Related party receivables | 21 | |||||||||
| Cash and cash equivalents | 10 | |||||||||
| Total assets | ||||||||||
| Liabilities and equity | ||||||||||
| Equity | ||||||||||
| Share capital | 22 | |||||||||
| Share premium | 22 | |||||||||
| Shared based payment reserve | 22 | |||||||||
| Warrant reserves | 22 | |||||||||
| Other reserves | 22 | ( | ) | ( | ) | |||||
| Foreign currency translation reserve | 22 | |||||||||
| Redemption reserve | 22 | |||||||||
| Accumulated deficit | 22 | ( | ) | ( | ) | |||||
| Total Shareholders’ equity | ||||||||||
| Non-controlling interests | 22 | |||||||||
| Total equity | ||||||||||
See accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
3
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
as of June 30, 2024, and December 31, 2023
| Note | June 30, 2024 | December 31, 2023 | ||||||||
| $ | $ | |||||||||
| Non-current liabilities | ||||||||||
| Lease liabilities | 18 | |||||||||
| Current liabilities | ||||||||||
| Lease liabilities | 18 | |||||||||
| Trade and other payables | 17 | |||||||||
| Convertible debentures and embedded derivatives | 19 | |||||||||
| Deferred consideration liability | 20 | |||||||||
| Related party payables | 21 | |||||||||
| Total liabilities | ||||||||||
| Total equity and liabilities | ||||||||||
| /s/ Ingo Hofmaier |
Ingo Hofmaier
Chief Financial Officer
Date: August 19, 2024
See accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
4
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
for the six months ended June 30, 2024, and June 30, 2023
| Note | Share Capital | Share Premium | Shared Based Payment Reserve | Warrant Reserves | Other Reserves | Foreign currency translation reserve | Redemption Reserve | Accumulated Deficit | Total Shareholders’ equity | Non- controlling Interest | Total
equity | |||||||||||||||||||||||||||||||||||
| At January 1, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Total loss for the interim financial period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income for the interim financial period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| At June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| At January 1, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||||||||||||||||||||
| Glencore contribution in US Recycling LLC | ||||||||||||||||||||||||||||||||||||||||||||||
| Total transactions with shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
| Total loss for the interim financial period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Total other comprehensive income for the interim financial period | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| At June 30, 2024 | 22 | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
See accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
5
UNAUDITED CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
for the six months ended June 30, 2024, and June 30, 2023
| June 30, | June 30, | |||||||||
| Note | 2024 | 2023 | ||||||||
| $ | $ | |||||||||
| Cash flows from operating activities | ||||||||||
| Consolidated loss for period | ( | ) | ( | ) | ||||||
| Adjustments for: | ||||||||||
| Share-based compensation expense | 22 | |||||||||
| Interest income | 6 | ( | ) | ( | ) | |||||
| Amortization of intangibles | 15 | |||||||||
| Foreign exchange (gain) loss | ( | ) | ||||||||
| Loss of disposal on property and equipment | ||||||||||
| Impairment for VAT receivable | 9 | |||||||||
| Fair value loss on embedded derivatives | 19 | |||||||||
| Interest expense | 7 | |||||||||
| Depreciation of property and equipment and right-of-use assets | 13 | |||||||||
| Operating loss before working capital changes | ( | ) | ( | ) | ||||||
| Changes in trade and other receivables | ( | ) | ( | ) | ||||||
| Changes in related party receivables | 21 | ( | ) | |||||||
| Changes in inventories | ( | ) | ( | ) | ||||||
| Changes in other current assets | ( | ) | ||||||||
| Changes in prepaid mining license | ||||||||||
| Changes in related party payables | 21 | ( | ) | |||||||
| Changes in trade and other payables | 15 | ( | ) | |||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||||
| Cash flows from investing activities | ||||||||||
| Interest received from bank | 6 | |||||||||
| Patent costs incurred | 15 | ( | ) | ( | ) | |||||
| Expenditure on property and equipment | 13 | ( | ) | ( | ) | |||||
| Expenditure on other intangible assets | 15 | |||||||||
| Investment in exploration and evaluation assets | 16 | ( | ) | ( | ) | |||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Issue of share capital | 22 | |||||||||
| Proceeds from loans and borrowings, net of transaction cost | 19 | |||||||||
| Payment of debenture interest | 19 | ( | ) | |||||||
| Payment of lease liabilities | 18 | ( | ) | ( | ) | |||||
| Proceeds from receipt of subscription receivable, net of costs | 22 | |||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||
| Net increase in cash and cash equivalents | ||||||||||
| Cash and cash equivalents | ||||||||||
| Effect of exchange rate changes in cash | ( | ) | ||||||||
| Beginning of period | ||||||||||
| End of period | ||||||||||
See accompanying notes to Unaudited Condensed Consolidated Interim Financial Statements.
6
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
1. Corporate and Group information
1.1. General information
Lifezone Metals Limited (the Company, individually and together with its controlled subsidiaries “Lifezone”) is a limited company incorporated and domiciled in the Isle of Man, whose shares have publicly traded on the New York Stock Exchange (“NYSE”) since July 6, 2023, under the trading symbol LZM. Lifezone’s warrants trade on the NYSE under the symbol LZMW.
The Company’s registered office is located at Commerce House, 1 Bowring Road, Ramsey, IM8 2LQ, Isle of Man.
The Unaudited Condensed Consolidated Interim Financial Statements of Lifezone for the six months ended June 30, 2024, were authorized for release in accordance with a resolution of the Directors of Lifezone on August 17, 2024.
1.2. Business overview
Lifezone aims to provide cleaner metals solutions for the global supply chain through the development, patenting, and licensing of its hydrometallurgical processing technology (“Hydromet Technology”), which has applicability to the extractive metallurgy, minerals, and metals recycling industries.
Lifezone’s primary metals asset is the Kabanga Nickel Project in Tanzania, believed to be one of the world’s largest and highest-grade undeveloped nickel sulfide deposits.
Lifezone’s management has technical expertise in hydrometallurgical refining, a track record of building and operating mines and commercial capabilities to finance projects of this scale.
1.3. Hydromet Technology overview
Lifezone’s Hydromet Technology is amenable to processing and refining metals from sulfide minerals containing nickel, copper, cobalt, platinum, palladium, rhodium and gold. As of June 30, 2024, Lifezone has 6 active patent families comprising 162 granted patents in a total of 67 countries. Within the same patent families, Lifezone has an additional 102 patent applications pending across multiple countries.
Compared to traditional pyrometallurgical smelting and refining technologies, Lifezone’s Hydromet Technology is expected to produce less carbon dioxide emissions per ton of metal produced with zero sulfur dioxide emissions, be more capital and operating cost efficient, have faster processing times and enable fully traceable refined LME-grade metals to enable enhanced supply chain transparency.
On July 18, 2023, Lifezone acquired The Simulus Group (“Simulus”), a leading hydrometallurgical laboratory and engineering company located in Perth, Australia. Prior to the acquisition, Simulus generated revenue by providing external hydrometallurgical test work and engineering services to a broad range of clients in the mining industry, including Lifezone. As of June 30, 2024, the primary activity at the Simulus laboratory has been the construction and operation of two Hydromet pilot plants at its premises in Perth, that will substantiate the applicability of Lifezone’s Hydromet Technology for its two core commercial projects, the Kabanga Nickel Project and the recycling of platinum, palladium and rhodium (together, “platinum group metals” or “PGMs”) from salvaged automotive catalytic converters.
7
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
1. Corporate and Group information (continued)
1.3. Hydromet Technology overview (continued)
Lifezone is focused on commercializing its Hydromet Technology across the metals and mining industry. Research and development are continuous alongside the broadening of Lifezone’s intellectual property portfolio through applications for additional patents to be applied to new opportunities in other metal groups and deposit types. Lifezone seeks to ensure that its Hydromet Technology remains protected through patent applications. In addition, Simulus is expected to have capacity in the future to provide revenue-generating bespoke test work and engineering services for external clients.
1.4. Kabanga Nickel Project
Lifezone’s primary metals asset is the Kabanga deposit in north-west Tanzania. Approximately 340 kilometers from Kabanga, a refinery is anticipated to be constructed that will utilize Lifezone’s Hydromet Technology to unlock a new source of fully traceable LME-grade nickel, copper and cobalt for the global battery metals markets, to empower Tanzania to achieve full in-country value creation and become the next premier source of Class 1 nickel. The refinery is expected to be located at a brownfield site in Kahama with existing infrastructure, a trained workforce and nearby rail, roads and airstrip. The results of the ongoing study work for the Kabanga Nickel Project are expected to be completed in Q3 2024.
In
October 2021, the government of Tanzania issued the Special Mining License (“SML”) over the Kabanga deposit area,
and in March 2024, a Refining License was issued at the proposed refinery location in Kahama. The Government of Tanzania is a
In
December 2021, BHP invested $
Lifezone is engaged in commercial discussions with global customers to monetize its portion of marketing rights with an offtake transaction. The end users of finished products from Kabanga are expected to be involved in the supply chain of battery electric vehicles that will support the global energy transition towards decarbonization.
8
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
1. Corporate and Group information (continued)
1.5. Platinum, palladium and rhodium recycling project in the United States
Lifezone’s
Hydromet Technology intellectual property was initially conceived from test work on PGM mineral concentrates, and it’s the first
test work and scoping study was undertaken in 2014 to demonstrate the successful recovery of PGMs from spent automotive catalytic converters
(“autocats”). Today, over
Recycling is expected to play an important role as an alternative supply of critical metals. However, current recycling practices, involving conventional smelting and refining, compound the carbon dioxide emissions intensity of metal units. Through the application of its Hydromet Technology, Lifezone intends to break this energy-intensive and pollutive recycling chain by providing a cleaner, lower-emissions and responsibly sourced recycling solution.
Through Lifezone’s partnership with Glencore, a major and diversified participant in global commodities, the Company is evaluating the design and construction of a commercial-scale Hydromet PGM recycling facility in the United States to recycle PGMs from autocat material.
In
January 2024, Lifezone and Glencore each funded $
2. Significant transactions
This section provides additional information which will outline how changes in the Lifezone group structure have impacted the financial position and performance of Lifezone as a whole, and the events that have occurred in the last two years impacting the financial position and performance of the periods presented in this report.
2.1. BHP investments
On
December 24, 2021, KNL entered into a $
9
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
2. Significant transactions (continued)
2.2. SPAC Transaction
On December 13, 2022, Lifezone and GoGreen Investments Corporation (“GoGreen”), an exempted special purchase acquisition company (“SPAC”) incorporated under the laws of the Cayman Islands and formerly listed on the NYSE, entered into a business combination agreement (“BCA”) with GoGreen Sponsor 1 LP, a Delaware limited partnership (the “Sponsor”), Aqua Merger Sub, a Cayman Islands exempted company (the “Merger Sub”), and Lifezone Holdings.
Lifezone
Holdings Limited (“Lifezone Holdings”) was formed as a holding company for Lifezone Limited and acquired
The Company, Lifezone Holdings and GoGreen consummated the SPAC Transaction pursuant to the BCA on July 6, 2023 (the “Closing” and the “Closing Date” respectively). The transaction was unanimously approved by GoGreen’s Board of Directors and was approved at the extraordinary general meeting of GoGreen’s shareholders held on June 29, 2023, together with all other proposals put to GoGreen shareholders. As a result of the SPAC Transaction, the Merger Sub, as the surviving entity after the SPAC Transaction, and Lifezone Holdings each became wholly owned subsidiaries of the Company. Lifezone is considered the accounting acquirer, as Lifezone shareholders hold the majority of shares in the combined entity following the acquisition. Lifezone’s key management personnel continues to direct the combined business and Lifezone set the direction of the board composition.
The
SPAC Transaction was accounted for as a capital reorganization (“Reorganization”). Under this method of accounting,
GoGreen was treated as the “acquired” company for financial reporting purposes, with Lifezone being the accounting acquirer
and accounting predecessor. Accordingly, the Reorganization was treated as the equivalent of the Company issuing shares at Closing of
the Reorganization for the net assets of GoGreen, accompanied by a recapitalization via a Private Investment in Public Equity (“PIPE”)
transaction. The Reorganization, which was not within the scope of IFRS 3 since GoGreen did not meet the definition of a business in
accordance with IFRS 3, was accounted for within the scope of IFRS 2. In accordance with IFRS 2, Lifezone recorded a one-time non-cash
expense of $
The
BCA was signed concurrent to the closing of the PIPE transaction, which raised $
10
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
2. Significant transactions (continued)
2.2. SPAC Transaction (continued)
Cash
inflows from the SPAC transaction amounted to $
Prior
to the Closing, the SPAC incurred
Following
the Closing, Lifezone shareholders comprised all prior shareholders of Lifezone Holdings, prior shareholders of GoGreen (including its
public shareholders post-redemptions and Sponsor shareholders) plus all PIPE investors resulting in Lifezone having a total of
Pursuant
to earnout arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional Lifezone shares if the
daily volume-weighted average price of Lifezone shares equals or exceeds (i) $
Lifezone’s
Form F-1 registration statement became effective on September 29, 2023, registering the resale of certain Lifezone Metals shares and
(private) warrants owned by certain previous Lifezone Holdings shareholders, the Sponsor shareholders (including its limited partners),
PIPE investors and the sellers of the Simulus business. Pursuant to the BCA, a 180-day lock-up period following the Closing Date applied
to (i)
2.3. Simulus acquisition
On March 3, 2023, Lifezone Asia-Pacific Pty Ltd, a wholly owned subsidiary of Lifezone, signed a share sale agreement with the owners of The Simulus Group, a leading hydrometallurgical laboratory and engineering company located in Perth, Australia.
The
transaction formally closed on July 18, 2023, for a total consideration of $
11
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
2. Significant transactions (continued)
2.4. Platinum, palladium and rhodium recycling project in the United States
On January 10, 2024, Lifezone signed a subscription agreement and completion of funding for Phase 1 of partnership with a wholly owned subsidiary of Glencore plc (LSE: GLEN) for a PGM recycling project which will utilize Lifezone’s Hydromet Technology.
Phase 1 of the project implementation is already underway and involves a confirmatory pilot program and feasibility study at Simulus in Perth, Australia. Following successful completion of Phase 1, Phase 2 will involve the Company and Glencore jointly funding the capital expenditures required to construct a commercial-scale PGM recycling facility in the United States.
The
signing of the Subscription Agreement, along with the completion of Phase 1 funding, means the estimated $
2.5. Issuance of unsecured convertible debentures
On
March 27, 2024, Lifezone completed a $
Further information on the accounting of the convertible debenture transaction is provided in Note 19.
3. Basis of preparation, significant accounting policies and estimates
3.1. Basis of preparation
Lifezone’s Unaudited Condensed Consolidated Interim Financial Statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” under the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and are reported in U.S. dollars (“USD” or “$”).
These Unaudited Condensed Consolidated Interim Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements contained on its Form 20-F for the year ended December 31, 2023, as some disclosures from the annual consolidated financial statements have been condensed or omitted.
These Unaudited Condensed Consolidated Interim Financial Statements incorporate the financial statements of the Company and its controlled subsidiaries as of June 30, 2024. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany balances, transactions, income and expenses are eliminated on consolidation.
The information furnished herein reflects all normal recurring entries, that are in the opinion of management, necessary for a fair statement of the results for the interim periods reported.
12
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.1. Basis of preparation (continued)
Operating results for the six-month period ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
The Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a historical cost basis unless otherwise stated.
3.2. Going concern
The
management of Lifezone has assessed the going concern assumptions of Lifezone during the preparation of these Unaudited Condensed Consolidated
Interim Financial Statements. As of June 30, 2024, Lifezone had consolidated cash and cash equivalents of $
The Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a going concern basis which contemplates the continuity of normal business activities, the realization of assets and discharge of liabilities in the ordinary course of business. Lifezone has not generated significant revenues from operations and, as common with many exploration-stage mining companies, Lifezone raises financing for its exploration, study and research and development activities in discrete tranches. Based on Lifezone’s current and anticipated liquidity and funding requirements, Lifezone will need additional capital in the future to fund its operations and project developments. In the event Lifezone issues additional equity in the future, shareholders could face significant dilution in their holdings.
Lifezone’s future operating losses and capital requirements may vary materially from those currently planned and will depend on many factors including Lifezone’s growth rate, the execution of various growth projects, and the demand for the Hydromet Technology, exploration and evaluation cost and capital costs in relation to the Kabanga Nickel Project, and the demand and prices for the minerals we envision extracting in our metals extraction business and as well as for Lifezone’s working capital requirements.
To
enhance our liquidity position and increase our cash reserve for existing operations and future investments, we continue to explore arrangements
with potential customers for the offtake of the metals that we expect to produce in the future from the Kabanga Nickel Project, and we
may in the future seek equity, mezzanine, alternative or debt financing. Additionally, we may receive the proceeds from any exercise
of any warrants in cash. Each Lifezone warrant represents the right to purchase one ordinary Lifezone share at a price of $
We
believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive
is dependent upon the market price of our Lifezone ordinary shares. On August 16, 2024, the market price for our Lifezone ordinary shares
was $
13
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.2. Going concern (continued)
In the event that Lifezone is unable to secure sufficient funding, it may not be able to fully develop its projects, and this may have a consequential impact on the carrying value of the related exploration and evaluation assets and the investment in its subsidiaries as well as the going concern status of Lifezone. Given the nature of Lifezone’s current activities, it will remain dependent on equity, mezzanine, alternative or debt funding or monetizing the offtake from the Kabanga Nickel Project until such time as the Lifezone becomes self-financing from the commercial production of metals and minerals and royalties received from intellectual property rights linked to its Hydromet Technology. To the extent that Lifezone foresees increasing financing risks, jeopardizing the existence of Lifezone, Lifezone can accelerate the reduction of costs and aim for smaller, more targeted capital raises.
3.3. Accounting pronouncements
The accounting policies adopted in the preparation of the Unaudited Condensed Consolidated Interim Financial Statements are consistent with those followed in the preparation of the annual consolidated financial statements of the Company for the year ended December 31, 2023, except for the adoption of new standards effective as of January 1, 2024.
Lifezone has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2024, but do not have an impact on Unaudited Condensed Consolidated Interim Financial Statements of the Company, as follows:
| ● | Lease Liability in a Sale and Leaseback – Amendments to IFRS 16 Leases. |
| ● | Classification of liabilities as Current or Non-Current and Non-current Liabilities with Covenants – Amendments to IAS 1 Presentation of Financial Statements. |
| ● | Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures – Supplier Finance Arrangements. |
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New IFRS, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Lifezone’s financial statements.
3.4. Basis of consolidation
Consolidation of a subsidiary begins when Lifezone obtains control over the subsidiary and ceases when Lifezone loses control of the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the Company as the parent entity of Lifezone and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with Lifezone’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of Lifezone are eliminated on full consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If Lifezone loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest, and other components of equity, while any resultant gain or loss is recognized in profit or loss. Any investment remains recognized at fair value.
14
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.4. Basis of consolidation (continued)
Lifezone attributes total comprehensive income or loss of subsidiaries between the owners of the Company as the parent entity and the non-controlling interests based on their respective ownership interests.
| Principal | Percentage (%) | |||||||||||||||||||||
| Principal | Country of | place of | Ownership | NCI | Ownership | NCI | ||||||||||||||||
| Name of subsidiary | activities | incorporation | Business | 2024 | 2024 | 2023 | 2023 | |||||||||||||||
| Aqua Merger Sub (dissolved April 8, 2024) | % | % | % | % | ||||||||||||||||||
| Lifezone Holdings Limited | % | % | % | % | ||||||||||||||||||
| Lifezone Limited | % | % | % | % | ||||||||||||||||||
| Lifezone US Holdings Limited | % | % | % | % | ||||||||||||||||||
| Lifezone Holdings US, LLC | % | % | % | % | ||||||||||||||||||
| Lifezone Services US, LLC | % | % | % | % | ||||||||||||||||||
| Lifezone Recycling US, LLC | % | % | % | % | ||||||||||||||||||
| LZ Services Limited | % | % | % | % | ||||||||||||||||||
| Kabanga Holdings Limited | % | % | % | % | ||||||||||||||||||
| Kabanga Nickel Company Limited | % | % | % | % | ||||||||||||||||||
| Kabanga Nickel Limited | % | % | % | % | ||||||||||||||||||
| Kagera Mining Company Limited | % | % | % | % | ||||||||||||||||||
| Lifezone Asia-Pacific Pty Ltd | % | % | % | % | ||||||||||||||||||
| The Simulus Group Pty Limited | % | % | % | % | ||||||||||||||||||
| Simulus Pty Limited | % | % | % | % | ||||||||||||||||||
| Romanex International Limited | % | % | % | % | ||||||||||||||||||
| Tembo Nickel Corporation Limited | % | % | % | % | ||||||||||||||||||
| Tembo Nickel Mining Company Limited | % | % | % | % | ||||||||||||||||||
| Tembo Nickel Refining Company Limited | % | % | % | % | ||||||||||||||||||
Lifezone Holdings US, LLC, Lifezone US Holdings LLC and Lifezone Recycling US, LLC were incorporated on September 15, 2023, in the state of Delaware, USA. Lifezone US Holdings Limited was incorporated on September 12, 2023, in England and Wales. Excluding Lifezone Recycling US, LLC and Lifezone Services US, LLC, investments in these other entities as of June 30, 2023, reflect the nominal share value.
15
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.5. Foreign Private Issuer status
Given the Company is incorporated in the Isle of Man, it is considered a Foreign Private Issuer (“FPI”) under the securities laws of the U.S. and the rules of the NYSE.
In our capacity as an FPI, we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information. NYSE listing rules include certain accommodations in the corporate governance requirements that allow FPI, such as us, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of NYSE.
FPIs may prepare their financial statements using US GAAP; or IFRS pursuant to Regulation S-X Rule 4-01(a)(2). In the case of FPIs that use the English-language version of IFRS as issued by the International Accounting Standards Board, or IASB IFRS, no reconciliation to US GAAP is needed.
We may take advantage of these exemptions until such time as we are no longer an FPI. We are required to determine our status as an FPI on an annual basis at the end of each second fiscal quarter.
We would cease to be an FPI at such time as more than 50% of our outstanding voting securities are held by United States residents and any of the following three circumstances applies:
| 1. | the majority of our executive officers or directors are United States citizens or residents. |
| 2. | more than |
| 3. | our business is administered principally in the United States. |
If we lose our FPI status we would be required to comply with Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for FPIs.
FPI status requires implementing procedures and processes to address public company regulatory requirements and customary practices. Management expects to incur additional annual expenses as a public company.
16
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.6. Emerging Growth Company status
We are an Emerging Growth Company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the (“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. This includes, but is not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act” or “SOX”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We will continue to qualify as an EGC until the earliest to occur of:
| 1. | the last day of the fiscal year during which we had total annual gross revenues of US$ |
| 2. | the last day of our fiscal year following the fifth anniversary of the date of the first sale of equity securities pursuant to an effective registration statement under the Securities Act; |
| 3. | the date on which we have, during the previous 3-year period, issued more than US$ |
| 4. | the date on which we are deemed to be a “Large Accelerated Filer”, as defined in Exchange Act Rule 12b-2. Lifezone would become a Large Accelerated Filer if Lifezone has a public float of greater than $700.0 million, has been filing periodic reports for at least |
| 5. | Section 103 of the JOBS Act provides that an EGC is not required to comply with the requirement to provide an auditor’s report on ICFR under Section 404(b) of the Sarbanes-Oxley Act. An EGC still has to perform management’s assessment of internal control over financial reporting (SOX 404(a)) and the disclosure requirement of Item 308(a) of Regulation S-K). As Lifezone is a newly public company, a SOX phase-in exception applies whereby the management report is not required until the second annual report. |
On September 21, 2023, Lifezone engaged Mazars LLP, a specialist SOX compliance knowledge and internal controls expert to support the implementation of SOX compliance requirements to assist Lifezone to be SOX compliant by December 31, 2024.
We expect to continue to be an EGC for the foreseeable future.
17
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
3. Basis of preparation, significant accounting policies and estimates (continued)
3.7. Functional and reporting currency
These Unaudited Condensed Consolidated Interim Financial Statements are presented in USD, which is Lifezone’s functional currency, and all values are rounded to the nearest USD, except where otherwise indicated. The functional currency is the currency of the primary economic environment in which the entity operates. Accordingly, Lifezone measures its financial results and financial position in USD, expressed as $ in this document.
Lifezone incurs transactions mainly in USD, British Pounds (“GBP”), Australian Dollars (“AUD”) and Tanzanian Shillings (“TZS”).
The subsidiaries LZ Services Limited (“LZSL”) a company incorporated in England and Wales, and Lifezone Asia-Pacific Pty Ltd, a company incorporated in Australia, are both wholly-owned subsidiaries of Lifezone Limited, and have functional currencies as GBP and AUD respectively. Simulus and its subsidiary Simulus Pty Limited, both companies incorporated in Australia, are wholly owned subsidiaries of Lifezone Asia-Pacific Pty Ltd and have functional currencies of AUD.
3.8. Significant accounting judgements, estimates and assumptions
The preparation of Lifezone’s Unaudited Condensed Consolidated Interim Financial Statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, including contingent assets and liabilities, and the accompanying disclosures. Actual results may differ from these estimates and uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the future period.
Except as described below, the judgements, estimates and assumptions applied in these Unaudited Condensed Consolidated Interim Financial Statements, including the key sources of estimation uncertainty, were the same as those applied in Lifezone’s last annual financial statements for the year ended December 31, 2023.
Hybrid Financial Instruments: Convertible debentures with embedded derivatives
Lifezone has issued convertible debentures with embedded derivatives, classified as hybrid financial instruments, which are initially measured at fair value and adjusted for transaction costs.
The host debt instrument is classified and measured at amortized cost, while the embedded derivatives are accounted for separately at FVTPL.
On initial recognition, Lifezone uses the residual value method to allocate the principal amount of the convertible debentures between the two components: host debt instrument and embedded derivatives. The fair value with gains or losses recognized in profit or loss of the embedded derivative liability is valued first, followed by the residual amount assigned to the host debt instrument.
The effective interest method is a method for calculating the amortized cost of a financial liability, and for allocating the interest expenses throughout the relevant credit period. The effective interest rate is the rate which accurately discounts the forecasted future cash flows over the financial liability’s expected lifetime to its’ carrying value, or, when appropriate, over a shorter period.
18
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
4. Segment information
For
management purposes, Lifezone is organized into business units based on the main types of activities and has
| ● | Metals extraction and refining business; and |
| ● | Intellectual property (“IP”) licensing business. |
The Metals extraction and refining segment of the business consists of Lifezone’s interest in KNL, comprising the Kabanga Nickel Project in Tanzania. The IP segment comprises patents residing within Lifezone’s subsidiary, Lifezone Limited, and managed by a team of highly trained engineers and scientists based in Lifezone’s Simulus laboratory based in Perth, a strategic partnership with Sedibelo and Industrial Development Corporation (“IDC”) regarding the development of the potential Kell-Sedibelo-Lifezone Refinery and the agreement between the Company and Glencore plc to recycle platinum, palladium and rhodium in the United States.
The Chief Executive Officer ensures that the corporate strategy is being implemented and he manages Lifezone on a day-to-day basis, monitors the operating results of its two business units separately for the purpose of making decisions about resource allocation and performance assessment. He is Lifezone’s Chief Operating Decision Maker. Segment performance is evaluated based on cash flows, operating profit or loss before taxes and is measured with operating profit or loss in the Unaudited Condensed Consolidated Interim Financial Statements.
However, Lifezone’s financing and treasury operations are managed by a corporate center based in London.
Inter-segment eliminations and transactions are identified separately, and the combined segments’ information is reconciled to the Statement of Financial Position and Statement of Comprehensive Income.
Inter-segment revenues are eliminated upon consolidation and reflected in the ‘Inter-segment eliminations’ column.
19
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
4. Segment information (continued)
| Intellectual | Metals | Inter-Segment | ||||||||||||||||||
| Property | Extraction | Corporate (1) | eliminations | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| For the six months ended June 30, 2024 | ||||||||||||||||||||
| Revenue | ( | ) | ||||||||||||||||||
| Cost of Sales | ( | ) | ( | ) | ||||||||||||||||
| Gain (loss) on foreign exchange | ( | ) | ( | ) | ( | ) | ||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest income | ( | ) | ||||||||||||||||||
| Fair value loss on embedded derivatives | ( | ) | ( | ) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Loss before tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| For the period ended June 30, 2024 | ||||||||||||||||||||
| Segment assets | ( | ) | ||||||||||||||||||
| Segment liabilities, excluding Group debt | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Convertible debentures and embedded derivative | ( | ) | ( | ) | ||||||||||||||||
| Segment liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Intellectual | Metals | Inter-Segment | ||||||||||||||||||
| Property | Extraction | Corporate (1) | eliminations | Total | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| For the six months ended June 30, 2023 | ||||||||||||||||||||
| Revenue | ( | ) | ||||||||||||||||||
| Gain (loss) on foreign exchange | ( | ) | ||||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||||||
| Loss before tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| For the period ended June 30, 2023 | ||||||||||||||||||||
| Segment assets | ( | ) | ||||||||||||||||||
| Segment liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Included
within general and administrative expenses in 2023 are non-recurring listing and capital raising costs of $
| 1 |
20
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
5. Revenue
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Kellplant Proprietary Ltd | ||||||||||||||||
| Kelltechnology SA Proprietary Ltd | ||||||||||||||||
| Consulting and management fee with affiliated companies | ||||||||||||||||
| Non-affiliated company revenue | ||||||||||||||||
Revenue
is attributable to Hydromet consulting related to mineral beneficiation operations of affiliated companies and technical and laboratory
services provided by Simulus. The affiliated entities invoiced in 2023 are joint venture entities of Lifezone. Lifezone Limited has a
Non-affiliated
company revenue of $
6. Interest income
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Interest on shareholder loans | ||||||||||||||||
| Interest on treasury deposits | ||||||||||||||||
Lifezone
manages interest generating opportunities through corporate treasury operations by investing group cash in overnight SOFR or term deposit
facilities provided by its two main international banks. Lifezone earned interest averaged
Interest
income from cash and cash equivalents amounted to $
21
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
7. Interest expense
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| Interest accretion on deferred consideration | 20 | |||||||||||||||||
| Interest accretion on lease liability | 18 | |||||||||||||||||
| Debenture interest | 19 | |||||||||||||||||
| Other interest expenses | ||||||||||||||||||
Interest
accretion on deferred consideration liability relates to the KNL acquisition. For the six months ended June 30, 2024, this amounted to
$
Interest
on leases relate to Tanzania and Australia subsidiaries leased office and warehouse premises as disclosed in detail in Note 18. For the
six months ended June 30, 2024, this amounted to $
Debenture
interest relates to the convertible debenture instruction as Debenture interest as disclosed in detail in Note 19: for the six months
ended June 30, 2024, this amounted to $
8. Fair value loss on embedded derivatives
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Fair value loss on embedded derivatives | ||||||||||||||||
On
June 30, 2024, the embedded derivative liability component of the convertible debentures as disclosed in detail in Note 19, was reassessed
to be $
22
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9. General and administrative expenses
Six months ended June 30, | Six months ended change | |||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Wages & employee benefits | % | |||||||||||||||
| Professional & Legal fees | % | |||||||||||||||
| Consultancy fees | ( | ) | ( | )% | ||||||||||||
| Non-recurring listing and equity raising costs | ( | ) | ( | )% | ||||||||||||
| Directors' fees | % | |||||||||||||||
| Depreciation of property and equipment | % | |||||||||||||||
| Depreciation of right of use asset | % | |||||||||||||||
| Amortization of intangible assets | % | |||||||||||||||
| Audit & accountancy fees | % | |||||||||||||||
| Rent | % | |||||||||||||||
| Insurance | % | |||||||||||||||
| Laboratory costs | % | |||||||||||||||
| Impairment of VAT receivables | % | |||||||||||||||
| Travel | ( | ) | ( | )% | ||||||||||||
| Share based payments expense | % | |||||||||||||||
| Other administrative expenses | % | |||||||||||||||
| Total general administrative expenses | ( | ) | ( | )% | ||||||||||||
Net wages and employee benefits amounted to $
During the six months ending June 30, 2024, $
Professional and legal fees amounted to $
23
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9. General and administrative expenses (continued)
Consultancy fees costs of $
Non-recurring listing and equity raising costs
(including transaction listing cost) of $
Directors’ fees for the Company covering the seven
paid directors out the total
Depreciation of property and equipment and depreciation
of right of use assets are higher by $
Insurance cost increase largely reflects the impact
of higher D&O insurance premiums taken out following our listing on the NYSE. The annual D&O premium was pre-paid in July 2023
and was expensed over 12-months, with a pre-payment asset of $
Laboratory costs relate to consumables incurred
by Simulus amounting to $
The “Impairment of VAT receivable”
reflects the full impairment of the Tanzanian VAT receivable amounting to $
Other administrative expenses are higher by $
24
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
9. General and administrative expenses (continued)
Total general administrative expenses for the
six months ending June 30, 2024, include the impact of the Simulus operations, amounting to $
10. Cash and cash equivalents
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| USD – United States dollar | ||||||||
| GBP – Sterling | ||||||||
| EUR – EURO | ||||||||
| AUD – Australian dollar | ||||||||
| ZAR – South African Rand | ||||||||
| TZS – Tanzania Shilling | ||||||||
| Cash and cash equivalents | ||||||||
| Made up of: | ||||||||
| Cash at banks and on hand | ||||||||
| Short-term deposits | ||||||||
| Cash and cash equivalents | ||||||||
11. Inventories
| June 30, | December 31 | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Raw materials and consumables | ||||||||
| Fuel | ||||||||
Raw materials and consumables are consumed in the ordinary course of business during the rendering of services by Simulus.
Fuel is used by vehicles, machinery and for power generation in relation to the Kabanga Nickel Project and stored at the Kabanga camp site. These are attributable to exploration and evaluation activity and capitalized to exploration and evaluation assets as consumed.
25
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
12. Trade and other receivables
| June 30, | December 31, | |||||||||
| 2024 | 2023 | |||||||||
| $ | $ | |||||||||
| VAT/GST receivables | ||||||||||
| Other receivables | ||||||||||
| Prepayments | ||||||||||
| Prepaid mining license | ||||||||||
VAT / GST receivables are short term and receivable
within twelve months following applicable VAT refund application in the local tax jurisdiction. Lifezone has net VAT receivables (after
the Tanzanian VAT impairment as described in Note 9) with the United Kingdom, and Australian tax authorities amounting to $
Prepayments include a $
Prepayments have decreased in the six months ended
June 30, 2024, mainly due to the release of the $
The prepaid mining license relates to TNCL’s
requirement to pay an annual fee to maintain its mining license with the Tanzanian Mining Commission. The prepaid portion of the fee was
$
All other receivables are short term in nature.
26
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
13. Property and equipment and right-of-use assets
Lifezone’s property and equipment and right-of-use assets
include building, transportation equipment, and office and computer equipment.
| Buildings | Transportation equipment | Office and computer equipment | Laboratory and testing equipment | Total Property and equipment | Right-of-use assets | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost | ||||||||||||||||||||||||||||
| As at January 1, 2023 | ||||||||||||||||||||||||||||
| Additions from acquisitions | ||||||||||||||||||||||||||||
| Foreign exchange impact | ||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| As at December 31, 2023 | ||||||||||||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||||||||||
| As at January 1, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Exchange adjustments | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Charge for the period | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| As at December 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Cost | ||||||||||||||||||||||||||||
| As at January 1, 2024 | ||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||
| Disposals | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Lease reassessments | ||||||||||||||||||||||||||||
| Foreign exchange impact | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| As at June 30, 2024 | ||||||||||||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||||||||||
| As at January 1, 2024 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Charge for the period | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Disposals | ||||||||||||||||||||||||||||
| Lease reassessments | ( | ) | ( | ) | ||||||||||||||||||||||||
| Foreign exchange impact | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| As at June 30, 2024 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net book value: | ||||||||||||||||||||||||||||
| As at December 31, 2023 | ||||||||||||||||||||||||||||
| As at June 30, 2024 | ||||||||||||||||||||||||||||
There was no new lease agreement entered into during the six months ended June 30, 2024. The reassessment was triggered by an increase in lease payments.
27
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
14. Goodwill
| Cost | ||||
| As at January 1, 2023 | ||||
| Acquired through business combination | ||||
| As at December 31, 2023 | ||||
| As at June 30, 2024 | ||||
| Accumulated impairment | ||||
| As at January 1, 2023 | ||||
| As at December 31, 2023 | ||||
| As at December 31, 2023 | ||||
| As at June 30, 2024 | ||||
Goodwill relates to the acquisition of Simulus, a leading hydrometallurgical laboratory and engineering company located in Perth, Australia by Lifezone Asia-Pacific Pty Ltd on July 18, 2023, as disclosed in Note 1.
For the purpose of annual impairment testing, goodwill is allocated to the operating segments expected to benefit from the synergies of the business combinations in which the goodwill arises as set out below, and is compared to its recoverable value:
| Goodwill allocated to cash generating unit | ||||
| Goodwill | ||||
| As at December 31, 2023 | ||||
| As at June 30, 2024 | ||||
28
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
15. Patents and Other Intangibles
| Patents | Software | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Cost | ||||||||||||
| As at January 1, 2023 | ||||||||||||
| Additions during the period | ||||||||||||
| As at December 31, 2023 | ||||||||||||
| Accumulated amortization | ||||||||||||
| As at January 1, 2023 | ( | ) | ( | ) | ||||||||
| Charge for the period | ( | ) | ( | ) | ( | ) | ||||||
| As at December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||
| Carrying amount at December 31, 2023 | ||||||||||||
| Cost | ||||||||||||
| As at January 1, 2024 | ||||||||||||
| Additions during the period | ||||||||||||
| As at June 30, 2024 | ||||||||||||
| Accumulated amortization | ||||||||||||
| As at January 1, 2024 | ( | ) | ( | ) | ( | ) | ||||||
| Charge for the period | ( | ) | ( | ) | ( | ) | ||||||
| As at June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||
| Carrying amount at June 30, 2024 | ||||||||||||
29
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
16. Exploration and evaluation assets and mining data
| Mining Data | Exploration and evaluation assets | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Cost | ||||||||||||
| As at January 1, 2023 | ||||||||||||
| Additions during the period | ||||||||||||
| Carrying amount as at December 31, 2023 | ||||||||||||
| Cost | ||||||||||||
| As at January 1, 2024 | ||||||||||||
| Additions during the period | ||||||||||||
| Carrying amount as at June 30, 2024 | ||||||||||||
The capitalization of exploration and evaluation costs assumes that there is a reasonable prospect that the project can be developed into a profitable mining operation and that the exploration and evaluation expenditure and study work relating to a mineral resource within a valid license area could result in cash in-flows over time, either via sale or development.
An assessment relating to the capitalization is performed yearly by management, based on confidence in the level of exploration and study work for each project. Grass-roots exploration work and indirect costs might be expensed, especially if the financial viability cannot be assessed via an integrated financial model that supports the economic development of the mineral property based on latest mining and processing plans or are otherwise difficult to prove to be recoverable.
Given that Lifezone made material progress in 2023 in advancing the DFS for the Kabanga Nickel Project, including completing its planned drilling program, releasing a new Mineral Resource Update and incorporating in its integrated financial model the new development plan and all trade-off decisions, management decided to start the capitalization of all costs related to the Kabanga Nickel Project and the Kabanga DFS.
Exploration and evaluation expenditures are recognized and measured at cost and the exploration and evaluation assets are classified as intangible assets.
Where Lifezone is unsuccessful in acquiring or being granted a tenement area, any such costs are immediately expensed. All costs incurred prior to securing the legal right to undertake exploration activities on a project are written-off as incurred.
Lifezone assesses on a project-by-project basis if the exploration and evaluation phase has concluded. At the earliest, an exploration asset gets reclassified as a development asset when a current and positive feasibility study describing the development path for the mineral resource was released and is available publicly. That is usually also the time when a mineral reserve gets declared. A reclassification will happen at the latest when an exploration asset gets approved for development.
30
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
16. Exploration and evaluation assets and mining data (continued)
Additions during the period are essentially capitalized expenditure incurred in the exploration and evaluation of the Kabanga Nickel Project, with costs including compensation payments made to project affected communities, fees paid to DFS consultants and engineering firms, the owners team and attributable technical and administrative overheads.
Lifezone assesses exploration assets yearly for impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
17. Trade and other payables
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Trade payables | ||||||||
| VAT payable | ||||||||
| Accrued expenses | ||||||||
All amounts are short-term. The carrying value of trade payables and accrued expenses are considered to be a reasonable approximation of their fair value.
18. Lease liabilities
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| At January 1 | ||||||||
| Additions | ||||||||
| Interest accretion on lease liability | ||||||||
| Payments | ( | ) | ( | ) | ||||
| At December 31 | ||||||||
| Current | ||||||||
| Non-current | ||||||||
31
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
18. Lease liabilities (continued)
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Undiscounted future lease payments | $ | $ | ||||||
| Less than 1 year | ||||||||
| More than 1 year but less than 5 years | ||||||||
| Entity | Country | Lease use | Lease term start | Lease term end | Remaining term | Third Party | ||||||
| TNCL | 2022 | 2026 | ||||||||||
| TNCL | 2021 | 2026 | ||||||||||
| TNCL | March 1, 2023 | 2026 | ||||||||||
| Lifezone Asia-Pacific Pty Ltd | August 1, 2022 | July 31, 2025 | ||||||||||
| Simulus Pty Limited | April 28, 2022 | April 27, 2026 | ||||||||||
| Simulus Pty Limited | August 1, 2023 | July 31, 2025 | ||||||||||
| Simulus Pty Limited | August 1, 2023 | July 31, 2025 |
19. Hybrid Financial Instruments: Convertible debentures with embedded derivatives
On March 27, 2024, Lifezone completed a $
The unsecured convertible debentures bear interest
over a
32
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19. Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
Interest is payable in cash until Lifezone has
a Form F-3 registration statement declared effective by the US Securities and Exchange Commission. The Form F-3 was declared effective
on August 16, 2024. Following the effectiveness of the Form F-3, one third of the applicable interest payment will be made by the issue
of the equivalent value in shares (the “Interest Shares”) at a price per Interest Share equal to a
The unsecured convertible debentures are convertible
into common shares of Lifezone at the option of the holder at a price of $
The unsecured convertible debentures were determined to be a hybrid financial liability, comprising a host debt instrument and two embedded derivatives, the Conversion Right and the Interest Shares, with both having economic characteristics and risks different to the host debt instrument. In other words, they are not closely related to the non-derivative host debt instrument given their value changes with the value of Lifezone shares, while the host liability changes in relationship to a reference borrowing index (in this case SOFR).
The host debt instrument is classified and measured at amortized cost, while the embedded derivatives are accounted for separately at fair value through profit or loss.
On initial recognition, the Company used the residual value method to allocate the principal amount of the debentures between the two components: host debt instrument and embedded derivatives. The fair value of the embedded derivative liability was valued first, followed by the residual amount assigned to the host debt instrument.
Transaction costs are required to be apportioned
between the host debt instrument and the embedded derivatives in proportion to their value, with the share of transaction costs linked
to the host debt instrument subtracted from the carrying amount at initial recognition. Transaction costs comprised an issuance discount
of $
33
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19. Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
Key Inputs
| Valuation Date | |
| Maturity Date | |
| Risk-free Rate | |
| Share Price | |
| Equity Volatility | |
| Dividend Yield | |
| Interest Rate | |
| Conversion Price | |
| Conversion Cap | |
| Credit Spread |
At initial recognition, the $
The high value of the combined embedded derivative
liability and the resulting high effective interest rate are driven by, among other factors, the share price trading close to the conversion
price at inception, an assumed volatility of
The effective interest rate is the rate that exactly
discounts the estimated future cash flows (interest and principal payments) over the
The conversion feature may be exercised by the holder at any time, meaning that the Company does not have the right to defer settlement of the liability, including any unpaid interest, for more than twelve months from the date of this report. Consequently, all liability elements of the unsecured convertible debentures are classified as current, irrespective of how many years are left until maturity of the instrument.
On June 30, 2024, the embedded derivative liability
component was reassessed to be $
34
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
19. Hybrid Financial Instruments: Convertible debentures with embedded derivatives (continued)
| Debenture host debt instrument | $ | |||
| At January 1, 2024 | ||||
| Additions | ( | ) | ||
| OID and Transaction issuance cost | ||||
| Interest | ( | ) | ||
| Accretion of issuance cost | ( | ) | ||
| At June 30, 2024 | ( | ) | ||
| Embedded derivatives | $ | |||
| At January 1, 2024 | ||||
| Additions | ( | ) | ||
| Fair value reassessment | ( | ) | ||
| At June 30, 2024 | ( | ) | ||
| Total Convertible debentures with embedded derivatives | ( | ) | ||
20. Deferred consideration liability
In April 2021, KNL completed the acquisition of
all shares of Kabanga Holdings Limited from Barrick International (Barbados) Corporation and Glencore Canada Corporation (“GCC”)
and all shares of Romanex International Limited from GCC and Sutton Resources Limited for a total consideration of $
Of the $
| ● | The
first tranche amounting to $ |
| ● | The
second tranche amounting to $ |
35
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
20. Deferred consideration liability (continued)
On December 15, 2022, KNL made the first tranche
payment amounting to $
The present value of the outstanding balance of
deferred consideration liability as of June 30, 2024, has been reported on the Statement of Financial Position at $
| Gross carrying amount | $ | |||
| At January 1, 2023 | ||||
| Remeasurement gain | ( | ) | ||
| Accretion of interest | ||||
| At December 31, 2023 | ||||
| Accretion of interest | ||||
| At June 30, 2024 | ||||
The discounted % reflects a 2-year facility appropriately priced market comparable commercial loan offered by the company bank.
21. Significant related party transactions
Related Party relationships with shareholders with significant influence
Keith Liddell, Chris von Christierson, and Peter Smedvig are the founding shareholders of Lifezone and they and members of their immediate family are related parties, some with significant influence over the affairs of Lifezone. The three founding shareholders (including the members of their immediate families) are long-term financial supporters of the business and are not considered to be related to each other and are not considered to control or jointly control the financial and operating policy decisions of Lifezone. Lifezone has no commercial relationships to Peter Smedvig beyond his shareholding in Lifezone and no compensation or transfer of resources took place during the reporting period with Peter Smedvig and known family members.
The Liddell family holdings are in aggregate approximately
36
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant related party transactions (continued)
Related Party relationships with shareholders with significant influence
Keith Liddell is the father of Natasha Liddell and Simon Liddell and the stepfather of Charles Liddell, who is the owner / partner in the Australian company Integrated Finance Limited. Simon Liddell is an employee of Lifezone Asia-Pacific Pty Ltd. He was also a director of Lifezone Asia-Pacific Pty Ltd. and resigned from his role with effect from July 1, 2024. Natasha Liddell was an employee of Lifezone Asia-Pacific Pty Ltd and a member of the Executive Committee and departed from her role as Chief Sustainability Officer of Lifezone, effective February 16, 2024. Keith Liddell holds his shares jointly with his wife Shelagh Jane Liddell, who has not received compensation during the reporting period and has no commercial agreement with Lifezone.
Chris von Christierson was a director at various group companies but resigned as a non-executive director from the boards of Lifezone Holdings, Lifezone Limited and KNL with effect from August 31, 2023. He no longer holds any directorships with any group company and received no compensation in the six months ending June 30, 2024.
The holdings in trusts where family members of Chris von Christierson are beneficiaries are classified as true trust holdings managed by professional trustees, making Chris von Christierson and close family members not related parties with significant influence. His son, Anthony von Christierson, is employed by Lifezone.
Director Compensation
Keith Liddell was appointed on July 6, 2023, as
a director of the Company. The Company has a director service contract agreement with Keith Liddell as a director of the Company. For
the six months ending June 30, 2024, Keith Liddell, was paid $
Directorships
| Name of entity | Type | Keith Liddell | Simon Liddell | |||
| Lifezone Asia-Pacific Pty Ltd | Subsidiary | ● | ●* | |||
| Simulus Pty Ltd | Subsidiary | ● | ||||
| The Simulus Group Pty Ltd | Subsidiary | ● | ||||
| Kabanga Holdings Limited | Subsidiary | ● | ||||
| Romanex International Limited | Subsidiary | ● | ||||
| Tembo Nickel Mining Company Limited | Subsidiary | ● | ||||
| Tembo Nickel Refining Company Limited | Subsidiary | ● | ||||
| Tembo Nickel Corp. Limited | Subsidiary | ● |
Resignations and appointments for the six months ended June 30, 2024
There were no resignations and appointments for the six months ended June 30, 2024.
| * | Simon Liddell resigned from Lifezone Asia-Pacific Pty Ltd with effect from July 1, 2024. |
37
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant related party transactions (continued)
Transactions with significant shareholders and their extended families
Lifezone had a commercial agreement with Keshel
Consult Limited for the engagement of Keith Liddell as a technical consultant of Lifezone Limited. This commercial agreement between Lifezone
Limited and Keshel Consult Limited was terminated on June 30, 2023, and replaced with a commercial agreement between Lifezone Limited
and Keith Liddell directly with effect from July 1, 2023. For the six months ending June 30, 2024, $
Mr. Charles Liddell (stepson of Mr. Keith Liddell)
is the owner / partner in the Australian company Integrated Finance Limited. For the six months ending June 30, 2024, Integrated Finance
Limited was paid or payable $
Ms. Natasha Liddell (the daughter of Mr. Keith
Liddell) was a paid employee of Lifezone Asia-Pacific until February 16, 2024. For the six months ending June 30, 2024, Ms. Natsha Liddell
was paid $
Mr. Simon Liddell (the son of Mr. Keith Liddell)
is a paid employee of Lifezone Asia-Pacific Pty Ltd, a wholly owned subsidiary of Lifezone. For the six months ending June 30, 2024, Mr.
Simon Liddell was paid $
Related Party Loans
Following the listing on the NYSE listing Lifezone has had a policy not to provide personal loans to directors or members of the Executive Committee.
Lisa Smith, an employee and shareholder, but not
considered holding significant influence over Lifezone, has a loan of $
38
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant related party transactions (continued)
Related party receivables
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Balances with affiliated entities | ||||||||
| BHP Billiton (UK) DDS Limited | ||||||||
| Kelltechnology SA Proprietary Ltd | ||||||||
| Balances with management personnel | ||||||||
| Related party receivables - Interest free | ||||||||
Receivables from affiliated entities relate to short-term services and payments on behalf of affiliated entities.
In 2020, Lifezone provided loans to shareholders
and employees who were working for Lifezone amounting to $
Balances with key management personnel
There are no balances with key management as at June 30, 2024.
Related party payable
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Balances with management personnel | ||||||||
| Related party payables | ||||||||
Relate to short-term services payments and are considered provided at arm’s length. The amount above relates to services provided by Keith Liddell to Lifezone Limited for the month of June 2024 not paid as at June 24, 2024 and services provided by Keith Liddell to Lifezone Limited for the period September to December 2023 not paid as at December 31, 2023.
39
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant related party transactions (continued)
Remuneration of key management personnel
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cash compensation for services | ||||||||||||||||
| Short-term bonuses | ||||||||||||||||
| Pension and medical benefits | ||||||||||||||||
| Total key management compensation | ||||||||||||||||
Cash compensation for services covers payments to employees and consultants considered key management personnel.
Short-term bonuses for the six months ending June
30, 2024, were $
The increase in total compensation paid to key
management personnel reflects a
| Keith Liddell | ||
| Chris Showalter | ||
| Ingo Hofmaier | ||
| Dr Michael Adams | ||
| Gerick Mouton | ||
| Benedict Busunzu | ||
| Spencer Davis | ||
| Anthony von Christierson | ||
| Evan Young |
40
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
21. Significant related party transactions (continued)
Related party revenue
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Kellplant Proprietary Ltd | ||||||||||||||||
| Kelltechnology SA Proprietary Ltd | ||||||||||||||||
| Consulting and management fee with affiliated companies | ||||||||||||||||
Related party revenue is attributable to Lifezone’s principal activity of hydromet consulting related to mineral beneficiation operations of affiliated companies primarily based in South Africa as discussed in Note 5. These affiliated entities are joint venture entities.
Lifezone Limited has a
There were no related party revenue transactions with Kellplant Proprietary Ltd and Kelltechnology SA Proprietary Ltd in the six months ending June 30, 2024, further details disclosed in detail in Note 25.
41
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity
| June 30, 2024 | December 31, 2023 | |||||||||||||||
| Number of Shares | $ | Number of Shares | $ | |||||||||||||
| Share capital | ||||||||||||||||
| Lifezone Metals Limited | ||||||||||||||||
| Number of ordinary shares in issue | ||||||||||||||||
| Nominal average value per ordinary per share | ||||||||||||||||
| Nominal value of ordinary total shares: | ||||||||||||||||
Share capital
Share capital reflects the par value of shares issued as shown in the Unaudited Condensed Consolidated Interim Financial Position in the presentational currency USD.
Share premium
Share premium reflects the excess of consideration received, net of equity issuance fees, over par value of shares.
Other reserve
Other reserves reflect revaluation of share-based payments and restricted stock units.
Foreign currency translation reserve
The assets and liabilities of Lifezone’s foreign subsidiaries are translated into USD using the exchange rates in effect on the balance sheet dates. Equity accounts are translated at historical rates, except for the change in earnings during the year, which is the result of the period as shown in the Unaudited Condensed Consolidated Interim Statement of Comprehensive Income. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in Lifezone’s consolidated foreign currency translation reserve. Lifezone has subsidiaries with functional currency in GBP and AUD.
Accumulated deficit
This includes all current and prior period accumulated losses of Lifezone.
42
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Reconciliation of Shareholders’ equity movement
| June 30, 2024 | Movements | December 31, 2023 | ||||||||||||||||||||||
| Number of Shares | $ | Number of Shares | $ | Number of Shares | $ | |||||||||||||||||||
| Share capital, beginning | ||||||||||||||||||||||||
| Exchanged for Issue of Lifezone Metal Limited shares | - | |||||||||||||||||||||||
| Previous GoGreen Sponsor shareholders | - | |||||||||||||||||||||||
| Previous GoGreen public shareholders | - | |||||||||||||||||||||||
| PIPE Investors | - | |||||||||||||||||||||||
| Simulus Vendors | - | |||||||||||||||||||||||
| Issue of Lifezone Metal Limited shares | - | |||||||||||||||||||||||
| Transactions with shareholders | ||||||||||||||||||||||||
| Issue of shares from RSU awards | - | |||||||||||||||||||||||
| Total transactions with shareholders | - | |||||||||||||||||||||||
| Share capital, ending | ||||||||||||||||||||||||
| Share premium | ||||||||||||||||||||||||
| Equity issuance fees | ( | ) | ( | ) | ||||||||||||||||||||
| Total share premium | ||||||||||||||||||||||||
| Previous Lifezone Holdings shareholders earnouts | ||||||||||||||||||||||||
| Previous Sponsor earnouts | ||||||||||||||||||||||||
| Total shared-base payment reserve | - | |||||||||||||||||||||||
| Warrant reserves | ||||||||||||||||||||||||
| Other reserves | ( | ) | ( | ) | ||||||||||||||||||||
| Translations reserve | ( | ) | ||||||||||||||||||||||
| Redemption reserve | - | |||||||||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Total Shareholders’ equity | ( | ) | ||||||||||||||||||||||
43
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Non-controlling Interest
In January 2021, KNL and the Government of Tanzania
established TNCL, a Tanzanian company in order to develop, process and refine future products from the Kabanga Nickel Project. Through
the Treasury Registrar, the Government of Tanzania owns a non-dilutable free-carried interest representing
In October 2022, BHP also agreed to invest a further
$
Earnouts
Following the SPAC Transaction, as described in
detail in Note 2.2, pursuant to earnout arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional
Lifezone shares if the daily volume-weighted average price of Lifezone shares equals or exceeds
Classification
Management has assessed how the BCA earnout should be valued and classified in accordance with and have listed below key conditions under the agreements in the application IAS 32: Financial Instruments: Presentation and IFRS 2 Share-based Payments,
| ● | Management have assessed IAS 32 paragraph 4 exceptions for Financial Instruments and concluded the stated exceptions do not apply to the BCA earnout share agreements, therefore IFRS 2 Share-based Payment rules need to be applied. |
| ● | Furthermore, in accordance with IFRS 2, paragraph 2, as a result of the obligations created throughout the ancillary agreements attached to the BCA, management has concluded that IFRS 2 does apply to the BCA earnout share provisions. |
| ● | The earnout triggering events are representative of market conditions as defined within paragraph 21 of IFRS 2. No other vesting conditions are present. |
| ● | In accordance with IFRS 2, market conditions constitute non-vesting conditions. As a result of the non-vesting conditions, the Company is required to recognize the share-based payment at inception, irrespective of whether the market condition has been met which in this case is considered to be representative of both the measurement and grant date. |
| ● | Although the term “non-vesting condition” is not explicitly defined in IFRS 2, it is inferred to be any condition that does not meet the definition of a vesting condition (IFRS 2 BC364). |
| ● | Non-vesting conditions are all requirements that do not represent service or performance conditions, but which have to be met in order for the counterparty to receive the share-based payment. |
| ● | The company has recognised the goods or services have been received in accordance with IFRS 2 paragraphs 10–22. |
44
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Earnouts (continued)
Accordingly, the BCA earnouts were recognized as equity at the acquisition date of July 6, 2023.
| Inputs | ||||
| Valuation Date | July 6, 2023 | |||
| Stock Price as of Measurement Date / BCA Date | $ | |||
| Equity Volatility (Pre BCA) | ||||
| Equity Volatility (Post BCA assumption) | % | |||
| Risk-Free Rate ( | % | |||
| Share Price Earnout Tranches | Beginning | Expiration | Share Price Hurdle | |||||
| Sale Threshold Price for Tranche 1 - Triggering Event I | $ | |||||||
| Sale Threshold Price for Tranche 2 - Triggering Event II | $ | |||||||
| Days Above Threshold Price | ||||||||
| Days Above Measurement Period | ||||||||
| Change of Control Provisions | ||||||||
| Change of Control Date | ||||||||
| Probability of Change of Control | % | |||||||
The following table illustrates the number and fair value of earnouts granted as at June 30, 2024.
| Share Options | Fair value per Option | Fair value $ | ||||||||||
| Granted - Lifezone Holdings ($ | $ | |||||||||||
| Granted – Lifezone Holdings ($ | $ | |||||||||||
| Outstanding as at June 30, 2024 | ||||||||||||
| Share Options | Fair value per Option | Fair value $ | ||||||||||
| Granted – Sponsor shareholders ($ | $ | |||||||||||
| Granted – Sponsor shareholder ($ | $ | |||||||||||
| Outstanding as at June 30, 2024 | ||||||||||||
45
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Warrant reserve
Lifezone’s Form F-1 registration statement became effective on September 29, 2023, resulting in registering the resale of certain Lifezone Metals shares and (private) warrants owned by certain previous Lifezone Holdings and the Sponsor shareholders (including its limited partners).
Each Lifezone warrant represents the right to
purchase one ordinary Lifezone share at an exercise price of $
Classification
The warrants are classified as either a liability or equity on inception, depending on the terms of the agreement. Warrants are only classified as equity when they are settled by the entity delivering a fixed number of its own equity instruments and receiving a fixed amount of cash or another financial asset. The Company assesses the appropriate classification of warrants at the time of inception.
Management has assessed how both the Public Warrants and Private Placement Warrants should be valued and classified in accordance with IAS 32: Financial Instruments: Presentation. Management have assessed IAS 32 paragraph 4 exceptions for Financial Instruments and assessed the warrants do not meet the exceptions allowed, therefore IAS 32 has been applied.
Management have reviewed the warrant agreement and the warrant assumption agreement’s, the mechanics of exercise to determine the accounting treatment, and have listed below key conditions under the agreements in the application of IAS 32, in particular to paragraphs 16A and 16B and 16C and 16D.
| ● | The agreements are representative of a contractual obligation, arising from a derivative financial instrument, that will or may result in the future receipt or delivery of the issuer’s own equity instruments |
| ● | The agreements are not representative of a puttable instrument as the issuer has the choice but not the obligation to repurchase or redeem the Warrant instrument for cash or another financial asset |
| ● | The Private Warrants are identical to the Public Warrants |
| ● | The Warrant agreement requires the Group to issue a fixed number of shares for a fixed amount of cash |
| ● | Exercise of the Warrants will be on a gross basis or on a cashless basis per the terms |
| ● | The Company may require the Warrant holders to exercise on a “cashless” basis while the agreement explicitly stated that the Company will not be in a position to net settle in cash. |
Accordingly, the warrants were recognized as equity.
46
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Warrant reserve (continued)
The fair value of warrants was independently valued
based on a Black-Scholes option pricing model.
| Valuation Date – date of warrant assumption | |||
| Unit Issuance Date | |||
| Announcement Date | |||
| Business Combination Date | |||
| Exercise Date | |||
| Expiration Date | |||
| First Trading Date |
| Stock Price as of Measurement Date | $ | |||
| Strike Price | $ | |||
| Risk-Free Rate ( | % | |||
| Redemption Threshold Price | $ | |||
| Days Above Threshold Price (Automatic Redemption) | ||||
| Days Above Measurement Period | ||||
| Probability of Acquisition | % |
Outputs
The fair value of outstanding Public Warrants has been valued at $
The fair value of outstanding Private Warrants was valued at $
| Number of Warrants | Fair value $ | |||||||
| Balance as at January 1, 2023 | ||||||||
| Public Warrants ($ | ||||||||
| Exercised | ( | ) | ( | ) | ||||
| Outstanding as at December 31, 2023 | ||||||||
| Outstanding as at June 30, 2024 | ||||||||
On October 19, 2023, Lifezone received $
There were no warrants exercised in the six months ended June 30, 2024.
47
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
22. Equity (continued)
Warrant reserve (continued)
| Number of Warrants | Fair value $ | |||||||
| Balance as at January 1, 2023 | ||||||||
| Private Warrants ($ | ||||||||
| Outstanding as at December 31, 2023 | ||||||||
| Outstanding as at June 30, 2024 | ||||||||
23. Loss per share (LPS)
Basic LPS is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted LPS is calculated by dividing the loss attributable to ordinary equity holders of the parent (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
| Three months ended | Six months ended | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss used for basic earnings per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Denominator: | ||||||||||||||||
| Basic weighted-average outstanding common shares | ||||||||||||||||
| Effect of dilutive potential common shares resulting from options | ||||||||||||||||
| Effect of dilutive potential restricted stock units | ||||||||||||||||
| Effect of dilutive potential warrants units | ||||||||||||||||
| Effect of dilutive potential earnout stock units | ||||||||||||||||
| Weighted-average shares outstanding - diluted | ||||||||||||||||
| Net loss per common share: | ||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
48
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
23. Loss per share (LPS) (continued)
The number of shares and nominal average value have been adjusted to retrospectively reflect the impact of the Flip-Up in accordance with the predecessor value method of accounting for the business combination under common control as disclosed in detail in Note 1.
Where a loss has occurred, basic and diluted loss
per share is the same because the outstanding share options are anti-dilutive. Accordingly, diluted loss per share equals the basic loss
per share. Earnouts and warrants outstanding as at June 30, 2024, totaling
24. Acquisitions of subsidiaries
Acquisitions during the current period
There were no acquisitions in the current reporting interim period.
Acquisitions during the prior period
There were no acquisitions in the prior comparative reporting interim period.
25. Joint ventures
The nature of the activities of all the Lifezone’s joint ventures is trading in and operation of industrial scale the metals extraction and metals refining investments, which are seen as complementing the Lifezone’s operations and contributing to achieving the Lifezone’s overall strategy.
| Country of | Principal place of | Percentage of Ownership (%) | ||||||||||
| JV Equity Entities: | incorporation | Business | 2024 | 2023 | ||||||||
| Kelltech Limited | % | % | ||||||||||
| Kelltechnology South Africa (RF) Proprietary Ltd | % | % | ||||||||||
| Kellplant Proprietary Ltd | % | % | ||||||||||
Lifezone has a
Kelltech Limited owns
49
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
25. Joint ventures (continued)
Kellplant is a wholly owned subsidiary of KTSA
with Lifezone having an indirect
At the time of the release of this document, the development of the Hydromet refinery at Sedibelo Resources’ Pilanesberg Platinum Mines operations is on hold and will need to be rescoped following Sedibelo Resources’ decision to update its mine plan and re-scope the refinery to process its underground mining operations, which have not yet been developed.
Although Lifezone holds the joint ownership in these companies, Lifezone does not have ultimate control as all major decisions have to be agreed unanimously by all parties before they can be actioned. Management therefore considered it appropriate to account for these entities as joint ventures.
All joint ventures are accounted for using the equity method.
Lifezone has recognized its
26. Financial risk review
This note presents information about Lifezone’s exposure to financial risks and the group’s management of capital. Lifezone’s risk management is coordinated by its directors and Lifezone does not operate any hedging operations or does not buy or sell any financial derivatives. The most significant financial risks to which Lifezone is exposed are described below.
a) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of interest rate risk, risks related to the price of equity instruments, commodity price risk and foreign exchange rates.
Market risks affecting Lifezone are comprised of interest rate risk and foreign exchange rate risk. Financial instruments affected by market risk include deposits, trade receivables, related party receivables, trade payables, accrued liabilities, deferred consideration liability, and long-term rehabilitation provision.
The sensitivity analysis in the following sections relates to the positions as of June 30, 2024, and December 31, 2023.
The sensitivity analysis is intended to illustrate the sensitivity to changes in market variables on Lifezone’s financial instruments and show the impact on profit or loss and shareholders’ equity, where applicable.
The analysis excludes the impact of movements in market variables on the carrying value of provisions.
50
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
a) Market risk (continued)
The following assumptions have been made in calculating the sensitivity analysis:
| ● | The Statement of Financial Position sensitivity relates to foreign currency-denominated trade payables, |
| ● | The sensitivity of the relevant profit before tax item and/or equity is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at June 30, 2024 and December 31, 2023; and |
| ● | The impact on equity is the same as the impact on profit before tax. |
b) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Lifezone’s revenue is currently concentrated with two primary customers, KTSA and Kellplant, both affiliated entities, and accordingly Lifezone is exposed to the possibility of loss if such customers default. Lifezone addresses this risk by monitoring its commercial relationship with such customers and by seeking to develop additional patented technology and entering into new partnerships.
Loan credit was extended to Lisa Smith for $
Lifezone evaluated the collectability of its consolidated
loan receivables of $
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Cash and cash equivalents | ||||||||
| Other receivables | ||||||||
| Receivables from affiliated entities | ||||||||
| Related party receivables | ||||||||
51
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
b) Credit risk (continued)
| Days past due | ||||||||||||||||||||||||||||
| Current | 31-60 | 61-90 | 91-120 | >120 | Impairment | Total | ||||||||||||||||||||||
| At June 30, 2024 | ||||||||||||||||||||||||||||
| Cash and cash equivalent | ||||||||||||||||||||||||||||
| Other receivables | ||||||||||||||||||||||||||||
| Receivable from affiliated entities | ||||||||||||||||||||||||||||
| Related party receivables | ||||||||||||||||||||||||||||
| Days past due | ||||||||||||||||||||||||||||
| Current | 31-60 | 61-90 | 91-120 | >120 | Impairment | Total | ||||||||||||||||||||||
| At December 31, 2023 | ||||||||||||||||||||||||||||
| Cash and cash equivalent | ||||||||||||||||||||||||||||
| Other receivables | ||||||||||||||||||||||||||||
| Receivable from affiliated entities | ||||||||||||||||||||||||||||
| Related party receivables | ||||||||||||||||||||||||||||
c) Liquidity risk
Liquidity risk arises from the possibility that Lifezone will not be able to meet its financial obligations as they fall due. Lifezone has historically been supported financially by its shareholders and the wider capital market. The risk of its shareholders discontinuing the provision of financing was historically regarded as low. Lifezone expects to fund its capital requirements and ongoing operations through current cash reserves, equity, mezzanine, debt funding or monetizing the offtake from the Kabanga Nickel project.
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| <=30 days | ||||||||
| 30-60 days | ||||||||
| 61-90 days | ||||||||
| 91-120 days | ||||||||
| >=121 days | ||||||||
| Total | ||||||||
52
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
d) Foreign currency risk
Lifezone has financial instruments which are denominated in currencies other than USD, its reporting currency. Lifezone mostly incurs expenditures for which it owes money denominated in non-U.S. dollar currencies, including GBP, TZS, ZAR, and AUD. As a result, the movement of such currencies could adversely affect Lifezone’s results of operations and financial position.
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| GBP £ | GBP £ | |||||||
| Cash in banks | ||||||||
| Prepaid expenses | ||||||||
| Trade and other payables | ||||||||
| AUD | AUD | |||||||
| Cash in banks | ||||||||
| Trade receivables | ||||||||
| Prepaid expenses | ||||||||
| Trade and other payables | ||||||||
| EUR | EUR | |||||||
| Cash in banks | ||||||||
| TZS | TZS | |||||||
| Cash in banks | ||||||||
| ZAR | ZAR | |||||||
| Cash in banks | ||||||||
53
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
26. Financial risk review (continued)
Sensitivity analysis
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Effect on Profit | ||||||||
| Change in GBP Rate | ||||||||
| 10% | ||||||||
| -10% | ( | ) | ( | ) | ||||
| Change in AUD Rate | ||||||||
| 10% | ( | ) | ( | ) | ||||
| -10% | ||||||||
| Change in EUR Rate | ||||||||
| 10% | ||||||||
| -10% | ( | ) | ( | ) | ||||
| Change in TZS Rate | ||||||||
| 10% | ( | ) | ( | ) | ||||
| -10% | ||||||||
| Change in ZAR Rate | ||||||||
| 10% | ( | ) | ( | ) | ||||
| -10% | ||||||||
e) Capital management.
For the purpose of Lifezone’s capital management, capital includes issued capital, share premium and other equity reserves attributable to the equity holders of the Company, as the parent entity of Lifezone. The primary objective of Lifezone’s capital management is to maximize the shareholder value.
Management assesses Lifezone’s capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. Lifezone manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, Lifezone expects to fund its capital requirements and ongoing operations through current cash reserves, equity, mezzanine, alternative or debt funding or monetizing the offtake from the Kabanga Nickel Project.
54
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended June 30, 2024
27. Contingent liabilities
The two legacy tax cases of Kabanga Nickel Company Ltd, a Tanzanian subsidiary of Lifezone, filed with the Tax Revenue Appeals Tribunal to dispute a tax assessment by the TRA regarding withholding tax imposed on imported services, are ongoing as of June 30, 2024. The services received were provided by non-resident entities between 2010 to 2012 and again from 2015 to 2016, while Kabanga Nickel Company Ltd was owned by previous owners, Barrick Gold and Glencore. A court session was held at the Tanzanian Court of Appeal in early July, dealing with one of the cases, while our Tanzanian subsidiary continues to engage with the TRA in order to resolve.
The combined principal of both cases is approximately
$
28. Subsequent events
Grant of new Restricted stock units
On July 1, 2024, Lifezone Metals Limited granted
On July 1, 2024,
There were no other significant events to note subsequent to June 30, 2024, which require adjustments to, or disclosures in these Unaudited Condensed Consolidated Interim Financial Statements.
Tax dispute
On July 30, 2024, the Tanzanian Court of Appeal
handed down a judgment covering the larger of the two legacy withholding tax cases, which was in favor of the TRA. The judgment
relates to a withholding tax amount claimed by the TRA in the sum of $
55
Item 2. Management’s Discussion and Analysis of financial condition and results of operations
You should read the following discussion and analysis of our financial condition and results of operations together with the Unaudited Condensed Interim Consolidated Financial Statements and related notes included in Item 1 of Part I of this Interim Financial Statements for the six months of 2024 (this “Interim Report”) and with our Audited Consolidated Financial Statements and the related notes for the fiscal year ended December 31, 2023 included in our 20-F filed with the SEC on April 1, 2024.
Special note regarding forward-looking statements
Certain statements made herein are not historical facts but may be considered “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended and the “safe harbor” provisions under the Private Securities Litigation Reform Act of 1995 regarding, amongst other things, the plans, strategies, intentions and prospects, both business and financial, of Lifezone Metals Limited and its subsidiaries. These statements are based on the beliefs and assumptions of our management. Although we believe that the plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “predicts,” “projects,” “forecasts,” “may,” “might,” “will,” “could,” “should,” “would,” “seeks,” “plans,” “scheduled,” “possible,” “continue,” “potential,” “anticipates” or “intends” or similar expressions; provided that the absence of these does not means that a statement is not forward-looking. Forward-looking statements contained or incorporated into this prospectus include, but are not limited to, statements about our ability to:
| ● | anticipate any event, change or other circumstances that could give rise to the termination of any agreement referred to herein; |
| ● | achieve projections and anticipate uncertainties relating to our business, operations and financial performance, including: |
| o | expectations with respect to financial and business performance, including financial projections and business metrics and any underlying assumptions; |
| o | expectations regarding product and technology development and pipeline; |
| o | expectations regarding market size; |
| o | expectations regarding the competitive landscape and the ability to develop, design and sell products and services that are differentiated from those competitors; |
| o | expectations regarding future acquisitions, partnerships or other relationships with third parties; |
| o | future capital requirements and sources and uses of cash, including the ability to obtain additional capital in the future; |
56
Management’s Discussion and Analysis of financial condition and results of operations
Special note regarding forward-looking statements (continued)
| ● | comply with applicable laws and regulations and stay abreast of modified or new laws and regulations applying to its business, including privacy regulation; |
| ● | anticipate the impact of, and response to, new accounting standards; |
| ● | anticipate the significance and timing of contractual obligations; |
| ● | maintain key strategic relationships with partners and customers; |
| ● | successfully defend litigation; |
| ● | acquire, maintain and protect intellectual property; |
| ● | meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness; and |
| ● | effectively respond to general economic and business conditions. |
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors could affect the future results of Lifezone, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements herein:
| ● | ability to maintain the NYSE’s listing standards; |
| ● | inability to recognize the anticipated benefits of the SPAC transaction consummated on July 6, 2023, with Lifezone Holdings and GoGreen Investments Corporation, which may be affected by, among other things, competition, the ability of Lifezone to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; |
| ● | litigation, complaints and/or adverse publicity; |
| ● | changes in applicable laws or regulations; |
| ● | possibility that Lifezone may be adversely affected by other economic, business or competitive factors; |
| ● | volatility in the markets caused by geopolitical and economic factors; |
| ● | privacy and data protection laws, privacy or data breaches, or the loss of data; |
| ● | the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability; and |
| ● | any defects in new products or enhancements to existing products. |
57
Management’s Discussion and Analysis of financial condition and results of operations
Special note regarding forward-looking statements (continued)
The foregoing list of risk factors is not exhaustive. There may be additional risks that Lifezone Metals presently does not know or that Lifezone Metals currently believes are immaterial that could also cause actual results to differ from those contained in forward-looking statements. In addition, forward-looking statements provide Lifezone Metals’ expectations, plans or forecasts of future events and views only as of the date of this Interim Report.
These forward-looking statements should not be relied upon as representing Lifezone Metals’ assessments as of any date subsequent to the date of this Interim Report. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Except as otherwise required by applicable law, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data, or methods, future events, or other changes after the date of this Interim Report.
Segments
See Note 4 of Lifezone’s Unaudited Condensed Consolidated Interim Financial Statements for the six months ended June 30, 2024, for further details.
Business Overview and key activities in the first half of 2024
Our activities in H1 2024 focused on our two key projects: the Kabanga Nickel Project and the PGM recycling partnership with Glencore.
Kabanga Nickel Project Definitive Feasibility Study update
The two-phased development plan for the Kabanga Nickel Project was finalized in Q1 2024 and forms the basis of the mine plan and ultimately the DFS. The plan calls for a 1.7 million ton per year Phase 1, with an additional 1.7 million ton per year Phase 2 expansion, for an expected 3.4 million ton per year operation in the aggregate. Cash flows generated from Phase 1 operations are expected to help cover the capital requirements for Phase 2. Following the release of our Updated Mineral Resource estimate late 2023, Lifezone is currently not undertaking any major exploration activities in Tanzania. Drilling is undertaken in the context of hydrotechnical investigations and to assess consumables, like limestone, but no resource drilling and assaying is currently taking place.
In June 2023, Lifezone completed the design and engineering specifications for the DFS for the Kabanga Nickel Project, meaning that the Project’s concentrate and refinery test work are completed, and flowsheet parameters and specifications are now final and not open for additional revisions. This includes the sizing of critical pieces of equipment, such as underground mining fleet, crushers and mills, flotation tanks and autoclaves. All relevant underground geotechnical investigations have been completed as well as the underground infrastructure design and estimating workstreams. Concentrator engineering and estimating workstreams are nearing completion, with some final cost optimization activities forecast for August.
With these technical requirements finalized, Lifezone is now focused on reviewing equipment and services, suppliers, finalizing the operating cost model and optimizing capital expenditures.
Lifezone has completed 90% of the DFS as of the end of June 2024, with the Project’s financial model currently being confirmed and chapter write-ups underway. The results of the ongoing study work for the Kabanga Nickel Project are expected to be completed in Q3 2024.
58
Management’s Discussion and Analysis of financial condition and results of operations
Business Overview and key activities in the first half of 2024 (continued)
PGM recycling project in partnership with Glencore
Our recycling partnership with Glencore progressed well during the first half of 2024 and we anticipate completing the feasibility study by Q4 2024. Following the successful commissioning of the pilot facility at our Simulus Laboratory, the related feasibility study and due diligence commenced during the second quarter of 2024. Project expenses of $1.3 million were incurred during six months ended June 30, 2024, in line with prior project guidance, with $1.0 million related to work undertaken by our Simulus laboratory in Perth, the rest relating to general and administrative overheads in the US. Under the terms of the agreement, expenses during the current project phase (Phase 1) are jointly funded (50:50).
Costs at Simulus pertain to labor and materials associated with the pilot plant test work and the related feasibility study for the project. The work packages include the design, construction, and operation of grinding, leaching, filtration, drying and heat treatment circuits and all associated utilities at our laboratory in Perth, Australia. Construction is largely complete for the remaining pilot plant areas including solvent extraction, ion exchange and acid recovery. To date, approximately 1mt of US sourced monolith has been prepared for the ongoing feasibility study. Engineering design and drafting activities for the commercial scale plant are ongoing to support the feasibility study.
The venture aims to utilise our patented Hydromet Technology to recycle platinum, palladium, and rhodium from responsibly sourced converter material in a cleaner and more efficient manner compared to traditional smelting and refining processing options. Importantly, our Perth team has already displayed a scalable and efficient process, and we have progressed to identifying a suitable site location in the US for commercialisation. A final investment decision is anticipated by the end of 2024.
A broader Business Overview is included in Note 1. - Corporate and Group Information above.
Significant components of results of operations
Revenue, Cost of Sales, and Gross Profit
Lifezone has generated significant losses from its operations as reflected in Lifezone’s accumulated deficit of $418.9 million as of June 30, 2024 (December 31, 2023, $408.2 million). Additionally, Lifezone has generated significant negative cash flows from operations and investing activities as we continue to support the development of our business and the Kabanga Nickel Project. In addition to our capital expenditure for our two key projects, we expect our operating expenses to increase for both workforce-related, other general and administrative and laboratory costs as we seek to expand our patent portfolio, continue to invest in research and development activities, expand the market penetration of our Hydromet Technology and continue develop the Kabanga Nickel Project.
Our revenue is generated from our IP licensing business. Lifezone Limited has a 50% interest in Kelltech Limited, a joint venture between Sedibelo Resources Limited and Lifezone, which Lifezone granted an exclusive license to use the Hydromet Technology SADC License Area and the license, the “Kell License”. The Kell License relates to Lifezone Hydromet Technology applicable to just precious metals projects. In turn, Kelltech Limited has exclusively sub-licensed the Kell License to KTSA (66.67% owned by Kelltech Limited). Kellplant is a wholly owned subsidiary of KTSA. For more information refer to Note 25.
59
Management’s Discussion and Analysis of financial condition and results of operations
Significant components of results of operations (continued)
Revenue, Cost of Sales, and Gross Profit (continued)
At the time of the release of this document, the development of the Hydromet refinery at Sedibelo Resources’ Pilanesberg Platinum Mines operations is on hold and will need to be rescoped following Sedibelo Resources’ decision to update their mine plan and re-scope the refinery to process its underground mining operations, which have not been developed yet, as a result no IP licensing revenue has been received in 2024.
IP licensing revenue received by Lifezone Limited under the Kell license is shown below.
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Kellplant Proprietary Ltd | - | - | - | 129,680 | ||||||||||||
| Kelltechnology SA Proprietary Ltd | - | - | - | 365,368 | ||||||||||||
| - | - | - | 495,048 | |||||||||||||
Lifezone has not generated any revenue from its metals’ extraction and refining business, where the Kabanga Nickel Project is in the exploration and evaluation stage. We do not expect to generate any revenue from our mining projects in the foreseeable future.
Six months ended June 30, | Six months ended change | |||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Revenue | 49,650 | 506,748 | (457,098 | ) | (90 | )% | ||||||||||
| Cost of sales | (12,252 | ) | - | (12,252 | ) | 0 | % | |||||||||
| Gross profit | 37,398 | 506,748 | (469,350 | ) | (93 | )% | ||||||||||
| Loss (gain) on foreign exchange | (60,475 | ) | 86,547 | (147,022 | ) | (170 | )% | |||||||||
| General and administrative expenses | (9,559,603 | ) | (13,412,649 | ) | 3,853,046 | 29 | % | |||||||||
| Operating loss | (9,582,680 | ) | (12,819,354 | ) | 3,236,674 | 25 | % | |||||||||
| Interest income | 1,361,638 | 269,800 | 1,091,828 | 405 | % | |||||||||||
| Fair value loss on embedded derivatives | (356,000 | ) | - | (356,000 | ) | 0 | % | |||||||||
| Interest expense | (2,364,345 | ) | (91,668 | ) | (2,272,677 | ) | (2,479 | )% | ||||||||
| Loss before tax | (10,941,387 | ) | (12,641,222 | ) | 1,699,835 | 13 | % | |||||||||
| Income tax | - | - | - | - | ||||||||||||
| Loss for the financial period | (10,941,387 | ) | (12,641,222 | ) | 1,699,835 | 13 | % | |||||||||
| Other comprehensive loss | ||||||||||||||||
| Exchange loss on translation of foreign operations | (21,873 | ) | (84,291 | ) | 62,418 | 74 | % | |||||||||
| Total other comprehensive loss for the period | (21,873 | ) | (84,291 | ) | 62,418 | 74 | % | |||||||||
| Total comprehensive loss for the financial period | (10,963,260 | ) | (12,725,513 | ) | 1,762,253 | 14 | % | |||||||||
60
Management’s Discussion and Analysis of financial condition and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
Comparison of Lifezone’s combined unaudited condensed consolidated results of operations for the six-month ended June 30, 2024, and for the six-month ended June 30, 2023.
Revenue
Revenue for the six-months ended June 30, 2024, was $49,650, compared to $506,748 for the six-months ended June 30, 2023, a decrease of $457,098. The decrease in revenue was primarily related to the Kellplant Hydromet Technology refinery project being put on hold. For the six months ended June 30, 2024, the fall in revenue from the Kellplant Hydromet Technology refinery project was not offset by revenue attributable to technical and laboratory services provided by Simulus, as Simulus was almost exclusively used for Lifezone’s own projects.
Cost of sales
Cost of sales for the six months ended June 30, 2024, was $12,252, compared to $Nil for the six months ended June 30, 2023. The increase is due to Simulus’s cost of sales reflected in the group’s financials since acquisition in July 2023. Prior to the Simulus acquisition, the group’s revenue was in relation to hydromet consulting related to mineral beneficiation operations of affiliated companies of which cost of sales were not attributed to.
Exchange loss on translation of foreign operations
The loss on translation of foreign exchange for the six months ended June 30, 2024, was $60,475 compared to a $86,547 gain in the six months ended June 30, 2023, a change of $147,022. The movement in the foreign exchange account was primarily due to movements in exchange rates in subsidiary operations.
Interest income
Refer to Note 6 for detailed discussion.
Fair value loss on embedded derivatives
Refer to Note 8 for detailed discussion.
Interest expense
Refer to Note 7 for detailed discussion.
61
Management’s Discussion and Analysis of financial condition and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
General and administrative expenses
Six months ended June 30, | Six months ended change | |||||||||||||||
| 2024 | 2023 | |||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Wages & employee benefits | 1,917,963 | 1,816,542 | 101,421 | 6 | % | |||||||||||
| Professional & Legal fees | 1,650,061 | 882,855 | 767,206 | 87 | % | |||||||||||
| Consultancy fees | 1,336,019 | 1,772,010 | (435,992 | ) | (25 | )% | ||||||||||
| Non-recurring listing and equity raising costs | - | 8,003,016 | (8,003,016 | ) | (100 | )% | ||||||||||
| Directors’ fees | 360,984 | 86,500 | 274,484 | 317 | % | |||||||||||
| Depreciation of property and equipment | 577,062 | 107,692 | 469,370 | 436 | % | |||||||||||
| Depreciation of right of use asset | 169,457 | 62,029 | 107,428 | 173 | % | |||||||||||
| Amortization of intangible assets | 90,247 | 38,301 | 51,946 | 136 | % | |||||||||||
| Audit & accountancy fees | 130,976 | 81,751 | 49,225 | 60 | % | |||||||||||
| Rent | 226,332 | 172,584 | 53,748 | 31 | % | |||||||||||
| Insurance | 911,013 | 6,953 | 904,060 | 13,002 | % | |||||||||||
| Laboratory costs | 638,822 | - | 638,822 | 0 | % | |||||||||||
| Impairment of VAT receivables | 839,758 | - | 839,758 | 0 | % | |||||||||||
| Travel | 251,306 | 364,781 | (113,475 | ) | (31 | )% | ||||||||||
| Share based payments expense | 32,457 | - | 32,457 | 0 | % | |||||||||||
| Other administrative expenses | 427,147 | 17,635 | 409,512 | 2,322 | % | |||||||||||
| Total general administrative expenses | 9,559,603 | 13,412,649 | (3,853,046 | ) | (29 | )% | ||||||||||
Total general and administrative expenses for the six months ending June 30, 2024, was $9.6 million compared to $13.4 million for the six months ended June 30, 2023, a decrease of $3.8 million. The overall decrease was mainly due to the non-recurring general and administrative expenses incurred as part of the listing on July 6, 2023, and the capitalization of technical and general overheads as evaluation expenditure.
Total general administrative expense for Simulus operations amounted to $1.5 million for the six months ending June 30, 2024 (six months ended June 30, 2024: $Nil) since Simulus was acquired on July 18, 2023, which includes wages and employee benefits of $474,414 for the six months ending June 30, 2024 (six months ended June 30, 2023: $Nil).
Refer to Note 9 for detailed discussion.
62
Management’s Discussion and Analysis of financial condition and results of operations
Revenue, Cost of Sales, and Gross Profit (continued)
General and administrative expenses (continued)
Staff head count as of June 30, 2024, was 150 compared to 189 as of December 31, 2023, a decrease of 39 employees.
June 30, 2024 | December 31, 2023 | Six months ended change | ||||||||||
| Company | ||||||||||||
| Tembo Nickel Corporation Limited | 88 | 125 | (37 | ) | ||||||||
| Lifezone Asia-Pacific Pty Ltd | 15 | 18 | (3 | ) | ||||||||
| Simulus Pty Limited | 25 | 20 | 5 | |||||||||
| Lifezone Limited | - | 5 | (5 | ) | ||||||||
| Lifezone Services US LLC | 1 | - | 1 | |||||||||
| LZ Services Limited | 18 | 17 | 1 | |||||||||
| Kabanga Nickel Limited | 3 | 4 | (1 | ) | ||||||||
| 150 | 189 | (39 | ) | |||||||||
Liquidity, capital resources and capital requirements
Lifezone has recurring net losses and negative operating and investing cash flows, and we expect that we will operate at a loss for the foreseeable future.
As at June 30, 2024, and December 31, 2023, we had cash and cash equivalents of $63.5 million and $49.4 million, respectively.
We generate revenue from our IP licensing business, including our laboratory business. Lifezone has not generated any revenue from its metals’ extraction and refining business, and we do not expect to generate any revenue from our metals’ extraction and refining business in the foreseeable future. Revenue from our IP licenses business, including testing and engineering services, are not expected to be sufficient to fund the development of our two key projects.
We have funded our operations primarily through the sale of our equity and convertible securities. Lifezone has no history of selling metals streams and royalties, and all our mining and all prospecting licenses are free from commercial streaming and royalty arrangements.
As of June 30, 2024, Lifezone did not have any material non-cancellable commitments relating to capital expenditures that it cannot cancel without a significant penalty.
Other than the $4.0 million contingent payment due to the sellers of the Kabanga Nickel Project upon the earlier of the completion of the DFS and the fifth anniversary of the contract from the date of signing, but no later than December 9, 2024, we did not have any material commitments or contingencies as at June 30, 2024.
63
Management’s Discussion and Analysis of financial condition and results of operations
Liquidity, capital resources and capital requirements (continued)
As at the date of this Interim Report, we believe that we will have sufficient cash resources to carry out our business plans for at least the next 12 months, after which we expect to need additional financing to further advance our projects and conduct our business. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions. Accordingly, we may require additional cash resources earlier than we currently expect or we may need to curtail currently planned activities. To enhance our liquidity position or increase our cash reserve for future investments or operations, we may in the future seek further equity or debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders.
Quarterly net proceeds from financing activities for 2023 and 2024
| Quarter ended, | $ | |||||
| March 31, 2023 | 47,500,000 | BHP T1B subscription agreement proceeds (net of transaction cost). | ||||
| June 30, 2023 | - | |||||
| September 30, 2023 | 68,581,776 | Proceeds from SPAC transaction (net of transaction cost), PIPE, Exercise of Warrants and Options. | ||||
| December 31, 2023 | - | |||||
| Financial Year 2023 | 116,081,776 | |||||
| March 31, 2024 | 45,825,001 | Proceeds from issuance of Convertible debenture notes (net of transaction cost), Subscriptions proceeds from Glencore in Lifezone Recycling US, LLC. | ||||
| June 30, 2024 | 4,925,000 | Proceeds from issuance of Convertible debenture notes. | ||||
| H1 Financial Year 2024 | 50,760,001 | |||||
In October 2022, BHP invested an additional $50.0 million into KNL increasing its stake to 17.0% and concurrently signed an investment option agreement to take its stake in KNL to 60.7% pending delivery of the Kabanga Nickel Project DFS and other conditions. Under its option, BHP would subscribe for the required number of KNL shares that, in aggregate with its existing KNL shareholding, would result in BHP indirectly owning 51% of the total voting and economic equity rights in Tembo (the T2 Option). This is at a price to be determined through an independent expert valuation of 0.7x KNL net asset value.
The extent of the capital resources required to develop the Kabanga Nickel Project and the PGM recycling plant in the United States will be better understood after the release of the respective feasibility studies. The final investment decision on the PGM recycling plant will be made after a positive feasibility study and the availability of, among other things, final front-end engineering design results, permitting and the execution of financing strategy.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.
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Management’s Discussion and Analysis of financial condition and results of operations
Liquidity, capital resources and capital requirements (continued)
Cashflow results
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Operating activities | (4,185,639 | ) | 311,383 | (8,336,912 | ) | (6,056,295 | ) | |||||||||
| Investing activities | (15,463,568 | ) | (14,596,893 | ) | (26,750,135 | ) | (17,505,408 | ) | ||||||||
| Financing activities | 3,585,565 | (31,387 | ) | 49,230,396 | 47,437,225 | |||||||||||
| Net increase in cash and cash equivalents | (16,063,642 | ) | (14,316,897 | ) | 14,143,349 | 23,875,522 | ||||||||||
Comparison of Lifezone’s results of operations for the six-months ended June 30, 2024, and for the six-months ended June 30, 2023.
a) Cash flow from operating activities
Net cash used in operating activities of Lifezone was $8.3 million for the six-month ended June 30, 2024, primarily consisting of $11.0 million of comprehensive loss for the period, adjusted for (i) items such as expenses for share-based payments, interest income, movements in amortization of intangibles, foreign exchange loss, interest expenses (including convertible debenture accretion interest expense), depreciation of property and equipment and right-of-use assets cumulatively amounting to $3.2 million and (ii) working capital changes, primarily consisting of an increases in trade and other receivables of $810,622, decrease in related party receivables of $945,913, increase in fuel and consumable inventories of $180,654, decrease in prepaid expenses of $655,739, changes in prepaid mining license of $499,555, decrease in in related party payables of $88,298 and an decrease in trade and other payables of $1,597,354.
Net cash used in operating activities of Lifezone was $6.1 million for the six-month ended June 30, 2023, primarily consisting of $12.7 million of comprehensive loss for the period, adjusted for (i) items such as interest income, amortization of intangibles, foreign exchange loss, interest expense and depreciation of property and equipment and right-of-use assets cumulatively amounting to $56,657 and (ii) working capital changes, primarily consisting of an increase in trade and other receivables of $1.1 million, increase in related party receivables of $1.4 million, increase in prepaid expenses of $2.2 million, changes in prepaid mining license of $499,903 and an increase in trade and other payables of $10.9 million.
b) Cash flow from investing activities
Net cash used in investing activities of Lifezone was $26.8 million, for the six months ended June 30, 2024, of which $28.0 million related to the investment in exploration and evaluation assets, expenditures relating to the acquisition of property and equipment amounting to $82,674 and patent costs incurred amounting to $72,040, which were partially offset by interest received from banks amounting to $1,361,638.
Net cash used in investing activities of Lifezone was $17.5 million for the six-months ended June 30, 2023, relating to the investment in exploration and evaluation assets amounting to $17.5 million, expenditures on property and equipment amounting to $253,505 and patent costs incurred amounting to $49,047, which were partially offset by interest received from banks amounting to $262,959.
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Management’s Discussion and Analysis of financial condition and results of operations
Liquidity, capital resources and capital requirements (continued)
Cashflow results (continued)
Land acquisition and the Resettlement Action Plan (“RAP”) spending amounted to $9.6 million during the six months ended June 30, 2024. The amount spent can be broken down by the $8.3 million spent on compensation payments for the six months ended June 30, 2024, and $1.3 million for all resettlement related management costs. In total, we have paid $10.4 million in the form of compensation payments since November 6, 2023, to June 30, 2024.
The RAP relates not only to the replacement or resettlement of affected communities, but also includes the restoration of their livelihoods and living conditions. The RAP outlines the steps and measures that will be taken to ensure that the affected communities are adequately compensated, and their needs are addressed during the resettlement process.
A total of $8.8 million for the six-months ended June 30, 2024, was spent on supporting activities onshore and offshore for the Kabanga Nickel Project.
c) Cash flow from financing activities
Net cash provided by financing activities of Lifezone was $49.2 million for the six-months ended June 30, 2024, primarily on account of the $49.3 million net proceeds received from the unsecured convertible debenture, net of Offer Issuance Discount (“OID”) costs of $750,000, net cash from proceeds from share subscription of $1.5 million, offset by lease payments of $316,090 and interest payments to the holders of the unsecured convertible debenture of $1.2 million.
Net cash provided by financing activities of Lifezone was $47.4 million for the six-months ended June 30, 2023, due to the Tranche 2 Investment by BHP in KNL $47.5 million (net of issuing costs of $2.5 million), offset by the payment of lease liabilities of $62,775.
The capital expenditure relates largely to exploration and evaluation activities, transportation, office, and computer equipment and Lifezone costs relating to legal and professional services required to expand and maintain Lifezone Limited’s six active IP patent families.
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Management’s Discussion and Analysis of financial condition and results of operations
Capital expenditures
Lifezone’s capital expenditure for the six-months ended June 30, 2024, was $28.1 million compared to $17.8 million for the six-months ended June 30, 2023.
The capital expenditure relates largely to exploration and evaluation activities, transportation, office, and computer equipment and Lifezone costs relating to legal and professional services required to expand and maintain Lifezone Limited’s six active IP patent families.
Research and development, patents, and licenses
Existing IP and the experience of an internal technical team of skilled chemical engineers and metallurgists is a core competence of Lifezone’s ability to successfully commercialize its proprietary Hydromet Technology for the Kabanga Nickel Project, other projects and cross-broader downstream metals processing industry as a cleaner and cheaper alternative to smelting.
Research and development costs for the six months ended June 30, 2024, were $72,039 (June 30, 2023: $49,047) which focused on the application of the Lifezone’s Hydromet Technology to process and recover nickel derived from lateritic mineralization and recovering platinum group metals from spent autocatalytic converters, as well as optimization and value engineering of primary nickel sulfide and PGM applications.
We estimate that our IP licensing business will require capital expenditure over the next 24 months for research and development, patent applications and laboratory equipment.
Through Lifezone’s Tanzanian subsidiary, TNCL, Lifezone currently holds an SML over the Kabanga Nickel deposit project area with an approximate area of 201.85 square kilometers. An SML is the type of license required to develop large-scale mining operations in Tanzania defined as requiring a capital investment of not less than $100 million.
The SML was issued on October 25, 2021, and will remain valid for a period of the productive life of the deposit indicated in a feasibility study report or such period as the applicant may request unless it is cancelled, suspended, or surrendered in accordance with the law.
The SML carries an annual rent of $1,009,250 (2023 $1,009,250). In addition, Lifezone holds 5 Prospecting Licenses surrounding the Kabanga SML and an Environmental Impact Assessment certificate was transferred from the legacy Kabanga acquisition entities to TNCL on June 16, 2021. Subsequently an updated Environmental and Social Management Plan to national standards was submitted to the Tanzanian National Environmental Management Council and approved on June 19, 2023.
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Management’s Discussion and Analysis of financial condition and results of operations
Tabular disclosure of contractual arrangements
| Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
| Long-Term Debt Obligations | 50,000,000 | - | - | 50,000,000 | - | |||||||||||||||
| Operating Lease obligations | 1,601,253 | 619,420 | 981,833 | - | - | |||||||||||||||
| Purchase Obligations | 2,628,015 | 2,628,015 | - | - | - | |||||||||||||||
| Other Long-Term Liabilities | 4,000,000 | 4,000,000 | - | - | - | |||||||||||||||
| 58,299,268 | 7,247,435 | 981,833 | 50,000,000 | - | ||||||||||||||||
Long-Term Debt Obligations, Capital (Finance) Leases, Operating Lease Obligations and Other Long-Term Liabilities are all IFRS required reporting disclosures. Lifezone does not have contractual arrangements covering Capital (Finance) Leases.
Management defines Purchase Obligations as agreements to purchase goods and services that are enforceable and legally binding across the business. Management assesses existing agreements by focusing on the largest agreements in place at the end of the reporting period. Lifezone does not have take-or-pay agreements, long-term constructions, or supply contracts in place as of June 30, 2024. Most of the agreements are for exploration services or technical services related to the feasibility study for the Kabanga Nickel project and the majority of these contracts can be terminated by Lifezone and its subsidiaries with four weeks’ notice, with the amount shown under Purchase Obligations reflecting that right based on historical spending.
The Long-Term Debt Obligations comprise the unsecured convertible debentures with a term of 4-years from issuance. Given their conversion feature, they are classified as current liabilities in the balance sheet, as the debentures could convert into Lifezone shares within the next 12 months. Lifezone has no obligation to pay cash to departure holders beyond interest payments before the debentures mature as shown above.
Off-balance sheet arrangements
As of June 30, 2024, Lifezone did not have or was not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material effect on our financial condition, results of operations, expenses, or liquidity and capital resources.
Related Party Transactions
Refer to Note 21 for detailed discussion.
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Management’s Discussion and Analysis of financial condition and results of operations
Management
Executive Officers and Directors
The following table lists the positions of individuals who currently serve as directors and officers of Lifezone, as at June 30, 2024.
| Name | Position(s) | |
| Keith Liddell | Chair, Director | |
| Robert Edwards | Lead Independent Director | |
| Chris Showalter | Chief Executive Officer, Director | |
| John Dowd | Director | |
| Govind Friedland | Director | |
| Jennifer Houghton | Director | |
| Mwanaidi Maajar | Director | |
| Beatriz Orrantia | Director | |
| Dr. Mike Adams | Chief Technical Officer | |
| Ingo Hofmaier | Chief Financial Officer (joined June 29, 2023) | |
| Gerick Mouton | Chief Operating Officer | |
| Spencer Davis | Group General Counsel (joined March 1, 2023) | |
| Anthony von Christierson | Senior Vice President: Commercial and Business Development | |
| Evan Young | Senior Vice President: Investor Relations and Capital Markets (joined October 10, 2023) |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
The certification requirements under either Section 13(a) or 15(d) of the Exchange Act apply to periodic quarterly reports on Forms 10-Q and 10-QSB, but not current reports on Form 6-K. The Company has designed and maintains disclosure controls and procedures to enable the Company to make timely disclosure in current reports, even though there is no specific certification requirement relating to this report.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 26 – Contingent Liabilities.
Item 1A. Risk Factors
There have been no material changes to our risk factors previously disclosed in Part I, Item 3D. “Risk Factors” of our 2023 Form 20-F.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Unregistered Sales of Equity Securities
Not applicable
Use of Proceeds from Registered Securities
Not applicable
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