UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2023
Commission File Number: 001-41737
Lifezone Metals Limited
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
December 13, 2023, during the regular quarterly meeting of the Board of Directors of Lifezone Metals
Limited (the “Company”), the Board approved the financial results of for the nine months ended September 30, 2023.
A copy of the company’s unaudited condensed consolidated interim financial statements as of September 30, 2023 and for the nine
month periods ended September 30, 2023 and 2022 is furnished as Exhibit 99.1 to this report on Form 6-K, and a copy of the company’s
management’s discussion and analysis of financial condition and results of operations for the period ended September 30, 2023 is
furnished as Exhibit 99.2 and Quantitative and Qualitative Disclosures about Market Risk is furnished as Exhibit 99.3 to this report
on Form 6-K. The Company intends to continue reporting quarterly financial results in 2024.
EXHIBIT INDEX
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: December 14, 2023 |
By: |
/s/ Ingo Hofmaier |
|
Name: |
Ingo Hofmaier |
|
Title: |
Chief Financial Officer |
3
Exhibit 99.1
LIFEZONE
METALS LIMITED
Unaudited
Condensed Consolidated INTERIM Financial Statements
FOR
THE NINE MONTHS ENDED
SEPTEMBER
30, 2023
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
for
the Nine months ended September 30, 2023 and September 30, 2022
| |
| |
Three
Months Ended | | |
Nine
Months ended | |
| |
| |
September
30 | | |
September
30 | |
| |
Note | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| |
$ | | |
$ | | |
$ | | |
$ | |
Revenue | |
5 | |
| 556,271 | | |
| 531,739 | | |
| 1,063,019 | | |
| 1,646,044 | |
(Including
related party revenues of $215,660 and $508,290, $654,568 and $1,573,452 for the three months end and nine months ended September
30, 2023 and 2022, respectively) | |
| |
| | | |
| | | |
| | | |
| | |
Loss
on foreign exchange | |
8 | |
| (228,619 | ) | |
| (114,441 | ) | |
| (142,072 | ) | |
| (144,914 | ) |
General
and administrative expenses | |
8 | |
| (347,843,080 | ) | |
| (4,613,327 | ) | |
| (361,255,729 | ) | |
| (10,128,400 | ) |
Operating
loss | |
| |
| (347,515,428 | ) | |
| (4,196,029 | ) | |
| (360,334,782 | ) | |
| (8,627,270 | ) |
Interest
income | |
6 | |
| 87,678 | | |
| 99,237 | | |
| 357,478 | | |
| 127,053 | |
Interest
expense | |
7 | |
| (58,974 | ) | |
| (68,306 | ) | |
| (150,642 | ) | |
| (198,861 | ) |
Loss
before tax | |
| |
| (347,486,724 | ) | |
| (4,165,098 | ) | |
| (360,127,946 | ) | |
| (8,699,078 | ) |
Income
tax | |
| |
| - | | |
| - | | |
| - | | |
| - | |
Loss
for the financial period | |
| |
| (347,486,724 | ) | |
| (4,165,098 | ) | |
| (360,127,946 | ) | |
| (8,699,078 | ) |
Other
comprehensive income | |
| |
| | | |
| | | |
| | | |
| | |
Other
comprehensive income that may be reclassified to profit or loss in subsequent periods (net of tax): | |
| |
| | | |
| | | |
| | | |
| | |
Exchange
(loss) gain on translation of foreign operations | |
| |
| (213,406 | ) | |
| 5,699 | | |
| (297,697 | ) | |
| 40,888 | |
Total
other comprehensive (loss) income for the period | |
| |
| (213,406 | ) | |
| 5,699 | | |
| (297,697 | ) | |
| 40,888 | |
Total
other comprehensive loss for the period | |
| |
| (347,700,130 | ) | |
| (4,159,399 | ) | |
| (360,425,6423 | ) | |
| (8,658,190 | ) |
Net
loss for the period: | |
| |
| | | |
| | | |
| | | |
| | |
Attributable
to ordinary shareholders of the company | |
| |
| (348,749,555 | ) | |
| (3,637,183 | ) | |
| (359,153,155 | ) | |
| (7,851,748 | ) |
Attributable
to non-controlling interests | |
| |
| 1,262,831 | | |
| (527,915 | ) | |
| (974,791 | ) | |
| (847,330 | ) |
| |
| |
| (347,486,724 | ) | |
| (4,165,098 | ) | |
| (360,127,946 | ) | |
| (8,699,078 | ) |
Total
comprehensive loss: | |
| |
| | | |
| | | |
| | | |
| | |
Attributable
to ordinary shareholders of the company | |
| |
| (348,962,961 | ) | |
| (3,631,484 | ) | |
| (359,450,852 | ) | |
| (7,810,860 | ) |
Attributable
to non-controlling interests | |
| |
| 1,262,831 | | |
| (527,915 | ) | |
| (974,791 | ) | |
| (847,330 | ) |
| |
| |
| (347,700,130 | ) | |
| (4,159,399 | ) | |
| (360,425,643 | ) | |
| (8,658,190 | ) |
Net loss per share: | |
| |
| | | |
| | | |
| | | |
| | |
Basic
and diluted net loss per ordinary share | |
21 | |
| (4.53 | ) | |
| (0.07 | ) | |
| (5.56 | ) | |
| (0.13 | ) |
/s/
Ingo Hofmaier |
|
Ingo Hofmaier |
|
Chief Financial Officer |
|
Date: December 14, 2023 |
|
See
accompanying notes to unaudited condensed consolidated interim financial statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM
STATEMENTS
OF FINANCIAL POSITION
as
of September 30, 2023 and December 31, 2022
| |
Note | |
September 30,
2023 | | |
December 31,
2022 | |
| |
| |
$ | | |
$ | |
Assets | |
| |
| | |
| |
Non-current assets | |
| |
| | |
| |
Goodwill | |
13 | |
| 9,020,813 | | |
| - | |
Exploration
and evaluation assets and mining data | |
12 | |
| 48,564,547 | | |
| 18,455,306 | |
Patents | |
13 | |
| 625,985 | | |
| 602,867 | |
Other
intangible assets | |
13 | |
| 205,119 | | |
| 92,096 | |
Property
and equipment | |
11 | |
| 5,449,426 | | |
| 884,322 | |
Right-of-use
assets | |
11 | |
| 1,476,271 | | |
| 352,307 | |
| |
| |
| 65,342,161 | | |
| 20,386,898 | |
Current
assets | |
| |
| | | |
| | |
Inventories | |
| |
| 104,656 | | |
| 49,736 | |
Trade
and other receivables | |
10 | |
| 8,643,323 | | |
| 6,005,207 | |
(Including
receivables from related parties of $75,000 and $655,683 as of September 30, 2023, and December 31, 2022, respectively and receivables
from affiliated entities of $1,612,291 and $959,935 as of September 30, 2023 and December 31, 2022, respectively) | |
| |
| | | |
| | |
Subscription
receivable | |
15 | |
| - | | |
| 50,000,000 | |
Cash
and cash equivalents | |
9 | |
| 73,258,538 | | |
| 20,535,210 | |
| |
| |
| 82,006,517 | | |
| 76,590,153 | |
Total
assets | |
| |
| 147,348,678 | | |
| 96,977,051 | |
| |
| |
| | | |
| | |
Liabilities
and equity | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Equity | |
| |
| | | |
| | |
Share capital | |
20 | |
| 7,819 | | |
| 3,101 | |
Share premium | |
20 | |
| 177,764,792 | | |
| 25,436,656 | |
Share
based payment reserve | |
20 | |
| 265,558,785 | | |
| 25,483,348 | |
Warrant
reserves | |
20 | |
| 15,097,425 | | |
| - | |
Other
reserves | |
20 | |
| (6,850,950 | ) | |
| (15,495,254 | ) |
Foreign
currency translation reserve | |
20 | |
| (181,833 | ) | |
| 115,864 | |
Redemption
reserve | |
20 | |
| 280,808 | | |
| 280,808 | |
Accumulated
deficit | |
20 | |
| (403,443,757 | ) | |
| (44,290,602 | ) |
Total
Shareholders’ equity (deficit) | |
| |
| 48,233,089 | | |
| (8,466,079 | ) |
Non-controlling
interests | |
20 | |
| 83,478,093 | | |
| 84,452,884 | |
Total
equity | |
| |
| 131,711,182 | | |
| 75,986,805 | |
See
accompanying notes to unaudited condensed consolidated interim financial statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM
STATEMENTS
OF FINANCIAL POSITION
as
of September 30, 2023 and December 31, 2022
| |
Note | |
September 30,
2023 | | |
December 31,
2022 | |
| |
| |
| $ | | |
| $ | |
Non-current liabilities | |
| |
| | | |
| | |
Lease liabilities | |
16 | |
| 1,106,714 | | |
| 290,576 | |
Long term asset retirement obligation provision | |
19 | |
| 303,000 | | |
| 303,000 | |
Contingent consideration | |
18 | |
| 3,809,045 | | |
| 3,689,755 | |
| |
| |
| 5,218,759 | | |
| 4,283,331 | |
Current liabilities | |
| |
| | | |
| | |
Lease liabilities | |
16 | |
| 455,749 | | |
| 105,304 | |
Trade and other payables | |
14 | |
| 9,962,988 | | |
| 16,601,611 | |
| |
| |
| 10,418,373 | | |
| 16,706,915 | |
| |
| |
| | | |
| | |
Total
liabilities | |
| |
| 15,637,496 | | |
| 20,990,246 | |
| |
| |
| | | |
| | |
Total
equity and liabilities | |
| |
| 147,348,678 | | |
| 96,977,051 | |
/s/
Ingo Hofmaier |
|
Ingo Hofmaier |
|
Chief Financial Officer |
|
Date: December 14, 2023 |
|
See
accompanying notes to unaudited condensed consolidated interim financial statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
for
the nine months ended September 30, 2023 and September 30, 2022
| |
Note | |
Share
Capital | | |
Share
Premium | | |
Share
Based Payment Reserve | | |
Warrant
Reserves | | |
Other
Reserves | | |
Foreign
currency
translation
reserve | | |
Redemption
Reserve | | |
Accumulated
Deficit | | |
Total
Shareholders’
equity | | |
Convertible
loans
issued | | |
Non-controlling
Interests | | |
Total
equity | |
| |
| |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
At
January 1, 2022 | |
| |
| 1,843 | | |
| 25,436,656 | | |
| 9,988,094 | | |
| - | | |
| - | | |
| - | | |
| 280,808 | | |
| (20,707,260 | ) | |
| 15,000,141 | | |
| 39,040,000 | | |
| (176,238 | ) | |
| 53,863,903 | |
Transactions
with shareholders: | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of ordinary shares | |
| |
| 1,258 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,258 | | |
| - | | |
| - | | |
| 1,258 | |
Total
transactions with shareholders | |
| |
| 1,258 | | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,258 | | |
| - | | |
| - | | |
| 1,258 | |
Total
loss for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| (7,851,748 | ) | |
| (7,851,748 | ) | |
| - | | |
| (847,330 | ) | |
| (8,699,078 | ) |
Total
other comprehensive income for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| | | |
| - | | |
| 40,888 | | |
| - | | |
| - | | |
| 40,888 | | |
| - | | |
| - | | |
| 40,888 | |
At
September 30, 2022 | |
| |
| 3,101 | | |
| 25,436,656 | | |
| 9,988,094 | | |
| - | | |
| - | | |
| 40,888 | | |
| 280,808 | | |
| (28,559,008 | ) | |
| 7,190,539 | | |
| 39,040,000 | | |
| (1,023,568 | ) | |
| 45,206,971 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
At
January 1, 2023 | |
| |
| 3,101 | | |
| 25,436,656 | | |
| 25,483,348 | | |
| - | | |
| (15,495,254 | ) | |
| 115,864 | | |
| 280,808 | | |
| (44,290,602 | ) | |
| (8,466,079 | ) | |
| - | | |
| 84,452,884 | | |
| 75,986,805 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| - | | |
| | | |
| | | |
| - | |
Acquisition
of a subsidiary: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Reorganization: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Exercise
of share options | |
| |
| 83 | | |
| 573,515 | | |
| (11,103,650 | ) | |
| - | | |
| 10,640,556 | | |
| - | | |
| - | | |
| - | | |
| 110,504 | | |
| - | | |
| - | | |
| 110,504 | |
Exercise
of RSUs | |
| |
| 150 | | |
| 9,524,850 | | |
| (14,379,698 | ) | |
| - | | |
| 4,854,698 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Share
for share exchange | |
| |
| 2,934 | | |
| (2,934 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Issuance
of shares: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Warrants: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Public
warrants | |
| |
| - | | |
| (7,866,000 | ) | |
| - | | |
| 14,490,000 | | |
| (6,624,000 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Private
placement warrants | |
| |
| - | | |
| (380,475 | ) | |
| - | | |
| 607,425 | | |
| (226,950 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Earnouts: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Earnouts
to shareholder | |
| |
| - | | |
| - | | |
| 248,464,035 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 248,464,035 | | |
| - | | |
| - | | |
| 248,464,035 | |
Earnouts
to sponsors | |
| |
| - | | |
| - | | |
| 17,094,750 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 17,094,750 | | |
| - | | |
| - | | |
| 17,094,750 | |
Issue
of share capital: | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Issuances
to SPAC shareholders and sponsors | |
| |
| 799 | | |
| 79,960,741 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 79,961,540 | | |
| - | | |
| - | | |
| 79,961,540 | |
Issuance
to PIPE Investors | |
| |
| 702 | | |
| 70,172,468 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 70,173,170 | | |
| - | | |
| - | | |
| 70,173,170 | |
Issuance
to Simulus Shareholders | |
| |
| 50 | | |
| 6,029,950 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 6,030,000 | | |
| - | | |
| - | | |
| 6,030,000 | |
Equity
issuance costs | |
| |
| - | | |
| (5,683,979 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (5,683,979 | ) | |
| - | | |
| - | | |
| (5,683,979 | ) |
Total
transactions with shareholders | |
| |
| 4,718 | | |
| 152,328,136 | | |
| 240,075,437 | | |
| 15,097,425 | | |
| 8,644,304 | | |
| - | | |
| - | | |
| - | | |
| 416,150,020 | | |
| - | | |
| - | | |
| 416,150,020 | |
Total
loss for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (359,153,155 | ) | |
| (359,153,155 | ) | |
| - | | |
| (974,791 | ) | |
| (360,127,946 | ) |
Total
other comprehensive loss for the interim financial period | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (297,697 | ) | |
| - | | |
| - | | |
| (297,697 | ) | |
| - | | |
| - | | |
| (297,697 | ) |
At
September 30, 2023 | |
20 | |
| 7,819 | | |
| 177,764,792 | | |
| 265,558,785 | | |
| 15,097,425 | | |
| (6,850,950 | ) | |
| (181,833 | ) | |
| 280,808 | | |
| (403,443,757 | ) | |
| 48,233,089 | | |
| - | | |
| 83,478,093 | | |
| 131,711,182 | |
See
accompanying notes to unaudited condensed consolidated interim financial statements.
UNAUDITED
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENTS
for
the nine months ended September 30, 2023 and September 30, 2022
| |
| |
September 30 | | |
September 30 | |
| |
Note | |
2023 | | |
2022 | |
| |
| |
$ | | |
$ | |
Cash flows from operating activities | |
| |
| | |
| |
Consolidated loss for year | |
| |
| (360,425,643 | ) | |
| (8,658,190 | ) |
Adjustments for: | |
| |
| | | |
| | |
SPAC transaction expenses | |
8 | |
| 76,857,484 | | |
| - | |
Share-based compensation expense | |
20 | |
| 265,558,785 | | |
| - | |
Interest income | |
6 | |
| (357,478 | ) | |
| (127,053 | ) |
Amortization of intangibles | |
13 | |
| 123,274 | | |
| 33,619 | |
Foreign exchange loss | |
8 | |
| 142,072 | | |
| 144,914 | |
Interest expense | |
7 | |
| 150,642 | | |
| 198,861 | |
Depreciation of property
and equipment and right-of-use assets | |
11 | |
| 848,951 | | |
| 109,992 | |
Operating loss before working
capital changes | |
| |
| (17,101,913 | ) | |
| (8,297,857 | ) |
Changes in trade and other receivables | |
| |
| (836,648 | ) | |
| (1,495,262 | ) |
Changes in related party receivables | |
| |
| (64,832 | ) | |
| (142,802 | ) |
Changes in inventories | |
| |
| (54,920 | ) | |
| (55,406 | ) |
Changes in other current assets | |
| |
| (1,623,805 | ) | |
| (485,283 | ) |
Changes in prepaid mining license | |
| |
| 754,753 | | |
| 758,735 | |
Changes in customer credit to related party | |
| |
| - | | |
| (208,550 | ) |
Changes in trade and
other payables | |
14 | |
| (4,704,319 | ) | |
| 571,371 | |
Net
cash used in operating activities | |
| |
| (23,631,684 | ) | |
| (9,355,054 | ) |
Cash flows from investing
activities | |
| |
| | | |
| | |
Interest received from bank | |
6 | |
| 350,637 | | |
| 120,232 | |
Patent costs incurred | |
| |
| (81,100 | ) | |
| (69,014 | ) |
Expenditure on property and equipment | |
11 | |
| (540,871 | ) | |
| (7,512 | ) |
Expenditure on other intangible assets | |
13 | |
| (178,315 | ) | |
| - | |
Investment in exploration and evaluation assets | |
12 | |
| (30,109,241 | ) | |
| (3,527,986 | ) |
Acquisition of subsidiaries,
net of cash acquired | |
22 | |
| (8,085,255 | ) | |
| (7,591 | ) |
Net
cash used in investing activities | |
| |
| (38,644,542 | ) | |
| (3,491,871 | ) |
Cash flows from financing activities | |
| |
| | | |
| | |
Proceeds from exercise of stock options | |
| |
| 110,534 | | |
| - | |
Net proceeds from PIPE transaction | |
1 | |
| 70,173,170 | | |
| - | |
Proceeds from SPAC acquisition | |
1 | |
| 3,104,056 | | |
| - | |
Share issuance cost | |
8 | |
| (5,683,979 | ) | |
| - | |
Payment of lease liabilities | |
16 | |
| (179,222 | ) | |
| (66,223 | ) |
Proceeds from receipt
of subscription receivable, net of transaction cost | |
1 | |
| 47,500,000 | | |
| - | |
Net
cash provided by (used in) financing activities | |
| |
| 115,024,529 | | |
| (66,223 | ) |
Net increase (decrease) in cash and cash equivalents | |
| |
| 52,748,700 | | |
| (12,913,148 | ) |
Cash and cash equivalents | |
| |
| | | |
| | |
Effect of exchange rate changes in cash | |
| |
| (25,372 | ) | |
| (73,350 | ) |
Beginning of period | |
| |
| 20,535,210 | | |
| 45,624,110 | |
End of period | |
| |
| 73,258,538 | | |
| 32,637,612 | |
See
accompanying notes to unaudited condensed consolidated interim financial statements.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Lifezone
Metals Limited (the Company, individually and together with its controlled subsidiaries “Lifezone”) is a limited company
incorporated and domiciled in Isle of Man, whose shares are publicly traded on the New York Stock Exchange (“NYSE”)
since July 6, 2023 under the trading symbol LZM. Lifezone warrants trade under the symbol LZMW.
Lifezone’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 nine months ended September 30, 2023, were authorized for release in accordance with a resolution
of the Directors of Lifezone on December 13, 2023.
The
Unaudited Condensed Consolidated Interim Financial Statements of Lifezone have been reviewed by Grant Thornton Ireland, an independent
public accountant prior to filing in accordance with the standards of the United States Public Company Accounting Oversight Board applicable
to reviews of interim financial information.
Lifezone
is a modern metals company engaged in the development, patenting, and licensing of its hydrometallurgical processing technology (“Hydromet
Technology”) for use in the extractive metallurgy, minerals, and 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. Information on the group structure of Lifezone is provided in Note 2.3.
Information
on other related party relationships of Lifezone is provided in Note 17.
Background
and basis for preparation
History
and organization
Lifezone
Holdings Limited (“Lifezone Holdings”) was formed as a holding company for Lifezone Limited and acquired 100% of the
equity interest (including outstanding options and Restricted Stock Units, “RSUs”) in Lifezone Limited on June 24,
2022, in consideration for issuing shares of Lifezone Holdings on a 1:1 basis to Lifezone Limited shareholders at the time (following
a 1:200 split of shares of Lifezone Limited) (the “Lifezone Holdings Transaction”). Also, on June 24, 2022 (just prior
to the Lifezone Holdings Transaction), the shareholders of Kabanga Nickel Limited (“KNL”), other than Lifezone Limited
and BHP Billiton (UK) DDS Limited (“BHP”), exchanged their shares of KNL for shares of Lifezone Holdings on a 1:1
basis (the “Flip-Up”). The KNL options were also exchanged for options in Lifezone Holdings on a 1:1 basis as part
of the Flip-Up.
As
Lifezone Holdings did not have any previous operations, Lifezone Limited and KNL (together with its subsidiaries) are together viewed
as the predecessors to Lifezone Holdings and its consolidated subsidiaries. As a result, the consolidated financial statements of Lifezone
Holdings recognize the assets and liabilities received in the Lifezone Holdings Transaction and the Flip-Up at their historical carrying
amounts, as reflected in the historical financial statements of Lifezone Limited and KNL (together with its subsidiaries).
Lifezone
Metals Limited was incorporated on December 8, 2022 for the purpose of effectuating the SPAC Transaction referred to below. Prior to
the consummation of the transaction, Lifezone Metals Limited had no material assets and did not operate any businesses.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 1. | General
information (continued) |
BHP investments
On
December 24, 2021, KNL entered into a $40 million convertible loan agreement with BHP and Lifezone Limited established a joint venture
with BHP under the Lifezone Subscription Agreement in relation to the Kabanga Nickel project. Following the conversion of convertible
loans on July 1, 2022, BHP held an 8.9% interest in KNL, reflected within non-controlling interests.
On
October 14, 2022, BHP agreed to invest a further $50 million in KNL in the form of equity under the Tranche 2 Subscription Agreement,
the completion of which was subject to certain conditions. Lifezone Limited satisfied substantially all the closing conditions and received
the $50 million on February 15, 2023 and issued a stock certificate on the same day, bringing BHP’s interest in KNL from 8.9% as
of December 31, 2022 to 17.0%, effective February 15, 2023. Associated with this transaction KNL paid $2.5 million equity issuance cost,
with the liability to an investment bank accounted for as a payable in 2022.
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,
Lifezone Holdings and GoGreen consummated the SPAC Transaction pursuant to the BCA (the “SPAC Transaction”) 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 (the “EGM”). GoGreen’s shareholders also voted to approve all the other proposals presented at the
EGM. 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 Lifezone Metals Limited. As Lifezone shareholders hold the majority of shares in the combined entity
post the acquisition, Lifezone’s key management personnel continues to direct the combined business and Lifezone set the direction
of the board composition, Lifezone is considered the accounting acquirer.
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 Lifezone Metals issuing shares at Closing
of the Reorganization for the net assets of GoGreen, accompanied by a recapitalization via Private Investment in Public Equity (“PIPE”)
transaction. The Reorganization, which is not within the scope of IFRS 3 since GoGreen did not meet the definition of a business in accordance
with IFRS 3, was accounted for within the scope of IFRS 2. In accordance with IFRS 2, Lifezone recorded a one-time non-cash expense of
$76.9 million recognized as a SPAC Transaction expense, based on the excess of the fair value of Lifezone shares issued at a value of
$10 per share over the fair value of GoGreen’s identifiable net assets acquired.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 1. | General
information (continued) |
SPAC
Transaction (continued)
GoGreen’s
net assets as of June 30, 2023, prior to the Closing of the SPAC Transaction predominantly comprised of cash and cash equivalents, less
current liabilities, are together considered the fair value of GoGreen’s identifiable net assets. In accordance with IFRS 2 paragraph
10, the net assets of GoGreen will be stated at fair value, with no goodwill or other intangible assets recorded and any excess of fair
value of Lifezone shares issued over the fair value of GoGreen’s identifiable net assets acquired represents a compensation for
the service of a stock exchange listing for its shares, shown as SPAC Transaction expenses below.
| |
Shares
issued at
Closing | | |
Fair
value
per Share | | |
Fair
value of
shares at
closing date | |
| |
| | |
| | |
$ | |
Previous
GoGreen Sponsor shareholders | |
| 6,468,600 | | |
| 10.00 | | |
| 64,686,000 | |
Previous GoGreen public
shareholders | |
| 1,527,554 | | |
| 10.00 | | |
| 15,275,540 | |
| |
| 7,996,154 | | |
| | | |
| 79,961,540 | |
Fair value of GoGreen
net assets | |
| | | |
| | | |
| (3,104,056 | ) |
SPAC
Transaction expense | |
| | | |
| | | |
| 76,857,484 | |
The
BCA was signed concurrent to the closing of the PIPE transaction, which raised $70.2 million of gross proceeds.
Prior
to the Closing, the SPAC incurred 94.47% of redemptions from public shareholders following a redemption vote deadline of June 27, 2023,
leaving 1,527,554 residual shares in trust. At the Closing, Lifezone acquired GoGreen and former GoGreen shareholders received the number
of Lifezone shares and warrants equal to their former holdings of GoGreen shares and warrants. The outstanding warrants formerly associated
with GoGreen will therefore be recognized in Lifezone future reported financial position.
Immediately
prior to the Closing, holders of all outstanding Lifezone Holdings options (18,054 total) and restricted stock units (30,000 total) elected
to exercise or settle, respectively, their options and restricted stock units for Lifezone Holdings shares. All outstanding Lifezone
Holdings shares were subsequently exchanged for Lifezone shares at the Closing Date July 6, 2023 at a ratio of c. 94:1.
The
SPAC Transaction is expected to have a significant impact on Lifezone’s future capital structure and operating results. The most
significant change in Lifezone’s reported financial positions is an approximate increase in cash and cash equivalents from $44.4
million as at June 30, 2023 to $73.3 million as at September 30, 2023. Cash inflows during the three months ending September 30, 2023
related to $70.2 million in gross proceeds from the PIPE transaction consummated substantially simultaneously with the SPAC Transaction
and $16.5 million GoGreen cash (post redemptions, but before paying all existing GoGreen liabilities), resulting in $86.6 million gross
proceeds for Lifezone before listing and equity issuance costs.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 1. | General
information (continued) |
SPAC
Transaction (continued)
As
a result of the SPAC Transaction, Lifezone as the new parent company, became a SEC-registered Foreign Private Issuer (“FPI”)
listed on the NYSE, which 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.
Following
the Closing, but prior to the completion acquisition of Simulus Group Pty Ltd (“Simulus”) on July 18, 2023 as described
in detail below, Lifezone shareholders comprised all prior shareholders of Lifezone Holdings, prior shareholders of GoGreen (including
its public shareholders post-redemptions and Sponsor shareholders) plus all PIPE investors resulting in Lifezone having a total of 77,693,602
shares issued and outstanding.
Pursuant
to earnout arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional Lifezone shares if the
daily volume-weighted average price of Lifezone shares equals or exceeds (i) $14.00 per share for any 20 trading days within a 30-trading
day period (“Trigger Event 1”) and (ii) $16.00 for any 20 trading days within a 30-trading day period (“Trigger
Event 2”). Of the total shares issued and outstanding, 1,725,000 shares are issued but in escrow and relate to the Sponsor
earnouts, which are subject to the occurrence of the two trigger events. Further information on the accounting earnouts is provided in
Note 20.
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 applies
to (i) 5,133,600 Lifezone shares, and 667,500 warrants received by the Sponsor shareholders and (ii) the Lifezone shares received by
the previous Lifezone Holdings shareholders who owned 1.5% or more of the outstanding Lifezone Holdings shares prior to the Closing Date,
in each case, subject to certain exceptions. 1,335,000 Lifezone shares received by the Sponsor shareholders were subject to a 60-day
lock-up from the Closing Date.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 1. | General
information (continued) |
SPAC
Transaction (continued)
Lifezone’s
shareholdings at the time of the Closing are summarized below. The table below excludes shares issued at the completion of the acquisition
of Simulus which was completed on July 18, 2023 as discussed in Note 22.
Shareholders | |
Shares
At
Closing | | |
%
At Closing | | |
Shares
(Fully Diluted) | | |
Fully
Diluted % | |
Previous Lifezone Holdings shareholders | |
| 62,680,131 | | |
| 80.7 | % | |
| 62,680,131 | | |
| 52.5 | % |
Previous GoGreen Sponsor shareholders | |
| 6,468,600 | | |
| 8.3 | % | |
| 6,468,600 | | |
| 5.4 | % |
Previous GoGreen public shareholders | |
| 1,527,554 | | |
| 2.0 | % | |
| 1,527,554 | | |
| 1.3 | % |
PIPE Investors | |
| 7,017,317 | | |
| 9.0 | % | |
| 7,017,317 | | |
| 5.9 | % |
Total | |
| 77,693,602 | | |
| 100.0 | % | |
| 77,693,602 | | |
| 65.0 | % |
| |
| | | |
| | | |
| | | |
| | |
Warrants ($11.50 Exercise Share Price) | |
| | | |
| | | |
| | | |
| | |
Previous GoGreen public warrants | |
| | | |
| | | |
| 13,800,000 | | |
| 11.6 | % |
Previous GoGreen Sponsor
warrants | |
| | | |
| | | |
| 667,500 | | |
| 0.6 | % |
Total | |
| | | |
| | | |
| 14,467,500 | | |
| 12.1 | % |
| |
| | | |
| | | |
| | | |
| | |
Earnout Trigger Event 1 ($14.00 per
Share) | |
| | | |
| | | |
| | | |
| | |
Previous Lifezone Holdings shareholders | |
| | | |
| | | |
| 12,536,026 | | |
| 10.5 | % |
Previous GoGreen Sponsor
shareholders | |
| | | |
| | | |
| 862,500 | | |
| 0.7 | % |
Total | |
| | | |
| | | |
| 13,398,526 | | |
| 11.2 | % |
| |
| | | |
| | | |
| | | |
| | |
Earnout Trigger Event 2 ($16.00 per
Share) | |
| | | |
| | | |
| | | |
| | |
Previous Lifezone Holdings shareholders | |
| | | |
| | | |
| 12,536,026 | | |
| 10.5 | % |
Previous GoGreen Sponsor
shareholders | |
| | | |
| | | |
| 862,500 | | |
| 0.7 | % |
Total | |
| | | |
| | | |
| 13,398,526 | | |
| 11.2 | % |
| |
| | | |
| | | |
| | | |
| | |
Fully
Diluted Total | |
| | | |
| | | |
| 119,458,154 | | |
| 100.0 | % |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 1. | General
information (continued) |
Simulus
acquisition
On
March 3, 2023, Metprotech, a wholly owned subsidiary of Lifezone, signed a share sale agreement with the shareholders of Simulus, a leading
hydrometallurgical laboratory and engineering company located in Perth, Australia.
The
transaction formally closed on July 18, 2023 for a total consideration of $14.53 million comprising a $1.0 million deposit paid on March
27, 2023, a cash consideration of $7.5 million paid on closing and 500,000 shares in Lifezone. The vendors are restricted from disposing
of, transferring, or assigning their consideration shares for a period of six months from the completion of the Simulus acquisition.
Further
information on the accounting of the Simulus acquisition is provided in Note 22.
| 2. | Significant
accounting policies |
Lifezone’s
Unaudited Condensed Consolidated Interim Financial Statements for the nine months ended September 30, 2023 have been prepared in accordance
with IAS 34 ‘Interim Financial Reporting’ under the International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board (“IASB”) and are reported in U.S. dollars (“USD”
or “$”).
The
Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a historical cost basis unless otherwise stated.
The
same accounting policies, presentation and methods of computation have been followed in these Unaudited Condensed Consolidated Interim
Financial Statements as were applied in the preparation of the financial statements of Lifezone Holdings for the year ended December
31, 2022, except for the impact of the adoption of the Standards and Interpretations as described in Note 2.2
These
standards and amendments do not have a significant impact on these unaudited condensed consolidated interim financial statements and
therefore the disclosures have not been made.
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.
The
Unaudited Condensed Consolidated Interim Financial Statements incorporate the results of the Flip-Up as discussed in Note 1, as of June
24, 2022. Lifezone Holdings acquired 100% of the equity interest in Lifezone Limited, a transaction accounted for using the predecessor
value method. Business combinations under common control are outside the scope of IFRS 3, therefore, Lifezone management used its judgment
to develop an accounting policy that is relevant and reliable, in accordance with IAS 8. Management considered the application of the
predecessor value method as the most appropriate (also known as merger accounting), which involves accounting for the assets and liabilities
of the acquired business using existing carrying values of the acquired business.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 2. | Significant
accounting policies (continued) |
| 2.1. | Basis
of preparation (continued) |
In
the Unaudited Condensed Consolidated Interim Statement of Financial Position, the acquiree’s identifiable assets and liabilities
are recognized at their carrying values at the acquisition date. The increase in the fair value of share-based payment reserves, assumed
by Lifezone Holdings as part of the Flip-Up, was accounted for directly in equity under Other Reserves. The results of acquired operations
are included in the Unaudited Condensed Consolidated Interim Statement of Comprehensive Income from the date on which control is obtained.
Lifezone
has prepared the Unaudited Condensed Consolidated Interim Financial Statements on the basis that it will continue to operate as a going
concern as discussed in Note 2.5.
The
Unaudited Condensed Consolidated Interim Financial Statements comprise the financial statements of Lifezone and all its controlled subsidiaries
as of September 30, 2023. Control is achieved when Lifezone is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically, Lifezone controls an investee
if, and only if, Lifezone has:
| ● | power
over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee); |
| ● | exposure,
or rights, to variable returns from its involvement with the investee; or |
| ● | the
ability to use its power over the investee to affect its returns. |
Generally,
there is a presumption that a majority of voting rights results in control. To support this presumption and when Lifezone has less than
a majority of the voting or similar rights of an investee, Lifezone considers all relevant facts and circumstances in assessing whether
it has power over an investee, including:
| ● | the
contractual arrangement(s) with the other vote holders of the investee; |
| ● | rights
arising from other contractual arrangements; and |
| ● | Lifezone’s
voting rights and potential voting rights. |
Lifezone
reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when Lifezone obtains control over the subsidiary and ceases when Lifezone
loses control of the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are
included in the Unaudited Condensed Consolidated Interim Financial Statements from the date Lifezone gains control until the date Lifezone
ceases to control the subsidiary.
| 2.2. | 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 Lifezone Holdings for the year ended December 31,
2022, except for the adoption of new standards effective as of January 1, 2023. 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 2023, but do not have an impact
on the unaudited condensed consolidated interim financial statements of the Company, as follows:
| ● | IFRS
17 ‘Insurance Contracts’ |
| ● | Deferred
Tax related to Assets and Liabilities arising from a Single Transaction (Amendments
to IAS 12, Income Taxes) |
| ● | Definition
of Accounting Estimates (Amendments to IAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors) |
| ● | Disclosure
of Accounting Policies (Amendments to IAS 1, Presentation of Financial Statements, and IFRS
Practice Statement 2, Making Materiality Judgements) |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 2. | Significant
accounting policies (continued) |
| 2.3. | Basis
of consolidation |
Profit
or loss and each component of other comprehensive income are attributed to the equity holders of Lifezone Metals Limited 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.
Lifezone
attributes total comprehensive income or loss of subsidiaries between the owners of Lifezone Metals Limited as the parent entity and
the non-controlling interests based on their respective ownership interests.
The
Consolidated Interim Financial Statements comprise the financial statements as of September 30, 2023, of the following 19 subsidiaries.
| |
Direct
/ | |
Country
of | |
Principal
place of | |
Percentage
of Ownership (%) | |
Name
of subsidiary | |
Indirect | |
incorporation | |
Business | |
2023 | | |
2022 | |
Aqua
Merger Sub (in liquidation) | |
Direct | |
Cayman
Islands | |
Cayman
Islands | |
| 100.0 | % | |
| 100.0 | % |
Lifezone
Holdings Limited | |
Indirect | |
Isle of Man | |
Isle of Man | |
| 100.0 | % | |
| 100.0 | % |
Lifezone
Limited | |
Indirect | |
Isle of Man | |
Isle of Man | |
| 100.0 | % | |
| 100.0 | % |
Lifezone
Holdings US, LLC | |
Indirect | |
United State of America | |
United State of America | |
| 100.0 | % | |
| 0 | % |
Lifezone
US Holdings Limited | |
Indirect | |
United Kingdom | |
United Kingdom | |
| 100.0 | % | |
| 0 | % |
Lifezone
US Holdings LLC | |
Indirect | |
United State of America | |
United State of America | |
| 100.0 | % | |
| 0 | % |
Lifezone
Recycling US, LLC | |
Indirect | |
United State of America | |
United State of America | |
| 100.0 | % | |
| 0 | % |
LZ
Services Limited | |
Indirect | |
United Kingdom | |
United Kingdom | |
| 100.0 | % | |
| 100.0 | % |
Kabanga
Holdings Limited | |
Indirect | |
Cayman Islands | |
Cayman Islands | |
| 83.0 | % | |
| 91.1 | % |
Kabanga
Nickel Company Limited | |
Indirect | |
Tanzania | |
Tanzania | |
| 83.0 | % | |
| 91.1 | % |
Kabanga
Nickel Limited | |
Indirect | |
United Kingdom | |
United Kingdom | |
| 83.0 | % | |
| 91.1 | % |
Kagera
Mining Company Limited | |
Indirect | |
Tanzania | |
Tanzania | |
| 83.0 | % | |
| 91.1 | % |
Metprotech
Pacific Proprietary Limited | |
Indirect | |
Australia | |
Australia | |
| 100.0 | % | |
| 100.0 | % |
The
Simulus Group Pty Limited | |
Indirect | |
Australia | |
Australia | |
| 100.0 | % | |
| 0 | % |
Simulus
Pty Limited | |
Indirect | |
Australia | |
Australia | |
| 100.0 | % | |
| 0 | % |
Romanex
International Limited | |
Indirect | |
Canada | |
Canada | |
| 83.0 | % | |
| 91.1 | % |
Tembo
Nickel Corporation Limited | |
Indirect | |
Tanzania | |
Tanzania | |
| 69.7 | % | |
| 76.5 | % |
Tembo
Nickel Mining Company Limited | |
Indirect | |
Tanzania | |
Tanzania | |
| 69.7 | % | |
| 76.5 | % |
Tembo
Nickel Refining Company Limited | |
Indirect | |
Tanzania | |
Tanzania | |
| 69.7 | % | |
| 76.5 | % |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 2. | Significant
accounting policies (continued) |
| 2.3. | Basis
of consolidation (continued) |
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 the United Kingdom. Investments in these entities as of September
30, 2023 reflect the nominal share value. These three companies have no tangible assets or business activities at the date of this report.
| 2.4. | Business
combinations under common control |
Business
combinations involving entities under common control are outside the scope of IFRS 3 ‘Business Combinations’ (Paragraphs
B5–B12D) and there is no other specific IFRS guidance. Accordingly, Lifezone management used its judgement to develop an accounting
policy that is relevant and reliable, in accordance with
IAS
8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’.
The
management of Lifezone has assessed the going concern assumptions of Lifezone during the preparation of these Unaudited Condensed Consolidated
Interim Financial Statements. Lifezone generated a net comprehensive loss attributable to ordinary shareholders of the company of $359.5
million for the nine months ended September 30, 2023 (September 30, 2022: $7.8 million) and accumulated losses of $403.4 million at September
30, 2023 (December 31, 2022: $44.4 million).
As
of September 30, 2023, Lifezone had consolidated cash and cash equivalents of $73.3 million. The cash flow for the nine months ended
September 30, 2023 was $52.7 million (September 30, 2022: net outflows $13.0 million), consisting of $115.0 million of net inflows (September
30, 2022: net outflows $0.07 million) from financing activities arising from the completion of the SPAC Transaction, the PIPE transaction
and an investment by BHP in KNL. Net outflows from operating activities of $23.6 million (September 30, 2022: net outflows $9.4 million)
and net outflows from investing activities of $38.6 million (September 30, 2022: net outflows $3.5 million), relate mainly to expenditure
for the Kabanga Nickel project and the Simulus acquisition.
Based
on Lifezone’s current and increasing liquidity and anticipated funding requirements, Lifezone will need additional capital in the
future to fund its operations and project developments. 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, capital costs expected for the construction costs of the Kabanga Nickel project,
and the demand 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 or increase our cash reserve for future investments or operations, 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 and alternative or debt financing. Additionally, we may receive the proceeds from any exercise
of any warrants in cash. Each Lifezone warrant represents the right to purchase one ordinary Lifezone share at a price of $11.50 per
share in cash.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 2. | Significant
accounting policies (continued) |
| 2.5. | Going
concern (continued) |
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 applies to
(i) 5,133,600 Lifezone shares, and 667,500 warrants received by the Sponsor shareholders and (ii) the Lifezone shares received by the
previous Lifezone Holding’s shareholders who owned 1.5% or more of the outstanding Lifezone Holdings shares prior to the Closing,
in each case, subject to certain exceptions. 1,335,000 Lifezone shares received by the Sponsor shareholders were subject to a 60-day
lock-up from the Closing Date.
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 December 13, 2023, the market price for our Lifezone ordinary shares
was $8.50. When the market price for our Lifezone ordinary shares is less than $11.50 per
share (i.e., the warrants are “out of the money”), we believe warrant holders
will be unlikely to exercise their warrants. If all the warrants are exercised, an additional
14,391,200 Lifezone ordinary shares would be
outstanding, with further details available under Note 27 (Subsequent events).
The
Unaudited Condensed Consolidated Interim Financial Statements have been prepared on a going concern basis which contemplates the continuity
of normal business activities and 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. As such, the ability of Lifezone to continue
as a going concern depends on its ability to secure this additional financing. In the event Lifezone issues additional equity in the
future, shareholders could face significant dilution in their holdings.
Together
with its brokers and financial advisors, Lifezone continuously monitors capital market conditions, and the Board recurrently considers
various forms of financing available to Lifezone.
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 of Lifezone Metals Limited
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, 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 its mineral resources 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.
Given
that Lifezone will likely need to raise funds within twelve months from the date of approval of these unaudited condensed consolidated
interim financial statements for project development, new projects, acquisitions and to fund operations, the situation gives rise to
a material uncertainty as there can be no assurance Lifezone will be able to raise required financing in the future. Notwithstanding
this material uncertainty, the Directors of Lifezone consider it appropriate to prepare the financial statements on a going concern basis
given Lifezone’s ability to raise necessary funding and its shareholder base at Lifezone and at KNL. The financial statements do
not include the adjustments that would result if Lifezone was unable to continue as a going concern.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 2. | Significant
accounting policies (continued) |
| 2.6. | 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 Metprotech Pacific Pty
Ltd (“Metprotech”) 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 Metprotech and have functional currencies of AUD. The balances of the subsidiaries reporting
under other currencies are translated to USD.
| 3. | Key
sources of estimation and uncertainty |
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, and the accompanying disclosures,
and the disclosure of contingent liabilities. 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.
The
judgements, estimates and assumptions applied in the Unaudited Condensed Consolidated Interim Financial Statements, including the key
sources of estimation uncertainty, were the same as those applied in Lifezone’s (and its predecessor holding companies) last annual
financial statements for the year ended December 31, 2022.
Fair
value hierarchy
A
fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
The
Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 3. | Key
sources of estimation and uncertainty (continued) |
Fair
value hierarchy (continued)
Equity
Instruments for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
| ● | Level
1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities |
| ● | Level
2 — Valuation techniques for which the lowest level input that is significant to the
fair value measurement is directly or indirectly observable |
| ● | Level
3 — Valuation techniques for which the lowest level input that is significant to the
fair value measurement is unobservable |
For
instruments that are recognised in the financial statements at fair value, the Group determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement
as a whole) at the end of each reporting period.
The
management determines the policies and procedures for non-recurring measurement, such as share options and restricted stock units. There
are no recurring fair value measurements, and the movement in the fair value of the share options and restricted stock units is due to
a modification during the year.
Management
have involved external valuers for valuation of the equity instruments. Selection criteria include market knowledge, reputation, independence
and whether professional standards are maintained. Share options and restricted stock units are currently measured under Level 3, the
inputs for which are disclosed in Note 20.
Management
have assessed that the fair values of cash and cash equivalents, trade receivables, trade payables and other current liabilities approximate
their carrying amounts largely due to the short-term maturities of these instruments.
For
management purposes, Lifezone is organized into business units based on the main types of activities and has two reportable operating
segments, as follows:
| ● | Metals
extraction and refining business; and |
| ● | Intellectual
property (“IP”) licensing business. |
The
Metals extraction and refining segment of the business consists of Lifezone’s interest in KNL, comprising the Kabanga Nickel project.
The IP segment comprises patents residing with and managed by Lifezone’s subsidiary Lifezone Limited, and a team of highly trained
engineers and scientists based in Lifezone’s newly acquired hydromet laboratory based in Perth, with the majority having joined
via the Simulus acquisition, that closed on July 18, 2023.
Further
information on the accounting of the Simulus acquisition is provided in Notes 1 and 22.
The
Chief Executive Officer ensures that the corporate strategy is being implemented. 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 and 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.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 4. | Segment
information (continued) |
However,
Lifezone’s financing and treasury operations are managed by corporate functions 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.
The
results for the nine months ending September 30, 2023 and September 30, 2022 respectively are shown below.
| |
Intellectual | | |
Metals | | |
Inter-Segment | | |
| |
| |
Property | | |
Extraction | | |
eliminations | | |
Total | |
| |
$ | | |
$ | | |
$ | | |
$ | |
For the nine months ended September 30, 2023 | |
| | |
| | |
| | |
| |
Revenue | |
| 8,027,904 | | |
| 1,274,076 | | |
| (8,238,961 | ) | |
| 1,063,019 | |
Interest income | |
| 78,023 | | |
| 279,455 | | |
| - | | |
| 357,478 | |
(Loss) gain on foreign exchange | |
| (253,222 | ) | |
| 111,150 | | |
| - | | |
| (142,072 | ) |
General and administrative expenses | |
| (26,929,249 | ) | |
| (342,565,441 | ) | |
| 8,238,961 | | |
| (361,255,729 | ) |
Interest expense | |
| (71,851 | ) | |
| (78,791 | ) | |
| - | | |
| (150,642 | ) |
Loss
before tax | |
| (19,148,395 | ) | |
| (340,979,551 | ) | |
| - | | |
| (360,127,946 | ) |
| |
| | | |
| | | |
| | | |
| | |
For the period ended September 30, 2023 | |
| | | |
| | | |
| | | |
| | |
Segment assets | |
| 10,738,961 | | |
| 136,609,717 | | |
| - | | |
| 147,348,678 | |
Segment liabilities | |
| (4,616,593 | ) | |
| (11,020,903 | ) | |
| - | | |
| (15,637,496 | ) |
| |
Intellectual | | |
Metals | | |
Inter-Segment | | |
| |
| |
Property | | |
Extraction | | |
eliminations | | |
Total | |
| |
$ | | |
$ | | |
$ | | |
$ | |
For the nine months ended September 30, 2022 | |
| | |
| | |
| | |
| |
Revenue | |
| 6,440,383 | | |
| - | | |
| (4,794,339 | ) | |
| 1,646,044 | |
Interest income | |
| 46,122 | | |
| 80,931 | | |
| - | | |
| 127,053 | |
(Loss) on foreign exchange | |
| (55,753 | ) | |
| (89,161 | ) | |
| - | | |
| (144,914 | ) |
General and administrative expenses | |
| (3,256,825 | ) | |
| (11,665,914 | ) | |
| 4,794,339 | | |
| (10,128,400 | ) |
Interest expense | |
| - | | |
| (198,861 | ) | |
| - | | |
| (198,861 | ) |
Gain
(loss) before tax | |
| 3,173,927 | | |
| (14,873,005 | ) | |
| - | | |
| (8,699,078 | ) |
| |
| | | |
| | | |
| | | |
| | |
For the period ended September 30, 2022 | |
| | | |
| | | |
| | | |
| | |
Segment assets | |
| 11,870,999 | | |
| 45,521,793 | | |
| - | | |
| 54,392,792 | |
Segment liabilities | |
| (372,848 | ) | |
| (8,812,973 | ) | |
| - | | |
| (9,185,821 | ) |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Kellplant Proprietary Ltd | |
| 56,140 | | |
| 130,583 | | |
| 129,680 | | |
| 1,133,122 | |
Kelltechnology SA Proprietary
Ltd | |
| 159,520 | | |
| 377,707 | | |
| 524,888 | | |
| 440,330 | |
Consulting and management fee with affiliated
companies | |
| 215,660 | | |
| 508,290 | | |
| 654,568 | | |
| 1,573,452 | |
Non-affiliated company
revenue | |
| 340,611 | | |
| 23,449 | | |
| 408,451 | | |
| 72,592 | |
| |
| 556,271 | | |
| 531,739 | | |
| 1,063,019 | | |
| 1,646,044 | |
Revenue
is attributable to Hydromet consulting related to mineral beneficiation operations of affiliated companies and technical and laboratory
services provided by Simulus to a wide array of customers. The affiliated entities are joint venture entities of Lifezone. Lifezone Limited
has a 50% interest in Kelltech Limited, a joint venture with Sedibelo Resources Limited. Lifezone Limited has an indirect 33.33% interest
in Kelltechnology SA Proprietary Ltd (“KTSA”), a subsidiary of Kelltech Limited, and Kellplant Proprietary Ltd (“Kellplant”),
a wholly owned subsidiary of KTSA as disclosed in detail in Note 23.
Non-affiliated
company revenue of $340k during the three months ending September 30, 2023 relates to third party customers following the Simulus acquisition
as disclosed in Note 1 and 22.
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Interest on shareholder loans | |
| - | | |
| 2,656 | | |
| 6,841 | | |
| 6,821 | |
Other interest company
revenue | |
| 87,678 | | |
| 96,581 | | |
| 350,637 | | |
| 120,232 | |
| |
| 87,678 | | |
| 99,237 | | |
| 357,478 | | |
| 127,053 | |
Other
interest income arises from cash in bank deposits with bank interest averaging 0.10 -1.40% over the period.
| |
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
Note | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| |
$ | | |
$ | | |
$ | | |
$ | |
Interest accretion on contingent
consideration | |
18 | |
| 40,186 | | |
| 59,905 | | |
| 119,290 | | |
| 179,714 | |
Interest accretion on lease liability | |
16 | |
| 18,788 | | |
| 7,006 | | |
| 31,352 | | |
| 17,752 | |
Other interest expenses | |
| |
| - | | |
| 1,395 | | |
| - | | |
| 1,395 | |
| |
| |
| 58,974 | | |
| 68,306 | | |
| 150,642 | | |
| 198,861 | |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 8. | General
and administrative expenses |
The following
is a summary of key expenses included in general and administrative expenses:
| |
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
Note | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
| |
$ | | |
$ | | |
$ | | |
$ | |
Wages
& employee benefits | |
| |
| 2,070,172 | | |
| 925,602 | | |
| 3,886,714 | | |
| 2,224,736 | |
Professional
fees | |
| |
| 1,181,725 | | |
| 1,075,535 | | |
| 11,374,386 | | |
| 3,119,398 | |
Directors’
fees | |
| |
| 262,179 | | |
| 43,604 | | |
| 348,679 | | |
| 130,729 | |
Legal
expenses | |
| |
| 80,357 | | |
| 118,982 | | |
| 245,577 | | |
| 261,146 | |
Mining
expenses | |
| |
| - | | |
| 351,578 | | |
| - | | |
| 934,816 | |
Depreciation
of property and equipment | |
11 | |
| 534,589 | | |
| 30,929 | | |
| 642,281 | | |
| 76,618 | |
Depreciation
of right of use asset | |
11 | |
| 144,641 | | |
| 9,887 | | |
| 206,670 | | |
| 33,374 | |
Amortization
of intangible assets | |
| |
| 84,973 | | |
| - | | |
| 123,274 | | |
| 33,619 | |
Share-based
expense - Lifezone Holdings shareholder earnout | |
20 | |
| 248,464,035 | | |
| - | | |
| 248,464,035 | | |
| - | |
Share-based
expense - Sponsor earnout | |
20 | |
| 17,094,750 | | |
| - | | |
| 17,094,750 | | |
| - | |
SPAC
transaction expenses | |
| |
| 76,857,484 | | |
| - | | |
| 76,857,484 | | |
| - | |
Taxes
& licenses | |
| |
| - | | |
| 1,486,749 | | |
| - | | |
| 1,546,071 | |
Loss
gain on foreign exchange | |
| |
| 228,619 | | |
| 114,441 | | |
| 142,072 | | |
| 144,914 | |
Lifezone
incurred costs of $23.2 million associated with the SPAC and PIPE transactions over 2022 and 2023, of which $9.6 million were accrued
in 2022, while $13.5 million were incurred in 2023. Lifezone has apportioned $5.7 million as directly attributable to equity issuance
fees recognised within shareholder’s equity resulting in a net balance of $7.9 million expensed which is included in Professional
fees above for the nine months ended September 30, 2023 (September 30, 2022: $573,299).
Share-based
payment expenses of $265,558,785 under the SPAC Transaction have been recognized in accordance with IFRS 2 Share-based Payment,
related to the earnouts with market performance vesting conditions as described in Note 1. These earnouts relate to shares granted to
previous Lifezone Holdings shareholders and Sponsor shareholders. In addition, related to the SPAC Transaction, Lifezone has recognized
$76,857,484 as SPAC transaction expenses to account for the excess of fair value of equity in Lifezone issued to participating (non-redeeming)
GoGreen shareholders over the fair value of GoGreen’s identifiable net assets acquired classified as a service of a stock exchange
listing in accordance with IFRS 2, paragraph 10.
Lifezone
capitalized mining expenses in Q3 2023 to exploration and evaluation assets following advancement in its exploration and study program
as disclosed in detail in Note 12.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 9. | Cash
and cash equivalents |
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Cash in banks | |
| 73,258,538 | | |
| 20,535,210 | |
Cash
in banks earns interest at the bank deposit rates averaging 0.10 -1.40% over the period.
Interest
income from cash and cash equivalents amounted to $350,637 for the nine months ended September 30, 2023 (December 31, 2022: $214,252).
| 10. | Trade
and other receivables |
Other
receivables consist of the following:
| |
| |
September 30, | | |
December 31, | |
| |
Note | |
2023 | | |
2022 | |
| |
| |
$ | | |
$ | |
Tax receivables | |
| |
| 4,255,692 | | |
| 2,827,070 | |
Other receivables | |
| |
| 427,000 | | |
| 158,231 | |
Receivables from affiliated entities | |
17 | |
| 1,612,291 | | |
| 959,935 | |
Prepayments | |
| |
| 2,184,751 | | |
| 560,946 | |
Related party receivables | |
17 | |
| 75,000 | | |
| 655,683 | |
Prepaid mining license | |
| |
| 88,589 | | |
| 843,342 | |
| |
| |
| 8,643,323 | | |
| 6,005,207 | |
Tax
receivables are short term and receivable within twelve months following applicable tax refund application in the local tax jurisdiction.
Lifezone has VAT receivables with Tanzania and United Kingdom tax authorities, and GST receivables with Australian tax authority.
Receivables
from affiliated entities relate to short term services and payments on behalf of affiliated entities disclosed in Note 17. Trade receivables
arising from revenue activities are included as part of Receivables from affiliated entities. Credit terms are 30 days from the start
of the period being charged.
Prepayments
include Directors and officers (“D&O”) annual insurance in addition to a 6-year run out cover taken out as part
of the BCA transaction. D&O insurance was required to cover the risk of potential compensation claims against business’ directors
for alleged wrongful acts such as breach of trust, breach of duty, neglect, etc. As of September 30, 2023 D&O insurance amounted
to $1,252,676.
Lifezone’s
Tanzanian subsidiary Tembo Nickel Corporation Limited (“Tembo Nickel”) is required to pay an annual fee to maintain
its mining license with the Tanzanian Mining Commission. The prepaid portion of the fee is reflected in the Prepaid mining license balance
above.
All
other receivables are short term in nature.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 11. | Property
and equipment and right-of-use assets |
Lifezone’s
property and equipment and right-of-use assets include building, transportation equipment, and office and computer equipment. The carrying
amounts for the reporting periods can be analyzed as follows:
| |
Buildings | | |
Transportation
equipment | | |
Office
and
computer
equipment | | |
Laboratory
and testing
equipment | | |
Total
Property
and equipment | | |
Right-of-use
assets | | |
Total | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Cost | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
As at
January 1, 2022 | |
| 932,623 | | |
| 41,457 | | |
| 52,292 | | |
| - | | |
| 1,026,372 | | |
| - | | |
| 1,026,372 | |
Additions | |
| - | | |
| 82,495 | | |
| 202,369 | | |
| - | | |
| 284,864 | | |
| 469,743 | | |
| 754,607 | |
Disposals
for the period | |
| (255,346 | ) | |
| - | | |
| (16,445 | ) | |
| - | | |
| (271,791 | ) | |
| - | | |
| (271,791 | ) |
As
at December 31, 2022 | |
| 677,277 | | |
| 123,952 | | |
| 238,216 | | |
| - | | |
| 1,039,445 | | |
| 469,743 | | |
| 1,509,188 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated
depreciation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
As at January 1,
2022 | |
| (14,713 | ) | |
| (7,773 | ) | |
| (3,041 | ) | |
| - | | |
| (25,527 | ) | |
| - | | |
| (25,527 | ) |
Charge
for the period | |
| (22,068 | ) | |
| (36,639 | ) | |
| (70,889 | ) | |
| - | | |
| (129,596 | ) | |
| (117,436 | ) | |
| (247,032 | ) |
As
at December 31, 2022 | |
| (36,781 | ) | |
| (44,412 | ) | |
| (73,930 | ) | |
| - | | |
| (155,123 | ) | |
| (117,436 | ) | |
| (272,559 | ) |
Carrying
amount at December 31, 2022 | |
| 640,496 | | |
| 79,540 | | |
| 164,286 | | |
| - | | |
| 884,322 | | |
| 352,307 | | |
| 1,236,629 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Cost | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
As at January 1,
2023 | |
| 677,277 | | |
| 123,952 | | |
| 238,216 | | |
| - | | |
| 1,039,445 | | |
| 469,743 | | |
| 1,509,188 | |
Additions
from acquisitions | |
| - | | |
| - | | |
| 220,698 | | |
| 4,704,783 | | |
| 4,925,481 | | |
| 261,139 | | |
| 5,186,620 | |
Foreign
exchange impact | |
| - | | |
| - | | |
| (11,603 | ) | |
| (247,364 | ) | |
| (258,967 | ) | |
| - | | |
| (258,967 | ) |
Additions | |
| - | | |
| 75,551 | | |
| 465,320 | | |
| - | | |
| 540,871 | | |
| 1,069,495 | | |
| 1,610,366 | |
As
at September 30, 2023 | |
| 677,277 | | |
| 199,503 | | |
| 912,631 | | |
| 4,457,419 | | |
| 6,246,830 | | |
| 1,800,377 | | |
| 8,047,207 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated
depreciation | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
As at January 1,
2023 | |
| (36,781 | ) | |
| (44,412 | ) | |
| (73,930 | ) | |
| - | | |
| (155,123 | ) | |
| (117,436 | ) | |
| (272,559 | ) |
Exchange
adjustments | |
| - | | |
| - | | |
| (483 | ) | |
| (10,307 | ) | |
| (10,790 | ) | |
| - | | |
| (10,790 | ) |
Charge
for the period | |
| (16,551 | ) | |
| (51,639 | ) | |
| (377,575 | ) | |
| (185,726 | ) | |
| (631,491 | ) | |
| (206,670 | ) | |
| (838,161 | ) |
As
at September 30, 2023 | |
| (53,332 | ) | |
| (96,051 | ) | |
| (451,988 | ) | |
| (196,033 | ) | |
| (797,404 | ) | |
| (342,106 | ) | |
| (1,121,510 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Carrying
amount at September 30, 2023 | |
| 623,945 | | |
| 103,452 | | |
| 460,643 | | |
| 4,261,386 | | |
| 5,449,426 | | |
| 1,476,271 | | |
| 6,925,697 | |
During
2022, the Lifezone disposed of certain buildings and office and computer equipment with a carrying value of $271,791. These assets relate
to the legacy Tanzanian operations deemed no longer in use. Lifezone recognized a loss on disposal of property and equipment amounting
to $271,791 in the prior year audited Consolidated Statement of Comprehensive Income.
There
were no disposals during the nine months ended September 30, 2023.
Non-cash
additions of $1,330,634 relating to new leased office space were recognized in the nine months ended September 30, 2023 as disclosed
in Note 16.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 12. | Exploration
and evaluation assets and mining data |
| |
Mining
Data | | |
Exploration and
evaluation assets | | |
Total | |
| |
$ | | |
$ | | |
$ | |
Cost | |
| | |
| | |
| |
As at January 1, 2022 | |
| 12,746,135 | | |
| - | | |
| 12,746,135 | |
Additions during the
period | |
| - | | |
| 5,709,171 | | |
| 5,709,171 | |
Carrying amount as at
December 31, 2022 | |
| 12,746,135 | | |
| 5,709,171 | | |
| 18,455,306 | |
Cost | |
| | | |
| | | |
| | |
As at January 1, 2023 | |
| 12,746,135 | | |
| 5,709,171 | | |
| 18,455,306 | |
Additions during the
period | |
| - | | |
| 30,109,241 | | |
| 30,109,241 | |
Carrying amount as at
September 30, 2023 | |
| 12,746,135 | | |
| 35,818,412 | | |
| 48,564,547 | |
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.
Exploration
and evaluation expenditures are recognized and measured at cost and the exploration and evaluation assets are classified as intangible
assets.
Lifezone
assesses exploration assets for impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
In making this assessment, Lifezone have regard to the facts and circumstances noted in IFRS 6, paragraph 20. In performing its assessment
of each of these factors, as at September 30, 2023, Lifezone has:
| ● | reviewed
the time period that Lifezone group companies have the right to explore the area and noted
no instances of expiration, or licences that are expected to expire in the near future and
not be renewed. |
| ● | determined
that further exploration and evaluation expenditure is either budgeted or planned for these
licences; |
| ● | not
decided to discontinue exploration activity due to there being a lack of quantifiable mineral
resource; and |
| ● | not
identified any instances where sufficient data exists to indicate that there are licences
where the exploration and evaluation expenditure is unlikely to be recovered from successful
development or sale. |
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.
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. Exploration and evaluation
expenditures to not include expenditures incurred after the technical feasibility and commercial viability of extracting a mineral resource
are demonstrable.
Additions
during the period are essentially capitalized expenditure incurred in the development of Kabanga Nickel project in Tanzania.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 13. | Other
intangibles assets |
| |
Patents | | |
Goodwill | | |
Software | | |
Total
Intangibles | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Cost | |
| | |
| | |
| | |
| |
As at January 1, 2022 | |
| 806,868 | | |
| - | | |
| - | | |
| 806,868 | |
Additions during the
period | |
| 92,545 | | |
| - | | |
| 92,096 | | |
| 184,641 | |
As at December 31, 2022 | |
| 899,413 | | |
| - | | |
| 92,096 | | |
| 991,509 | |
Accumulated amortization | |
| | | |
| | | |
| | | |
| | |
As at January 1, 2022 | |
| (225,451 | ) | |
| - | | |
| - | | |
| (225,451 | ) |
Charge for the period | |
| (71,095 | ) | |
| - | | |
| - | | |
| (71,095 | ) |
As at December 31, 2022 | |
| (296,546 | ) | |
| - | | |
| - | | |
| (296,546 | ) |
Carrying amount at December
31, 2022 | |
| 602,867 | | |
| - | | |
| 92,096 | | |
| 694,963 | |
| |
| | | |
| | | |
| | | |
| | |
Cost | |
| | | |
| | | |
| | | |
| | |
As at January 1, 2023 | |
| 899,413 | | |
| - | | |
| 92,096 | | |
| 991,509 | |
Additions during the
period | |
| 81,100 | | |
| 9,020,813 | | |
| 178,315 | | |
| 9,280,228 | |
As at September 30, 2023 | |
| 980,513 | | |
| 9,020,813 | | |
| 270,411 | | |
| 10,271,737 | |
Accumulated amortization | |
| | | |
| | | |
| | | |
| | |
As at January 1, 2023 | |
| (296,546 | ) | |
| - | | |
| - | | |
| (296,546 | ) |
Charge for the period | |
| (57,982 | ) | |
| - | | |
| (65,292 | ) | |
| (123,274 | ) |
As at September 30, 2023 | |
| (354,528 | ) | |
| - | | |
| (65,292 | ) | |
| (419,820 | ) |
Carrying amount at September
30, 2023 | |
| 625,985 | | |
| 9,020,813 | | |
| 205,119 | | |
| 9,851,917 | |
Goodwill
recognized in the period relates to the acquisition of Simulus, a leading hydrometallurgical laboratory and engineering company located
in Perth, Australia by Metprotech on July 18, 2023 as disclosed in detail in Note 22.
Management
with the assistance of an independent valuation specialist, have concluded that no identifiable intangible assets existed from the acquisition
of Simulus. Management have concluded that the fair value of the intangible assets acquired as a result of the Simulus transaction was
de minimis (i.e., no independent value existed). Based on this conclusion and given the de minimis value, any intangible assets that
may exist are not required to be recorded and classified outside of goodwill. Management also determined that recording and classifying
a de minimis amount of intangible assets within goodwill would not cause the financial statements to be misleading and/or cause a reasonable
user of the financial statements to arrive at a different conclusion.
There
were no indicators of impairment during the period to September 30, 2023 to suggest that the provisional goodwill had been impaired.
Therefore, as at September 30, 2023, the goodwill relating to the Simulus acquisition has not yet been subject to any impairment testing.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 14. | Trade
and other payables |
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Trade payables | |
| 891,541 | | |
| 645,677 | |
Tax payable | |
| 129,007 | | |
| 595,412 | |
Accrued expenses | |
| 8,942,440 | | |
| 15,360,522 | |
| |
| 9,962,988 | | |
| 16,601,611 | |
Included
in accrued expenses and trade payables as of September 30, 2023 are $2,500,000 (December 31, 2022: $9,649,642) of accrued non-recurring
listing costs and equity issuance costs in relation to the SPAC and PIPE transactions. On October 13, 2023 the $2,500,000 above amount
was paid.
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.
| 15. | Subscription
receivable |
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Subscription
receivable | |
| - | | |
| 50,000,000 | |
In
October 2022, BHP agreed to invest a further $50 million in KNL in the form of equity under the Tranche 2 Subscription Agreement. Please
refer to Note 2.3
Lifezone’s
Tanzanian subsidiary, Tembo Nickel entered into a contract with Cordula Limited, Tanzania for lease of office space in Dar Es Salaam
used for operations in 2022 for term five (5) years and an additional contract in 2023 for a further 5 years. The lease contract does
not include variable lease payments. As at September 30, 2023 the remaining lease term was three (3) years.
Lifezone’s
Australian subsidiary, Metprotech leases office space in Perth used for operations from Trustees of the Christian Brothers, Australia.
The lease contract does not include variable lease payments. As at September 30, 2023 the remaining lease term was one (1) year and nine
(9) months.
As
part of the Simulus acquisition that closed on July 18, 2023 (please refer to Note 22), Lifezone assumed the existing lease obligations
of Simulus. Simulus entered into a contract with the Seattle Investments Pty Ltd, Australia for lease of office and warehouse space in
Perth used for operations in 2020. The terms of the lease were five (5) years. The lease contract does not include variable lease payments.
As at September 30, 2023 the remaining lease term was one (1) year and seven (7) months.
On
August 3, 2023, Simulus entered into a contract with Nowa Pty Ltd Australia for lease of office and warehouse space in Perth used for
operations in 2022. The terms of the lease were five (5) years. The lease contract does not include variable lease payments. As at September
30, 2023 the remaining lease term was four (4) years and ten (10) months.
Lifezone
or group subsidiaries’ obligations under its leases are secured by lessor’s title to the leased assets.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 16. | Lease
liabilities (continued) |
| |
2023 | |
| |
$ | |
As at January 1, 2022 | |
| - | |
Additions | |
| 456,068 | |
Interest accretion on lease liability | |
| 20,745 | |
Payments | |
| (80,933 | ) |
As at January 1, 2023 | |
| 395,880 | |
| |
| | |
Current | |
| 105,304 | |
Non-current | |
| 290,576 | |
| |
| 395,880 | |
| |
| | |
As at January 1, 2023 | |
| 395,880 | |
Additions | |
| 1,314,453 | |
Interest accretion on lease liability | |
| 31,352 | |
Payments | |
| (179,222 | ) |
As at September 30, 2023 | |
| 1,562,463 | |
| |
| | |
Current | |
| 455,749 | |
Non-current | |
| 1,106,714 | |
| |
| 1,562,463 | |
Shown
below is the maturity analysis of the undiscounted lease payments:
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Less than 1 year | |
| 521,768 | | |
| 122,513 | |
More than 1 year but
less than 5 years | |
| 1,162,885 | | |
| 311,850 | |
| |
| 1,684,653 | | |
| 434,363 | |
17. |
Significant
related party transactions |
Related
Party relationships with shareholders with significant influence
The
three founding shareholders of Lifezone and members of their immediate family are related parties, some with significant influence over
the affairs of Lifezone. Keith Liddell and family, Chris von Christierson and family, and Peter Smedvig, personally and via various investment
companies and trusts collectively held approximately 63.0% of the outstanding Lifezone shares as of September 30, 2023. 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 beyond Peter Smedvig’s shareholding in Lifezone and no compensation or transfer of resources
took place during the reporting period with Peter Smedvig and known family members.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 17. | Significant
related party transactions (continued) |
Related
Party relationships with shareholders with significant influence (continued)
The
Liddell family holdings are in aggregate approximately 30.7 % of all outstanding Lifezone shares as of September 30, 2023, making him
and members of his immediate family related parties with significant influence over the affairs of the Company. Keith Liddell is a director
at various group companies and was the Chairman of Lifezone Holdings until the listing at the NYSE, when he became the Chairman of Lifezone.
He is also retained as a consultant to provide metallurgical engineering services to Lifezone in matters related to metals recovery and
advice in respect of design, engineering, commissioning, and operation of Lifezone’s metal and mineral projects. This commercial
agreement between Lifezone and Keth Liddell replaced an earlier agreement with Keshel Consult Limited, which was terminated on June 30,
2023, and replaced with a commercial agreement between Lifezone and Keith Liddell directly with effect from July 1, 2023.
His
children, Simon Liddell and Natasha Liddell are employees of Metprotech; Simon Liddell is a director of the company Metprotech, and Natasha
Liddell is a member of the Executive Committee. Keith’s stepson, Charles Liddell, has an IT consultancy agreement with KNL. Keith
Liddell’s wife Shelagh Jane Liddell also holds shares and 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. During the period
January to September 2023, Chris von Christierson, through Southern Prospecting (UK) Limited was paid $21,656 (January to September 2022:
$21,656) as non-executive director by Lifezone Limited, a wholly owned subsidiary of Lifezone, and through Southern Prospecting (UK)
Limited was paid $21,656 (January to September 2022: $21,656) as a non-executive director by KNL, a wholly owned subsidiary of Lifezone.
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.
Director
Compensation
During
the period January to September 2023, Keith Liddell was paid $22,031 (January to September 2022: $22,031) as a non-executive director
by Lifezone Limited, a wholly owned subsidiary of Lifezone and Keith Liddell was paid $22,031 (January to September 2022: $22,031) as
a non-executive director by KNL, a subsidiary of Lifezone. Keith Liddell resigned from a number of Lifezone directorships on September
11, 2023, including Lifezone Holdings Limited, Lifezone Limited, and KNL.
Natasha
Liddell was a non-paid Director of Lifezone Holdings and Lifezone Limited before resigning on September 11, 2023.
Directorships
Name
of entity | |
Type | |
Keith
Liddell | |
Simon
Liddell |
Metprotech Pacific Pty Limited | |
Subsidiary | |
● | |
● |
Simulus Pty Ltd | |
Subsidiary | |
● | |
|
The Simulus Group Pty Ltd | |
Subsidiary | |
● | |
|
Tembo Nickel Mining Company Limited | |
Subsidiary | |
● | |
|
Tembo Nickel Refining Company Limited | |
Subsidiary | |
● | |
|
Tembo Nickel Corp. Limited | |
Subsidiary | |
● | |
|
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 17. | Significant
related party transactions (continued) |
Resignations
and appointments for the nine months ended September 30, 2023
Chris
von Christierson resigned on August 31, 2023 from:
| ● | Lifezone
Holdings Limited, |
| ● | Tembo
Nickel Mining Company Limited, |
| ● | Tembo
Nickel Refining Company Limited; and |
| ● | Tembo
Nickel Corp. Limited. |
Natasha
Liddell resigned on September 11, 2023 from:
| ● | Lifezone
Holdings Limited; and |
Keith
Liddell resigned on September 11, 2023 from:
| ● | Lifezone
Holdings Limited, |
| ● | Kelltechnology
South Africa (RF) (Pty) Ltd. |
Keith
Liddell was appointed on July 6, 2023 as a director of Lifezone Metals Limited
Keith
Liddell was appointed on July 18, 2023 as a director of:
| ● | The
Simulus Group Pty Ltd. |
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.
For the nine months ending September 30, 2023 $392,445 was paid or payable to Keshel Consult Limited (September 30, 2022: $401,360).
The total amount outstanding as at September 30, 2023 was $nil (September 30, 2022: $nil). This commercial agreement between Lifezone
and Keshel Consult Limited was terminated on June 30, 2023, and replaced with a commercial agreement between Lifezone and Keith Liddell
directly with effect from July 1, 2023.
Mr.
Charles Liddell (stepson of Mr. Keith Liddell) is the owner / partner in the Australian firm Integrated Finance Limited. For the nine
months ending September 30, 2023, Integrated Finance Limited were paid or payable $34,650 (September 30, 2022: $34,650) for the provision
of information technology services to KNL, a wholly owned subsidiary of Lifezone. The total amount outstanding as of September 30, 2023
is $nil (September 30, 2022: $nil).
Ms.
Natasha Liddell (the daughter of Mr. Keith Liddell) is a paid employee of Metprotech, a wholly owned subsidiary of Lifezone. For the
nine months ending September 30, 2023, Ms. Natsha Liddell was paid $233,471 (September 30, 2022: $213,364), including short-term bonuses
and pension payments. She joined Metprotech from BHP Australia in 2022 and is responsible for Sustainability and Communications at Lifezone.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 17. | Significant
related party transactions (continued) |
Transactions
with significant shareholders and their extended families (continued)
Mr.
Simon Liddell (the son of Mr. Keith Liddell) is a paid employee of Metprotech, a wholly owned subsidiary of Lifezone. For the nine months
ending September 30, 2023, Mr. Simon Liddell was paid $214,755 (September 30, 2022: $142,778), including short-term bonuses and pension
payments. He is VP Mining and has extensive underground mining experience, having joined from Gold Fields in Australia in 2022.
Lifezone
Limited has a commercial agreement with Southern Prospecting (UK) Limited for the engagement of Chris von Christierson as a consultant
of Lifezone Limited, a wholly owned subsidiary of Lifezone, in respect of mining projects and management. For the nine months ending
September 30, 2023 Southern Prospecting was paid $56,050 (September 30, 2022: $56,050). The total amount outstanding at September 30,
2023 was $nil (September 30, 2022: $nil). This commercial agreement with Southern Prospecting (UK) Limited was terminated on August 31,
2023.
Lifezone
Limited has a commercial agreement with Transition Resources Limited for the engagement of Anthony von Christierson as a consultant of
Lifezone Limited. For the nine months ending September 30, 2023 $163,193 was paid or payable to Transition Resources Limited (September
30, 2022: $136,412). The total amount outstanding on September 30, 2023 was $192,402 (September 30, 2022: $nil). This commercial agreement
with Transition Resources Limited was terminated on July 31, 2023, around the time of the completion of the listing project. As of August
1, 2023, Anthony von Christierson is an employee of LZSL, a wholly owned subsidiary of Lifezone and is a Senior Vice President, leading
Lifezone’s business development department.
Related
Party Loans
At
the time of the listing, Lifezone did not provide personal loans to directors or a member of the Executive Committee.
Lisa
Smith, a shareholder, but not considered holding significant influence over Lifezone has a loan of $75,000 with KNL. As at September
30, 2023 this was outstanding and is expected to be repaid before H1, 2024.
Related
party receivables
Lifezone
had receivables due from related parties as follows.
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Balances with affiliated entities | |
| | |
| |
BHP Billiton (UK) DDS Limited | |
| 338,567 | | |
| 211,099 | |
Kelltechnology SA Proprietary
Ltd | |
| 1,273,724 | | |
| 748,836 | |
Other receivables | |
| 1,612,291 | | |
| 959,935 | |
Balances with key
management personnel | |
| | | |
| | |
Related party receivables – Interest
free | |
| 75,000 | | |
| 375,000 | |
Related party receivables
– Interest bearing | |
| - | | |
| 280,683 | |
| |
| 75,000 | | |
| 655,683 | |
Balances
with key management personnel
There are
no balances with key management as at 30 September 2023.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 17. | Significant
related party transactions (continued) |
Related
party share-based payments
Lifezone
Holdings granted restricted stock units to key management personnel as described in detail in Note 20.
Receivables
from affiliated entities
Relate to
short-term services to and payments on behalf of affiliated entities and are considered provided at arm’s length.
Remuneration
of key management personnel
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Cash compensation for services | |
| 1,475,733 | | |
| 715,235 | | |
| 3,060,472 | | |
| 1,951,747 | |
Short-term bonuses | |
| - | | |
| - | | |
| 512,524 | | |
| - | |
Pension and medical
benefits | |
| 35,558 | | |
| 21,022 | | |
| 67,693 | | |
| 43,876 | |
Total compensation paid
to key management personnel | |
| 1,511,291 | | |
| 736,257 | | |
| 3,640,689 | | |
| 1,995,623 | |
The
amounts disclosed in the table are the amounts recognized as an expense during the reporting period related to key management personnel
as listed below.
Keith Liddell |
Chairman |
Chris Showalter |
Chief Executive
Officer |
Ingo Hofmaier |
Chief Financial
Officer (joined June 29, 2023) |
Dr Michael
Adams |
Chief Technology
Officer |
Gerick Mouton |
Chief Operating
Officer |
Benedict
Busunzu |
Tembo Nickel
Chief Executive Officer |
Spencer Davis |
Group General
Counsel (joined March 1, 2023) |
Natasha Liddell |
Chief Sustainability
Officer |
Anthony von
Christierson |
Senior Vice
President: Commercial and Business Development |
Evan Young |
Senior Vice
President: Investor Relations and Capital Markets (joined October 10, 2023) |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 17. | Significant
related party transactions (continued) |
Related
party revenue
Lifezone
had sales to related parties as follows for the period ending:
| |
Three
months ended September 30, | | |
Nine
months ended September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Kellplant Proprietary Ltd | |
| 56,140 | | |
| 130,583 | | |
| 129,680 | | |
| 1,133,122 | |
Kelltechnology SA Proprietary
Ltd | |
| 159,520 | | |
| 377,707 | | |
| 524,888 | | |
| 440,330 | |
Consulting and management
fee with affiliated companies | |
| 215,660 | | |
| 508,290 | | |
| 654,568 | | |
| 1,573,452 | |
Related
party revenue is attributable to Lifezone’s principal activity of hydromet consulting related to mineral beneficiation operations
of affiliated companies primarily based in South Africa as discussed in Note 5. These affiliated entities are joint venture entities.
Lifezone Limited has a 50% interest in Kelltech Limited, a joint venture with Sedibelo Resources Limited. Lifezone Limited has an indirect
33.33% interest in KTSA, a subsidiary of Kelltech, and Kellplant, a wholly owned subsidiary of KTSA as disclosed in detail in Note 23.
| 18. | Contingent
consideration |
In
April 2021, KNL completed the acquisition of all shares of Kabanga Holdings Limited from Barrick International (Barbados) Corporation
and Glencore Canada Corporation (“GCC”) and all shares of Romanex International Limited from GCC and Sutton Resources
Limited for a total consideration of $14 million, to acquire the physical assets and all historical IP related to the Kabanga Nickel
project. The IP relates to a significant amount of data and exploration and study expenses that earlier owners invested into the Kabanga
Nickel project.
Of
the $14 million, $8 million was paid by KNL to the previous owners before completion of the acquisition, with the remaining $6 million
due to the sellers in stage payments as below:
| ● | The
first tranche amounting to $2 million: payable at the earlier of completion of feasibility
study and 3rd anniversary of the contract from date of signing. |
| ● | The
second tranche amounting to $4 million: payable at the earlier of the completion of feasibility
study or the 5th anniversary of the contract from date of signing. |
On
December 15, 2022 KNL made the first tranche payment amounting to $2 million. The remaining $4 million is expected to be paid at the
completion of a definitive feasibility study (“DFS”) or on December 9, 2024, whatever is earlier.
The
present value of the outstanding balance of contingent consideration as of September 30, 2023 discounted at 4.25% has been reported on
the Statement of Financial Position at $3,809,045 (December 31, 2022: $3,689,755).
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 18. | Contingent
consideration (continued) |
The
carrying amounts for the reporting periods can be analyzed as follows:
| |
$ | |
Gross carrying amount | |
| |
At January 1, 2022 | |
| 5,681,603 | |
Repayment | |
| (2,000,000 | ) |
Remeasurement gain | |
| (235,505 | ) |
Accretion of interest | |
| 243,657 | |
At December 31, 2022 | |
| 3,689,755 | |
Accretion of interest | |
| 119,290 | |
At September 30, 2023 | |
| 3,809,045 | |
The
discounted % reflects a 2-year facility appropriately priced market comparable commercial loan offered by the company bank.
| 19. | Long
term rehabilitation provision |
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Asset retirement
obligation provision | |
| 303,000 | | |
| 303,000 | |
Lifezone’s
exploration, development and future mining and processing activities are subject to various Tanzanian Government controls and regulations
relating to protection of the environment, including requirements for the closure and reclamation of mining properties. Through the exploration
and evaluation activities on Lifezone’s prospecting and mining properties, asset retirement obligations are incurred.
Lifezone
expects to create provisions for the future cost of asset retirement and industry specific rehabilitation obligations on a discounted
cash flow basis at the time of developing its mines and constructing and using related processing facilities. Asset retirement obligations
represent the present value of future rehabilitation costs relating to prospecting and mining sites. Assumptions are made on the current
and future economic environment, which management believes are a reasonable basis upon which to estimate future liabilities. These estimates
are reviewed regularly to consider any material changes to the assumptions because of changes in laws and regulations, public expectations,
costs, analysis of site conditions and changes in technology to restore the mine sites. However, actual asset retirement cost will ultimately
depend upon future market prices for the necessary rehabilitation work required that will reflect market conditions at the relevant time.
Lifezone
provided an asset retirement obligation as of September 30, 2023 of $303,000 (December 31, 2022: $303,000). These are historic obligations
that were consolidated when Lifezone acquired the Kabanga Nickel project. All current exploration sites in Tanzania are restored once
activities are completed. Lifezone is currently assessing if there are any legacy areas that require rehabilitation. Given that there
is a chance that no liabilities exist, management has not reassessed the value of the asset retirement obligation provision during the
nine months ended September 30, 2023.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Lifezone
Holdings was incorporated on March 28, 2022, as a holding company for Lifezone Limited and acquired 100% of the equity interest in Lifezone
Limited on June 24, 2022. Refer to Note 1.
Lifezone
was incorporated on December 8, 2022, as a holding company for Lifezone Holdings and acquired 100% of the equity interest in Lifezone
Holdings on July 6, 2023 as part of the SPAC Transaction. Refer to Note 1.
| |
September
30, 2023 | | |
December
31, 2022 | |
| |
Number
of Shares | | |
$ | | |
Number
of
Shares | | |
$ | |
Share capital | |
| | |
| | |
| | |
| |
Lifezone Holding Limited | |
| | |
| | |
| | |
| |
Number of ordinary shares in issue | |
| | | |
| | | |
| 620,290 | | |
| | |
Nominal average value per ordinary per share | |
| | | |
| | | |
| | | |
| 0.005 | |
Nominal value of ordinary total shares: | |
| | | |
| | | |
| | | |
| 3,101 | |
| |
| | | |
| | | |
| | | |
| | |
Lifezone Metals Limited | |
| | | |
| | | |
| | | |
| | |
Number of ordinary shares in issue | |
| 78,193,602 | | |
| | | |
| | | |
| | |
Nominal average value per ordinary per share | |
| | | |
| 0.0001 | | |
| | | |
| | |
Nominal value of ordinary total shares: | |
| | | |
| 7,819 | | |
| | | |
| | |
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 retained 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 functioning in GBP and AUD.
Accumulated
deficit.
This
includes all current and prior period accumulated losses of Lifezone.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Reconciliation
of Shareholders’ equity (deficit) movement
| |
September
30, 2023 | | |
Movements | | |
December
31, 2022 | |
| |
Number
of
Shares | | |
$ | | |
$ | | |
Number
of
Shares | | |
$ | |
Share
capital, beginning | |
| 620,290 | | |
| 3,101 | | |
| | | |
| | | |
| 1,843 | |
Transactions
with shareholders | |
| | | |
| | | |
| | | |
| | | |
| | |
Lifezone
Holdings restricted stock units exercised | |
| 30,000 | | |
| 150 | | |
| 150 | | |
| - | | |
| - | |
Lifezone
Holdings share options, net settled exercised | |
| 16,602 | | |
| 83 | | |
| 83 | | |
| - | | |
| - | |
| |
| 46,602 | | |
| 233 | | |
| 233 | | |
| - | | |
| - | |
Total
Lifezone Holdings shares prior to exchange | |
| 666,892 | | |
| 3,334 | | |
| - | | |
| - | | |
| - | |
Share
exchange transaction | |
| | | |
| | | |
| | | |
| | | |
| | |
Total
Lifezone Holdings shares exchange for Lifezone Metals shares | |
| (666,892 | ) | |
| (3,334 | ) | |
| (3,334 | ) | |
| - | | |
| - | |
Exchange
ratio 94:1 | |
| | | |
| | | |
| | | |
| | | |
| | |
Exchanged
for Issue of Lifezone Metal Limited shares | |
| 62,680,131 | | |
| 6,268 | | |
| 6,268 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Previous
GoGreen Sponsor shareholders | |
| 6,468,600 | | |
| 647 | | |
| 647 | | |
| - | | |
| - | |
Previous
GoGreen public shareholders | |
| 1,527,554 | | |
| 153 | | |
| 153 | | |
| - | | |
| - | |
PIPE
Investors | |
| 7,017,317 | | |
| 702 | | |
| 702 | | |
| - | | |
| - | |
Simulus
Vendors | |
| 500,000 | | |
| 50 | | |
| 50 | | |
| - | | |
| - | |
| |
| 78,193,602 | | |
| 7,819 | | |
| 7,819 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Share
flip up transaction | |
| | | |
| | | |
| | | |
| | | |
| | |
Swap
of Lifezone and KNL shares | |
| - | | |
| - | | |
| | | |
| (620,290 | ) | |
| (1,843 | ) |
Issue
of Lifezone Holdings shares | |
| - | | |
| - | | |
| | | |
| 620,290 | | |
| 3,101 | |
| |
| | | |
| | | |
| | | |
| - | | |
| 1,258 | |
Total
transactions with shareholders | |
| 78,193,602 | | |
| 7,819 | | |
| 7,819 | | |
| - | | |
| 1,258 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Share
capital, ending | |
| 78,193,602 | | |
| 7,819 | | |
| 4,718 | | |
| 620,290 | | |
| 3,101 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Share premium | |
| | | |
| 183,688,771 | | |
| 158,012,115 | | |
| | | |
| 25,676,656 | |
Equity
issuance fees | |
| | | |
| (5,923,979 | ) | |
| (5,683,979 | ) | |
| | | |
| (240,000 | ) |
Total
share premium | |
| | | |
| 177,764,792 | | |
| 152,328,136 | | |
| | | |
| 25,436,656 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Lifezone
Holdings restricted stock units | |
| | | |
| - | | |
| (14,379,698 | ) | |
| | | |
| 14,379,698 | |
Lifezone
Holdings share options | |
| | | |
| - | | |
| (11,103,650 | ) | |
| | | |
| 11,103,650 | |
Previous
Lifezone Holdings shareholders earnouts | |
| | | |
| 248,464,035 | | |
| 248,464,035 | | |
| | | |
| | |
Previous
Sponsor earnouts | |
| | | |
| 17,094,750 | | |
| 17,094,750 | | |
| | | |
| - | |
Total
share based payment reserve | |
| | | |
| 265,558,785 | | |
| 240,075,437 | | |
| | | |
| 25,483,348 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Warrant
Reserves | |
| | | |
| 15,097,425 | | |
| 15,097,425 | | |
| | | |
| - | |
Other
Reserves | |
| | | |
| (6,850,950 | ) | |
| 8,644,304 | | |
| | | |
| (15,495,254 | ) |
Translations
Reserve | |
| | | |
| (181,833 | ) | |
| (297,697 | ) | |
| | | |
| 115,864 | |
Redemption
Reserve | |
| | | |
| 280,808 | | |
| - | | |
| | | |
| 280,808 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated
deficit | |
| | | |
| (403,443,757 | ) | |
| (359,153,155 | ) | |
| | | |
| (44,290,602 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total
Shareholders’ equity (deficit) | |
| | | |
| 48,233,089 | | |
| 56,699,168 | | |
| | | |
| (8,466,079 | ) |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Convertible
loan.
On
December 24, 2021, KNL entered into a $40 million convertible loan agreement with BHP. The loan was converted July 1, 2022 into 35,277
ordinary shares in KNL which represented 8.9% of the total voting and economic share rights in the KNL on a fully diluted basis. Conversion
of the loan to equity was subject to clearance from the Tanzanian Fair Competition Commission. The Company had recorded the BHP convertible
loan as equity based on the conversion terms of the agreement.
Non-controlling
Interest.
In
January 2021, KNL and the Government of Tanzania established Tembo Nickel, a joint venture company in Tanzania in order to develop, process
and refine future products from the Kabanga Nickel project. Through the Treasury Registrar, the Government of Tanzania owns a non-dilutable
free-carried interest representing 16% of the issued share capital of Tembo Nickel. The government’s 16% interest in the joint
venture arrangement is presented as a non-controlling interest in the Unaudited Condensed Consolidated Interim Financial Statements.
In
October 2022, BHP also agreed to invest a further $50 million into KNL in the form of equity under the Tranche 2 Subscription Agreement,
as described in detail in Note 1. KNL satisfied substantially all the closing conditions and received the $50 million on February 15,
2023 and issued a stock certificate on the same day, bringing BHP’s interest in KNL from 8.9% as of December 31, 2022 to 17.0%,
effective February 15, 2023. Associated with this transaction KNL paid $2.5 million equity issuance cost.
Restricted
stock units.
On
November 10, 2021, restricted stock units were granted to Chris Showalter for 150 ordinary shares at $1.00 per share with a ten-year
lapse date.
The
restricted stock units vest only upon certain events being one of the following:
| ● | Asset
sale – arm’s-length sale of all or substantially all of the assets of Lifezone
Holdings. |
| ● | Share
sale – arm’s-length sale of shares in Lifezone Holdings to a buyer which results
in a change of control of Lifezone Holdings. |
| ● | Listing
– listing of the shares of Lifezone Holdings, or a holding company formed for the purposes
of the listing, on any recognized investment exchange. |
The
fair value of restricted stock units recognized as expensed in the nine months ended September 30, 2023 was $Nil (December 31, 2022:
$Nil) with a weighted remaining contractual life of Nil years (December 31, 2022: 9 years). The increase in the fair value of share-based
payment reserves, assumed by Lifezone as part of the Flip-Up, are accounted for directly in equity under other reserves in 2022 and 2023
respectively.
The
fair value of restricted stock units recognized on the statement of financial position ended September 30, 2023 was $Nil (December 31,
2022: $14,379,698), included as part of share-based payment reserve.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Restricted
stock units (continued)
| |
RSUs
Unit | | |
Fair
value
($) | |
Balance as at January 1, 2022 | |
| 150 | | |
| 9,525,000 | |
Granted | |
| - | | |
| - | |
Released * | |
| (150 | ) | |
| - | |
Exchanged * | |
| 30,000 | | |
| - | |
Lapsed | |
| - | | |
| - | |
Fair value adjustment | |
| - | | |
| 4,854,698 | |
Exercised | |
| - | | |
| - | |
Outstanding at December 31, 2022 | |
| 30,000 | | |
| 14,379,698 | |
| |
| | | |
| | |
Balance as at January 1, 2023 | |
| 30,000 | | |
| 14,379,698 | |
Exchanged ** | |
| (30,000 | ) | |
| (14,379,698 | ) |
Outstanding as at September 30, 2023 | |
| - | | |
| - | |
| * | As
part of the Flip-Up transaction, as mentioned in Note 1, the 150 restricted stock units granted
by subsidiary Lifezone Limited in 2021 units were exchanged for 30,000 restricted stock units
in Lifezone Holdings in May 2022 |
Under
the BCA with GoGreen shareholders approved the merger in a special meeting held on June 29, 2023, prior to the SPAC Transaction closing.
The GoGreen shareholder approval was the final legal hurdle in pursuing the merger with Lifezone Holdings.
| ** | The
final transaction steps of the SPAC Transaction involved the exercise of all outstanding
RSU for shares in Lifezone Holdings, before all outstanding shares of Lifezone Holdings were
exchanged for shares in Lifezone. On the Closing Date, Lifezone purchased the shares of Lifezone
Holdings at a ratio of c. 94:1, translating in 2,819,653 new Lifezone shares. |
Following
the SPAC Transaction, as described in detail in Note 1, there are no RSU outstanding as of September 30, 2023.
Share
Options.
In
2021, the Board of Directors of Kabanga Nickel Limited approved the grant of a total of 18,054 share options to certain management personnel.
Based on certain milestones, 11,916 (66.7%) units vested in 2021, but none of the units were exercised. The remaining share options vest
upon the following exit events:
| ● | Asset
sale – arm’s-length sale of all or substantially all of the assets of Lifezone
Holdings |
| ● | Share
sale (including via a SPAC) – arm’s-length sale of shares in Lifezone Holdings
to a buyer which results in a change of control of Lifezone Holdings |
| ● | Listing
– listing of the shares of the Company, or a holding company formed for the purposes
of the listing, on any recognised investment exchange. |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Share
Options. (continued)
Share
options recognized as expense in the nine months ended September 30, 2023 was $Nil (December 31, 2022: $Nil). The increase in the fair
value of share-based payment reserves, assumed by Lifezone Holdings as part of the Flip-Up, are accounted for directly in equity under
other reserves in 2022 and 2023 respectively.
The
fair value of share options recognized in the Statement of Financial Position as of September 30, 2023 was $Nil (December 31, 2022: $11,103,650),
included as part of share-based payment reserve.
Following
the SPAC Transaction as described in detail in Note 1, there were no share options outstanding as of September 30, 2023. The share options
outstanding as of September 30, 2022 had a weighted remaining contractual life of 7.69 years. Prior to the exercise of all outstanding
Lifezone Holdings share options the options had exercise prices ranging between $58.16 and $101.78 with a weighted exercise price of
$74.58.
The
number and weighted average exercise price of share options per ordinary share is as follows:
| |
Share
Options | |
| |
| | |
Weighted
| |
| |
Units | | |
price
($) | |
| |
| | |
| |
Balance as at January 1, 2022 | |
| 18,054 | | |
| 74.48 | |
Outstanding at December 31, 2022 | |
| 18,054 | | |
| 74.48 | |
| |
| | | |
| | |
Balance as at January 1, 2023 | |
| 18,054 | | |
| 74.58 | |
Exchanged * | |
| (18,054 | ) | |
| (74.58 | ) |
Outstanding as at September 30, 2023 | |
| - | | |
| - | |
| * | The
SPAC Transaction involved the exercise of all outstanding share options for shares in Lifezone
Holdings, before all outstanding shares of Lifezone Holdings were exchanged for shares in
Lifezone on the Closing Date at a ratio of c. 94:1, translating in 1,560,396 of new Lifezone
shares. |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Earnouts
Following
the SPAC Transaction on July 6, 2023 (“Acquisition date”) , as described in detail in Note 1, pursuant to earnout
arrangements under the BCA, former Lifezone Holdings and Sponsor shareholder will receive additional Lifezone shares if the daily volume-weighted
average price of Lifezone shares equals or exceeds (i) $14.00 per share for any 20-trading days within a 30- trading day period (“Trigger
Event 1”) and (ii) $16.00 for any 20 trading days within a 30-trading day period (“Trigger Event 2”). Of
the total shares issued and outstanding, 1,725,000 shares are issued but in escrow and relate to the Sponsor earnouts, which are subject
to the occurrence of the two trigger events.
Classification
Management
has assessed how the BCA earnout should be valued and classified in accordance with and have listed below key conditions under
the agreements in the application IAS 32: Financial Instruments: Presentation and IFRS 2 Share-based Payments,
| ● | Management
have assessed IAS 32 paragraph 4 exceptions for Financial Instruments and concluded the stated
exceptions do not apply to the BCA earnout share agreements, therefore IFRS 2 Share-based
Payment rules need to be applied. |
| ● | Furthermore,
in accordance with IFRS 2, paragraph 2, as a result of the obligations created throughout
the ancillary agreements attached to the Business Combination Agreement, 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; therefore, since no other vesting conditions are present, the Company is required
to recognize the share-based payment at inception, irrespective of whether the market conditions
identified above have been met. |
| ● | 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 is 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. |
Accordingly,
the earnouts are recognized as equity the acquisition date.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Earnouts
(continued)
The
fair value of earnouts have been independently valued based on a Monte Carlo simulation model. The assumptions used in the stock option
pricing model were as below:
| |
| |
| |
Inputs | |
| |
| |
| |
| |
Valuation Date | |
| |
| |
| 07/06/2023 | |
Stock Price as of Measurement
Date / BCA Date | |
| |
| |
$ | 10.32 | |
Equity Volatility (Pre BCA) | |
| |
| |
| n/a | |
Equity Volatility (Post BCA) | |
| |
| |
| 94.0 | % |
Risk-Free Rate (5.00 Years) | |
| |
| |
| 4.28 | % |
Share
Price Earnout Tranches | |
Beginning | |
Expiration | |
| Share
Price Hurdle | |
Sale Threshold Price for Tranche 1 - Triggering
Event I | |
07/06/2023 | |
07/06/2028 | |
$ | 14.00 | |
Sale Threshold Price for Tranche 2 - Triggering
Event II | |
07/06/2023 | |
07/06/2028 | |
$ | 16.00 | |
Days Above Threshold Price | |
| |
| |
| 20 | |
Days Above Measurement Period | |
| |
| |
| 30 | |
Change of Control Provisions | |
| |
| |
| Estimate | |
Change of Control Date | |
| |
| |
| n/a | |
Probability of Change of Control | |
| |
| |
| 0 | % |
The
following table illustrates the number and fair value of earnouts granted, and movements at valuation date as at September 30, 2023
| |
Share
Earnout | | |
Fair
value
per Earnout | | |
Fair
value
($) | |
Balance as at January 1, 2023 | |
| - | | |
| | | |
| - | |
Granted - Lifezone Holdings ($14.00 per Share) | |
| 12,536,026 | | |
$ | 9.98 | | |
| 125,109,539 | |
Granted - Lifezone Holdings ($16.00 per
Share) | |
| 12,536,026 | | |
$ | 9.84 | | |
| 123,354,496 | |
Outstanding as at September 30, 2023 | |
| 25,072,052 | | |
| | | |
| 248,464,035 | |
| |
Share
Earnout | | |
Fair
value
per Earnout | | |
Fair
value
($) | |
Balance as at January 1, 2023 | |
| - | | |
| | | |
| - | |
Granted - Sponsor shareholder ($14.00 per Share) | |
| 862,500 | | |
$ | 9.98 | | |
| 8,607,750 | |
Granted - Sponsor shareholder ($16.00
per Share) | |
| 862,500 | | |
$ | 9.84 | | |
| 8,487,000 | |
Outstanding as at September 30, 2023 | |
| 1,725,000 | | |
| | | |
| 17,094,750 | |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Warrant
reserve.
As
described in detail in Note 1, following Lifezone’s Form F-1 registration statement becoming effective on September 29, 2023 resulting
in registering the resale of certain Lifezone Metals shares and (private) warrants owned by certain previous Lifezone Holdings and the
Sponsor shareholders (including its limited partners).
Each
Lifezone warrant represents the right to purchase one ordinary Lifezone share at an exercise price of $11.50 per share in cash.
Pursuant
to the BCA, a 180-day lock-up period following the Closing Date applies to 667,500 warrants received by the Sponsor shareholders.
Classification
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 instruments for cash or another financial
asset. |
| ● | The
Private Warrants are identical to the Public Warrants, |
| ● | The
Warrant agreement requires Lifezone 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, |
| ● | Lifezone
may require the warrant holders to exercise on a “cashless” basis while the agreement
explicitly states that Lifezone will not be in a position to net settle in cash. |
Accordingly,
the warrants are recognized as equity.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Warrant
reserve (continued)
The
fair value of warrants outstanding have been independently valued based on a Black-Scholes option pricing model. The assumptions used
in the stock option pricing model were as below:
| |
Inputs | |
| |
| |
Valuation Date | |
| 07/05/2023 | |
Unit Issuance Date | |
| 10/21/2021 | |
Announcement Date | |
| 12/13/2022 | |
Business Combination Date | |
| 07/05/2023 | |
Exercise Date | |
| 08/04/2023 | |
Expiration Date | |
| 07/05/2028 | |
First Trading Date | |
| 12/13/2021 | |
Stock Price as of Measurement
Date | |
$ | 11.44 | |
Strike Price | |
$ | 11.50 | |
Risk-Free Rate (5.00 Years) | |
| 4.16 | % |
Redemption Threshold Price | |
$ | 18.00 | |
Days Above Threshold Price (Automatic Redemption) | |
| 20 | |
Days Above Measurement Period | |
| 30 | |
Probability of Acquisition | |
| 100 | % |
Outputs
The
fair value of outstanding Public Warrants have been valued at $1.05 per warrant unit at valuation date.
The
fair value of outstanding Private Warrants have been valued at $0.57 per warrant unit at valuation date.
The
number of warrants and fair value of outstanding Public Warrants as at September 30, 2023 is as follows:
| |
Number
of
Warrants | | |
Fair
value
($) | |
Balance as at January 1, 2023 | |
| - | | |
| - | |
Public Warrants
($11.50 per warrant) | |
| 13,800,000 | | |
| 14,490,000 | |
Outstanding as at September 30, 2023 | |
| 13,800,000 | | |
| 14,490,000 | |
The
number of warrants and fair value of outstanding Private Warrants as at September 30, 2023 is as follows:
| |
Number
of
Warrants | | |
Fair
value
($) | |
Balance as at January 1, 2023 | |
| - | | |
| - | |
Private
Warrants ($11.50 per warrant) | |
| 667,500 | | |
| 607,425 | |
Outstanding as at September 30, 2023 | |
| 667,500 | | |
| 607,425 | |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 21. | Earnings
per share (EPS) |
In
the case of Lifezone, basic EPS is calculated by dividing the loss for the year attributable to ordinary equity holders of Lifezone Metals
Limited (as the parent entity of Lifezone) by the weighted average number of ordinary shares outstanding during the year.
Diluted
EPS is calculated by dividing the loss attributable to ordinary equity holders of Lifezone Metals Limited as 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 warrants and earnouts into ordinary shares.
The
following table sets forth the reconciliation of the numerator and denominator used in the computation of basic and diluted loss per
common share for the three and nine months ended September 30, 2023 and September 30, 2022:
| |
Three
months ended | | |
Nine
months ended | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Numerator: | |
| | |
| | |
| | |
| |
Net loss used for basic earnings
per share | |
| (348,749,555 | ) | |
| (3,637,183 | ) | |
| (359,153,155 | ) | |
| (7,851,748 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic weighted-average outstanding common shares | |
| 77,047,215 | | |
| 58,300,082 | | |
| 64,617,797 | | |
| 58,300,082 | |
Effect of dilutive potential common shares
resulting from options | |
| 153,242 | | |
| 2,819,653 | | |
| 1,921,082 | | |
| 2,819,653 | |
Effect of dilutive potential restricted stock
units | |
| 84,804 | | |
| 1,560,396 | | |
| 1,063,127 | | |
| 1,560,396 | |
Effect of dilutive potential warrants units | |
| 13,681,223 | | |
| - | | |
| 4,610,522 | | |
| - | |
Effect of dilutive potential
earnout stock units | |
| 25,613,213 | | |
| - | | |
| 8,631,559 | | |
| - | |
Weighted-average shares outstanding - diluted | |
| 116,579,697 | | |
| 62,680,131 | | |
| 80,844,087 | | |
| 62,680,131 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common share: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted loss per share | |
| (4.53 | ) | |
| (0.07 | ) | |
| (5.56 | ) | |
| (0.13 | ) |
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 September 30, 2023, totaling 13,136,464
(2022: nil) and Options and RSU outstanding as at September 30, 2023, totaling 3,000,253 (2022: 3,000,253) are considered potentially
dilutive.
In
accordance with the requirements of IAS 33 – Earnings per share, the denominator at each year was retrospectively adjusted
to reflect the BCA and Simulus acquisition transaction as described in detail in Note 1.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
22. | Acquisitions
of subsidiaries |
Acquisitions
during the current period
Simulus
acquisition
On
March 3, 2023, Metprotech, a wholly owned subsidiary of Lifezone, signed a share sale agreement with the vendors of Simulus, a leading
hydrometallurgical laboratory and engineering company located in Perth, Australia.
The
acquisition of Simulus was driven by a strategic rationale with Lifezone estimating that
it would have taken years to build a comparable team with the right experience, create the
corresponding laboratory setup, purchase and build the lab equipment and get it licensed.
Simulus was Lifezone’s metallurgical laboratory of choice for years and the Simulus
team have supported a number of studies and test work for the Kabanga Nickel and other projects,
via numerous batch, pilot and engineering work.
Consequently,
Lifezone acquired Simulus instead of building something similar over years. To do so, Lifezone
had to pay a premium to the shareholders of Simulus to convince them to sell. Lifezone had
confidence in the capability of the laboratory as Lifezone had a long-standing commercial
relationship with Simulus. Lifezone has had contracts with Simulus since 2010 and Simulus
was Lifezone’s preferred laboratory and process design engineer. The acquisition allows
Lifezone to shorten testing times, providing guaranteed capacity when Lifezone requires such
and helps Lifezone control external costs and advance its research and development initiatives.
The
transaction formally closed on July 18, 2023 for a total purchase consideration of $14.53 million comprising of a $1.0 million deposit
paid on March 27, 2023, a cash consideration of $7.5 million paid on closing and 500,000 shares in Lifezone, fair valued at $12.06 per
share, in exchange for 100% ownership of Simulus. The vendors are restricted from disposing of, transferring, or assigning their consideration
shares for a period of six months from the completion of the Simulus acquisition. Transaction costs associated with this acquisition
largely related to internal costs, external costs which were incurred were not material.
Simulus
property, plant, and equipment acquired have been independently fair valued under IFRS 13, using the replacement cost method as the valuation
technique. This valuation method has been selected due to the nature of the specialized, modified property, plant and equipment installed
by Simulus over the years of operation. The replacement cost approach reflects the amount that would be required to replace or substitute
an asset with similar service capacity.
Management,
with the assistance of an independent valuation specialist, have assessed that no identifiable
intangible assets existed, as a result of the Simulus SPA transaction, that met either of
the following 1) separability criterion and are able to be independently valued, or 2) contractual-legal
criterion and able to be independently valued. Based on this management concluded that the
fair value of the intangible assets acquired as a result of the Simulus transaction was de
minimis (i.e., no independent value existed). Given the de minimis value, any intangible
assets that may exist are not required to be recorded and classified outside of goodwill.
Management also determined that recording and classifying a de minimis amount of intangible
assets within goodwill would not cause the financial statements to be misleading and/or cause
a reasonable user of the financial statements to arrive at a different conclusion.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
22. | Acquisitions
of subsidiaries (continued) |
Acquisitions
during the current period (continued)
Simulus
acquisition (continued)
USD | |
000’s | |
Assets acquired | |
| |
Cash | |
| 427 | |
Trade debtors | |
| 260 | |
Prepayments | |
| 406 | |
Property, plant and
equipment (revalued) | |
| 4,926 | |
Total assets acquired | |
| 6,019 | |
Liabilities assumed | |
| | |
Trade creditors | |
| (474 | ) |
Total liabilities assumed | |
| (474 | ) |
WC adjustment | |
| (35 | ) |
Total identifiable net assets
at fair value | |
| 5,510 | |
Consideration | |
| | |
Cash deposit (paid March 27, 2023) | |
| 1,000 | |
Cash on completion (paid July 18, 2023) | |
| 7,500 | |
Issue of shares in Lifezone
Metals Limited | |
| 6,030 | |
| |
| 14,530 | |
Goodwill
arising on acquisition | |
| 9,020 | |
Goodwill
arising from the transaction comprises future economic benefits and expected synergies from combining the operations of Simulus as an
established operating and licensed laboratory, that has the technical expertise Lifezone requires that would otherwise require time and
additional resources to establish. Goodwill is not amortized but is tested for impairment at the end of each annual reporting period,
and more frequently if any impairment triggers are identified.
Acquisitions
during the previous period.
In
January 2022, Lifezone Limited acquired all the outstanding shares of Metprotech from related parties Keith Liddell and Shelagh Jane
Liddell under a share purchase agreement for a total of $7,591.
The
nature of the activities of all Lifezone’s joint ventures is trading in and operation of industrial scale, the metals extraction
and metals refining investments, which are seen as complementing Lifezone’s operations and contributing to achieving Lifezone’s
overall strategy.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
23. | Joint
ventures (continued) |
Details
of each of Lifezone’s joint ventures at the end of the reporting period are as follows:
| |
Country of | |
Principal place of | |
Percentage
of Ownership (%) | |
JV Equity
Entities: | |
incorporation | |
Business | |
2023 | | |
2022 | |
Kelltech Limited | |
Mauritius | |
Mauritius | |
| 50 | % | |
| 50 | % |
Kelltechnology South Africa (RF) Proprietary
Ltd | |
South Africa | |
South Africa | |
| 33 | % | |
| 33 | % |
Kellplant Proprietary Ltd | |
South Africa | |
South Africa | |
| 33 | % | |
| 33 | % |
Lifezone
has a 50% interest in Kelltech Limited, a joint venture between Sedibelo Resources Limited and Lifezone, which Lifezone granted an exclusive
license to use the Hydromet Technology across Angola, Botswana, the Democratic Republic of Congo, Lesotho, Malawi, Madagascar, Mozambique,
Namibia, Swaziland, Tanzania, Zambia, Zimbabwe, South Africa, and the Seychelles (the “SADC License Area” and the
license, the “Kell License”). The Kell License relates to Lifezone Limited’s Hydromet Technology applicable
to just precious metals projects and the SADC Licence Area.
Kelltech
Limited owns 66.67% of KTSA and has further exclusively sub-licensed the Kell License to KTSA. The remaining 33.33% interest in KTSA
is held by the Industrial Development Corporation of South Africa, a South African national development finance institution. Lifezone
has an indirect 33.33% interest in KTSA.
Kellplant
is a wholly owned subsidiary of KTSA with Lifezone having an indirect 33.33% interest in Kellplant. Kellplant plans to develop, own and
operate a refinery at Sedibelo Resources Pilanesberg Platinum Mines operations in South Africa that will utilize Lifezone Limited’s
Hydromet Technology to process and refine platinum group metals (“PGMs”), other precious metals and base metals.
At
the time of the release of this document, the development of the Hydromet refinery at Sedibelo Resources’ Pilanesberg Platinum
Mines operations is on hold and will need to be rescoped following Sedibelo Resources’ decision to update their mine plan and re-scope
the refinery to process its underground mining operations, which have not been developed yet.
Although
Lifezone holds the joint ownership in these companies, Lifezone does not have ultimate control as all major decisions had to be agreed
unanimously by all parties before they could be actioned. Management therefore considered it appropriate to account for these entities
as joint ventures.
All joint
ventures are accounted for using the equity method.
Lifezone
has recognized its 50% share in Kelltech Limited share capital of $1,000, which is fully impaired.
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.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
24. | Financial
risk review (continued) |
The
most significant financial risks to which Lifezone is exposed are described below:
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, contingent considerations,
and long-term rehabilitation provision.
The
sensitivity analysis in the following sections relates to the positions as of September 30, 2023 and December 31, 2022.
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.
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 September 30, 2023 and December 31, 2022; and |
| ● | The
impact on equity is the same as the impact on profit before tax. |
Credit
risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation. Lifezone’s revenue is currently concentrated with two primary customers, KTSA and Kellplant, both affiliated entities,
and accordingly Lifezone is exposed to the possibility of loss if such customers default. Lifezone addresses this risk by monitoring
its commercial relationship with such customers and by seeking to develop additional patented technology and entering into new partnerships.
Loan
credit was extended to Lisa Smith for $75,000 as shown in Note 17. Credit risk is therefore regarded as low. The carrying amount of financial
assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was $75,000.
Lifezone
evaluated the collectability of its consolidated loan receivables of $75,000 and determined that no allowance loss is required.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
24. | Financial
risk review (continued) |
b) | Credit
risk (continued) |
Set
out in the following page is the information about the credit risk exposure of Lifezone’s financial assets as at September 30,
2023 and December 31, 2022:
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
Cash and cash equivalents | |
| 73,258,538 | | |
| 20,535,210 | |
Subscription receivable | |
| - | | |
| 50,000,000 | |
Other receivables | |
| 427,000 | | |
| 158,231 | |
Receivables from affiliated entities | |
| 1,612,291 | | |
| 959,935 | |
Related party receivables | |
| 75,000 | | |
| 655,683 | |
| |
| 75,372,829 | | |
| 72,309,059 | |
| |
| | |
Days
past due | | |
| | |
| |
| |
Current | | |
31-60 | | |
61-90 | | |
91-120 | | |
>120 | | |
Impairment | | |
Total | |
At September 30, 2023 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Cash
and cash equivalent | |
| 73,258,538 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 73,258,538 | |
Other
receivables | |
| 111,165 | | |
| 315,836 | | |
| - | | |
| - | | |
| - | | |
| | | |
| 427,001 | |
Receivable
from affiliated entities | |
| 1,273,724 | | |
| - | | |
| - | | |
| - | | |
| 338,567 | | |
| - | | |
| 1,612,291 | |
Related
party receivables | |
| 75,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 75,000 | |
| |
| 74,718,427 | | |
| 315,836 | | |
| - | | |
| - | | |
| 338,567 | | |
| - | | |
| 75,372,830 | |
| |
| | |
Days
past due | | |
| | |
| |
| |
Current | | |
31-60 | | |
61-90 | | |
91-120 | | |
>120 | | |
Impairment | | |
Total | |
At December 31, 2022 | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Cash
and cash equivalent | |
| 20,535,210 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 20,535,210 | |
Subscription
receivable | |
| 50,000,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 50,000,000 | |
Other
receivables | |
| 79,648 | | |
| 66,861 | | |
| - | | |
| 11,722 | | |
| - | | |
| - | | |
| 158,231 | |
Receivable
from affiliated entities | |
| 748,836 | | |
| - | | |
| - | | |
| - | | |
| 211,099 | | |
| - | | |
| 959,935 | |
Related
party receivables | |
| 655,683 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 655,683 | |
| |
| 72,019,377 | | |
| 66,861 | | |
| - | | |
| 11,722 | | |
| 211,099 | | |
| - | | |
| 72,309,059 | |
Liquidity
risk arises from the possibility that Lifezone will not be able to meet its financial liability obligations as they fall due. Lifezone
has historically been supported financially by its shareholders. 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.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
| 24. | Financial
risk review (continued) |
c) | Liquidity
risk (continued) |
| |
September 30 | | |
December 31 | |
| |
2023 | | |
2022 | |
| |
$ | | |
$ | |
<=30 days | |
| 9,873,501 | | |
| 16,029,218 | |
30-60 days | |
| 79,039 | | |
| - | |
61-90 days | |
| 118,558 | | |
| 23,018 | |
91-120 days | |
| 158,527 | | |
| - | |
>=121 days | |
| 5,592,010 | | |
| 4,691,328 | |
Total | |
| 15,821,635 | | |
| 20,743,564 | |
The
above largely consists of group lease obligations, contingent consideration, long term asset retirement obligation provision and trade
and other payables.
Lifezone
has financial instruments which are denominated in currencies other than USD, its reporting currency. Lifezone mostly incurs expenditures
for which it owes money denominated in non-U.S. dollar currencies, including GBP, TZS, ZAR, and AUD. As a result, the movement of such
currencies could adversely affect Lifezone’s results of operations and financial position.
The
following table includes financial instruments which are denominated in foreign currencies:
| |
September 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
| |
GBP £ | | |
GBP £ | |
Cash in banks | |
| 2,060,483 | | |
| 359,021 | |
Prepaid expenses | |
| 127,329 | | |
| - | |
Trade and other payables | |
| 179,563 | | |
| 77,301 | |
| |
AUD
$ | | |
AUD
$ | |
Cash in banks | |
| 2,927,508 | | |
| 1,456,988 | |
Trade receivables | |
| 171,878 | | |
| - | |
Prepaid expenses | |
| 205,319 | | |
| - | |
Trade and other payables | |
| 528,513 | | |
| 919,785 | |
| |
EUR
€ | | |
EUR
$ | |
Cash in banks | |
| 133,247 | | |
| - | |
| |
TZS
$ | | |
TZS
$ | |
Cash in banks | |
| 666,823,660 | | |
| 600,859,075 | |
| |
ZAR
$ | | |
ZAR
$ | |
Cash in banks | |
| 850,570 | | |
| - | |
* | Lifezone
held no ZAR or EUR as on December 31, 2022. |
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
24. | Financial
risk review (continued) |
| d) | Foreign
currency risk (continued) |
Sensitivity
analysis
The
following table demonstrates the estimated sensitivity to a reasonably possible change in the GBP, TZS, ZAR, and AUD exchange rates,
with all other variables held constant. The impact on Lifezone’s profit is due to changes in the fair value of monetary assets
and liabilities. Lifezone’s exposure to foreign currency changes for all other currencies is not considered material.
| |
September 30, | | |
December 31, | |
Effect on Profit | |
2023 | | |
2022 | |
Change in GBP Rate | |
| | |
| |
10% | |
| 251,203 | | |
| 43,204 | |
-10% | |
| (251,203 | ) | |
| 43,204 | |
| |
| | | |
| | |
Change in AUD Rate | |
| | | |
| | |
10% | |
| (189,044 | ) | |
| (97,851 | ) |
-10% | |
| 189,044 | | |
| 97,851 | |
| |
| | | |
| | |
Change in EUR Rate | |
| | | |
| | |
10% | |
| 14,036 | | |
| - | |
-10% | |
| (14,036 | ) | |
| - | |
| |
| | | |
| | |
Change in TZS Rate | |
| | | |
| | |
10% | |
| (26,620 | ) | |
| (25,744 | ) |
-10% | |
| 26,620 | | |
| 25,744 | |
| |
| | | |
| | |
Change in ZAR Rate | |
| | | |
| | |
10% | |
| (4,489 | ) | |
| - | |
-10% | |
| 4,489 | | |
| - | |
* | There
were no ZAR or EUR held currencies as at December 31, 2022 |
For
the purpose of Lifezone’s capital management, capital includes issued capital, share premium and other equity reserves attributable
to the equity holders of Lifezone metals Limited, 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, debt funding or monetizing the offtake from the
Kabanga Nickel project.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
25. | Contingent
liabilities |
In
2020, Kabanga Nickel Company Ltd, a subsidiary of Lifezone, filed a tax appeal at the Tax
Revenue Appeals Tribunal of Tanzania to dispute a tax assessment regarding withholding tax
imposed on services imported by Kabanga Nickel Company Ltd. The services were provided by
non-resident entities while Kabanga Nickel Company Ltd was owned by previous joint owners,
Barrick Gold, and Glencore. The amount of tax in dispute as at December 31, 2020 was $3,664,624
(TZS 8,426,336,706) and has not changed since then. As at September 30, 2023, the appeal
is still pending at the Tax Revenue Appeals Tribunal awaiting a hearing date.
Additionally,
in 2021, Kabanga Nickel Company Ltd also filed an appeal before the Tax Revenue Appeals Tribunal against the Tax Revenue Authority (“TRA”)
to challenge the TRA’s claim for withholding tax. The nature of tax assessment is the same as above. The amount of tax in dispute
is $183,396 (TZS 421,811,314). As at September 30, 2023, Lifezone is still negotiating an out-of-court settlement with the TRA for all
matters under dispute.
In
the opinion of management and in consultation with its legal counsel, the probability that the tax appeals will result in an adverse
outcome is low.
26. | Significant
events during the interim period |
On
September 5, 2022, Lifezone Limited entered into a non-binding term sheet with Harmony Minerals Limited and Dutwa Minerals Limited for
the acquisition of all the tangible assets and all registered and unregistered IP relating to the Dutwa Nickel project (excluding the
Ngasamo deposit in the Dutwa Nickel project area). The Dutwa Nickel project hosts a laterite nickel deposit located in northern central
Tanzania. It is envisioned that excess sulfuric acid generated by future processing of Kabanga mineralization could be used in processing
the laterite mineralization at Dutwa, providing potential synergies between both operations.
On
April 27, 2023 the term sheet was amended with exclusivity expiring on 27 July, 2023. The acquisition remains subject to the parties
entering into definitive documentation, with detailed negotiations still outstanding.
In
the event Lifezone Limited proceeds with the current form of the term sheet for the acquisition, pursuant to the terms of the amended
term sheet, Lifezone Limited will have to make payments cumulatively amounting to initially $12.6 million on the satisfaction of various
conditions, in addition to the non-refundable deposit of $0.4 million which Lifezone Limited paid on September 12, 2022.
As
at the date of these Condensed Consolidated Interim Financial Statements discussion between the Government of Tanzania and the sellers
were ongoing and the transaction had not completed.
On
July 6, 2023 Lifezone, Lifezone Holdings and GoGreen consummated the SPAC Transaction pursuant to the BCA, refer to SPAC Transaction,
as described in detail in Note 1.
On
July 18, 2023 Metprotech, a wholly owned subsidiary of Lifezone, completed the Simulus acquisition, refer to Simulus acquisition, as
described in detail in Notes 1 and 22.
Notes
to the Unaudited Condensed Consolidated Interim Financial Statements
for
the nine months ended September 30, 2023
Exercise
of warrants
On
October 23, 2023 Lifezone received $878,025 from the exercise of 76,300 public warrants at the exercise price of $11.50 per warrant for
the right to one ordinary share in Lifezone. 14,391,200 warrants remain outstanding as at December
13, 2023 translating into potential gross proceeds of $165,498,800.
There
were no other significant events to note subsequent to September 30, 2023 which require adjustments to, or disclosures in these Unaudited
Condensed Consolidated Interim Financial Statements.
Report
of Independent Registered Public Accounting Firm
Board of
Directors and Shareholders
Lifezone
Metals Limited
Results
of Review of Interim Financial Statements
We
have reviewed the accompanying unaudited condensed consolidated interim financial statements of Lifezone Metals Limited (the
“Company”) and consolidated subsidiaries as of September 30, 2023, and for the three and nine-month period then ended,
and the related notes (collectively referred to as the “interim financial statements”). Based on our review, we are not
aware of any material modifications that should be made to the accompanying interim financial statements for them to be in
conformity with International Financial Reporting Standards.
Basis
for Review Results
These
unaudited condensed consolidated interim financial statements are the responsibility of the Company’s management. We conducted
our review in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”). A
review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the
PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
/s/
GRANT THORNTON
GRANT THORNTON
Dublin, Ireland
December
14, 2023
53
Exhibit 99.2
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 Report for the nine months of 2023 (this “Interim Report”)
and with our Audited Consolidated Financial Statements and the related notes for the fiscal year ended December 31, 2022 included in our
Form F-1 filed with the SEC on September 25, 2023 and in our Form 6-K, which included the financial information for the period ending
June 30, 2023, which was furnished with the SEC on September 20, 2023.
Special note regarding forward-looking statements
Some of the statements contained in this Interim
Report (including information incorporated by reference herein) include “forward-looking statements” within the meaning of
the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act of 1934, as amended (the “Exchange
Act”) regarding, amongst other things, the plans, strategies, and prospects, both business and financial, of Lifezone Metals Limited
and its subsidiaries and/or affiliates. These statements are based on the beliefs and assumptions of management. Although we believe that
the plans, strategies, 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, strategies, 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.
These statements are based on the current expectations
of 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 Limited and its subsidiaries. These statements are subject
to a number of risks and uncertainties regarding Lifezone’s business, and actual results may differ materially.
Management’s Discussion and Analysis of financial condition
and results of operations
Special note regarding forward-looking statements
(continued)
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; failure to establish mineral reserves and mineral resources, the grade
and recovery of metals and/or minerals which are mined, success of future exploration, reliability of sampling and data, success of any
test-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 Lifezone in connection with the SPAC Transaction or otherwise;
failure to realize the anticipated benefits of the SPAC Transaction, including difficulty in integrating the businesses of Lifezone Holdings
and GoGreen; the risks related to the rollout of Lifezone’s business, the efficacy of the Hydromet Technology, and the timing of
expected business milestones; Lifezone’s development of, and processing of mineral resources at, the Kabanga Nickel project; the
effects of competition on Lifezone’s business; the ability of Lifezone to execute its growth strategy, manage growth profitably
and retain its key employees; the ability of Lifezone to reach and maintain profitability; enhancing future operating and financial results;
complying with laws and regulations applicable to Lifezone’s business; the volatility of the trading price of Lifezone’s ordinary
shares; Lifezone’s ability to continue to comply with applicable listing standards of the NYSE; the ability of Lifezone to maintain
the listing of its securities on a U.S. national securities exchange; costs related to the SPAC Transaction and the PIPE transactions;
and other risks that will be detailed from time to time in filings with the U.S. Securities and Exchange Commission (the “SEC”).
The foregoing list of risk factors is not exhaustive.
There may be additional risks that management presently does not know or that Management 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
expectations, plans or forecasts of future events and views as of the date of this Interim Report. Lifezone and Lifezone anticipate that
subsequent events and developments will cause assessments to change. However, while Lifezone may elect to update these forward-looking
statements in the future, Lifezone specifically disclaims any obligation to do so.
You should not put undue reliance on these 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 Interim Report, which are based upon information available to us as of the date of this Interim Report, and such statements
should not be read to indicate that our management has conducted an exhaustive inquiry into, or review of, all potentially available relevant
information. Certain statements made herein include references to “clean” or “green” metals, methods of production
of such metals, energy, or the future in general. Such references relate to environmental benefits such as lower green-house gas (“GHG”)
emissions and energy consumption involved in the production of metals using the Hydromet Technology relative to the use of traditional
methods of production and the use of metals such as nickel in the batteries used in electric vehicles.
While studies by third parties (commissioned by
Lifezone) have shown that the Hydromet Technology, under certain conditions, results in lower GHG emissions and lower consumption of electricity
compared to smelting with respect to refining platinum group metals, no active refinery currently licenses the Hydromet Technology. Accordingly,
the Hydromet Technology and the resultant metals may not achieve the environmental benefits to the extent Lifezone expects or at all.
Any overstatement of the environmental benefits in this regard may have adverse implications for Lifezone and its stakeholders. 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, except as required by applicable law.
Management’s Discussion and Analysis of financial condition
and results of operations
Special note regarding forward-looking statements
(continued)
Third quarter highlights
| ● | High-grade drill results received from infill drilling at the Kabanga Nickel project | Campaign
designed to enhance the mineral resource estimates for the Tembo and North Zones. |
| ● | Multiple technical work programs continue | Activities will inform the ongoing definitive feasibility
study, expected by the end of Q3 2024. |
| ● | Safety is the top priority at Kabanga | The site has achieved a milestone of more than one million
hours worked without a lost time injury. |
| ● | Positive engagement continues with local stakeholders and Tanzanian government | Lifezone Metals’
teams performed activities such as financial literacy training, hosted multiple site visits with senior government officials and furthered
social and environmental studies. |
| ● | Integration of the Simulus Group in Perth well underway | A fully integrated laboratory and engineering
study team allows for shortened testing times and meets the specific requirements of our Hydromet Technology. |
| ● | Well capitalized with proceeds from PIPE transaction | Consolidated cash and cash equivalents of
$73 million as of September 30, 2023. |
| ● | NYSE Listing Complete | Lifezone began trading with the ticker symbol LZM on the NYSE on July 6, 2023, creating
the first pure-play NYSE publicly traded nickel resource and cleaner technology company. |
Subsequent to the quarter end, on December 7,
2023, Lifezone reported the November 2023 Mineral Resource Update for the Kabanga Nickel Project. The November 2023 Mineral Resource Update
reflected the results of Lifezone Metals’ 2021-2023 drilling programs and an updated mineralization interpretation. The November
2023 Mineral Resource Update included a significant increase in Mineral Resources tonnages and contained metals.
Business overview
Lifezone is a cleaner metals company focused on
supplying critical metals with low levels of associated carbon dioxide emissions, to support the global energy transition. This is expected
to be achieved through the adoption of its patented Hydromet Technology, which offers a cleaner and cheaper alternative to traditional
downstream smelting and refining.
The Hydromet Technology is currently amenable
to processing and refining metals from sulfide minerals containing nickel and cobalt (for the production of batteries for electric vehicles),
copper (for electrification), platinum group metals (for expanding the hydrogen economy) and gold without the use of cyanide for processing.
Lifezone’s management has technical expertise in hydrometallurgical refining, a track record of building and operating mines and
commercial capabilities to finance projects.
Lifezone is domiciled in the Isle of Man and listed
on the NYSE with the ticker LZM.
Management’s Discussion and Analysis of financial condition
and results of operations
Kabanga Nickel project overview
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. The
Kabanga Nickel project could become a direct-to-metal operation bringing together potential future mining operations and a Hydromet Technology
refinery.
Approximately 350 kilometers from the Kabanga
mine site, at a brownfield site in Kahama with existing infrastructure and nearby rail, a refinery is anticipated to be constructed that
will utilize Lifezone’s Hydromet Technology. The refinery site in Kahama is expected to be located within a Special Economic Zone,
which could include fiscal benefits. Lifezone envisions that the refinery will process nickel, copper, and cobalt delivered from the Kabanga
Nickel project, enabling fully traceable refined metals to be sold to global customers.
The refined end products are expected to carry
a significantly lower carbon dioxide emissions footprint compared to industry averages, particularly with regards to nickel as most of
future global nickel supply is coming from Indonesia where energy-intensive refining technologies utilize electricity predominantly from
coal-fired power stations.
The Kabanga Nickel project deposit has historically
been constrained by lack of infrastructure (rail and grid power) and distance from international smelters. However, Lifezone plans to
unlock this large, high-grade project primarily through leveraging capital and operating cost efficiencies expected to be achieved through
the use of its Hydromet Technology when compared to smelting, with a proposed vertically integrated operation within Tanzania. In-country
beneficiation is an important social benefit allowing Tanzania to recognize the full economic and social value of its national resources.
Lifezone formally acquired the Kabanga Nickel
project in April 2021 from previous joint owners, Barrick Gold and Glencore who had spent over $293 million on the project and completed
577 kilometers of diamond drilling. In December 2021, Lifezone Limited brought BHP, the world’s largest mining company by market
capitalization, as a funding partner into the Kabanga Nickel project. Since then, BHP has invested $90 million into the Kabanga Nickel
project and $10 million into Lifezone Limited, which holds Lifezone’s Hydromet Technology patents.
A Framework Agreement with the Government of Tanzania
was signed in January 2021 between KNL and the Government of Tanzania, which stipulates the principles of sharing of economic benefits
and its 16% free-carried interest in the Kabanga Nickel project. Subsequently, a Special Mining License (“SML”) was
issued to KNL in October 2021 that is valid for a period covering the estimated productive life of the deposit. The Kabanga Nickel project
is not subject to any commercial metals streaming or royalty arrangements with related or third parties.
BHP’s current look-through ownership of
the Kabanga Nickel project is 14.3%. Upon completion of the DFS, BHP have the option to increase their look-through ownership to 51%.
The option consideration will be calculated by applying a 0.7 multiple to the net asset value of the KNL determined by 3 independent valuation
experts. Proceeds will be used to fund the development of the Kabanga Nickel project. KNL has agreed with BHP a royalty rate in return
for licensing its Hydromet Technology to the refinery. Lifezone will retain 40% of the marketing rights of the refined end products from
the refinery, under certain conditions.
Lifezone has commenced a competitive process to
monetize a portion of its 40% allocation of the marketing rights. Lifezone has engaged with several global original equipment car manufacturers
and battery producers who have expressed an interest in purchasing refined nickel cathode that could be produced from the Kahama refinery
in the future. The scale and quality of the project, and the potential low carbon dioxide emissions footprint of the metal have been well
received. As at September 30, 2023, Lifezone has yet to enter into significant revenue contracts or forward looking commitments with potential
customers of products produced by the Kabanga Nickel project.
Management’s Discussion and Analysis of financial condition
and results of operations
Kabanga Nickel project overview (continued)
During Q3 2023, the infill drilling program continued
with a goal of increasing the geological confidence of nickel mineralization. An average of five drill rigs were employed onsite and a
total of 12 drill holes totaling 8,955 meters were completed during the period. Infill drilling concluded at the Tembo Zone in June and
then shifted focus to the North Zone. Approximately 33,443 new meters have been added into the resource model from the infill drilling
campaign since it commenced in December 2021 to the end of September 2023. The results of the successful infill drill program and an updated
mineralization interpretation led to the publication of the November 2023 Mineral Resource Update on December 7, 2023, which included
a significant increase in Mineral Resources tonnages and contained metals.
Geotechnical studies remain ongoing, water monitoring
bores are informing onsite hydrology studies, and metallurgical testing is also underway with variability samples drilled and collected.
Engineering work has been focusing on the underground mine design, the placement of surface infrastructure and the positioning of tailings
storage facility. The preparation of the DFS remains on track for completion by the end of Q3 2024.
The Kabanga Nickel project site had a successful
quarter with no lost time injury occurrences. As a result, the project recorded more than one million hours worked without a lost time
injury. The “Your Safety is My Safety” campaign continues its successful implementation and training continued with employees
and contractors.
As continued demonstration of Lifezone’s
commitment to local stakeholders and the Government of Tanzania, Lifezone’s teams performed activities such as financial literacy
training, hosted multiple site visits with senior government officials and furthered social and environmental studies.
Hydromet Technology overview
Lifezone is also focused on commercializing its
Hydromet Technology in the metals recycling market, which is expected to grow substantially in the future as an alternative supply of
critical minerals. Currently over 20% of the global supply of PGMs comes from the secondary market with the large majority being processed
by smelters. Lifezone intends to break energy-intensive and polluting smelting from the recycling chain and provide a cleaner solution
for the circular economy. Utilizing the Lifezone’s existing processing knowledge relating to PGMs, the perceived route to market
is to install a hydrometallurgical recycling facility to process and refine PGMs from spent autocatalytic converters in North America
or Europe. On June 15, 2023, Lifezone Limited signed a Memorandum of Understanding with a global PGM customer to establish a commercial
scale PGM recycling facility.
Research and development and further broadening
the Lifezone’s IP with additional patents is a continuous exercise to ensure its Hydromet Technology is protected and can be applied
to processing additional metal groups and deposit types. On July 18, 2023, Lifezone closed the acquisition of Simulus in Perth, Australia.
As a result, Lifezone now has an in-house laboratory to undertake additional test work and engineering design to further streamline project
timelines; advance our research and development initiatives to current projects and importantly potentially widen our portfolio of patents;
and undertake metallurgical test work for potential clients that may wish to adopt Lifezone’s Hydromet Technology in return for
licensing fees.
Management’s Discussion and Analysis of financial condition
and results of operations
Explanatory note relating to the SPAC Transaction
and listing on the NYSE.
As described in detail in Note 1 of Lifezone’s
Unaudited Condensed Consolidated Interim Financial Statements, at Closing, Lifezone consummated the previously announced SPAC Transaction
pursuant to the BCA, dated as of December 13, 2022, by and among Lifezone, GoGreen Investments Corporation, an exempted blank check company
incorporated under the laws of the Cayman Islands, GoGreen Sponsor 1 LP, a Delaware limited partnership, Aqua Merger Sub, a Cayman Islands
exempted company and Lifezone Holdings, and Keith Liddell, solely in his capacity as Lifezone Holdings shareholder representative, and
the shareholders of Lifezone Holdings party thereto.
Pursuant to the BCA, among other things, closing
mechanics of the SPAC Transaction comprised:
| 1. | GoGreen merged with and into the Merger Sub, with the Merger Sub surviving the merger and the shareholders
of GoGreen (other than shareholders of GoGreen who elected to redeem their GoGreen ordinary shares and dissenting shareholders) receiving
ordinary shares, with $0.0001 par value per share, of Lifezone (“ordinary shares”); and |
| 2. | each issued and outstanding GoGreen public warrant converted into, and was exchanged for, the right to
receive one Lifezone public warrant and (ii) each issued and outstanding GoGreen private warrant converted into and was exchanged for
the right to receive one Lifezone private warrant (in the case of each GoGreen public warrant and GoGreen private warrant, rounded down
to the nearest whole number of warrants without cash settlement for such rounded fraction in accordance with the terms of the BCA) (the
Lifezone public warrants and the Lifezone private warrants, together, the “warrants”); |
The SPAC Transaction was consummated on the Closing Date. The transaction
was unanimously approved by GoGreen’s board of directors and was approved at the EGM. GoGreen’s shareholders also voted to
approve all the other proposals presented at the EGM.
As a result of the SPAC Transaction, Merger Sub,
as the surviving entity, and Lifezone Holdings each became wholly owned subsidiaries of Lifezone.
On the Closing Date, ordinary shares and the warrants
commenced trading on the NYSE, under the new ticker symbols “LZM” and “LZMW,” respectively.
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.
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Foreign Private Issuer status (continued)
We may take advantage of these exemptions until
such time as we are no longer an FPI. We are required to determine our status as an FPI on an annual basis at the end of each second fiscal
quarter.
We would cease to be an FPI at such time as more
than 50% of our outstanding voting securities are held by United States residents and any of the following three circumstances applies:
| 1. | the majority of our executive officers or directors are United States citizens or residents. |
| 2. | more than 50% of our assets are located in the United States; or |
| 3. | our business is administered principally in the United States. |
If we lose our FPI status we would be required
to comply with Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive
than the requirements for FPIs.
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”), reduced disclosure obligations regarding executive compensation in their periodic
reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved.
We will continue to qualify as an EGC until the
earliest to occur of:
| 1. | the last day of the fiscal year during which we had total annual gross revenues of US$1,235,000,000 (as
such amount is indexed for inflation every 5 years by the SEC or more; |
| 2. | the last day of our fiscal year following the fifth anniversary of the date of the first sale of equity
securities pursuant to an effective registration statement under the Securities Act; |
| 3. | the date on which we have, during the previous 3-year period, issued more than US$1,000,000,000 in non-convertible
debt; or |
| 4. | the date on which we are deemed to be a “Large Accelerated Filer”, as defined in Exchange
Act Rule 12b-2. Lifezone would become a Large Accelerated Filer if Lifezone has a public float of greater than $700 million, has been
filing periodic reports for at least 12 months, has previously filed at least one annual report, and is not a smaller reporting company. |
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.
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Emerging Growth Company status (continued)
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 end of financial reporting December 31, 2024. The companies excluded from the scope are companies
that have no material impact on Lifezone as they have no employees, no active operation or are in voluntary liquidation.
We expect to continue to be an EGC for the foreseeable
future.
Recycling market update
On December 13, 2023, Lifezone announced that
it has entered into a non-binding term sheet with a subsidiary of Glencore plc (the world’s fourth largest mining company by market
capitalization) for the two-phased implementation of a recycling joint venture to recover platinum group metals from spent automotive
catalytic converters utilizing Lifezone’s Hydromet Technology. The business model will involve the purchase of catalytic converter
feed material to process and deliver high-purity, refined PGMs on site from 100% recycled sources.
At incorporation, Lifezone Recycling US, LLC is
registered in the US and 100% owned by Lifezone. Upon completion of the first phase investment, Glencore and Lifezone will both invest
$1.5 million into Lifezone Recycling US, LLC for new units and pro-forma equity ownerships of 94% and 6% (Lifezone and Glencore, respectively).
Proceeds from the first stage investment will
primarily be allocated to funding a confirmatory pilot plant and feasibility study to take place in Lifezone’s laboratory in Perth,
Australia. The results of the piloting and study are expected to conclude by the end of H1 2024 and the second stage investment decision
will be dictated by the outcomes of the first stage.
Segments
See Note 4 of Lifezone’s Unaudited Condensed
Consolidated Interim Financial Statements for the nine months ended September 30, 2023 for further details.
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 $403.4 million as of September 30, 2023. 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. For a discussion of our expected spending on capital expenditures to support our continued commercialization
and growth objectives as we strategically invest in studies, test work, equipment, and infrastructure, see “Liquidity and capital
resources”. In addition to our capital expenditure, we expect our operating expenses to increase for both infrastructure and workforce-related
costs as we seek to expand our patent portfolio, continue to invest in research and development activities, seek to expand the market
penetration of our Hydromet Technology and develop the Kabanga Nickel project.
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Significant components of results of operations
(continued)
Revenue, Cost of Sales, and Gross Profit
(continued)
We generate revenue from our IP licensing business.
Lifezone Limited has granted the Kell license
to Kelltech Limited (50% owned by Lifezone Limited) to exclusively use its Hydromet Technology across the SADC License Area. The Kell
License relates to Lifezone Limited’s 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 23
IP licensing revenue received by Lifezone Limited
under the Kell license are shown below.
| |
Three months ended
September 30, | | |
Nine months ended
September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Kellplant Proprietary Ltd | |
| 56,140 | | |
| 130,583 | | |
| 129,680 | | |
| 1,133,122 | |
Kelltechnology SA Proprietary Ltd | |
| 159,520 | | |
| 377,707 | | |
| 524,888 | | |
| 440,330 | |
| |
| 215,660 | | |
| 508,290 | | |
| 654,568 | | |
| 1,573,452 | |
As of September 30, 2023, 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 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 2024, we did not have any material commitments or contingencies as at September 30, 2023.
We have not generated any revenue from our mining
project because 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.
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Significant components of results of operations
(continued)
Revenue, Cost of Sales, and Gross Profit
(continued)
| |
Three months ended September 30, | | |
Q3 change | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
Revenue | |
| 556,271 | | |
| 531,739 | | |
| 24,532 | | |
| 5 | % |
Loss on foreign exchange | |
| (228,619 | ) | |
| (114,441 | ) | |
| (114,178 | ) | |
| (100 | )% |
General and administrative expenses | |
| (347,843,080 | ) | |
| (4,613,327 | ) | |
| (343,229,753 | ) | |
| (7,440 | )% |
Operating loss | |
| (347,515,428 | ) | |
| (4,196,029 | ) | |
| (343,319,399 | ) | |
| (8,182 | )% |
Interest income | |
| 87,678 | | |
| 99,237 | | |
| (11,559 | ) | |
| (12 | )% |
Interest expense | |
| (58,974 | ) | |
| (68,306 | ) | |
| 9,332 | | |
| 14 | % |
Loss before tax | |
| (347,486,724 | ) | |
| (4,165,098 | ) | |
| (343,321,626 | ) | |
| (8,243 | )% |
Income tax | |
| - | | |
| - | | |
| - | | |
| 0 | % |
Loss for the financial period | |
| (347,486,724 | ) | |
| (4,165,098 | ) | |
| (343,321,626 | ) | |
| (8,243 | )% |
Other comprehensive income | |
| | | |
| | | |
| | | |
| | |
Exchange gain on translation of foreign operations | |
| (213,406 | ) | |
| 5,699 | | |
| (219,105 | ) | |
| (3,845 | )% |
Total other comprehensive income for the period | |
| (213,406 | ) | |
| 5,699 | | |
| (219,105 | ) | |
| (3,845 | )% |
Total comprehensive loss for the financial period | |
| (347,700,130 | ) | |
| (4,159,399 | ) | |
| (343,540,731 | ) | |
| (8,259 | )% |
Revenue, Cost of Sales, and Gross Profit
Comparison of Lifezone’s combined unaudited
proforma condensed consolidated results of operations for Q3 2023 and Q3 2022.
Revenue
Revenue for Q3 2023 was $556,271, compared to
$531,739 for Q3 2022, an increase of $24,532. The increase in revenue was primarily on account of increase revenue from consultancy services
provided to third parties offset by a decrease in revenue services provided to the development of the Kellplant Hydromet Technology refinery
project which is on hold and will need to be rescoped following SRL’s decision to update their mine plan and scope the refinery
to process its underground mining operations, which have not been developed yet.
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Revenue, Cost of Sales, and Gross Profit
(continued)
Exchange loss on translation of foreign operations
The loss on foreign exchange at Lifezone for Q3
2023 was $228,619, as compared to $114,441 in Q3 2022, an increase of $114,178. The increase in the loss on foreign exchange was primarily
due to movements in exchange rates in subsidiary operations.
Interest income
Interest income represents the income earned by
Lifezone pursuant to the interest on the financial instruments and cash held with banks.
Interest expense is the interest accretion related
to contingent consideration in relation to the KNL legacy acquisition, interest on leases and other interest expense.
| |
Three months ended
September 30, | | |
Q3 change | |
| |
2023 | | |
2022 | | |
2023 v 2022 | |
General and Administrative expenses | |
$ | | |
$ | | |
$ | | |
$ | |
Wages & employee benefits | |
| 2,070,172 | | |
| 925,602 | | |
| 1,144,570 | | |
| 124 | % |
Professional fees | |
| 1,181,725 | | |
| 1,075,535 | | |
| 106,190 | | |
| 10 | % |
Directors’ fees | |
| 262,179 | | |
| 43,604 | | |
| 218,575 | | |
| 501 | % |
Legal expenses | |
| 80,357 | | |
| 118,982 | | |
| (38,625 | ) | |
| (32 | )% |
Mining expenses | |
| - | | |
| 351,578 | | |
| (351,578 | ) | |
| (100 | )% |
Depreciation of property and equipment | |
| 534,589 | | |
| 30,929 | | |
| 503,660 | | |
| 1,628 | % |
Depreciation of right of use asset | |
| 144,641 | | |
| 9,887 | | |
| 134,754 | | |
| 1,363 | % |
Amortization of intangible assets | |
| 84,973 | | |
| - | | |
| 84,973 | | |
| 0 | % |
Share-based expense - Lifezone Holdings shareholder earnout | |
| 248,464,035 | | |
| - | | |
| 248,464,035 | | |
| 0 | % |
Share-based expense - Sponsor earnout | |
| 17,094,750 | | |
| - | | |
| 17,094,750 | | |
| 0 | % |
SPAC Transaction expenses | |
| 76,857,484 | | |
| - | | |
| 76,857,484 | | |
| 0 | % |
Audit & accountancy fees | |
| 194,021 | | |
| 116,002 | | |
| 78,019 | | |
| 67 | % |
Drilling and site costs | |
| - | | |
| 28,622 | | |
| (28,622 | ) | |
| (100 | )% |
Insurance | |
| 515,932 | | |
| 37,662 | | |
| 478,270 | | |
| 1,270 | % |
Other administrative expenses | |
| 31,483 | | |
| 187,891 | | |
| (156,408 | ) | |
| (83 | )% |
Taxes & licenses | |
| - | | |
| 1,486,749 | | |
| (1,486,749 | ) | |
| (100 | )% |
Travel | |
| 326,739 | | |
| 200,284 | | |
| 126,455 | | |
| 63 | % |
| |
| 347,843,080 | | |
| 4,613,327 | | |
| 343,229,753 | | |
| 7,440 | % |
Loss on foreign exchange | |
| 228,619 | | |
| 114,441 | | |
| 114,178 | | |
| 100 | % |
| |
| 347,071,699 | | |
| 4,727,768 | | |
| 343,343,931 | | |
| 7,262 | % |
Management’s Discussion and Analysis of financial condition
and results of operations
Business overview (continued)
Revenue, Cost of Sales, and Gross Profit
(continued)
General and administrative expenses
Total general and administrative expenses for
the three months ending September 30, 2023 were $347,843,080 compared to $4,613,327 for the three months ending September 30, 2022, an
increase of $343,229,753. The increase in recurring general and administrative expenses was primarily due to the addition of 98 new employees
on top of the closing 75 employee headcount as of September 30, 2022. This amounts to an increase of $1,144,570 in wages and employee
benefits resulting in a total employee headcount of 173 as of September 30, 2023 and an increase of $67,565 in professional and legal
expenses. Increase in travel expenses of $126,455 was primarily caused by travel to the Kabanga Nickel project site (within Tanzania by
local employees) and increased travel by the owner’s team and consultants to Tanzania.
Audit & Accountancy fees have increased $78,019,
largely due to additional external audit fees associated with the BCA. Excluding the increase in audit related costs, following the hiring
of internal accounting resources compared to the period ended September 30, 2022 where accounting services were externally sourced, costs
related to external accounting services are reducing.
Share-based expenses of $265,558,785 under the
SPAC Transaction have been recognized in accordance with IFRS 2 Share-based Payment, the earnouts have market performance vesting
conditions. These earnouts relate to shares granted to previous Lifezone Holdings shareholders and Sponsor shareholders.
Furthermore, Lifezone has recognized $76,857,484
in SPAC Transaction expenses to account for the excess of fair value of equity issued to participating GoGreen shareholders over the value
of GoGreen’s identifiable net assets acquired as part of the SPAC Transaction. The SPAC Transaction expenses are considered compensation
for the service of a stock exchange listing in accordance with IFRS 2 paragraph 10.
Exploration and evaluation assets and mining
data
Lifezone capitalized mining expenses in Q3 2023
to exploration and evaluation assets following advancement in its exploration and study program.
Nine months ended September 30, 2023, compared
to the September 30, 2022
| |
$ | |
Carrying amount at September 30, 2022 | |
| 16,274,121 | |
Movements during the quarter | |
| 2,181,185 | |
Carrying amount at December 31, 2022 | |
| 18,455,306 | |
Movements during the period | |
| 30,109,241 | |
Carrying amount at September 30, 2023 | |
| 48,564,547 | |
See Note 12 of our unaudited condensed consolidated
interim financial statements for the nine months ended September 30, 2023.
Management’s Discussion and Analysis of financial condition
and results of operations
Kabanga Nickel project – Tanzania
Management considers exploration and evaluation
costs linked to the Kabanga Nickel project meeting the criteria of exploration and evaluation assets under IFRS 6. The ongoing work is
focused on the SML area granted October 27, 2021, which is owned by Tembo Nickel, a joint-venture company incorporated in Tanzania of
which the Government of Tanzania is a 16% shareholder.
Furthermore, the outcome of the ongoing exploration
work and studies are expected to be captured in a DFS, which is yet to be published. Earlier studies are more than 5 years old and are
considered outdated in a commercial and technical sense. Lifezone aims to release the DFS in the next 12 months and to maintain the good
standing of the licenses and permits linked to the Kabanga Nickel SML area. A key part of the business plan is an extensive exploration
program that is intended to expand the areas of known mineralization and to increase the geological confidence of previously defined mineral
resources. The expected completion of the DFS will allow for the declaration of a mineral reserve.
Exploration costs arising following the issuance
of a prospecting and mining license are capitalized on a project-by-project basis as exploration and evaluation assets. Management considers
the following exploration and evaluation costs (but not exhaustive) meeting the criteria under IFRS 6 for capitalization:
| ● | purchase of legal rights to explore for natural resources; |
| ● | to conduct topographical, geochemical, geophysical investigations and related technical services; |
| ● | trenching, pitting and soil sampling; |
| ● | any type of exploratory drilling and assaying and related consulting services; |
| ● | generation of any geotechnical information; |
| ● | related costs to access the site and provide accommodation and basic services including security and transport
for employees and contractors; |
| ● | statutory reporting requirements, |
| ● | license fees and other cost to keep the licenses in good standing, including external affairs, government
relationship and community work related to an exploration asset; |
| ● | costs related to feasibility studies, including trade-off and commercial studies; |
| ● | metallurgical tests including testing of mineralization for processing and refining, stacking and storage,
acid mine drainage or transport; |
| ● | all labour and contractor costs related to the activities above; |
| ● | finance costs to the extent they are directly attributable to financing these activities, following IFRS
7; and |
| ● | costs incurred as part of exploration activities include appropriate technical and administrative overheads,
that might be provided by offshore and holding entities. |
It can be assumed, that if a legal entity only holds one exploration and evaluation assets, most if not all costs are related to that
exploration and evaluation asset and these costs get capitalized in relation to that single asset.
Management’s Discussion and Analysis of financial condition
and results of operations
Liquidity, capital resources and capital
requirements
Liquidity refers to Lifezone’s ability to
generate sufficient cash flows to meet the cash requirements of its business operations, including working capital and capital expenditure
needs, contractual obligations, any debt service, and other commitments.
Through our wholly owned subsidiary, Lifezone
Limited, we own a family of Hydromet patents for metal beneficiation. Our business model for the IP licensing business is to generate
income from consulting fees and licensing our proprietary technology in return for royalties. We may also own interests in and/or operate
processing refineries, that use our patented Hydromet Technology and accumulated IP and skills, to economically beneficiate metals to
produce refined products for sale with significantly reduced carbon dioxide emissions intensity and cost when compared to traditional
smelting and refining methods.
We estimate that our Kabanga Nickel project mining
and refining operations will require significant capital expenditures to build out the required infrastructure and procure equipment ahead
of commencing operations. Pursuant to the initial BHP’s investment in KNL in 2021 and the Tranche 2 Investment, BHP currently owns
17.0% of the shareholding of KNL, having cumulatively invested $90 million directly into KNL.
Further, pursuant to the Tranche 3 Option Agreement
entered into between BHP, Lifezone Limited and KNL, BHP has the option to consummate a further investment in KNL, subject to the satisfaction
of certain conditions, in particular, the satisfactory completion of, and agreement on, the DFS, agreement on the joint financial model
with the Government of Tanzanian in respect of the Kabanga Nickel project, the amendment of the articles of association and share capital
of the subsidiaries of Tembo Nickel to remove the free-carried interest rights of the Government of Tanzania in the subsidiaries of Tembo
Nickel and receipt of any necessary regulatory and tax approvals. In the event such investment is consummated, BHP would own a 60.7% majority
stake in KNL providing a 51% indirect interest in Tembo Nickel. The proceeds of such investment will be used to further advance the Kabanga
Nickel project by taking the project through into formal construction. If the Tranche 3 investment is not made by BHP, we expect that
we would continue developing the Kabanga Nickel project with additional funding through traditional project debt and/or equity financing
sources, monetizing the offtake from the project and/or royalty streams, and we may also explore other strategic partners for the project
or sell certain of our assets. Lifezone is seeking to monetize our portion of the marketing rights with an offtake agreement. If Lifezone
is unable to monetize its portion of the marketing rights through an offtake agreement, then other funding avenues will need to be pursued.
Management’s Discussion and Analysis of financial condition
and results of operations
Liquidity, capital resources and capital requirements (continued)
As of September 30, 2023, Lifezone’s non-cancellable
commitments, as disclosed below, do not include any commitments related to capital expenditures as Lifezone does not have any material
commitments related to capital expenditures that it cannot cancel without a significant penalty.
Other than the $4 million contingent payment due
to the sellers of the Kabanga Nickel project upon the completion of the DFS or on December 9, 2024, whatever is earlier, Lifezone did
not have any material commitments or contingencies as at September 30, 2023.
To enhance our liquidity position or increase
our cash reserve for future investments or operations, we may in the future seek equity or debt financing. The issuance and sale of additional
equity would result in further dilution to our shareholders, and any issuance and sale of additional equity at our subsidiaries, including
in connection with the Tranche 3 investment in KNL by BHP, would dilute our interest in KNL. The incurrence of indebtedness would result
in increased fixed obligations and could result in operating covenants that would restrict our operations.
Cashflow results
| |
Three months ended
September 30, | | |
Nine months ended
September 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| |
$ | | |
$ | | |
$ | | |
$ | |
| |
(Unaudited) | | |
(Unaudited) | |
Operating activities | |
| (17,575,389 | ) | |
| (4,580,412 | ) | |
| (23,631,684 | ) | |
| (9,355,054 | ) |
Investing activities | |
| (21,138,737 | ) | |
| (1,539,828 | ) | |
| (38,644,145 | ) | |
| (3,491,871 | ) |
Financing activities | |
| 67,587,304 | | |
| (27,613 | ) | |
| 115,024,529 | | |
| (66,223 | ) |
Net increase (decrease) in cash and cash equivalents | |
| 28,873,178 | | |
| (6,147,853 | ) | |
| 52,748,700 | | |
| (12,913,148 | ) |
Comparison of Lifezone’s results of operations
for Q3 2023 and Q3 2022
a) | Cash flow from operating activities |
Net cash used in operating activities of Lifezone
was $17,575,389 for Q3 2023, primarily consisting of $347,700,130 of comprehensive loss for the period, adjusted for (i) items such as
expenses for share-based payments, issuance of common stock under the SPAC Transaction cumulatively amounting to $342,416,269, interest
income, movements in amortization of intangibles, foreign exchange loss, interest income, interest expense and depreciation of property
and equipment and right-of-use assets cumulatively amounting to $964,118 and (ii) working capital changes, primarily consisting of an
decrease in trade and other receivables of $235,925, increase in fuel inventories of $37,714, decrease in related party receivables of
$1,309,343, decrease in prepaid expenses of $578,340, changes in prepaid mining license of $254,850 and an decrease in trade and other
payables of $15,596,390.
Management’s Discussion and Analysis of financial condition
and results of operations
Cashflow results (continued)
a) | Cash flow from operating activities
(continued) |
Net cash used in operating activities of Lifezone
was $4,580,412 for Q3 2022, primarily consisting of $4,159,399 of consolidated loss for the period, adjusted for (i) items such as interest
income, amortization of intangibles, foreign exchange loss, interest income, interest expense, loss on disposal of property and equipment,
and depreciation of property and equipment and right-of-use assets cumulatively amounting to $124,326 and (ii) working capital changes,
primarily consisting of an increase in trade and other receivables of $356,463, increase in fuel inventories of $14,653, decrease in related
party receivables of $8,004, increase in prepaid expenses of $390,326, changes in prepaid mining license of $255,299 and an increase in
trade and other payables of $47,200.
b) | Cash flow from investing activities |
Net cash used in investing activities of Lifezone
was $21,138,737 for Q3 2023, of which $12,643,426 related to the investment in exploration and evaluation assets, the acquisition of subsidiaries
(in connection with the Simulus acquisitions, net of cash acquired) amounting to $8,085,255, expenditures relating to the acquisition
of property and equipment amounting to $287,366 and patent costs incurred amounting to $32,053, which were partially offset by interest
received from banks amounting to $87,678.
Net cash used in investing activities of Lifezone
was $1,539,828 for Q3 2022, of which $1,529,927 related to the investment in exploration and evaluation assets, patent costs incurred
amounting to $33,619, expenditures on property and equipment amounting to $72,863 offset by interest received from banks amounting to
$96,581.
c) | Cash flow from financing activities |
Net cash provided by financing activities of Lifezone
was $67,587,304 for Q3 2023, primarily on account of the $70,173,170 of proceeds from PIPE transaction, net cash from proceeds from SPAC
acquisition of $3,104,056, exercise of Lifezone Holdings share options $110,504, offset by account of payment of lease liabilities of
$179,222 and share issuance cost of $5,683,979.
Net cash provided by financing activities of Lifezone
was $27,615 for Q3 2022, on account of payment of lease liabilities of $27,613.
Capital expenditures.
Lifezone’s capital expenditure for Q3 2023
was $21.2 million while Lifezone capital expenditure in Q3 2022 was $1.6 million. The capital expenditure relates largely to exploration
and evaluation activities, transportation, office, and computer equipment and Lifezone costs relating to legal and professional services
required to expand and maintain Lifezone Limited’s six active IP patent families.
Management’s Discussion and Analysis of financial condition
and results of operations
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 across the broader downstream metals processing
industry as a cleaner and cheaper alternative to smelting.
Along with trade secret protection, non-disclosure,
and licensing agreements, Lifezone’s IP comprises a collection of global patents focused on the economic processing and recovery
of metals from sulfide minerals and concentrates. As of September 30, 2023, Lifezone Limited has been granted or issued 98 patents and
has 7 applications pending in 59 jurisdictions relating to Lifezone’s suite of Hydromet Technology and associated processes. These
are categorized into six families of principal patents.
Research and development costs for the nine months
ended September 30, 2023 were $81,100 (September 30, 2022: $69,014) 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.
Following the closing of the acquisition of Simulus
on July 18, 2023, Lifezone owns an in-house laboratory to undertake additional test work and engineering design to further streamline
timelines, advance its research and development initiatives to current projects, and potentially widen the portfolio of its IP with new
additional patents.
Through its Tanzanian subsidiary, Tembo Nickel,
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 requiring a capital investment of not less than
$100 million. The SML was issued on October 25, 2021 and shall remain valid for a period of the productive life of the Kabanga Nickel
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.
In addition, the Lifezone holds 5 Prospecting Licenses surrounding the Kabanga SML. An Environmental Impact Assessment certificate was
transferred from the legacy Kabanga acquisition entities to Tembo Nickel on June 16, 2021. Subsequently an updated Environmental and Social
Management Plan was submitted to the Tanzanian National Environmental Management Council and approved on June 19, 2023.
Management’s Discussion and Analysis of financial condition
and results of operations
Tabular disclosure of contractual arrangements
| |
USD | | |
USD | | |
USD | | |
USD | | |
USD | |
| |
Total | | |
Less than 1
year | | |
1-3
years | | |
3-5
years | | |
More than
5 years | |
Long-Term Debt Obligations | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Capital (Finance) Leases | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Operating Lease Obligations | |
| 1,684,653 | | |
| 521,768 | | |
| 1,162,885 | | |
| - | | |
| - | |
Purchase Obligations | |
| 3,080,989 | | |
| 3,080,000 | | |
| - | | |
| - | | |
| - | |
Other Long-Term Liabilities | |
| 4,000,000 | | |
| - | | |
| 4,000,000 | | |
| - | | |
| - | |
Total | |
| 8,765,642 | | |
| 3,602,757 | | |
| 5,162,885 | | |
| - | | |
| - | |
Long-Term Debt Obligations, Capital (Finance)
Leases, Operating Lease Obligations and Other Long-Term Liabilities are IFRS required reporting disclosures. Lifezone does not have contractual
arrangements covering Long-Term Debt Obligations and 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 September 30, 2023. 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 termination right
based on historical spending.
Off-balance sheet arrangements and legal proceedings
As of September 30, 2023, 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.
Lifezone is not engaged in any capacity in any
material litigation, arbitration, prosecution or other legal proceedings (which means with a value of in excess of $100,000) or in any
material proceedings or hearings before any statutory or governmental body, department, board or agency or other dispute resolution proceedings
(“Legal Proceedings”), nor has Lifezone been involved in any such Legal Proceedings during the 12 months prior to September
30, 2023 and the date of this Interim Report.
No such litigation, arbitration, prosecution,
or other proceedings are pending, and no facts or circumstance exist which are likely to result in any Legal Proceedings.
So far as Lifezone is aware, there is no outstanding
judgment, order, decree, arbitral award or decision of any court, tribunal, arbitrator, or governmental agency against any Lifezone group
entity or any person for whose acts Lifezone may be vicariously liable.
So far as Lifezone is aware, no material dispute
with the employees of the Lifezone exists or is threatened and Lifezone is not aware of any existing or threatened labor disturbance by
such employees or those of any of its significant suppliers, manufacturers, contractors, or customers.
Management’s Discussion and Analysis of financial condition
and results of operations
Related Party Transactions
See Note 17.
Management
Executive Officers and Directors
The following table lists the names, ages as of
September 30, 2023 and positions of the individuals who currently serve as directors and officers of Lifezone:
Name |
|
Age |
|
Position(s) |
Keith Liddell |
|
64 |
|
Chairman, Director |
Chris Showalter |
|
48 |
|
Chief Executive Officer, Director |
Ingo Hofmaier |
|
47 |
|
Chief Financial Officer |
Gerick Mouton |
|
46 |
|
Chief Operating Officer |
Dr. Mike Adams |
|
63 |
|
Chief Technical Officer |
Spencer Davis |
|
45 |
|
Group General Counsel |
Natasha Liddell |
|
39 |
|
Chief Sustainability Officer |
Anthony von Christierson |
|
35 |
|
Senior Vice President: Commercial and Business Development |
Govind Friedland |
|
48 |
|
Director |
John Dowd |
|
55 |
|
Director |
Robert Edwards |
|
57 |
|
Director |
Beatriz Orrantia |
|
52 |
|
Director |
Jennifer Houghton |
|
61 |
|
Director |
Mwanaidi Maajar |
|
69 |
|
Director |
Note: - Evan Young (age 38) joined the Company as Senior Vice
President: Investor Relations and Capital Markets on October 10, 2023. Evan Young has more than 15 years of metals and mining capital
markets experience and will lead the investor relations program.
Exhibit 99.3
Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
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