Exhibit 99.1
Condensed Consolidated Interim Financial Statements
(Expressed in Canadian dollars - unaudited)
Three and six months ended December 31, 2021 and 2020
STANDARD LITHIUM LTD.
Condensed Consolidated Interim Statements of Financial Position
As at December 31, 2021 and June 30, 2021
(Expressed in Canadian dollars)
December 31, 2021 (unaudited) | June 30, 2021 (audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Receivables | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Reclamation deposit (Note 4) | ||||||||
| Exploration and evaluation assets (Note 3) | ||||||||
| Intangible asset (Note 5) | ||||||||
| Pilot plant (Note 6) | ||||||||
| Asset under construction – Commercial plant (Note 7) | ||||||||
| Right of use asset (Note 8) | ||||||||
| Deposits | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Lease liability – short-term (Note 8) | ||||||||
| Total liabilities current | ||||||||
| Non-current liabilities | ||||||||
| Decommissioning provision (Note 10) | ||||||||
| Lease liability – long-term (Note 8) | ||||||||
| TOTAL LIABILITIES | ||||||||
| EQUITY | ||||||||
| Share capital (Note 11) | ||||||||
| Reserves (Note 11) | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ |
Nature and Continuance of Operations (Note 1)
Commitments (Notes 3 and 12)
Subsequent Events (Note 15)
Approved by the Board of Directors and authorized for issue on February 10, 2022.
| “Robert Mintak” | “Dr. J. Andrew Robinson” | ||
| Director | Director |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STANDARD LITHIUM LTD.
Condensed Consolidated Interim Statements of Comprehensive Loss
Three and Six months ended December 31, 2021 and 2020
(Expressed in Canadian dollars - unaudited)
| Three months ended December 31, | Six months ended December 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Administrative Expenses | ||||||||||||||||
| Advertising and investor relations | $ | $ | $ | $ | ||||||||||||
| Amortisation – intangible asset (Note 5) | ||||||||||||||||
| Amortisation – pilot plant (Note 6) | ||||||||||||||||
| Amortisation – office lease (Note 8) | ||||||||||||||||
| Carbon capture research & development | ||||||||||||||||
| Consulting fees | ||||||||||||||||
| Filing and transfer agent | ||||||||||||||||
| Foreign exchange | ( | ) | ( | ) | ||||||||||||
| Management fees (Note 12) | ||||||||||||||||
| Office and administration | ||||||||||||||||
| Patent | ||||||||||||||||
| Pilot plant operations (Note 6) | ||||||||||||||||
| Preliminary economic assessment | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Project investigation | ||||||||||||||||
| Share-based payments(Notes 11 and 12) | ||||||||||||||||
| Travel | ||||||||||||||||
| Loss from operations before other items | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expenses) income | ||||||||||||||||
| Interest Income, net of fees | ||||||||||||||||
| Interest and accretion expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expenses) income | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive gain/(loss) | ||||||||||||||||
| Item that may be reclassified subsequently | ||||||||||||||||
| to income or loss: | ||||||||||||||||
| Currency translation differences of foreign operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STANDARD LITHIUM LTD.
Condensed Consolidated Interim Statements of Changes in Equity
Six months ended December 31, 2021 and 2020
(Expressed in Canadian dollars - unaudited)
Number of shares | Share capital | Reserves | Deficit | Accumulated other comprehensive income | Total equity | |||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Share-based payment | - | |||||||||||||||||||||||
| Shares issued for private placement, net of costs | ||||||||||||||||||||||||
| Shares issued for evaluation &exploration assets | ||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||
| Stock options exercised | ( | ) | ||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Currency translation differences for foreign operations | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Share-based payment | - | |||||||||||||||||||||||
| Shares issued for private placement, net of costs | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||
| Stock options exercised | ( | ) | ||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Currency translation differences for foreign operations | - | |||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STANDARD LITHIUM LTD.
Condensed Consolidated Interim Statements of Cash Flows
Six months ended December 31, 2021 and 2020
(Expressed in Canadian dollars - unaudited)
| Six Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Cash flows from (used in) operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Add items not affecting cash | ||||||||
| Share-based payment | ||||||||
| Interest accrued | ||||||||
| Foreign exchange | ( | ) | ( | ) | ||||
| Amortisation – pilot plant | ||||||||
| Amortisation – intangible asset | ||||||||
| Amortisation – office lease | ||||||||
| Interest expense | ||||||||
| Net changes in non-cash working capital items to operations: | ||||||||
| Receivables | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows used in investing activities | ||||||||
| Exploration and evaluation assets | ( | ) | ( | ) | ||||
| Pilot plant | ( | ) | ( | ) | ||||
| Commercial plant development | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from private placement, net of costs | ||||||||
| Share issuance costs | ( | ) | ||||||
| Exercise of warrants | ||||||||
| Exercise of options | ||||||||
| Lease payments | ( | ) | ||||||
| Net cash from financing activities | ||||||||
| Net change in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
1. Nature and Continuance of Operations
Standard Lithium Ltd. (the “Company”) was incorporated under
the laws of the Province of British Columbia on August 14, 1998 under the name Tango Capital Corp. On April 7, 1999, the Company changed
its name to Patriot Capital Corp. and to Patriot Petroleum Corp. effective March 5, 2002. On December 1, 2016 the Company continued under
the Canadian Business Corporations Act and changed its name to Standard Lithium Ltd. The Company’s principal operations are comprised
of exploration for and development of lithium brine properties in the United States of America (“USA”). The address of the
Company’s corporate office and principal place of business is
The condensed consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards (“IFRS”) on a going concern basis, which presume the realization
of assets and discharge of liabilities in the normal course of business for the foreseeable future. The Company has no sources of revenue
and as at December 31 2021 had an accumulated deficit of $
During March 2020, the World Health Organisation declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse developments, has adversely affected workforces, economies and financial markets globally, leading to an economic downturn. The impact of COVID-19 on the Company’s operations has not been significant, but management continues to monitor the situation.
2. Basis of Presentation
a) Statement of compliance
The condensed consolidated interim financial statements of the Company, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).
These condensed consolidated interim financial statements comply with International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed consolidated interim financial statements do not include all of the information required of a complete set of consolidated financial statements and are intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and the performance of the Company since the end of its last annual reporting period. It is therefore recommended that these condensed consolidated interim financial statements be read in conjunction with the annual consolidated financial statements of the Company for the year ended June 30, 2021, which were prepared in accordance with IFRS as issued by the IASB.
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
| 2. | Basis of Presentation – continued |
b) Basis of consolidation
The consolidated financial statements of the Company include
the accounts of the Company and its wholly owned subsidiaries. On February 21, 2017, the Company acquired Moab Minerals Corp. and its
wholly owned subsidiary
c) Functional and presentation currency
Items included in the condensed consolidated
interim financial statements of the Company and its wholly owned subsidiaries are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The functional currency of the Company and its Canadian
subsidiary, Texas Lithium Holdings Corp. is the Canadian dollar. The functional currency of its US subsidiaries,
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of transaction. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are included in profit and loss.
The results and financial position of a subsidiary that has a functional currency different from the presentation currency are translated into the presentation currency as follows:
§ Assets and liabilities are translated at the closing rate at the reporting date;
§ Income and expenses for each income statement are translated at average exchange rates for the period; and
8
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
| 2. | Basis of Presentation – continued |
c) Functional and presentation currency – continued
§ All resulting exchange differences are recognised in other comprehensive income as cumulative translation adjustments.
On consolidation, exchange differences arising from the translation of the net investment in foreign entity is taken to accumulated other comprehensive loss. When a foreign operation is sold, such exchange differences are recognized in profit or loss as part of the gain or loss on sale.
d) Basis of measurement
The condensed consolidated interim financial statements have been prepared on the historical cost basis except for financial assets classified as fair value through profit or loss which are stated at their fair value.
In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
3. Exploration and Evaluation Expenditures
| California | Arkansas | |||||||||||
Property $ | Property $ | Total $ | ||||||||||
| Acquisition costs: | ||||||||||||
| Balance, June 30, 2020 | ||||||||||||
| Acquisition of property | ||||||||||||
| Effect of movement in foreign exchange rates | ( | ) | ( | ) | ( | ) | ||||||
| Balance, June 30, 2021 | ||||||||||||
| Acquisition of property | ||||||||||||
| Effect of movement in foreign exchange rates | ||||||||||||
| Balance, December 31, 2021 | ||||||||||||
| Exploration Costs: | ||||||||||||
| Balance, June 30, 2020 | ||||||||||||
| Other exploration costs | ||||||||||||
| Effect of movement in foreign exchange rates | ( | ) | ( | ) | ( | ) | ||||||
| Balance, June 30, 2021 | ||||||||||||
| Other exploration costs | ||||||||||||
| Effect of movement in foreign exchange rates | ||||||||||||
| Balance, December 31, 2021 | ||||||||||||
| Balance, June 30, 2021 | ||||||||||||
| Balance, December 31, 2021 |
9
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
3. Exploration and Evaluation Expenditures - continued
California Property
On August 11, 2016, the Company entered into an option purchase and assignment agreement (the "Option Purchase Agreement") with TY & Sons Explorations (Nevada), Inc. ("TY & Sons") and Nevada Alaska Mining Company Inc. ("Nevada Mining"), pursuant to which the Company will acquire all of TY & Sons’ right, title and interest in a property option agreement between TY & Sons and Nevada Mining, as property owner (the "Underlying Option Agreement"). Under the Underlying Option Agreement, TY & Sons has the option (the "Option") to acquire from Nevada Mining an interest in the California Property (collectively, the "Option Purchase"), which comprises mineral claims situated in San Bernardino County, California. The transaction, having received the approval of the TSX Venture Exchange, closed on November 17, 2016. As consideration, the Company issued common shares of the Company and paid certain costs incurred to TY & Sons.
In order to exercise the Option pursuant to the terms of the Underlying
Option Agreement, the Company will be required to pay the total sum of US$
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | Issue common shares on closing of the Option Purchase Agreement (issued) |
| · | Issue common shares on or before October 1, 2017 (issued) |
| · | Issue common shares on or before October 1, 2018 (issued) |
| · | Issue common shares on or before October 1, 2019 (issued) |
| · | Issue common shares on or before October 1, 2020 (issued) |
The property is subject to a
On May 1, 2017, the Company signed a Property Lease Agreement with National
Chloride Company of America (“National Chloride”) for rights to an adjacent property to the California Property, with approximately
10
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
3. Exploration and Evaluation Expenditures - continued
California Property – continued
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | Issue 100,000 common shares on the closing date (issued) |
| · | Issue common shares on or before November 24, 2017 (issued) |
| · | Issue common shares on or before May 24, 2018 (issued) |
| · | Issue common shares on or before May 24, 2019 (issued) |
| · | Issue common shares on or before May 24, 2020 (issued) |
| · | Issue common shares on or before May 24, 2021 (issued) |
| · | Issue 200,000 common shares on or before May 24, 2022 |
| · | Issue 500,000 common shares successful completion of a pre-feasibility study |
It is expressly agreed that the “Leased
Rights” are limited to lithium exploration and production activities and operations. The Company will pay a two percent royalty
on gross revenue derived from the properties to National Chloride, subject to a minimum annual royalty payment of US$500,000. On September
1, 2017, the Property Lease Agreement was amended to include an additional approximately
On April 23, 2018 the Company entered into an exploration and option agreement
(“EOA”), with TETRA Technologies, Inc. (“TETRA”), to secure access to additional operating and permitted land
consisting of approximately
11
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
3. Exploration and Evaluation Expenditures - continued
California Property – continued
In connection with the entering into
of the EOA, the Company made a non-refundable deposit of $126,780 (US$100,000) (See Note 5), and will be required to pay the total
sum of US$
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ upon successful completion of a bankable feasibility study |
| · | Issue common shares on April 23, 2018 (issued) |
| · | Issue 200,000 common shares on or before October 23, 2018 (issued) |
| · | Issue common shares on or before April 23, 2019 (issued) |
| · | Issue common shares on or before April 23, 2020 (issued) |
| · | Issue common shares on or before April 23, 2021 (issued) |
| · | Issue common shares on or before April 23, 2022 |
| · | Issue common shares on or before April 23, 2023 |
| · | Issue common shares successful completion of a pre-feasibility study |
12
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
3. Exploration and Evaluation Expenditures - continued
Arkansas Property
On July 26, 2017, the Company entered into a Memorandum of Understanding
(MOU) with a non-affiliated NYSE-listed company (the “Vendor”) with regard to an option to acquire certain rights to conduct
brine exploration and production and lithium extraction activities on approximately
On December 29, 2017, the Company entered into an Option Agreement to proceed with the transaction (the “Agreement Date”). Under this Option Agreement, the Company will be required to make payments to the Vendor as follows:
| · | US$ |
| · | An additional US$ |
| · | An additional US$ |
| · | An additional US$ |
| · | Additional annual payments of US$ |
During the Lease Period, at any time following the commencement of Commercial
Production, the Company agreed to pay a Royalty of
On May 4, 2018 the Company entered
into a Memorandum of Understanding (“MOU”), with LANXESS Corporation (“LANXESS”) with the purpose of testing
and proving the commercial viability of extraction of lithium from brine that is produced as part of LANXESS’ bromine extraction
business at its three southern Arkansas facilities.The MOU sets out the basis on which the parties have agreed to cooperate in a phased
process towards developing commercial opportunities related to the production, marketing and sale of battery grade lithium products extracted
from tail brine and brine produced from the Smackover Formation. The MOU forms the basis of what will become a definitive agreement and
is binding until the execution of a more comprehensive agreement that the parties may execute on the completion of further development
phases. The Company has paid an initial $
13
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
4. Reclamation deposit
On September 6, 2017, the Company
paid $
5. Intangible asset
On December 13, 2018, the Company acquired Ontario Limited (“2661881”) from Craig Johnstone Brown (“Brown”) by purchasing all the issued and outstanding shares. holds the intellectual property rights to a process for the selective extraction of lithium from brine solutions (the “IP Assets”). The Company determined that this transaction is an asset acquisition as the assets acquired did not constitute a business.
The consideration payable by the Company to Brown will be comprised of cash and common shares of the Company as follows:
| (i) | $ |
| (ii) | $ |
| (iii) | $ |
| (iv) | common shares on the closing date (issued); |
| (v) | $ payable on the earlier of (i) the third anniversary of the closing date, (ii) the date that the Company conclusively determines whether or not to proceed with the commercial development of the IP Assets (regardless of the outcome of such decision); or (iii) such other date as the Company and Brown may agree in writing (the “Investment Date”) (paid); and |
| (vi) | shares issuable on the earlier of (i) the third anniversary of the closing date, (ii) the date that the Company conclusively determines whether to proceed with the commercial development of the IP Assets (regardless of the outcome of such decision); or (iii) such other date as the Company and Brown may agree in writing (the “Investment Date”) (issued). |
On October 28, 2019, the Company agreed to accelerate the timeframe of
completion of the payments and common share issuances detailed under items (v) and (vi) above to Brown by making (a) a cash payment of
$
14
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
5. Intangible asset - continued
The fair value of the intangible assets acquired is as follows:
| $ | ||||
| Consideration paid | ||||
| Cash | ||||
| Fair value of 500,000 common shares issued at closing date | ||||
| Fair value of promissory note payable due six months after closing date | ||||
| Cash payable on or before the Investment Date | ||||
| Fair value of 500,000 common shares issuable on or before the Investment Date | ||||
| Total consideration paid | ||||
| Legal fees capitalized in connection with the acquisition of 2661881 | ||||
| Balance, June 30, 2019 | ||||
| Amortisation | ( | ) | ||
| Balance, June 30, 2020 | ||||
| Amortisation | ( | ) | ||
| Balance, June 30, 2021 | ||||
| Amortisation | ( | ) | ||
| Balance, December 31, 2021 |
The intangible asset represents purchase of intellectual property rights and was put in use in conjunction with the operation of the Company’s pilot plant on May 9, 2020 (Note 6).
6. Pilot plant
On May 9, 2020, the Company commenced full-time operation of its LiSTR pilot plant, located at LANXESS’ south plant facility in El Dorado, Arkansas. The pilot plant is the culmination of over three years of research and development activities by the Company and its partners. The pilot plant is a bespoke DLE (Direct Lithium Extraction) plant, designed to extract lithium directly and continuously from Smackover Formation brines. The plant is designed to process up to 50 USGPM of brine, extract the lithium, and produce a high quality, concentrated lithium chloride intermediate product.
The pilot plant is being amortized on a straight-line basis over its estimated
useful life of
The pilot plant operations costs include costs for personnel, management supervision, repairs and maintenance of the building and equipment, parts, membranes and reagents used in brine processing and process optimization costs.
15
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
6. Pilot plant - continued
As at December 31, 2021, the carrying value of the pilot plant is summarized as follows:
| $ | ||||
| Balance at June 30, 2019 | ||||
| Costs transferred from asset under construction | ||||
| Decommissioning provision | ||||
| Amortisation | ( | ) | ||
| Balance at June 30, 2020 | ||||
| Additions | ||||
| Amortisation | ( | ) | ||
| Effect of movement in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2021 | ||||
| Additions | ||||
| Amortisation | ( | ) | ||
| Effect of movement in foreign exchange rates | ||||
| Balance at December 31, 2021 |
7. Asset under construction – Commercial Plant
The Company is developing a commercial plant for the extraction of battery-grade lithium from tail brine from a stand-alone facility located adjacent the LANXESS facility in southern Arkansas. The commercial plant is under development and not available for use and therefore not subject to depreciation as at December 31, 2021.
8. Right of use asset and lease liability
IFRS 16 requires how leases will be recognized, measured, presented and disclosed. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is twelve months or less for the underlying asset. On November 1, 2021, the Company leased their head office in Vancouver for a three year term ending October 31, 2024. The payments are made to the lessor monthly.
The lease liability was calculated using a discount rate of
| $ | ||||
| Balance at June 30, 2021 | ||||
| Additions | ||||
| Discount on future commitment | ( | ) | ||
| Lease liability at December 31, 2021 |
16
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
8. Right of use asset and lease liability - continued
Changes in the Company’s right of use assets during the period ended December 31, 2021 are as follows:
| $ | ||||
| Balance at June 30, 2021 | ||||
| Additions | ||||
| Amortisation | ( | ) | ||
| Balance at December 31, 2021 |
The right of use asset is being amortized on a straight-line basis over
the
Changes in the Company’s lease liabilities during the period ended December 31, 2021 were are follows:
| $ | ||||
| Balance at June 30, 2021 | ||||
| Additions | ||||
| Lease payments | ( | ) | ||
| Interest on lease payments | ||||
| Balance at December 31, 2021 | ||||
| Less: current portion | ( | ) | ||
| Lease liability – non-current |
9. Convertible loan
On October 29, 2019 (the “Closing Date”), the Company entered
into a US$
The principal amount of the Loan matures on the fifth anniversary of the
Closing Date, provided that at the election of the Lender at any time after the second anniversary of the Closing Date, the Maturity Date
shall be such earlier date as the Lender may elect by written notice provided to the Company at least 60 days before such earlier date.
The Loan will be convertible at the option of the Lender at any time prior to the repayment of the Loan, at the Lender’s option,
to convert all or any portion of a Loan into common shares and warrants of the Company at a rate such that for each US$
17
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
9. Convertible loan – continued
The outstanding principal amount of the Loan will bear interest at an annual
rate of
The Company determined that the Convertible loan contains an embedded foreign exchange derivative liability and a debt host liability. The embedded foreign exchange derivative liability was determined to be not material and therefore the Company assigned the full value on initial recognition to the debt host liability.
The gross proceeds of the Convertible loan were reduced by the transaction
costs of US$199,869 resulting in a balance of US$
On June 10, 2021, the Lender elected for early conversion of the loan in
full and the Company issued common shares and issued
| $ | ||||
| Beginning balance at June 30, 2019 | ||||
| Initial recognition | ||||
| Interest and accretion expense | ||||
| Foreign exchange loss | ||||
| Balance at June 30, 2020 | ||||
| Interest and accretion expense | ||||
| Foreign exchange gain | ( | ) | ||
| Common shares issued for conversion | ( | ) | ||
| Interest paid | ( | ) | ||
| Balance at June 30, 2021 and December 31, 2021 | - |
18
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
10. Decommissioning Provision
The following table presents the continuity of the decommissioning provision associated with the Company’s pilot plant:
| $ | ||||
| Beginning balance at June 30, 2019 | ||||
| Initial recognition | ||||
| Balance at June 30, 2020 | ||||
| Effect of movement in foreign exchange rates | ( | ) | ||
| Balance at June 30, 2021 | ||||
| Effect of movement in foreign exchange rates | ||||
| Balance at December 31, 2021 |
The present value of the decommissioning provision of $
11. Share Capital
a) Authorized capital
Unlimited number of common voting shares without nominal or par value
Unlimited number of preferred shares without par value issued in one or more series
common shares were issued and outstanding at December 31, 2021.
On October 1, 2020, the Company issued common shares with a fair value of $ to Nevada Alaska Mining Co. Ltd. (Note 3).
On December 18, 2020, the Company closed a prospectus financing of common shares at a price of $2.20 for aggregate gross proceeds of $. The Company incurred $ of share issuance costs related to the financing.
On April 23, 2021, the Company issued common shares with a fair value of $ to TETRA Technologies, Inc. (Note 3).
On May 21, 2021, the Company issued common shares with a fair value of $ to National Chloride. (Note 3).
On June 10, 2021, the Company issued common shares to Lanxess Corporation upon the conversion of the convertible loan (Note 7).
During the year ended June 30, 2021, the Company issued a total
of common shares for the exercise of share purchase warrants. The Company received proceeds of $
19
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
11. Share Capital – continued
During the year ended June 30, 2021, the Company issued a total
of common shares for the exercise of stock options. The Company received proceeds of $
On November 30, 2021, the Company closed a non-brokered private
placement of
During the six months ended December 31, 2021,
the Company issued a total of common shares for the exercise of share purchase warrants for gross proceeds of $
During the six months ended December 31, 2021,
the Company issued a total of common shares for the exercise of stock options. The Company received proceeds of $
b) Warrants
Warrant transactions are summarized as follows:
Number of warrants | Weighted average exercise price | |||||||
| Balance at June 30, 2020 | ||||||||
| Expired | ( | ) | ||||||
| Exercised | ( | ) | ||||||
| Issued | ||||||||
| Balance at June 30, 2021 | ||||||||
| Issued | 336,877 | 11.09 | ||||||
| Exercised | ( | ) | ||||||
| Balance at December 31, 2021 | ||||||||
The weighted average contractual life of the warrants outstanding is years.
c) Options
The Company has a stock option plan in place under which it is authorized to grant options to officers, directors, employees, consultants and management company employees enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option shall not be less than the price permitted by any stock exchange. The options can be granted for a maximum term of 10 years.
20
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
11. Share Capital – continued
c) Options – continued
On August 9, 2020, the Company extended the expiration date of stock options issued to consultants from August 9, 2020 to August 9, 2021. The exercise price of the options remains $ per option.
On January 18, 2021, the Company granted stock options to directors and officers of the Company at a price of $ for a period of 5 years. All of the stock options vested at grant.
On April 13, 2021, the Company granted stock options to consultants of the Company at a price of $ for a period of three (3) years with the stock options vesting one quarter at grant, one quarter three months from grant date, one quarter at six months from grant date and one quarter at nine months from grant date.
On July 20, 2021, The Company granted stock options
to a director of the Company at a price of $ for a period of
The following weighted average assumptions were used for the Black-Scholes valuation of stock options granted:
| 2021 | 2020 | |||||||
| Annualized volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Dividend rate | % | % | ||||||
| Expected life of options (years) | ||||||||
| Forfeiture rate | % | % | ||||||
| Share price on grant date | $ | $ |
Stock option transactions are summarized as follows:
Number of options | Weighted average exercise price | |||||||
| Balance at June 30, 2020 | $ | |||||||
| Options exercised | ( | ) | ||||||
| Options granted | ||||||||
| Balance at June 30, 2021 | ||||||||
| Options exercised | ( | ) | ||||||
| Options granted | ||||||||
| Balance at December 31, 2021 |
21
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
11. Share Capital - continued
c) Options - continued
The following table summarizes stock options outstanding and exercisable at December 31, 2021:
| Options Outstanding | Options Exercisable | |||||||||||||||||||||
| Weighted | Weighted | Weighted | ||||||||||||||||||||
| Average | Average | Average | ||||||||||||||||||||
| Exercise | Number | Remaining | Exercise | Exercise | ||||||||||||||||||
| Price | of | Contractual Life | Price | Number | Price | |||||||||||||||||
| $ | Shares | (years) | $ | Exercisable | $ | |||||||||||||||||
12. Related Party Transactions
Key management personnel are persons responsible for planning, directing and controlling the activities of the entity, and include directors and officers of the Company.
Compensation to key management is comprised of the following:
December 31, 2021 | December 31, 2020 | |||||||
| Management fees | $ | $ | ||||||
| Share-based payments | ||||||||
| Key management personnel compensation | $ | $ |
As at December 31, 2021 there is $
22
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
12. Related Party Transactions - continued
On July 1, 2020, the Company entered into consulting agreements with the President & COO, CEO, CFO and a director of the Company. The new agreements provide for a “Change of Control” clause that can be triggered should certain events occur as follows:
| a) | A merger, amalgamation, arrangement, reorganization or transfer takes place in which equity securities of the Company possessing more than one-half of the total combined voting power of the Company’s outstanding equity securities are acquired by a person or persons different from the persons holding those equity securities immediately prior to such transaction, and the composition of the board of directors of the Company following such transaction is such that the directors of the Company prior to the transaction constitute less than one-half of the directors following the transaction, except that no Change in Control will be deemed to occur if such merger, amalgamation, arrangement, reorganization or transfer is with any subsidiary or subsidiaries of the Company; |
| b) | If any person, or any combination of persons acting jointly or in concert by virtue of an agreement, arrangement, commitment or understanding shall acquire or hold, directly or indirectly, 20% or more of the voting rights attached to all outstanding equity securities; |
| c) | If any person, or any combination of persons acting jointly or in concert by virtue of an agreement, arrangement, commitment or understanding shall acquire or hold, directly or indirectly, the right to appoint a majority of the directors of the Company; or |
| d) | If the Company sells, transfers or otherwise disposes of all or substantially all of its assets, except that no Change in Control will be deemed to occur if such sale or disposition is made to a subsidiary or subsidiaries of the Company. |
If the Company terminates the agreements other than for Just Cause, the
Company shall provide the director or officers with working notice, payment in lieu of working notice or a combination of the two equal
to twenty-four (24) months of fees applicable. As of December 31, 2021, the maximum amount that would be payable is $
13. Capital Management
The Company considers its capital structure to include shareholders’ equity. Management’s objective is to ensure that there is sufficient capital to minimize liquidity risk and to continue as a going concern. Management reviews its capital management approach on an ongoing basis and believes that its approach, given the relative size of the Company is reasonable.
The Company is not subject to any external restrictions and the Company did not change its approach to capital management during the year.
23
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
14. Financial Instruments and Financial Risk Management
The fair value of financial instruments is the amount of consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act. Fair values are determined by reference to quoted market prices, as appropriate, in the most advantageous market for that instrument to which the Company has immediate access. In the absence of an active market, fair values are determined based on prevailing market rates for instruments with similar characteristics.
The fair value of current financial instruments approximates their carrying value as they are short term in nature.
Financial instruments that are held at fair value are categorised based on a valuation hierarchy which is determined by the valuation methodology utilised:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is as prices) or indirectly (that is, derived from prices).
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
There were no transfers between Levels 1, 2 or 3 for the period ended December 31, 2021 and the year ended June 30, 2021.
The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy:
| December 31, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Cash | $ | $ | $ | $ |
| June 30, 2021 | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Cash | $ | $ | $ | $ |
The Company’s Board of Directors has the overall responsibility
for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are
established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks
and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in response
to the Company’s activities. Management regularly monitors compliance with the Company’s risk management policies and procedures
and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
24
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
14. Financial Instruments and Financial Risk Management - continued
In the normal course of operations, the Company is exposed to various risks such as commodity, interest rate, credit, and liquidity risk. To manage these risks, management determines what activities must be undertaken to minimize potential exposure to risks. The objectives of the Company in managing risk are as follows:
| · | maintaining sound financial condition; |
| · | financing operations; and |
| · | ensuring liquidity to all operations. |
In order to satisfy these objectives, the Company has adopted the following policies:
| · | recognize and observe the extent of operating risk within the business; |
| · | identify the magnitude of the impact of market risk factors on the overall risk of the business and take advantage of natural risk reductions that arise from these relationships. |
| (i) | Interest rate risk |
The Company does not have any financial instruments which are subject to interest rate risk.
| (ii) | Credit risk |
Credit risk is the risk of loss if counterparties do not fulfill their contractual obligations and arises principally from trade receivables. The Company does not have any financial instruments which are subject to credit risk.
| (iii) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able
to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure
its expenditures will not exceed available resources. At December 31, 2021, the Company has a working capital surplus of $
| (iv) | Currency risk |
Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates. The Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:
December 31, 2021 $ | June 30, 2021 $ | |||||||
| Cash | ||||||||
| Accounts payable | ( | ) | ( | ) |
At December 31, 2021, US Dollar amounts were converted at a rate of USD 1.00 to CAD 1.2678. A 10% increase or decrease in the US Dollar relative to the Canadian Dollar would result in a change of approximately $11,773,000 in the Company’s comprehensive loss for the year to date.
25
STANDARD LITHIUM LTD.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Expressed in Canadian Dollars - unaudited)
15. Subsequent Events
Subsequent to December 31, 2021, the Company issued common shares
upon the exercise of warrants for proceeds of $
On January 27, 2022, a putative securities class action lawsuit was filed against the Company, Robert Mintak, and Kara Norman in the United States District Court for the Eastern District of New York, captioned Gloster v. Standard Lithium Ltd., et al., 22-cv-0507 (E.D.N.Y.) (the “Action”). The complaint seeks to certify a class of investors who purchased or otherwise acquired the Company’s publicly traded securities between May 19, 2020 and November 17, 2021, and asserts violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against all defendants and Section 20(a) of the Exchange Act against the individually-named defendants. The complaint alleges, among other things, that during the proposed class period, defendants misrepresented and/or failed to disclose certain material facts regarding the Company’s LiSTR Direct Lithium Extraction (“LiSTR”) technology and “final product lithium recovery percentage” at its Direct Lithium Extraction Demonstration Plant in southern Arkansas. Plaintiff seeks various forms of relief, including monetary damages in an unspecified amount. The Company intends to vigorously defend against the Action.
26