As confidentially submitted to the Securities and Exchange Commission on September 19, 2022

pursuant to the Jumpstart our Business Startups Act

Registration No. 333-           

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

  

FORM F-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

 

SNOW LAKE RESOURCES LTD.

(Exact name of Registrant as specified in its charter)

 

Not Applicable

(Translation of Registrant’s Name into English)

 

Manitoba, Canada   1099   Not Applicable
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

242 Hargrave Street, #1700

Winnipeg, Manitoba R3C 0V1 Canada

info@snowlakelithium.com

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Cogency Global Inc.

122 East 42nd Street, 18th Floor
New York, NY 10168

(800)221-0102

(Names, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Louis A. Bevilacqua, Esq. Rob Condon, Esq.
Bevilacqua PLLC Dentons US LLP
1050 Connecticut Avenue, NW, Suite 500 1221 Avenue of the Americas
Washington, DC 20036 New York, New York 10020
(202) 869-0888 (212) 768-6700

  

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company ☒

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐ 

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

  

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS   SUBJECT TO COMPLETION   DATED SEPTEMBER 19, 2022

 

               Common Shares

 

 

Snow Lake Resources Ltd.

 

 

 

This is a follow-on firm commitment public offering of our common shares, no par value per share, at an assumed price of US$ per share. Our common shares are listed on the Nasdaq Capital Market, or the Nasdaq, under the symbol “LITM.” On September 16, 2022, the last reported sale price for our common share was US$2.58 per share. The final public offering price will be determined through negotiation between us and the representative of the underwriters in the offering and the assumed offering price used throughout this prospectus may not be indicative of the final offering price. At present, there is a very limited market for our common shares. The trading price of our common shares has been, and may continue to be, subject to wide price fluctuations in response to various factors, many of which are beyond our control, including those described in “Risk Factors.”

 

We are an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws, and, as such, are eligible for reduced public company reporting requirements for this and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company” and “Prospectus Summary—Implications of Being a Foreign Private Issuer.

 

We are not considered a “controlled company” under Nasdaq corporate governance rules as we do not currently expect that more than 50% of our voting power will be held by an individual, a group or another company immediately following the consummation of this offering. Nonetheless, following the consummation of this offering, our directors, officers and principal shareholders will hold in aggregate approximately % or more of our common shares. As a result, these shareholders, if they act together, will be able to control the management and affairs of our Company.

 

As a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We may in the future elect to follow home country practices in Canada with regard to certain corporate governance matters. See “Risk Factors—Risks Related to Our Common Shares and this Offering.”

 

Investing in our common shares involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus for a discussion of information that should be considered in connection with an investment in our common shares.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

    Per Share     Total  
Public offering price   US$       US$    
Underwriting discounts and commissions(1)   US$       US$    
Proceeds to us, before expenses(2)   US$       US$    

 

(1) Underwriting discounts and commissions do not include a non-accountable expense allowance equal to 1% of the public offering price payable to the underwriters. We have agreed to reimburse the underwriters for certain expenses and the underwriters will receive compensation in addition to underwriting discounts and commissions.  The registration statement, of which this prospectus is a part, also registers for sale warrants to purchase common shares to be issued to the representative of the underwriters. We have agreed to issue the warrants to the representative of the underwriters as a portion of the underwriting compensation payable to the underwriters in connection with this offering. See “Underwriting” for additional disclosure regarding underwriters’ compensation and offering expenses.

 

(2)The total estimated expenses related to this offering are set forth in the section entitled “Expenses Related to The Offering”.

 

We have granted the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to common shares representing 15% of the total number of common shares to be offered by us pursuant to this offering (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the public offering price less the underwriting discount. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable will be $   , and the total gross proceeds to us, before underwriting discounts and commission expenses, will be $   . If we complete this offering, net proceeds will be delivered to us on the closing date. 

 

The underwriters expect to deliver the common shares to purchasers on or about     , 2022.

 

ThinkEquity

 

The date of this prospectus is           , 2022.

 

 

 

  

Located in mining-friendly jurisdiction with access and infrastructure

 

Large Secure Land Position

 

●     Snow Lake has a strong land position encompassing 55,318 acres

 

Pro Mining Community

 

●     HudBay operates the Lalor Mine and concentrator in the Snow Lake district

 

●     Recent investments in the district by several mining companies demonstrate high confidence in the potential for new mine discoveries

 

●     Nearly a century of historic and consistent mining in the area

 

Access

 

●     Year round access to the Property can be gained via boat, barge, helicopter or winter ice/bush roads

 

Existing Infrastructure

 

●     Powerline traversing the Property

 

●     Airstrip located 8.5km to the north

 

●     Major Road access within 11km

 

●     Railway access 65km to the south

 

 

   

 

 

  

TABLE OF CONTENTS

 

  Page
Prospectus Summary 1
Risk Factors 11
Special Note Regarding Forward-Looking Statements 26
Use of Proceeds 27
Dividend Policy 28
Capitalization 29
Dilution 30
Management’s Discussion and Analysis of Financial Condition and Results of Operations 32
Corporate History and Structure 50
Industry 54
Business 65
Management 87
Principal Shareholders 94
Related Party Transactions 96
Description of Share Capital 97
Shares Eligible for Future Sale 109
Material United States and Canadian Income Tax Considerations 110
Enforceability of Civil Liabilities 115
Underwriting 116
Expenses Related to this Offering 125
Legal Matters 125
Experts 125
Where You Can Find More Information 126
Financial Statements F-1

 

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we, nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of common shares.

 

For investors outside the United States: Neither we, nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus outside the United States.

 

This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.

 

i

 

 

SCIENTIFIC AND TECHNICAL INFORMATION

 

Cautionary Note Regarding Presentation of Mineral Reserve and Mineral Resource Estimates

 

The U.S. Securities and Exchange Commission, or the SEC, adopted final rules in 2018 to amend and modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the U.S. Securities Act of 1933, as amended, or the Securities Act, or the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. These amendments, which we refer to as the SEC Mining Modernization Rules, became effective February 25, 2019, with compliance, following a transition period, required for the first fiscal year beginning on or after January 1, 2021. Under the SEC Mining Modernization Rules, following the transition period, the historical property disclosure requirements for mining registrants included in SEC Industry Guide 7 has been rescinded and replaced with disclosure requirements in subpart 1300 of SEC Regulation S-K, or S-K 1300. Domestic companies and foreign private issuers that file reports with the SEC are now required to disclose mineral resources, mineral reserves, and material exploration results for material mining operations in accordance with S-K 1300.

 

As a Canadian foreign private issuer that is not eligible to file reports with the SEC pursuant to the multi-jurisdictional disclosure system, we are required to provide disclosure on our mineral properties under the SEC Mining Modernization Rules beginning with our fiscal year starting July 1, 2021. We provide that disclosure in this prospectus.

 

As a result of the adoption of the SEC Mining Modernization Rules, the SEC now recognizes estimates of “measured mineral resources,” “indicated mineral resources” and “inferred mineral resources.” In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding definitions under the CIM Standards that are required under NI 43-101. Information regarding inferred mineral resources contained or referenced in this prospectus now complies with the SEC disclosure guidelines adopted under the SEC Mining Modernization Rules as codified in S-K 1300 and should be comparable to similar information made public by other companies that report in accordance with U.S. or Canadian standards.

 

We are still in the exploration stage and our planned commercial operations have not commenced. There is currently no commercial production at our Snow Lake Lithium™ Project sites (previously called Thompson Brothers Lithium Project or TBL property). We have completed a technical report that, we believe, is in compliance with the SEC’s new S-K 1300 disclosure rules. We have not yet completed a preliminary feasibility study, or PFS, of the Snow Lake Lithium™ property. As such, our Snow Lake Lithium™ property’s’ estimated proven or probable mineral reserves, expected mine life and lithium pricing cannot be determined at this time as the feasibility studies, drilling and pit design optimizations have not yet been undertaken.

 

Qualified Person Statement

 

Some scientific and technical information contained herein with respect to the Snow Lake Lithium™ Project is derived from the report titled “Technical Report Summary and Resource Estimate, Snow Lake Lithium™ Project, Snow Lake Area, Herb Lake Mining Division, Manitoba, Canada” prepared for us with an effective date of June 7, 2021. We refer to this report herein as our S-K 1300 Report or our S-K 1300 compliant indicated and inferred mineral resource report. Canmine Consultants and Nuterra Geoscience have approved and verified the scientific and technical information related to the Snow Lake Lithium™ Project contained in the S-K 1300 Report and reproduced in this prospectus.

  

ii

 

 

GLOSSARY OF MINING TERMS

 

The following is a glossary of certain mining terms that may be used in this prospectus.

 

Ag Silver.
   
Alluvial A placer formed by the action of running water, as in a stream channel or alluvial fan; also said of the valuable mineral (e.g gold or diamond) associated with an alluvial placer.
   
Assay A metallurgical analysis used to determine the quantity (or grade) of various metals in a sample.
   
Au Gold.
   
Claim A mining right that grants a holder the exclusive right to search and develop any mineral substance within a given area.

 

CIM

 

The Canadian Institute of Mining, Metallurgy and Petroleum.

   
CIM Standards The CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council from time to time.
   
Concentrate A clean product recovered in flotation, which has been upgraded sufficiently for downstream processing or sale.
   
Core drilling A specifically designed hollow drill, known as a core drill, is used to remove a cylinder of material from the drill hole, much like a hole saw. The material left inside the drill bit is referred to as the core. In mineral exploration, cores removed from the core drill may be several hundred to several thousand feet in length.
   
Cu Copper.
   
Competent Person A Competent Person is a minerals industry professional responsible for the preparation and/or signing off reports on exploration results and mineral resources and reserves estimates and who is accountable for the prepared reports. A Competent Person has a minimum of five years’ relevant experience in the style of mineralization or type of deposit under consideration and in the activity which that person is undertaking. A Competent Person must hold acceptable qualification titles as listed in all Reporting Codes and Reporting Standards (NRO Recognized Professional Organizations with enforceable disciplinary processes including the powers to suspend or expel a member) and thus is recognized by governments, stock exchanges, international entities, and regulators.
   
Cut-off grade When determining economically viable mineral reserves, the lowest grade of mineralized material that can be mined and processed at a profit.
   
Deposit An informal term for an accumulation of mineralization or other valuable earth material of any origin.
   
Dilational structure Structures composed of mechanisms whose only degree of freedom corresponds to dilation. 
   
Drift A horizontal or nearly horizontal underground opening driven along a vein to gain access to the deposit.
   
Dyke A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks.

 

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En-echelon Structures within rock caused by noncoaxial shear.
   
Exploration Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
   
Flotation A milling process in which valuable mineral particles are induced to become attached to bubbles and float as others sink.
   
FS A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.
   
Grade Term used to indicate the concentration of an economically desirable mineral or element in its host rock as a function of its relative mass. With gold, this term may be expressed as grams per tonne (g/t) or ounces per tonne (opt).
   
Greywacke A variety of sandstone generally characterized by its hardness, dark color, and poorly sorted angular grains of quartz, feldspar, and small rock fragments set in a compact, clay-fine matrix.
   
Ha Hectare - An area totaling 10,000 square meters or 2.47 acres.
   
IA Initial Assessment. A study, other than a pre-feasibility or feasibility study, that includes an economic analysis of the potential viability of mineral resources completed per the S-K 1300 standard of disclosure.
   
Indicated Mineral Resource    Part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.
   
Inferred Mineral Resource  Part of a mineral resource for which quantity and grade or quality can be estimated on the basis of limited geological evidence and sampling and reasonably implied, but not verified, geological and grade continuity.
   
Km Kilometre(s). Equal to 0.62 miles.
   
kMT Kilo metric tonne.
   
LCE Lithium Carbonate Equivalent - Trade in lithium is largely centered around key lithium raw materials and chemicals such as spodumene concentrate, lithium carbonate and lithium hydroxide, which vary significantly in their lithium content. To normalize this varied lithium content data, market participants will often also report data in terms of a “lithium carbonate equivalent,” or “LCE.”
   
Lithologic The character of a rock formation, a rock formation having a particular set of characteristics.
   
M Metre(s). Equal to 3.28 feet.
   
Mafic Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.

 

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Massive Said of a mineral deposit, especially of sulfides, characterized by a great concentration of mineralization in one place, as opposed to a disseminated or vein-like deposit.
   
Measured Mineral Resource Part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
   
Metallurgy  The science and art of separating metals and metallic minerals from their ores by mechanical and chemical processes.
   
Mineral A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form.
   
Mineral Deposit A mass of naturally occurring mineral material, e.g., metal ores or nonmetallic minerals, usually of economic value, without regard to mode of origin.
   
Mineralization A natural occurrence in rocks or soil of one or more yielding minerals or metals.
   
Mineral Project The term “mineral project” means any exploration, development or production activity, including a royalty or similar interest in these activities, in respect of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base, precious and rare metals, coal, and industrial minerals.
   
Mineral Reserve The economically mineable part of a Measured and/or Indicated Mineral Resource.
   
Mineral Resource A concentration or occurrence of diamonds, natural, solid, inorganic or fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.
   
Net Smelter Royalty The aggregate proceeds received from time to time from any arm’s length smelter or other arm’s length purchaser from the sale of any ores, concentrates, metals or other material of commercial value, net of expenses.
   
Modifying Factors Considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
   
Mt Metric tonne. Metric measurement of weight equivalent to 1,000 kilograms or 2,204.6 pounds.   
   
NI 43-101 National Instrument 43-101 is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. issuers that are subject to Canadian securities laws. This includes Canadian entities as well as foreign-owned mining entities who have securities that trade on stock exchanges or Over The Counter (OTC) markets overseen by the Canadian Securities Administrators (CSA), even if they only trade on Over The Counter (OTC) derivatives or other instrumented securities.

 

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Ore  Mineralized material that can be extracted and processed at a profit.
   
Ounce A measure of weight in gold and other precious metals, correctly troy ounces, which weigh 31.2 grams as distinct from an imperial ounce which weigh 28.4 grams.
   
Pegmatite An igneous rock, formed by slow crystallization at high temperature and pressure at depth, and exhibiting large interlocking crystals usually greater in size than 2.5 cm (1 in).
   
PFS Preliminary feasibility study. A Preliminary Feasibility Study is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study.
   
Probable Mineral Reserve The mineable part of an indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.
   
Proven Mineral Reserve The term “proven mineral reserve” is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors.
   
Qualified Person An individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development, production activities and project assessment, or any combination thereof, including experience relevant to the subject matter of the project or report and is a member in good standing of a self-regulating organization.
   
Reclamation Restoration of mined land to original contour, use, or condition where possible.
   
Spodumene A pyroxene mineral consisting of lithium aluminium inosilicate, LiAl(SiO3)2, and is a source of lithium.
   
Sedimentary Said of rock formed at the Earth’s surface from solid particles, whether mineral or organic, which have been moved from their position of origin and re-deposited, or chemically precipitated.
   
Strike The direction, or bearing from true north, of a vein or rock formation measure on a horizontal surface.
   
Tenement A mineral claim.
   
Tonne A metric ton of 1,000 kilograms (2,205 pounds).
   
μm Micrometer.
   
Zn Zinc.

  

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PROSPECTUS SUMMARY

 

This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our common shares. You should carefully read the entire prospectus, including the risks associated with an investment in our company discussed in the “Risk Factors” section of this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See the section titled “Special Note Regarding Forward-Looking Statements.”

 

In this prospectus, “we,” “us,” “our,” “our company,” “Snow Lake” and similar references refer to Snow Lake Resources Ltd. and its consolidated subsidiaries.

 

Our Company

 

Our Mission

 

Snow Lake is committed to operating a fully renewable and sustainable lithium mine that can deliver a completely traceable, carbon neutral and zero harm product to the electric vehicle and battery market in North America. We aspire to set the standard for responsible lithium battery manufacturing.

 

Overview

 

We are an exploration stage mining company engaged in lithium exploration in the province of Manitoba, Canada.

 

On March 7, 2019, we and Nova Minerals Limited, or Nova, a major shareholder, entered into a share sale agreement, whereby, as part of a group restructuring, we acquired all of the outstanding capital stock of Thompson Bros (Lithium) Pty Ltd., a wholly owned subsidiary of Nova and owner of the Snow Lake Lithium™ Project discussed below.

 

Our primary focus is currently conducting exploration for lithium at our 100% owned Snow Lake Lithium™ Project. See “Business – Our Mineral Project – Snow Lake LithiumProject.” Our objective is to develop a world-class lithium mine in Manitoba and to become the first fully energy renewable lithium hydroxide producer in North America, strategically located to supply the U.S. “Auto Alley,” from Michigan to the southern United States, and the European battery market via our nearby access to the Hudson Bay Railway and the Port of Churchill. With our commitment to the environment, corporate social responsibility and sustainability, we aim to derive substantial revenues from the sale of lithium to the growing electric vehicle, or EV and battery storage markets in the United States and abroad. With access to renewable energy produced in Manitoba, we expect to become the first supplier in North America of lithium mined exclusively with the benefit of power produced from fully sustainable, local sources.

 

The Historical Setting for the Growth of Lithium Demand

 

The unprecedented prosperity of the 20th century is very much attributable to the discovery of oil in Western Pennsylvania in the mid-1800s and the subsequent invention of the internal combustion engine. The symbiotic relationship between oil and the internal combustion engine has been the underpinning of world economic growth, expansion and, most importantly, the empowerment of millions of people to whom mobility and freedom have become a way of life. The interstate highways that flourished in the United States over the past century have enabled commercial fluidity across the globe that capitalized exponentially on the gilded age of rail.

 

Until recently, a world without oil and the internal combustion engine was inconceivable and environmentalists protesting the high price being paid for our economic way of life, were brandished unrealistic luddites. The paradox of environmental sensitivity and the irreversible progress of a polluting population seemed permanently juxtaposed, until it wasn’t.

 

Today, we have reached the confluence where economic reality and social responsibility can finally meet. Thanks to technological innovation, through the development of the lithium battery we can now create an electric fleet of vehicles that not only delivers luxury and economy but is also ecologically friendly to our planet. We are now on the precipice of the next great economic age - preceded by the steam engine, the railroad, the combustion engine and the internet, we are now ready to be catapulted into the electric age. With the advent of the lithium battery, no longer will we have to rely on fossil fuel to power our economy or our cars as we embark into the next great age and, more importantly, we can limit and ultimately reverse the damage caused to our planet by the rapid economic expansion of the past century.

 

The Coming Commodity Supercycle and Growth in Lithium Demand

 

From our perspective, indications suggest that we are currently on the verge of a commodity supercycle fueled by pent up demand, infrastructure spending and post-COVID-19 economic exuberance. We expect that lithium, in particular, will benefit not only from a general rise in commodity demand but, specifically, from what we see as the tipping point for vehicle fleet electrification.

 

1

 

 

We believe that the journey now to the full electrification of our global automobile fleet has begun. Demand for EVs is being driven by conscious consumers who take the threat of global warming seriously and who have forced a universal commitment from the manufacturing industry to produce cars to match their environmentally conservative outlook. During the coming years, the achievement of this fleet conversion will be the primary challenge for the worldwide automobile industry and the determining factor will not be design or engineering, but batteries. Batteries will be the fuel and gold of the 21st century. Based on today’s predictions of the trajectory of future EV growth, the world will not have sufficient battery capacity to match growing demand. Today’s global fleet of approximately 1.4 billion automobiles includes 10 million plug in electric vehicles, an increase from only one million such EVs in 2015. Extrapolating the growth trajectory of EV demand, we believe that current industrial infrastructure is not scaled sufficiently to meet the coming demand.

 

Lithium is the key mineral ingredient in the power storage component of the EV revolution and the global demand growth curve for lithium consumption over the next decade is expected to be exponential. While normal commodity cycles are affected by incremental and organic growth, it is only once in a century that we witness new, previously nonexistent demand grow to accommodate a new economic, social and cultural reality.

 

We believe that current global lithium production cannot cover a fraction of the projected exponential growth anticipated in the coming EV growth cycle and we intend to position our company to become a significant lithium supplier to the North American automotive industry and beyond.

 

The table below shows the expected increase in lithium consumption through 2025.

 

 

As can be seen in this table, the leading driver for the growth in lithium consumption has been, and will continue to be, battery production for EVs. Fortune Business Insights has predicted that the EV market will exhibit a CAGR of 21.1% during the period from 2019 to 2026.

 

Today, a large portion of the global lithium output is mined in diverse global locations such as Australia and Chile, transported great distances, primarily to China, for processing and then shipped again, back to the North American automobile industry. This is not a sustainable model and will not provide the necessary environmental or geopolitical comfort that will be required to electrify the global fleet of automobiles.

 

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Our Corporate Strategy

 

Recently, EV auto makers have begun to face consumer scrutiny relating to the sourcing of materials, including lithium, that go into the makeup of electric vehicles. Additionally, in recent years, pressure has begun to be placed on EV auto makers by consumers and investors demanding that environmental, sustainability and governance, or ESG, standards be met in exchange for their investment dollars.

 

Extracting a natural resource to meet demand in an age-old fashion similar to how other commodities are mined is not our approach. Today’s environmentally conscious consumers no longer want to be willfully ignorant of the sourcing and impact of the raw materials that are part of their everyday lives. Today’s conscious consumers of electric vehicles will not be satisfied by a pollution free means of transportation if the means to deliver that environmentally friendly car involve dubious mining ethics, pollutive extraction and processing, long distance logistics and general environmental damage in the process. It is understandable that consumers and investors who wish to see a sustainable future through EVs and sustainable lithium batteries would also care that their production does not put the environment, and their future, at unnecessary risk.

 

Snow Lake is committed to being the first, fully renewable energy powered electric mine in the world that can deliver fully traceable, conflict free, net zero carbon, battery grade lithium to the electric vehicle consumer market. We intend to set the standard for responsible battery manufacturing.

 

We intend to achieve our environmental, sustainability and governance friendly strategy through utilization and operation of the following initiatives and resources:

 

  We have entered into a memorandum of understanding, or MOU, with Meglab Electronique Inc. for Meglab’s delivery to us of the first all-electric lithium mine in the world. We have also entered into a MOU with CentrePort Canada Inc. to have CentrePort as the potential location to build our hydroxide plant. In April 2021, we entered into a MOU with IMG Investitions- und Marketinggesellschaft Sachsen-Anhalt mbH, the economic development agency for the state of Saxony-Anhalt, to consider investment in a lithium hydroxide plant in the Saxony-Anhalt region for final processing. We cannot guarantee, however, that the above nonbinding MOUs will lead to definitive agreements.

 

  Power to operate our future lithium mine is expected to be supplied by Manitoba Hydro on a 97% renewable basis;

 

  We are currently identifying sites within Manitoba for hydroxide processing of spodumene that will be powered by renewable energy sources;

 

  The Arctic Gateway Group’s Hudson Bay Railway lines are located within 65 kilometers of our Snow Lake Lithium™ property will connect our lithium mining operations to the North American auto industry with a minimum carbon footprint, with total mine to manufacturer distance of less than 1,000 miles; and

 

These factors will give us a competitive edge and first mover status in delivering a fully verifiable, environmentally friendly product to a rapid growth market that is consumer driven to demand a new level of transparency and responsibility.

 

Practical Steps

 

We have launched our PFS, which will include in depth metallurgy analysis, resource definition, engineering assessment and ore sorting optimization, among other studies, during the second half of 2022. During the first quarter of 2022 we began an additional drilling program to further expand our existing resource and a mag drone survey that will be partially financed by a grant from the Manitoba Government. During the remainder of 2022 we intend to survey historic drilling holes from Sherritt Gordon’s lithium discoveries more than 50 years ago, the records of which are intact. Also, we began our environmental studies process during the latter part of 2021 and sometime in 2023 we will begin the permitting for the start of our future mining operations. We are confident that we will confirm the historic mineralization assessments on the Snow Lake Lithium™ property and be in a position to begin the construction and commissioning of our mining operations during 2024/2025.

 

3

 

 

The Snow Lake LithiumProject

 

Our 100% owned Snow Lake Lithium™ Project consists of 122 mineral claims located on Crown land near Snow Lake, central Manitoba, Canada. We refer to this property as the Snow Lake Lithium™ property. The Snow Lake Lithium™ property encompasses two lithium-rich spodumene pegmatite clusters known as the Thompson Brothers and Sherritt Gordon, or SG, pegmatite dykes. A preliminary exploration program was conducted during 2017/2018 with respect to the Thompson Brothers dyke resulting in an S-K 1300 compliant updated estimate dated June 9, 2021 of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% lithium oxide, or Li2O, for 91,200 Li2O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li2O, for 19,300 Li2O tonnes. Further drilling will be required to determine whether the Snow Lake Lithium™ property contains proven or probable mineral reserves, and then we will have to engage in economic modeling and analysis to determine the economic viability of the project. We expect that if the S-K 1300 compliant numbers are confirmed as probable or proven resources, a fully functioning lithium mine could provide 8 to10 years of producing 160k tonnes per annum of 6% lithium ore concentrate.

 

Our Opportunity

 

Our Snow Lake Lithium™ Project is strategically located in Manitoba, Canada, ideally situated to economically deliver mined and processed lithium products to the EV battery industry serving North America’s “Auto Alley” from Michigan to the southern United States. With direct rail access running north to the Port of Churchill, which supplies access to Europe by ship, we expect to be able to economically deliver our future lithium output to the markets of Europe as well. Preliminary exploration of our Snow Lake Lithium™ property indicates a substantial S-K 1300 compliant indicated and inferred resource of lithium ore, and we have only explored 1% of the Snow Lake Lithium™ property. We expect to prove this indicated and inferred resource in the near future through further exploration and technical analysis and reporting, although we can provide no guarantee that our indicated and inferred resource will be confirmed as proven or probable. With expected to be proven mineral resources and our prime location, successful completion of a PFS, obtaining of the required permitting and building of a mine and ore concentrator, we expect to be able to produce economically significant amounts of marketable lithium ore concentrate in a socially responsible and environmentally friendly way while utilizing renewable energy to power our mining operations. Assuming our successful execution of the required exploration and development steps and operating in accordance with our ESG corporate principals, we expect to be in a strong position to be able to exploit, through offtake agreements with OEM manufacturers, the anticipated rising demand for lithium hydroxide to meet the burgeoning needs of the EV battery and related markets in North America and beyond.

 

Our Competitive Strengths

 

We believe that the following competitive strengths contribute to be our success and to differentiate us from our competitors:

 

  Our initial metallurgical test work yielded a spodumene concentrate grading 6.37% Li2O and our preliminary flotation tests indicate that a spodumene concentrate with +6.0% Li2O may be readily produced from the deposit. These preliminary findings suggest that our Snow Lake Lithium™ property might contain lithium resources meeting industry and market specifications. For a discussion of this historical metallurgical test work, see “Business – Historical Mineral Processing and Metallurgical Testing” below.

 

  Our Snow Lake Lithium™ property is large, and we believe it is host to valuable lithium resources in commercial quantities.

 

  Access to Manitoba produced 97%+ renewable energy is expected to enable us to become the first supplier in North America of lithium mined exclusively with the benefit of fully renewable sources of energy.

 

  No significant technical challenges related to exploration and development of the deposits have been identified.

 

  We are strategically located in the North American market.

 

  Our operations are located in an exceptional mining friendly jurisdiction with excellent mining infrastructure.

 

  Our leadership team consists of experienced mining executives and operators, with a track record of de-risking and delivering.

 

  The combination of the benefits of mining under a fully renewable energy ecosystem, location in a mining friendly jurisdiction, and strategic proximity to the major United States EV manufacturing markets should make us an attractive source for offtake agreements with lithium battery and/or EV manufacturers who will need to secure their raw material supplies.

 

4

 

 

Our Growth Strategies

 

We have developed a strategic plan for further exploration and development of the Snow Lake Lithium™ property that includes the following milestones:

 

  Complete resource update in accordance with the SEC’s new Mining Modernization Rules (field work completed) to expand and upgrade from Inferred to Indicated Resources.

 

  Complete Preliminary Feasibility Study, or PFS, study (began in the first quarter of 2022).

 

  Complete next stage of resource exploration drilling leading to resource upgrade to the Measured from Indicated level.

 

  Continue exploration of the TB1 dyke, which currently makes up our S-K 1300 compliant resource, to expand our known resource at this location.

 

  Continue exploration drilling at the Sherritt Gordon pegmatite dykes where preliminary exploration in the 1940s identified near surface spodumene deposits. Although no SG resources are included in our S-K 1300 compliant indicated and inferred mineral resource report, we expect that additional exploration of the SG dykes will result in the discovery of JORC reportable resources.

 

  Continue exploration of additional prospects located on our Snow Lake Lithium™ property could add additional tonnage through further drilling. We also intend to explore for extensions to the existing mineral resources and other potential mineralization within the Snow Lake Lithium™ property.

 

Our Risks and Challenges

 

Our prospects should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by similar companies. Our ability to realize our business objectives and execute our strategies is subject to risks and uncertainties, including, among others, the following:

 

Risks Related to Our Business and Industry

 

Risks and uncertainties related to our business and industry include, but are not limited to, the following:

 

  We have a limited operating history and have not yet generated any revenues;
     
  Our financial statements have been prepared on a going concern basis and our financial status creates a doubt whether we will continue as a going concern;
     
  If we do not obtain additional financing, our business may be at risk or execution of our business plan may be delayed;
     
  The coronavirus pandemic may cause a material adverse effect on our business;
     
  All of our business activities are now in the exploration stage and there can be no assurance that our exploration efforts will result in the commercial development of lithium hydroxide;
     
  Our mineral resources described in our most recent S-K 1300 compliant indicated and inferred mineral resource report are only estimates and no assurance can be given that the anticipated tonnages and grades will be achieved, or that the indicated level of recovery will be realized. Although S-K 1300 compliant, there has been insufficient drilling on the Snow Lake Lithium™ property to qualify our inferred resource under the SEC’s new Mining Modernization Rules. Further drilling will be required to determine whether the Snow Lake Lithium™ property contains proven or probable mineral reserves and there can be no assurance that we will be successful in our efforts to prove our resource;

 

5

 

 

  Mineral exploration and development are subject to extraordinary operating risks. We currently do not insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which could have an adverse impact on us;
     
  Our business operations are exposed to a high degree of risk associated with the mining industry;
     
  We may not be able to obtain or renew licenses or permits that are necessary to our operations;
     
   Our Snow Lake Lithium™ property may face indigenous land claims;
     
  Volatility in lithium prices and lithium demand may make it commercially unfeasible for us to develop our Snow Lake Lithium™ Project;
     
  There can be no guarantee that our interest in the Snow Lake Lithium™ property is free from any title defects;
     
  Our mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies;
     
  We currently report our financial results under International Financial Reporting Standards, or IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles;
     
  Our directors and officers are engaged in other business activities and accordingly may not devote sufficient time to our business affairs, which may affect our ability to conduct operations and generate revenue; and
     
  In the event that key personnel leave our company, we would be harmed since we are heavily dependent upon them for all aspects of our activities.

 

Risks Related to This Offering and Ownership of Our Common Shares 

 

Risks and uncertainties related to this offering and our Common Shares include, but are not limited to, the following:

 

 

We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree;

     
  If through additional drilling we are not able to prove our resource according to the SEC’s new Mining Modernization Rules, your investment in our common shares could become worthless;
     
  You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the prospectus based on foreign laws;
     
  We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies;
     
  As a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our shares;
     
  A major shareholder, Nova Minerals, owns a significant interest in our outstanding common shares. As a result, it will have the ability to influence all matters submitted to our shareholders for approval; and
     
  Future issuances of debt securities, which would rank senior to our common shares upon our bankruptcy or liquidation, and future issuances of preferred shares, which could rank senior to our common shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common shares.

 

6

 

 

In addition, we face other risks and uncertainties that may materially affect our business prospects, financial condition, and results of operations. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our common shares.

 

Our Corporate Structure

 

We were incorporated in the Province of Manitoba, Canada under The Corporations Act (Manitoba), or MCA, on May 25, 2018 by our major shareholder Nova. As of the date of this prospectus, Nova owned approximately 36.82% of our outstanding common shares. Nova has agreed to lock up its holdings of 6,600,000 our common shares until March 21, 2023.

 

We have three wholly owned subsidiaries, Snow Lake Exploration Ltd., or Snow Lake Exploration, Snow Lake (Crowduck) Ltd., or Snow Lake Crowduck, and Thompson Bros (Lithium) PTY Ltd. (formerly Manitoba Minerals Pty Ltd), or Thompson Bros. Through a series of agreements between 2016 to 2019 we acquired a 100% interest in the Snow Lake Lithium™ property. Our subsidiary, Thompson Bros, which owned our 20 claims before they were transferred to Snow Lake Crowduck, has been deregistered in Australia and Manitoba.

 

Corporate Information

 

Our corporate address is 242 Hargrave St #1700, Winnipeg, MB R3C 0V1 Canada. Our company email address is info@snowlakelithium.com.

 

Our registered office is located at 242 Hargrave St #1700, Winnipeg, MB R3C 0V1 Canada.

 

Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168.

 

Our website can be found at https://snowlakelithium.com. The information contained on our website is not a part of this prospectus, nor is such content incorporated by reference herein, and should not be relied upon in determining whether to make an investment in our common shares.

 

Implications of Being an Emerging Growth Company

 

We qualify as an “emerging growth company” under the Jumpstart Our Business Act of 2012, as amended, or the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

 

7

 

 

Implications of Being a Foreign Private Issuer

 

We are subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements we file certain reports with the SEC. As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we have four months after the end of each fiscal year to file our annual reports with the SEC and we are not required to file current reports as frequently or promptly as U.S. domestic reporting companies. We also present our financial statements pursuant to IFRS, as issued by the International Accounting Standards Board, instead of pursuant to U.S. generally accepted accounting principles. Furthermore, our officers, directors and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign private issuer, we are permitted, and intend to follow certain home country corporate governance practices instead of those otherwise required under the listing rules of Nasdaq for domestic U.S. issuers. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting companies.

 

Notes on Prospectus Presentation

 

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. Certain market data and other statistical information contained in this prospectus are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the Canadian mining industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source.

 

Our reporting currency and our functional currency is Canadian dollar. This prospectus contains translations of Canadian dollars into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from Canadian dollars into U.S. dollars relating to the unaudited interim consolidated financial statements as of December 31, 2021 and for the six months ended December 31, 2021 and 2020 in this prospectus were made at a rate of C$1.2777 per US$1.00, the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of December 30, 2021. All translations from Canadian dollars into U.S. dollars relating to the audited consolidated financial statements as of and for the years ended June 30, 2021 and 2020 in this prospectus were made at a rate of C$1.2404 per US$1.00, the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of June 30, 2021. On September 9, 2022, the noon buying rate for Canadian dollar was 1.3036 per US$1.00. We make no representation that the Canadian dollar or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Canadian dollar, as the case may be, at any particular rate or at all.

 

All references in the prospectus to “U.S. dollars,” “dollars,” “US$” and “$” are to the legal currency of the United States and all references to “C$” are to the legal currency of Canada.

 

Share Consolidation (a “Reverse Split”)

 

On October 7, 2021, we effectuated a one-for-five reverse stock split of our common shares, or the Reverse Split. The Reverse Split combined each five of our common shares into one common share. Fractional shares will not be issued to any existing shareholder in connection with the Reverse Split, but the Company purchased from each existing shareholder the right to such fractional share that would have been issued, at a price based on our initial public offering price. The right to fractional shares which the Company purchased resulting from the Reverse Split, in the aggregate, was less than ten (10) common shares. The historical audited financial statements included elsewhere in this prospectus have been adjusted for the Reverse Split. Unless otherwise indicated, all other share and per share data in this prospectus have been retroactively adjusted, where applicable, to reflect the Reverse Split as if it had occurred as at the June 30, 2019 fiscal year end.

 

8

 

 

The Offering

 

Shares offered

 

Common shares outstanding immediately before the offering

 

common shares, assuming an offering price of US per share.

 

17,924,758 common shares.

     

Common shares outstanding immediately after the offering

 

        common shares (or     common shares if the underwriters exercise the over-allotment option in full).
Over-Allotment Option We have granted the representative of the underwriters an option for a period of 45 days from the date of this prospectus to purchase up to       additional common shares, constituting 15% of the numbers of our common shares to be offered by us pursuant to this offering (excluding shares subject to this option), at the follow-on public offering price less the underwriting discount.
     
Underwriters’ Warrants  

We will issue to the representative of the underwriters, or its permitted designees, warrants to purchase up to common shares representing 5% of the common shares offered hereby, or up to        common shares if the underwriters exercise their over-allotment option in full. The underwriters’ warrants will have an exercise price of 125% of the per share public offering price, will become exercisable 180 days after the commencement of sales of this offering, and will terminate on the fifth anniversary of the commencement of sales of this offering.

 

Lockup  

The representative of the underwriters has required that officers and directors of the Company enter into lock-up agreements pursuant to which these officers and directors have agreed that, without the prior consent of the representative, they will not, for a period of 60 days following the closing of the offering, subject to certain exceptions, offer, sell or otherwise dispose of or transfer any securities of the Company owned by them as of the date of the closing of the offering or acquired during the lock-up period.

 

Use of proceeds   We expect to receive net proceeds of approximately US$    million from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and assuming no exercise of the over-allotment option. We intend to use the net proceeds for resource development activities, technical studies and reports, capital costs, corporate purposes and general corporate expenses. See “Use of Proceeds.”
     
Risk factors   Investing in our common shares involves a high degree of risk and purchasers of our common shares may lose part or all of their investment. See “Risk Factors” for a discussion of factors you should carefully consider before deciding to invest in our common shares.
     
Nasdaq Capital Market Symbol   Our common shares are listed on the Nasdaq Capital Market under the symbol “LITM.”
     

 

The number of common shares outstanding is based on 17,924,758 shares outstanding as of the date of this prospectus and excludes:

 

  520,000 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock Option Plan at a weighted average exercise price of C$2.50 (approximately US$2.02) per share;
     
  1,062,407 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock at a weighted average exercise price of US$7.50 per share;

 

  824,325 additional common shares that are reserved for future issuance under our Amended and Restated Stock Option Plan;

 

  637,106 common shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of C$1.56 (approximately US$1.27) per share;

 

  184,000 common shares issuable upon exercise of the warrants issued to the representative of the underwriters in our initial public offering at a weighted average exercise price of US$9.375 per share; and
     
  up to          common shares issuable upon exercise of the warrants to be issued to the representative of the underwriters in this offering.

 

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Summary Consolidated Financial Information 

  

The following summary historical financial information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in the prospectus and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

 

The following summary consolidated financial data as of December 31, 2021 and 2020 is derived from our unaudited consolidated financial statements included elsewhere in this prospectus.

 

Our financial statements are prepared and presented in accordance with IFRS. Our historical results for any period are not necessarily indicative of our future performance.

  

   Six Months Ended December 31, 
  

2020

(unaudited)

  

2021

(unaudited)

   2021
(unaudited)
 
Statements of Loss Data  C$   C$   US$ 
Total operating expenses   (108,790)   (2,925,819)   (2,289,911)
Total other income (loss)   5,031    513,161    401,629 
Net loss   (103,759)   (2,412,658)   (1,888,282)
Net loss per share – basic and diluted   (0.01)   (0.17)   (0.14)
Weighted average shares outstanding – basic and diluted   13,008,014    13,943,543    13,943,543 

 

The following as adjusted consolidated statements of financial position as of December 31, 2021, gives effect to the sale by us of      common shares offered by us in this Prospectus (excluding the underwriter’s over-allotment option), after deducting the estimated underwriting discounts and other offering expenses.

 

    As of December 31,   As of
December 31
   

2020

(unaudited)

   

2021

(unaudited)

    2021 (unaudited)  

As adjusted
for the offering

Statements of Financial Position Data   C$     C$     US$   (unaudited) US$
Cash     52,293       30,779,336       24,089,642    
Current assets     63,580       32,086,248       25,112,505    
Total assets     5,643,039       38,255,963       29,941,272    
Current liabilities     539,173       2,049,882       1,604,353    
Total liabilities     539,173       2,049,882       1,604,353    
Shareholders’ equity     5,103,866       36,206,081       28,336,919    
Total liabilities and shareholders’ equity     5,643,039       38,255,963       29,941,272    

 

The following summary consolidated financial data as of June 30, 2021 and 2020 is derived from our audited consolidated financial statements included elsewhere in this prospectus.

 

Our financial statements are prepared and presented in accordance with IFRS. Our historical results for any period are not necessarily indicative of our future performance.

 

   Years Ended June 30, 
   2020   2021   2021 
Statements of Loss Data  C$   C$   US$ 
Total operating expenses   (247,364)   (595,598)   (480,166)
Total other income (loss)   65,248    43,162    34,797 
Net loss   (182,116)   (552,436)   (445,369)
Net loss per share – basic and diluted   (0.01)   (0.04)   (0.03)
Weighted average shares outstanding – basic and diluted   13,007,995    13,008,669    13,008,669 

 

   As of June 30, 
   2020   2021   2021 
Statements of Financial Position Data  C$   C$   US$ 
Cash   143,089    318,844    257,049 
Current assets   154,480    397,461    320,430 
Total assets   5,551,359    6,127,685    4,940,088 
Current liabilities   343,734    1,374,819    1,108,367 
Total liabilities   343,734    1,374,819    1,108,367 
Shareholders’ equity   5,207,625    4,752,866    3,831,720 
Total liabilities and shareholders’ equity   5,551,359    6,127,685    4,940,088 

 

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RISK FACTORS 

 

An investment in our common shares involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this prospectus, before purchasing our common shares. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Special Note Regarding Forward-Looking Statements.”

 

Risks Related to Our Business and Industry

 

We have a limited operating history and have not yet generated any revenues.

 

Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment. We were formed in May 2018 and we have not yet begun commercial production of lithium hydroxide. To date, we have no revenues. We are in the exploration stage of our development with the potential to establish commercial operations still an unknown. We intend to proceed with the development of the Snow Lake Lithium™ property through to economic studies such as a PFS and provided the results are positive, through to mine development. We intend in the longer term to derive substantial revenues from becoming a strategic supplier of battery-grade lithium hydroxide to the growing electric vehicle and battery storage markets. Our company is in the exploration stage, and we do not expect to start generating revenues until the fourth quarter of 2024, at the earliest. Our planned exploration and development of mineral resources, primarily lithium, will require significant investment prior to commercial introduction and may never be successfully developed or commercially successful.

 

Our financial statements have been prepared on a going concern basis and our financial status creates a doubt whether we will continue as a going concern.

 

Our financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Our future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that we will be successful in completing an equity or debt financing or in achieving or maintaining profitability. The financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should we be unable to continue as a going concern.

 

If we do not obtain additional financing, our business may be at risk or execution of our business plan may be delayed.

 

We have limited assets upon which to commence our business operations and to rely otherwise. As of December 31, 2021, we had cash of C$30,779,336 (approximately US$ 24,089,642) and during the six-month period ended December 31 2021, and 2020, we had a net loss of C$2,412,658 (approximately US$1,888,282) and C$103,759, respectively. As of June 30, 2021, we had cash of C$318,844 (approximately US$ 257,049) and during the fiscal year ended June 30, 2021, and 2020, we had a net loss of C$552,436 (approximately US$445,369) and C$182,116, respectively. Subsequently on November 18, 2021, we completed our initial public offering of common shares on the Nasdaq resulting in net proceeds of US$25.29 million. Additional funding will be needed to implement our business plan that includes various expenses such as continuing our mining exploration program, legal, operational set-up, general and administrative, marketing, employee salaries and other related start-up expenses. Obtaining additional funding will be subject to various factors, including general market conditions, investor acceptance of our business plan and ongoing results from our exploration efforts. These financings could result in substantial dilution to the holders of our common shares, or require contractual or other restrictions on our operations or on alternatives that may be available to us. If we raise additional funds by issuing debt securities, these debt securities could impose significant restrictions on our operations. Any such required financing may not be available in amounts or on terms acceptable to us, and the failure to procure such required financing could have a material and adverse effect on our business, financial condition and results of operations, or threaten our ability to continue as a going concern.

 

We may not be able to acquire additional funds on acceptable terms, or at all. If we are unable to raise adequate funds, we may have to delay, reduce the scope of or eliminate some or all of our planned exploration programs. If we do not have, or are not able to obtain, sufficient funds, we may be required to delay further exploration, development or commercialization of our expected mineral resources, if and when verified. We also may have to reduce the resources devoted to our mining efforts or cease operations. Any of these factors could harm our operating results.

 

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The coronavirus pandemic may cause a material adverse effect on our business.

 

The COVID-19 outbreak has led governments across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures, social distancing, and restrictions on business operations and large gatherings. On March 11, 2020, the federal government of Canada announced a $1 billion package to help Canadians through the health crisis. To date, there have been a large number of temporary business closures, quarantines and a general reduction in consumer activity in Canada.

 

As a result of the measures adopted by the Province of Manitoba and the federal government of Canada, certain of our mining exploration activities have been delayed. The access to investor capital as well as the potential for a 14-day quarantine when travelling into the Province of Manitoba have discouraged us from engaging in certain exploration activities in the near term. As a result of these unexpected delays, we had placed our focus on completing lab work and technical report writing using the field data that we have previously compiled. In August 2021, members of our team made a site visit to Manitoba and conducted mapping and prospecting and in October 2021 additional members of our team visited the site. In February 2022, a drilling program began at the site that is ongoing as of the date of filing.

 

The spread of the virus in many countries continues to adversely impact global economic activity and has contributed to significant volatility and negative pressure in financial markets and supply chains. The pandemic has had, and could have a significantly greater, material adverse effect on the Canadian economy as a whole, as well as the local economy where we conduct our operations. The pandemic has resulted, and may continue to result for an extended period, in significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.

 

If the current pace of the pandemic does not continue to slow and the spread of the virus is not contained, our business operations could be further delayed or interrupted. We expect that government and health authorities may announce new or extend existing restrictions, which could require us to make further adjustments to our operations in order to comply with any such restrictions. We may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees were suspected of having the virus, which could require quarantine of some or all such employees or closure of our facilities for disinfection. We may also delay or reduce certain capital spending and related projects until the travel and logistical impacts of the pandemic are lifted, which will delay the completion of such projects. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.

 

The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including the effectiveness of vaccines and other treatments and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global lithium mining and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.

 

To the extent the pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

 

Our business is subject to operational risks that are generally outside of our control and could adversely affect our business.

 

Mineral mining sites, like the sites where our Snow Lake Lithium™ property is located, by their nature are subject to many operational risks and factors that are generally outside of our control and could adversely affect our business, operating results and cash flows. These operational risks and factors include the following:

 

  unanticipated ground and water conditions;

 

  adverse claims to water rights and shortages of water to which we have rights;

 

  adjacent land ownership that results in constraints on current or future operations;

 

  geological problems, including earthquakes and other natural disasters;

 

  metallurgical and other processing problems;

 

  the occurrence of unusual weather or operating conditions and other force majeure events;

 

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  lower than expected ore grades or recovery rates;

 

  accidents;

 

  delays in the receipt of or failure to receive necessary government permits;

 

  the results of litigation, including appeals of agency decisions;

 

  uncertainty of exploration and development;

 

  delays in transportation;

 

  interruption of energy supply;

 

  labor disputes;

 

  inability to obtain satisfactory insurance coverage; and

 

  the failure of equipment or processes to operate in accordance with specifications or expectations.

 

Any one or more of these factors or other risks could cause us not to realize the anticipated benefits of an acquisition of properties or companies and could have a material adverse effect on our financial condition.

 

All of our business activities are now in the exploration stage and there can be no assurance that our exploration efforts will result in the commercial development of lithium hydroxide.

 

All of our operations are at the exploration stage and there is no guarantee that any such activity will result in commercial production of lithium mineral deposits. Very limited drilling has been conducted on our Snow Lake Lithium™ property to date, which makes the extrapolation of an S-K 1300 compliant indicated or inferred resource to an S-K 1300 probable or proven reserve and to commercial viability impossible without further drilling. We intend to engage in that additional exploratory drilling with proceeds from our initial public offering but we can provide no assurance of future success from our planned additional drilling program. The exploration for lithium deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish proven mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration programs planned by us or any future development programs will result in a profitable commercial mining operation. There is no assurance that our mineral exploration activities will result in any discoveries of commercial quantities of lithium. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted. Our long-term profitability will be in part directly related to the cost and success of our exploration programs and any subsequent development programs.

 

Our mineral resources or reserves may be significantly lower than expected.

 

We are in the exploration stage and our planned principal operations have not commenced. There is currently no commercial production on the Snow Lake Lithium™ property and we have not yet completed a preliminary feasibility study. As such, our estimated proven or probable mineral reserves, expected mine life and lithium pricing cannot be determined as the exploration program, drilling, feasibility studies and pit (or mine) design optimizations have not yet been undertaken, and the actual mineral reserves may be significantly lower than expected. You should not rely on the S-K 1300 compliant technical report, or PFS, if and when completed and published, as indications that we will have successful commercial operations in the future. Even if we prove reserves on the Snow Lake Lithium™ property, we cannot guarantee that we will be able to develop and market them, or that such production will be profitable.

 

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The estimation of lithium reserves is not an exact science and depends upon a number of subjective factors. Any indicated or inferred resource figures presented in this prospectus are estimates from the written reports of technical personnel and mining consultants who were contracted to assess the mining prospects. Resource estimates are a function of geological and engineering analyses that require us to forecast production costs, recoveries, and metals prices. The accuracy of such estimates depends on the quality of available data and of engineering and geological interpretation, judgment, and experience. Estimated indicated or inferred lithium resources may not be upgraded to indicated or measured or to probable or proved reserves, and any reserves may not be realized in actual production and our operating results may be negatively affected by inaccurate estimates. Additionally, resource estimates do not determine the economics of a mining project and, although we have begun to prepare a preliminary feasibility study, even once the PFS is produced we cannot guarantee that it will reflect positive economics for our mining resources or that we will be able to execute our plans to create an economically viable mining operation.

 

Our mineral resources described in our most recent S-K 1300 compliant indicated and inferred mineral resource report are only estimates and no assurance can be given that the anticipated tonnages and grades will be achieved, or that the indicated level of recovery will be realized.

 

We intend to continue exploration on our Snow Lake Lithium™ property and we may or may not acquire additional interests in other mineral properties. The search for mineral deposits as a business is extremely risky. We can provide investors with no assurance that exploration on our current properties, or any other property that we may acquire, will establish that any commercially exploitable quantities of mineral deposits exist. Additional potential problems may prevent us from discovering any mineral deposits. These potential problems include unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of viable lithium mineral deposits on our properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.

 

We have no history of mineral production.

 

We are an exploration stage company and we have no history of mining or refining mineral products from our properties. As such, any future revenues and profits are uncertain. There can be no assurance that our Snow Lake Lithium™ Project will be successfully placed into production, produce minerals in commercial quantities or otherwise generate operating earnings. Advancing projects from the exploration stage into development and commercial production requires significant capital and time and will be subject to further technical studies, permitting requirements and construction of mines, processing plants, roads and related works and infrastructure. We will continue to incur losses until mining-related operations successfully reach commercial production levels and generate sufficient revenue to fund continuing operations. There is no certainty that we will generate revenue from any source, operate profitably or provide a return on investment in the future.

 

Lithium mining and production is relatively new to the Province of Manitoba and the Snow Lake area.

 

If and when our lithium resources on the Snow Lake Lithium™ property are proven, we intend to work towards entering the production stage of our operations. We intend not to use diesel or gasoline fuel for any of our mining, sorting and concentrating activities. This means that the sorting and concentrating of, and the production of our spodumene lithium into a lithium hydroxide will be conducted through a fully electrified process, potentially not using any fossil fuels to generate the electrical power needed to run our operations. Lithium mining has occurred at the Tanco mine located north east of Winnipeg, but the mining and processing of lithium ore has not previously been undertaken in or near the Snow Lake region of Manitoba. Locating the necessary experts and work force that are familiar with and trained in this particular mining process may be a challenge and our success may be hindered by the lack of historical familiarity with the processes and challenges faced in lithium mining and production.

 

Mineral exploration and development are subject to extraordinary operating risks. We currently do not insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which could have an adverse impact on us.

 

Exploration and mining operations generally involve a degree of risk. Our operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of rare earth metals, including, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, personal injury or loss of life and damage to property and environmental damage, all of which may result in possible legal liability. Although we expect that adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as fire, rock falls, geo-mechanical issues, equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability. The occurrence of any of these events could result in a prolonged interruption of our operations that would have a material adverse effect on our business, financial condition, results of operations and prospects.

 

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The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral resources and reserves, to develop metallurgical processes and to construct mining and processing facilities and infrastructure at a particular site. It is impossible to ensure that the exploration or development programs planned by us will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices that are highly cyclical, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our company not receiving an adequate return on invested capital. There is no certainty that the expenditures made towards the search and evaluation of mineral deposits will result in the discovery of mineral resources or the development of commercial quantities of mineral reserves.

 

Our development projects have no operating history upon which to base estimates of future capital and operating costs. Mineral resource and reserve estimates and estimates of operating costs are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, and feasibility studies, which derive estimates of capital and operating costs based upon anticipated tonnage and grades to be mined and processed, ground conditions, the configuration of the deposit, expected recovery rates of minerals from ore, estimated operating costs, and other factors. As a result, actual production, cash operating costs and economic returns could differ significantly from those estimated.

 

There are numerous risks associated with the development of the Snow Lake Lithium™ property.

 

Our future success will largely depend upon our ability to successfully explore, develop and manage the Snow Lake Lithium™ property. In particular, our success is dependent upon management’s ability to implement our strategy, to develop the project and to maintain ongoing lithium production from the mines that we expect to develop.

 

Development of the Snow Lake Lithium™ property could be delayed, experience interruptions, incur increased costs or be unable to complete due to a number of factors, including but not limited to:

 

  changes in the regulatory environment including environmental compliance requirements;

 

  non-performance by third party consultants and contractors;

 

  inability to attract and retain a sufficient number of qualified workers;

 

  unforeseen escalation in anticipated costs of exploration and development, or delays in construction, or adverse currency movements resulting in insufficient funds being available to complete planned exploration and development;

 

  increases in extraction costs including energy, material and labor costs;

 

  lack of availability of mining equipment and other exploration services;

 

  shortages or delays in obtaining critical mining and processing equipment;

 

  catastrophic events such as fires, storms or explosions;

 

  the breakdown or failure of equipment or processes;

 

  construction, procurement and/or performance of the processing plant and ancillary operations falling below expected levels of output or efficiency;

 

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  civil unrest in and/or around the mine site and supply routes, which would adversely affect the community support of our operations;

 

  changes to anticipated levels of taxes and imposed royalties; and/or

 

  a material and prolonged deterioration in lithium market conditions, resulting in material price erosion.

 

It is not uncommon for new mining developments to experience these factors during their exploration or development stages or during construction, commissioning and production start-up, or indeed for such projects to fail as a result of one or more of these factors occurring to a material extent. There can be no assurance that we will complete the various stages of exploration and development necessary in order to achieve our strategy in the timeframe pre-determined by us or at all. Any of these factors may have a material adverse effect on our business, results of operations and activities, financial condition and prospects.

 

Changes in technology and future demand may result in an adverse effect on our results of operation.

 

Currently lithium is a key metal used in batteries, including those used in electric vehicles. However, the technology pertaining to batteries, electric vehicles and energy creation and storage is changing rapidly and there is no assurance lithium will continue to be used to the same degree as it is now, or that it will be used at all. Any decline in the use of lithium ion batteries or technologies utilizing such batteries may result in a material and adverse effect on our future profitability, results of operation and financial condition.

 

Our business operations are exposed to a high degree of risk associated with the mining industry.

 

Our business operations are exposed to a high degree of risk inherent in the mining sector. Risks which may occur during the exploration and development of mineral resources include environmental hazards, industrial accidents, equipment failure, import/customs delays, shortage or delays in installing and commissioning plant and equipment, metallurgical and other processing problems, seismic activity, unusual or unexpected formations, formation pressures, rock bursts, wall failure, cave ins or slides, burst dam banks, flooding, fires, explosions, power outages, opposition with respect to mining activities from individuals, communities, governmental agencies and non-governmental organizations, interruption to or the increase in costs of services, cave-ins and interruption due to inclement or hazardous weather conditions.

 

Commencement of mining can also reveal mineralization or geologic formations, including higher than expected content of other minerals that can be difficult to separate from rare earth metals, which can result in unexpectedly low recovery rates.

 

Such occurrences could cause damage to, or destruction of properties, personal injury or death, environmental damage, pollution, delays, increased production costs, monetary losses and potential legal liabilities. Moreover, these factors may result in a mineral deposit, which has been mined profitably in the past to become unprofitable. They are also applicable to sites not yet in production and to expanded operations. Successful mining operations will be reliant upon the availability of processing and refining facilities and secure transportation infrastructure at the rate of duty over which we may have limited or no control. Any liabilities that we incur for these risks and hazards could be significant and the costs of rectifying the hazard may exceed our asset value.

 

Infrastructure required to carry on our business may be affected by unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure.

 

Exploitation of the Snow Lake Lithium™ property will depend to a significant degree on adequate infrastructure. In the course of developing our expected operations, assuming our exploration efforts will be successful, we may need to construct and support the construction of infrastructure, which includes permanent gas pipelines, water supplies, power, transport and logistics services which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure or any failure or unavailability in such infrastructure could materially adversely affect our operations, financial condition and results of operations.

 

We may receive negative conclusions from further economic assessments.

 

The net proceeds from our follow-on public offering are being used to, among other things, fund the preparation of a preliminary feasibility study on the Snow Lake Lithium™ property and for the continuation of the exploration work to establish the economic potential of the Snow Lake Lithium™ property. Until such time as any further economic assessment is concluded, uncertainty will exist as to the economic viability of the Snow Lake Lithium™ property. In the event that any further economic assessments have negative conclusions, investors may lose some or all of their investment.

 

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We may not be able to obtain or renew licenses or permits that are necessary to our operations.

 

In the ordinary course of business, we will be required to obtain and renew governmental licenses or permits for exploration, development, construction and commencement of mining at the Snow Lake Lithium™ property. Obtaining or renewing the necessary governmental licenses or permits is a complex and time-consuming process involving public hearings and costly undertakings on the part of our company. The duration and success of our efforts to obtain and renew licenses or permits are contingent upon many variables not within our control, including the interpretation of applicable requirements implemented by the licensing and/or permitting authorities. We may not be able to obtain or renew licenses or permits that are necessary to our operations, including, without limitation, an exploitation license, or the cost to obtain or renew licenses or permits may exceed what we believe we can recover from the Snow Lake Lithium™ property. Any unexpected delays or costs associated with the licensing or permitting process could delay the development or impede the operation of a mine, which could adversely impact our operations and profitability.

 

The Snow Lake Lithium™ property may face indigenous land claims

 

The Snow Lake Lithium™ property may now or in the future be the subject of indigenous land claims. The legal nature of land claims is a matter of considerable complexity. The impact of any such claim on our ownership interest in the Snow Lake Lithium™ property cannot be predicted with any degree of certainty and no assurance can be given that a broad recognition of indigenous rights in the area in which the Snow Lake Lithium™ property is located, by way of a negotiated settlement or judicial pronouncement, would not have an adverse effect on our operations. Even in the absence of such recognition, we may at some point be required to negotiate with, and seek the approval of holders of, such interests in order to facilitate exploration and development work on the Snow Lake Lithium™ property. There is no assurance that we will be able to establish a practical working relationship with the indigenous groups in the area which would allow us to ultimately develop the Snow Lake Lithium™ property.

 

Volatility in lithium prices and lithium demand may make it commercially unfeasible for us to develop our Snow Lake LithiumProject.

 

The development of our Snow Lake Lithium™ Project is dependent on the continued growth of the lithium market, and the continued increased demand for lithium chemicals by emerging producers of electric vehicles and other users of lithium-ion batteries. These producers and the related technologies are still under development and a continued sustained increase in demand is not certain. To the extent that such demand does not manifest itself, and the lithium market does not continue to grow, or existing producers increase supply to satisfy this demand, then our ability to develop our Snow Lake Lithium™ Project will be adversely affected. Our lithium exploration and development activities may be significantly adversely affected by volatility in the price of lithium. Mineral prices fluctuate widely and are affected by numerous factors beyond our control such as global and regional supply and demand, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, and the political and economic conditions of mineral-producing countries throughout the world. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our lithium activities not producing an adequate return on invested capital to be profitable or viable.

 

There can be no guarantee that our interest in the Snow Lake Lithium™ property is free from any title defects.

 

We have taken all reasonable steps to ensure it has proper title to the Snow Lake Lithium™ property. However, there can be no guarantee that our interest in the Snow Lake Lithium™ property is free from any title defects, as title to mineral rights involves certain intrinsic risks due to the potential problems arising from the unclear conveyance history characteristic of many mining projects. There is also the risk that material contracts between us and relevant government authorities will be substantially modified to the detriment of us or be revoked. There can be no assurance that our rights and title interests will not be challenged or impugned by third parties.

 

Our mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies.

 

Our exploration programs are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies. If we are unable to obtain the requisite critical supplies in time and at commercially acceptable prices or if there are significant disruptions in the supply of electricity, water or other inputs to the mine site, our business performance and results of operations may experience material adverse effects.

 

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We may experience an inability to attract or retain qualified personnel.

 

Our success depends to a large degree upon our ability to attract, retain and train key management personnel, as well as other technical personnel. If we are not successful in retaining or attracting such personnel, our business may be adversely affected. Furthermore, the loss of our key management personnel could materially and adversely affect our business and operations.

 

As our business becomes more established, it will also be required to recruit additional qualified key financial, administrative, operations and marketing personnel. There will be no guarantee that we will be able to attract and keep such qualified personnel and if we are not successful, it could have a material and adverse effect on our business and results from operations.

 

Failure to comply with federal, provincial and/or local laws and regulations could adversely affect our business.

 

Our mining operations are subject to various laws and regulations governing exploration, development, production, taxes, labor standards and occupational health, mine safety, protection of endangered and protected species, toxic substances and explosives use, reclamation, exports, price controls, waste disposal and use, water use, forestry, land claims of local people, and other matters. This includes periodic review and inspection of the Snow Lake Lithium™ property that may be conducted by applicable regulatory authorities.

 

Although the exploration activities on the Snow Lake Lithium™ property have been and, we expect, will continue to be carried out in accordance with all applicable laws and regulations, there is no guarantee that new laws and regulations will not be enacted or that existing laws and regulations will not be applied in a way which could limit or curtail exploration or in the future, production. New laws and regulations or amendments to current laws and regulations governing the operations and activities of mining or more stringent implementation of existing laws and regulations could have a material adverse effect on us and cause increases in capital expenditures costs, or reduction in levels of exploration, development and/or production.

 

Failure to comply with applicable laws and regulations, even if inadvertent, may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. We may also be required to reimburse any parties affected by loss or damage caused by our mining activities and may have civil or criminal fines and/or penalties imposed against us for infringement of applicable laws or regulations.

 

Failure to comply with environmental regulation could adversely affect our business.

 

All phases of our operations with respect to the Snow Lake Lithium™ property will be subject to environmental regulation. Environmental legislation involves strict standards and may entail increased scrutiny, fines and penalties for non-compliance, stringent environmental assessments of proposed projects and a high degree of responsibility for companies and their officers, directors and employees. Changes in environmental regulation, if any, may adversely impact our operations and future potential profitability. In addition, environmental hazards may exist on the Snow Lake Lithium™ property that are currently unknown. We may be liable for losses associated with such hazards, or may be forced to undertake extensive remedial cleanup action or to pay for governmental remedial cleanup actions, even in cases where such hazards have been caused by previous or existing owners or operators of the properties, or by the past or present owners of adjacent properties or by natural conditions. The costs of such cleanup actions may have a material adverse impact on our operations and future potential profitability.

 

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

 

We currently report our financial results under IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles.

 

We report our financial statements under IFRS. There have been and there may in the future be certain significant differences between IFRS and United States generally accepted accounting principles, or U.S. GAAP, including differences related to revenue recognition, intangible assets, share-based compensation expense, income tax and earnings per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. In addition, we do not intend to provide a reconciliation between IFRS and U.S. GAAP unless it is required under applicable law. As a result, you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under U.S. GAAP.

 

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Our assets and operations are subject to economic, geopolitical and other uncertainties.

 

Economic, geopolitical and other uncertainties may negatively affect our business. Economic conditions globally are beyond our control. In addition, the outbreak of hostilities and armed conflicts between countries can create geopolitical uncertainties that may affect both local and global economies. Downturns in the economy or geopolitical uncertainties may cause future customers to delay or cancel projects, reduce their overall capital or operating budgets or reduce or cancel orders which could have a material adverse effect on our business, results of operations and financial condition.

 

Our operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral rights, could result in loss, reduction or expropriation of entitlements.

 

In addition, the financial markets can experience significant price and value fluctuations that can affect the market prices of equity securities and other companies in ways that are unrelated to the operating performance of these companies. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of our common shares.

 

As we face intense competition in the mineral exploration and exploitation industry, there can be no assurance that we will be able to compete effectively with other companies.

 

The mining industry, and the lithium mining sector in particular, is very competitive. Our competition is from larger, established mining companies with greater liquidity, greater access to credit and other financial resources, newer or more efficient equipment, lower cost structures, more effective risk management policies and procedures and/or a greater ability than us to withstand losses. Our competitors may be able to respond more quickly to new laws or regulations or emerging technologies, or devote greater resources to the expansion or efficiency of their operations than we can. In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and gain significant market share to our detriment.

 

As a result of this competition, we may have to compete for financing and be unable to acquire financing on terms we consider acceptable. we may also have to compete with the other mining companies for the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees or we may not be able to compete successfully against current and future competitors, and any failure to do so could have a material adverse effect on our business, financial condition, results of operations and future prospects as well as our exploration programs may be slowed down or suspended, which may cause us to cease operations as a company.

 

Our executive officers are engaged in other business activities and, accordingly, may not devote sufficient time to our business affairs, which may affect our ability to conduct operations.

 

Our executive officers are engaged as consultants under independent contractor agreements rather than as employees and, as such, they have been and are involved in other business activities. Our VP of Resource Development may also be engaged in the exploration program of our majority shareholder, Nova, and our Chief Executive Officer and our Chief Operating Officer each have consulting clients in addition to working for us. Although we expect that as our business operations ramp up our executive officers will devote substantially all of their time to our business, as a result of the other business endeavors that they are currently engaged in, our executive officers may not be able to devote sufficient time to our business affairs, which may negatively affect our ability to conduct our ongoing operations. In addition, management of our company may be periodically interrupted or delayed as a result of these officers’ other business interests.

 

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We may be subject to potential conflicts of interest.

 

We may be subject to potential conflicts of interests, as certain directors of our company are, and may continue to be, engaged in the mining industry through their participation in corporations, partnerships or joint ventures, which are potential competitors of our company. Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers may conflict with the interests of our company. Our directors and officers with conflicts of interest will be subject to the procedures set out in the related Canadian law and regulations.

 

We may not meet cost estimates.

 

A change in the timing of any projected cash flows due to capital funding or, once in production, production shortfalls or labor disruptions would result in delays in receipt of such cash flows and in using such cash to fund operating activities and, as applicable, reduce debt levels. This could result in additional loans to finance capital expenditures in the future.

 

The level of capital and operating cost estimates which are used for determining and obtaining financing and other purposes are based on certain assumptions and are fundamentally subject to considerable uncertainties. It is very likely that actual results for the Snow Lake Lithium™ property will differ from our current projections, estimates and assumptions, and these differences may be significant. Moreover, experience from actual mining may identify new or unexpected conditions that could decrease operational activities, and/or increase capital and/or operating costs above, the current estimates. If actual results are less favorable than we currently estimate, our business, results from operations, financial condition and liquidity could be materially adversely affected.

 

We may pursue opportunities to acquire complementary businesses, which could dilute our shareholders’ ownership interests, incur expenditure and have uncertain returns.

 

We may seek to expand through future acquisitions of either companies or properties, however, there can be no assurance that we will locate attractive acquisition candidates, or that we will be able to acquire such candidates on economically acceptable terms, if at all, or that we will not be restricted from completing acquisitions pursuant to contractual arrangements. Future acquisitions may require us to expend significant amounts of cash, resulting in our inability to use these funds for other business or may involve significant issuances of equity. Future acquisitions may also require substantial management time commitments, and the negotiation of potential acquisitions and the integration of acquired operations could disrupt our business by diverting management and employees’ attention away from day-to-day operations. The difficulties of integration may be increased by the necessity of coordinating geographically diverse organizations, integrating personnel with disparate backgrounds and combining different corporate cultures.

 

Any future acquisition involves potential risks, including, among other things: (i) mistaken assumptions and incorrect expectations about mineral properties, mineral resources and costs; (ii) an inability to successfully integrate any operation our company acquires; (iii) an inability to recruit, hire, train or retain qualified personnel to manage and operate the operations acquired; (iv) the assumption of unknown liabilities; (v) limitations on rights to indemnity from the seller; (vi) mistaken assumptions about the overall cost of equity or debt; (vii) unforeseen difficulties operating acquired projects, which may be in geographic areas new to us; and (viii) the loss of key employees and/or key relationships at the acquired project.

 

At times, future acquisition candidates may have liabilities or adverse operating issues that we may fail to discover through due diligence prior to the acquisition. If we consummate any future acquisitions with unanticipated liabilities or that fails to meet expectations, our business, results of operations, cash flows or financial condition may be materially adversely affected. The potential impairment or complete write-off of goodwill and other intangible assets related to any such acquisition may reduce our overall earnings and could negatively affect our balance sheet.

 

Legal proceedings may arise from time to time in the course of our business.

 

Legal proceedings may arise from time to time in the course of our business. Such litigation may be brought from time to time in the future against us. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Other than as disclosed elsewhere in this prospectus, we are not currently subject to material litigation nor have we received an indication that any material claims are forthcoming. However, due to the inherent uncertainty of the litigation process, we could become involved in material legal claims or other proceedings with other parties in the future. The results of litigation or any other proceedings cannot be predicted with certainty. The cost of defending such claims may take away from management’s time and effort and if we are incapable of resolving such disputes favorably, the resultant litigation could have a material adverse impact on our financial condition, cash flow and results from operation.

 

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Land reclamation requirements may be burdensome.

 

Land reclamation requirements are generally imposed on companies with mining operations or mineral exploration companies in order to minimize long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents or reasonably re-establish pre-disturbance landforms and vegetation. In order to carry out reclamation obligations imposed on us in connection with exploration, potential development and production activities, we must allocate financial resources that might otherwise be spent on exploration and development programs. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

 

In the event that key personnel leave our company, we would be harmed since we are heavily dependent upon them for all aspects of our activities.

 

We are heavily dependent on our officers and directors, the loss of whom could have, in the short-term, a negative impact on our ability to conduct our activities and could cause additional costs from a delay in the exploration and development of our Snow Lake Lithium™ property.

 

The obligations associated with being a public company require significant resources and management attention, and we incur significant costs as a result of being a public company.

 

As a public company, we face increased legal, accounting, administrative and other costs and expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act, which requires that we file annual and other reports with respect to our business and financial condition, as well as the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Public Company Accounting Oversight Board, and the continued listing requirements of Nasdaq, each of which imposes additional reporting and other obligations on public companies. As a public company, we are required to, among other things:

 

  prepare and file annual and other reports in compliance with the federal securities laws;

 

  expand the roles and duties of our board of directors and committees thereof and management;

 

  hire additional financial and accounting personnel and other experienced accounting and finance staff with the expertise to address complex accounting matters applicable to public companies;

 

  institute more comprehensive financial reporting and disclosure compliance procedures;

 

  involve and retain, outside counsel and accountants to assist us with the activities listed above;

 

  build and maintain an investor relations function;

 

  establish new internal policies, including those relating to trading in our securities and disclosure controls and procedures;

 

  comply with the initial listing and maintenance requirements of Nasdaq; and

 

  comply with the Sarbanes-Oxley Act.

 

We expect these rules and regulations, and any future changes in laws, regulations and standards relating to corporate governance and public disclosure, which have created uncertainty for public companies, to continue to incur legal and financial compliance costs and make some activities more time consuming and costly than for private companies. These laws, regulations and standards are subject to varying interpretations, in many cases, due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Our investment in compliance with existing and evolving regulatory requirements will result in increased administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities, which could have a material adverse effect on our business, financial condition and results of operations.

 

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Risks Related to This Offering and Ownership of Our Common Shares

 

An active market in which investors can resell their common shares may not be available.

 

Our common shares were listed and began trading on the Nasdaq Capital Market on November 19, 2021 under the symbol “LTIM.” Prior to the listing, there was no public market for our common shares. A liquid public market for our common shares may not sufficiently develop. The prices at which our securities are traded may decline, meaning that you may experience a decrease in the value of your common shares regardless of our operating performance or prospects.

 

The market price of our common shares may fluctuate, and you could lose all or part of your investment.

 

The market price for our common shares has been volatile, in part because our shares do not have a substantial history of trading publicly. In addition, the market price of our common shares may fluctuate significantly in response to several factors, most of which we cannot control, including:

 

  actual or anticipated variations in our operating results;

 

  increases in market interest rates that lead investors of our common shares to demand a higher investment return;

 

  changes in earnings estimates;

 

  changes in market valuations of similar companies;

 

  actions or announcements by our competitors;

 

  adverse market reaction to any increased indebtedness we may incur in the future;

 

  additions or departures of key personnel;

 

  actions by shareholders;

 

  announcement’s by Government, or general market confidence; and

 

  our ability to maintain the listing of our common shares on Nasdaq.
     
  speculation in the media, online forums, or investment community;

 

Volatility in the market prices of our securities may prevent investors from being able to sell their securities at or above their purchase price. As a result, you may suffer a loss on your investment.

 

We may not be able to maintain a listing of our common shares on Nasdaq.

 

Although our common shares are listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our common shares may be delisted. In addition, our board of directors may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common shares from Nasdaq may materially impair our shareholders’ ability to buy and sell our common shares and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common shares. The delisting of our common shares could significantly impair our ability to raise capital and the value of your investment.

 

We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.

 

We intend to the proceeds from this offering for resource development activities including, possibly, resource development activities, technical studies and reports, capital costs, corporate purposes and general corporate expenses. However, we have considerable discretion in the application of the proceeds. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our share price. The net proceeds from this offering may also be placed in investments that do not produce income or that lose value. Please see “Use of Proceeds” below for more information.

 

You will experience immediate and substantial dilution as a result of this offering.

 

As of December 31, 2021, our net tangible book value was approximately US$29,941,272, or approximately US$1.69 per share. Since the effective price per share of our common shares being offered in this offering is substantially higher than the net tangible book value per share, you will suffer substantial dilution with respect to the net tangible book value of the common shares you purchase in this offering. Based on the public offering price of US$ per share being sold in this offering, and our net tangible book value per share as of December 31, 2021, if you purchase shares in this offering, you will suffer immediate and substantial dilution of US$ per share (or US$ per share if the underwriters exercise the over-allotment option in full) with respect to the net tangible book value of the common shares. See the section titled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase shares in this offering.

 

We do not expect to declare or pay dividends in the foreseeable future.

 

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our common shares will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

 

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If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our common shares could be negatively affected.

 

Any trading market for our common shares may be influenced in part by any research reports that securities industry analysts publish about us. We may not obtain further research coverage by securities industry analysts. If no further securities industry analysts commence coverage of us, the market price and market trading volume of our common shares could be negatively affected. In the event we are covered by more analysts, and one or more of such analysts downgrade our shares, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our common shares could be negatively affected.

  

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the prospectus based on foreign laws.

 

We are incorporated in the Province of Manitoba, Canada under The Corporations Act (Manitoba). We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, a majority of our directors and executive officers and the experts named in this prospectus reside outside the United States, and a significant amount of their assets are located outside the United States. As a result, service of process upon such persons may be difficult or impossible to effect within the United States. Furthermore, because a substantial portion of our assets, and substantially all the assets of our directors and officers and the Canadian experts named herein, are located outside of the United States, any judgment obtained in the United States, including a judgment based upon the civil liability provisions of United States federal securities laws, against us or any of such persons may not be collectible within the United States. In Canada, provincial and territorial reciprocal enforcement of judgments legislation sets out the procedure for registering foreign judgments and this procedure varies depending on the province or territory of the enforcing court. If a foreign judgment originates from a jurisdiction not captured by the applicable provincial or territorial reciprocal enforcement of judgments or enforcement of foreign judgments legislation, the foreign judgment may be capable of enforcement at common law and the party seeking to enforce the foreign judgment must commence new proceedings in the domestic or enforcing court. For more information regarding the relevant laws of Canada, see “Enforceability of Civil Liabilities.”

 

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

 

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

 

  the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

 

  the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

 

  the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

  the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

 

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a semi-annual basis as press releases, distributed pursuant to the rules and regulations of Nasdaq Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

 

We are subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our shareholders could receive less information than they might expect to receive from more mature public companies.

 

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

 

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Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common shares less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common shares.

 

As a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our shares.

 

We are exempted from certain corporate governance requirements of Nasdaq by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted to follow the governance practices of our home country in lieu of certain corporate governance requirements of Nasdaq. Certain corporate governance practices in Canada, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. For instance, we are not required to:

  

  have a compensation committee and a nominating/corporate governance committee to be comprised solely of “independent directors;” or

 

 

hold an annual meeting of shareholders no later than one year after the end of its fiscal year.

 

We currently follow our home country practice that (i) does not require us to seek shareholder approval for amending our share incentive plans; (ii) does not require us to hold an annual meeting of shareholders no later than one year after the end of its fiscal year; (iii) a nominating/corporate governance committee does not need to compose entirely of independent directors; and (iv) a compensation committee does not need to compose entirely of independent directors. Consequently, we are exempt from independent director requirements of Rule 5605 (d) and (e) of Nasdaq Capital Market listing standards, except for the requirements under subsection (b)(2) thereof pertaining to executive sessions of independent directors. Accordingly, our investors may not be provided with the benefits of certain corporate governance requirements of Nasdaq.

 

Nova Minerals as a major shareholder owns a significant amount of our common shares. As a result, although less than a majority of our outstanding common shares, it will have the ability to significantly influence all matters submitted to our shareholders for approval.

 

A major shareholder, Nova, owns approximately 36.82% of our outstanding common shares. Although Nova does not own a majority of our outstanding common shares, it may have the ability to significantly influence all matters submitted to our shareholders for approval including:

  

  election of our board of directors;

 

  removal of any of our directors;

 

  any amendments to our certificate or articles of incorporation; and

 

  adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

 

In addition, this concentration of ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our share price or prevent our shareholders from realizing a premium over our share price.

 

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Future issuances of our common shares or securities convertible into, or exercisable or exchangeable for, our common shares, or the expiration of lock-up agreements that restrict the issuance of new common shares or the trading of outstanding common shares, could cause the market price of our common shares to decline and would result in the dilution of your holdings.

 

Future issuances of our common shares or securities convertible into, or exercisable or exchangeable for, our common shares, or the expiration of lock-up agreements that restrict the issuance of new common shares or the trading of outstanding common shares, could cause the market price of our common shares to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our common shares. In all events, future issuances of our common shares would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our common shares. In connection with our initial public offering, we, all of our directors and officers and shareholders holding more than 97% of our outstanding common shares as of November 18, 2021 on a fully-diluted basis, have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our common shares or securities convertible into or exercisable or exchangeable for our common shares for a period of (i) 180 days after November 18, 2021 in the case of our company, (ii) 12 months after November 18, 2021 in the case of our directors and officers, and (iii) 180 days after November 18, 2021 in the case of our shareholders, including our majority owner, Nova. In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our common shares may become available for resale, subject to applicable law, including without notice, which could reduce the market price for our common shares. In connection with our initial public offering, Nova agreed to lock up its holdings of our common shares until May 17, 2022; provided, however, that Nova obtained a waiver from the underwriter in our initial public offering to sell the common shares covered under the resale prospectus. On March 21, 2022, in consideration for such waiver, the underwriter required Nova to amend the original lock up to extend the period of such lock up until March 21, 2023 with respect to its 6,600,000 common shares. As of the date of this prospectus, most of our shareholders’ lock up agreements have expired.

 

Future issuances of debt securities, which would rank senior to our common shares upon our bankruptcy or liquidation, and future issuances of preferred shares, which could rank senior to our common shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common shares.

 

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common shares. Moreover, if we issue preferred shares, the holders of such preferred shares could be entitled to preferences over holders of common shares in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred shares in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our common shares must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common shares.

 

There is a risk that we will be a passive foreign investment company for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our shares.

 

In general, a non-U.S. corporation is a passive foreign investment company, or PFIC, for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and certain gains. Cash is a passive asset for these purposes.

 

Based on the expected composition of our income and assets and the value of our assets, including goodwill, we do not expect to be a PFIC for our current taxable year. However, the proper application of the PFIC rules to a company with a business such as ours is not entirely clear. Because the proper characterization of certain components of our income and assets is not entirely clear, because we will hold a substantial amount of cash as the result of our initial public offering, and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of our shares, which could be volatile), there can be no assurance that we will not be a PFIC for our current taxable year or any future taxable year.

 

If we were a PFIC for any taxable year during which a U.S. investor holds shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Material United States and Canadian Income Tax Considerations—U.S. Federal Income Taxation Considerations—Passive Foreign Investment Company Consequences” for additional information.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

 

  our goals and strategies;

 

  expectations regarding revenue, expenses and operations;

 

  our having sufficient working capital and be able to secure additional funding necessary for the continued exploration of our property interests;

 

  expectations regarding the potential mineralization, geological merit and economic feasibility of our projects;

 

  expectations regarding exploration results at the Snow Lake Lithium™ Project;

 

  mineral exploration and exploration program cost estimates;

 

  expectations regarding any environmental issues that may affect planned or future exploration programs and the potential impact of complying with existing and proposed environmental laws and regulations;

 

  receipt and timing of exploration permits and other third-party approvals;

 

  government regulation of mineral exploration and development operations;

 

  expectations regarding any social or local community issues that may affected planned or future exploration and development programs; and

 

  key personnel continuing their employment with us.

 

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

 

This prospectus also contains certain data and information, which we obtained from various government and private publications. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

 

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Although we have ongoing disclosure obligations under United States federal securities laws, we do not intend to update or otherwise revise the forward-looking statements in this prospectus, whether as a result of new information, future events or otherwise.

 

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USE OF PROCEEDS 

 

We estimate that we will receive approximately $ in net proceeds from the sale of common shares offered by us in this offering (or approximately $ if the underwriters exercise in full their option to purchase up to additional common shares from us), after deducting the underwriting discounts and commissions and estimated offering expenses of approximately $ payable by us. Our estimated net proceeds is based on the sale of common shares in this offering at an assumed public offering price of $ per share (the last reported sale price of our common shares on Nasdaq on , 2022).

 

Each $0.25 increase or decrease in the assumed public offering price of $ per share would increase or decrease, respectively, our net proceeds by $ million, assuming the maximum number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriters’ fees and estimated offering expenses payable by us.

 

We plan to use the net proceeds of this offering as follows:

 

% of the net proceeds (approximately US$ million) for resource development activities such as drilling, soil sampling, as well as potential project acquisition;

 

% of the net proceeds (approximately US$ million) for technical studies and reports such as preliminary economic assessment, preliminary feasibility study, resource modelling and/or technical reports such as an S-K 1300 compliant report;

 

% of the net proceeds (approximately US$ million) for capital costs such as deposits made or actual costs towards procuring the land required for the planned hydroxide plant, major equipment, road to project, rail upgrades, buying back the existing NSR;

 

% of the net proceeds (approximately US$ million) for corporate purposes such as salaries, office, public company fees, audit fees, director and officer insurance premium payments or other similar uses; and

 

% of the net proceeds (approximately US$ million) as general corporate expenses. This would include items such as the cost of acquiring capital, underwriting discounts and commissions and attorneys’ fees, environmental, sustainability and governance (ESG) initiatives, and marketing and promotional efforts.

 

The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. Our management, however, will have broad discretion in the way that we use the net proceeds of this offering. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Shares—We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.”

 

Pending our use of the net proceeds from this offering, we may invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.

  

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DIVIDEND POLICY

 

We have never declared or paid cash dividends on our common shares. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common shares in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common shares. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. Further, under the terms of the MCA, we are prohibited from declaring or paying a dividend if our board has reasonable grounds for believing that we are, or would after the payment be, unable to pay our liabilities as they become due, or the realizable value of our assets would thereby be less than the aggregate of our liabilities and stated capital. See also “Risk Factors—Risks Related to This Offering and Ownership of Our Common Shares—We do not expect to declare or pay dividends in the foreseeable future.”

 

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CAPITALIZATION

 

The following table sets forth our cash and capitalization as of December 31, 2021:

 

  on an actual basis; and

 

  on an as adjusted basis to reflect the sale of           common shares by us in this offering at an assumed public offering price of US$         per share, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

The as adjusted information below is illustrative only and our capitalization following the completion of this offering is subject to adjustment based on the public offering price of our common shares and other terms of this offering determined at pricing. You should read this table together with our financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

   Actual   As adjusted 
   C$   US$   C$   US$ 
Cash   30,779,336    24,089,642           
Total long-term obligations   -    -    -    - 
Shareholders’ equity:                    
Share capital   37,925,083    29,682,307           
Reserves   2,965,180    2,320,717           
Deficit   (4,684,182)   (3,666,105)          
Total shareholder’s  equity   36,206,081    28,336,919           
Total capitalization   36,206,081    28,336,919           

 

If the underwriters exercise the over-allotment option in full, each of our as adjusted cash, share capital, total shareholders’ equity and total capitalization would be US$         , US$         , US$         , US$         , respectively.

 

The table above is based on 17,924,758 shares outstanding as of the date of this prospectus and excludes:

 

  520,000 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock Option Plan at a weighted average exercise price of C$2.50 (approximately US$2.02) per share;
     
  1,062,407 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock at a weighted average exercise price of US$7.50 per share;

 

  824,325 additional common shares that are reserved for future issuance under our Amended and Restated Stock Option Plan;

 

  637,106 common shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of C$1.56 (approximately US$1.27) per share;

 

  184,000 common shares issuable upon exercise of the warrants issued to the representative of the underwriters in our initial public offering at a weighted average exercise price of US$9.375 per share.

 

A $0.25 increase or decrease in the assumed public offering price of $          per share, which is the last reported sale price of our common shares on Nasdaq on          , 2022, would increase or decrease, as appropriate, our as adjusted cash and cash equivalents, total shareholders’ equity and total capitalization by approximately $         million, assuming the number of common shares offered by us as set forth on the cover page of this prospectus remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us in this offering.

 

Similarly, a 1,000,000 shares increase or decrease in the number of shares offered by us, based on the assumed public offering price of $          per share, would increase or decrease our as adjusted cash and cash equivalents and total shareholders’ equity by approximately $          million, after deducting underwriters discounts and commissions and estimated offering expenses payable by us in this offering.

 

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DILUTION

 

If you invest in our common shares, your interest will be diluted to the extent of the difference between the public offering price per common share and our net tangible book value per common share after this offering. Dilution results from the fact that the assumed public offering price per common share is substantially in excess of the net tangible book value per common share attributable to the existing shareholders for our presently outstanding common shares.

 

Our net tangible book value was approximately US$        , or approximately US$         per common share, as of December 31, 2021. Our net tangible book value represents the amount of our total consolidated tangible assets (which is calculated by subtracting deferred tax assets from our total consolidated assets), less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value per share after giving effect to this offering.

 

After giving effect to our sale of          common shares in this offering at the assumed public offering price of US$         per share, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses, our as adjusted net tangible book value as of December 31, 2021 would have been approximately US$         , or approximately US$         per share. This amount represents an immediate increase in as adjusted net tangible book value of US$         per share to existing shareholders and an immediate dilution in as adjusted net tangible book value of US$         per share to purchasers of our common shares in this offering, as illustrated in the following table.

 

Assumed follow-on public offering price per common share     US$     
Net tangible book value per common share before this offering (as of December 31, 2021)     US$     
As adjusted net tangible book value per common share after this offering     US$     
Increase in net tangible book value per common share to the existing shareholders     US$     
Dilution in net tangible book value per common share to new investors in this offering     US$     

 

If the underwriters exercise their over-allotment option in full, the as adjusted net tangible book value per common share, as adjusted to give effect to this offering, would be US$         per share, and the dilution in as adjusted net tangible book value per share to new investors purchasing common shares in this offering would be US$         per share.

 

Each $0.25 increase or decrease in the assumed public offering price of $         per share, based on the last reported sale price for our common shares on Nasdaq on         , 2022, would increase or decrease the as adjusted net tangible book value per common share after this offering by $         per common share and the dilution per share to investors participating in this offering by $         per common share, assuming that the maximum number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us in this offering.

 

We may also increase or decrease the number of common shares we are offering. An increase of 1,000,000 in the number of shares offered by us would increase or decrease our as adjusted net tangible book value per common share by approximately $        , and the dilution per common share to investors participating in this offering by $         after deducting underwriting discounts and commissions and estimated offering expenses payable by us in this offering.

 

The as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual public offering price of our common shares and other terms of this offering determined at pricing.

 

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The table above is based on 17,924,758 shares outstanding as of the date of this prospectus and excludes:

 

  520,000 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock Option Plan at a weighted average exercise price of C$2.50 (approximately US$2.02) per share;
     
  1,062,407 common shares issuable upon the exercise of outstanding options under our Amended and Restated Stock at a weighted average exercise price of US$7.50 per share;

 

  824,325 additional common shares that are reserved for future issuance under our Amended and Restated Stock Option Plan;

 

  637,106 common shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of C$1.56 (approximately US$1.27) per share;

 

  184,000 common shares issuable upon exercise of the warrants issued to the representative of the underwriters in our initial public offering at a weighted average exercise price of US$9.375 per share.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this prospectus. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

 

The audited consolidated financial statements for the years ended June 30, 2021 and 2020, as well as the unaudited condensed consolidated financial statements for the periods ended December 31, 2021 and December 31, 2020, are prepared pursuant to IFRS and in accordance with the standards of the U.S. Public Company Accounting Oversight Board. As permitted by the rules of the SEC for foreign private issuers, we do not reconcile our financial statements to U.S. generally accepted accounting principles.

 

The management’s discussion and analysis of the financial condition and results of operations (“MD&A”) of the Company for the year ended June 30, 2021, and its financial position as of the same date, should be read in conjunction with the Company’s audited consolidated financial statements as at June 30, 2021(“F2021”), including the notes thereto. The comparative reporting period is the year ended June 30, 2020 (“F2020”).

 

The management’s discussion and analysis for the six months period ended December 31, 2021, and its financial position as of the same date, should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as at December 31, 2021, including the notes thereto. The comparative reporting period is the six-month period ended December 31, 2020.

 

All figures are in Canadian dollars, unless otherwise noted.

 

Cautionary Note Regarding Forward-looking Information and Statements:

 

This MD&A may contain forward-looking statements that are based on the Company’s expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements speak only as of the date on which they are made, and there are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Examples of some of the specific risks associated with the operations of the Company are set out below under “Risk Factors”. Actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements.

 

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Certain information included in this management’s discussion and analysis may constitute forward-looking information within the meaning of securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “believe”, “plan”, “scheduled”, “intend”, “estimate”, “forecast”, “predict”, “potential”, “continue”, “anticipate” or other similar expressions concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated events or results, and may include statements or information regarding the future plans or prospects of the Company. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements.

 

For expansion of certain risks and uncertainties that could contribute to a difference in results, please review those risks listed under the heading “Risks Factors” in this MD&A. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Forward-looking statements are not guaranteeing future performance and there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and the Company takes no responsibility to update them or to revise them to reflect new events or circumstances, except as required by law.

 

Overview

 

We are an exploration stage mining company engaged in lithium exploration in the province of Manitoba, Canada. Our primary focus is currently conducting exploration for lithium at our 100% owned Snow Lake Lithium™ Project. See “Business – Our Mineral Project – Snow Lake LithiumProject.” Our objective is to develop a world-class lithium mine in the jurisdictionally friendly Canadian province of Manitoba and to become the first fully renewable lithium hydroxide producer in North America, strategically located to supply the U.S. “Auto Alley” and the European battery market via our nearby access to the Hudson Bay Railway and the Port of Churchill. With our commitment to the environment, corporate social responsibility and sustainability, we aim in the longer term to derive substantial revenues from the sale of lithium hydroxide to the growing electric vehicle and stationary (e.g., residential, utility and industrial) battery storage markets in the U.S. and abroad. With access to renewable energy produced in Manitoba, we expect to become the first supplier in North America of lithium mined exclusively with the benefit of power produced from fully sustainable, local sources.

 

Overall Performance

 

  I. Principal business and corporate history

 

We were incorporated under the Corporations Act (Manitoba) on May 25, 2018. The corporate and principal place of business is 242 Hargrave St #1700, Winnipeg, MB R3C 0V1 Canada. The Company is a Canadian natural resource exploration company engaged in the exploration and development of mineral resources through the subsidiaries:

 

i.Snow Lake Exploration Ltd.

 

ii.Snow Lake (Crowduck) Ltd.

 

In this registration statement, Snow Lake and the subsidiaries it controlled are referred to as “the Group”.

 

On March 7, 2019, we and Nova Minerals Ltd. entered into a share sale agreement (the “Agreement”), whereby we acquired all 100,000,000 of the issued and outstanding shares of Thompson Bros (Lithium) Pty Ltd (“Thompson Bros”), formerly Manitoba Minerals Pty Ltd. (“Manitoba Minerals”), a wholly owned subsidiary of Nova Minerals Ltd. as part of a group restructuring. Subsequently, on February 9, 2021, Thompson Bros was dissolved.

 

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Recent Developments

 

Impact of Coronavirus Pandemic

 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The virus has since spread to over 150 countries. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. On March 11, 2020, the federal government of Canada announced a $1 billion package to help Canadians through the health crisis. To date, there have been a large number of temporary business closures, quarantines and a general reduction in consumer activity in Canada.

 

As a result of the measures adopted by the Province of Manitoba and the federal government of Canada, certain of our mining exploration activities have been delayed occasionally. Drilling was able to begin in January 2022 and continue with very little interruption.

 

We have taken steps to take care of our employees, including providing the ability for employees to work remotely and implementing strategies to support appropriate social distancing techniques for those employees who are not able to work remotely. We have also taken precautions with regard to employee, facility and office hygiene as well as implementing significant travel restrictions. We are also assessing our business continuity plans for all business units in the context of the pandemic. This is a rapidly evolving situation, and we will continue to monitor and mitigate developments affecting our workforce, our suppliers, our customers, and the public at large to the extent we are able to do so. We have and will continue to carefully review all rules, regulations, and orders and responding accordingly.

 

The spread of the virus in many countries continues to adversely impact global economic activity and has contributed to significant volatility and negative pressure in financial markets and supply chains. The pandemic has had, and could have a significantly greater, material adverse effect on the Canadian economy as a whole, as well as the local economy where we conduct our operations. The pandemic has resulted, and may continue to result for an extended period, in significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.

 

If the current pace of the pandemic cannot be slowed and the spread of the virus is not contained, our business operations could be further delayed or interrupted. We expect that government and health authorities may announce new or extend existing restrictions, which could require us to make further adjustments to our operations in order to comply with any such restrictions. We may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees were suspected of having the virus, which could require quarantine of some or all such employees or closure of our facilities for disinfection. We may also delay or reduce certain capital spending and related projects until the travel and logistical impacts of the pandemic are lifted, which will delay the completion of such projects. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.

 

The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.

 

Emerging Growth Company

 

In November 2021, we closed an initial public offering (“IPO”) where the Company issued 3,680,000 shares at US$7.50 per shares for gross proceeds of US$27.6 million. The Company currently qualifies as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

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We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

 

Results of Operations

 

Comparison of the years ended June 30, 2021 and 2020

 

For the year ended June 30, 2021, the Company had not yet placed any of its mineral properties into production, the Company incurred a net loss of C$552,436 (June 30, 2020 - C$182,116). As of June 30, 2021, the Company had a deficit (accumulated losses) of C$2,271,524 (June 30, 2020 - C$1,719,088) and current liabilities in excess of current assets of C$977,358 (June 30, 2020 – C$189,254). There is no certainty that additional financing at terms that are acceptable to the Company will be available, and an inability to obtain financing would have a direct impact on the Company’s ability to continue as a going concern.

 

The following table sets forth key components of our results of operations during the years ended June 30, 2021 and 2020.

 

Years ended June 30,  2021   2020   Increase / (Decrease) 
   C$   US$   C$   C$   US$ 
Expenses                    
Bank fees and interest   2,084    1,680    2,669    (585)   (472)
Consulting fees   34,399    27,732    43,255    (8,856)   (7,140)
Director and officer consulting fees   200,858    161,930    118,700    82,158    66,235 
General and administrative   8,254    6,654    20,626    (12,372)   (9,974)
Interest expense and accretion   140,264    113,080    -    140,264    113,080 
Amortization of transaction cost   13,284    10,709    -    13,284    10,709 
Professional fees   174,211    140,447    57,272    116,939    94,275 
Transfer agent and regulatory fees   22,244    17,933    3,885    18,359    14,801 
Travel expenses   -    -    957    (957)   (772)
    (595,598)   (480,166)   (247,364)   (348,234)   (280,743)
Other income (loss)                         
Foreign currency gain (loss)   (254)   (205)   (6,001)   5,747    4,633 
Gain on change in fair value of derivative liability   32,676    26,343    -    32,676    26,343 
Recovery of accounts payable   10,740    8,658    -    10,740    8,658 
Recovery of flow through share liability   -    -    71,249    (71,249)   (57,440)
Income (loss) and comprehensive income (loss) for the period   (552,436)   (445,369)   (182,116)   (370,320)   (298,549)

 

Revenues. We have not generated any revenues to date and do not anticipate generating any revenues until the fourth quarter of 2024, at the earliest.

 

Consulting fees: Consulting fees include the fees that we pay to our third-party consultants, including professional accounting services, taxation, and other related support. Our consulting fees marginally decreased during the year ended June 30, 2021, when compared to the year ended June 30, 2020, due to the rationalization of certain services obtained during fiscal 2021.

 

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Director and officer consulting fees: Directors and officers fees increased by C$82,158 (USD$66,235) resulting from an increase in CFO fees of C$5,000, an increase in Chief Executive Officer (CEO)  fees of approximately C$54,000 and the creation on December 2021 of the new VP Corporate Development position representing for fiscal 2021 an expense of C$23,000.

 

General and administrative: The reduction in general and administrative fees of C$12,372 (US$9,974) is mainly due to an increase in tax related fees for approximately C$8,000, a reduction in general office expenses by approximately $9,000, a decrease in insurances by approximately C$6,000 and a reduction in other general expenses related to Thomson Bros approximately C$4,000.

 

Professional fees. Professional fees include the fees that we pay to professional advisors, such as our legal counsel. Our professional fees increased by C$116,939 (USD$94,275), resulting from an increase in audit related fees for approximately C$41,000 and legal fees that increased by C$75,000. Both increases are mainly related to additional services associated with the listing of the Company. 

 

Transfer agent and regulatory fees. Transfer agent and regulatory fees increased by C$18,359 (US$14,801) resulting from an increase in transfer agent fees of approximately C$20,000, services that we did not have during F2020, and a decrease in share registry fees of approximately C$2,000.

 

Foreign currency (loss) gain. For the year ended June 30, 2021, we incurred a foreign currency translation loss of C$254 (US$205), as compared to a foreign currency translation loss of C$6,001 for the comparative period.

 

Recovery of flow through share liability. As the Company did not have any flow-through share liability outstanding during F2021, no recovery was recorded. For the year ended June 30, 2020, the Company incurred a recovery of flow through share liability of C$71,249 (US$57,440). Flow-through share arrangements involve resource expenditure deductions for income tax purposes which are renounced to purchasers of common shares in accordance with income tax legislation. Each flow-through share entitles the holder to a 100% tax deduction in respect of qualifying Canadian exploration expenses. The value of the flow-through share liability was determined using the residual value method, after determining the fair value of the common shares and common shares purchase warrants issued in our December 2018 private placement financing. During the six months ended December 31, 2020, we satisfied all of our flow-through obligations and recognized a recovery on the statement of loss and comprehensive loss for the full amount of the flow-through share liability.

 

Convertible debenture

In February 2021, the Company issued convertible debt (the “Debentures”) for a total of C$865,263 (US$697,356). The Debentures were sold at a discount of approximately 5% for proceeds of C$805,000 (US$648,984), and included a conversion feature to convert the Debenture into common shares of the Company as well as granted 346,104 warrants to subscribers of the Debentures.

 

If convertible debt is convertible to equity at a variable conversion rate, where the quantity of shares or units into which the debt is convertible varies based on changes in variables affecting calculation of the conversion price, the value of the conversion component is first calculated and classified as a derivative liability, with the residual value allocated to the loan liability component, which is recognized as a liability and, where applicable, to warrants issued to debenture holders, which are recognized in reserves. Subsequent to initial recognition, the liability component of a convertible debenture is measured at  amortized cost using the effective interest method and accreted to face value over the term of the convertible debenture.

 

The Company determined the fair value of the conversion feature component upon initial recognition was C$442,589 (US$356,812). The residual C$362,411 (US$292,173) value of the C$805,000 net proceeds received was allocated on a pro-rata basis between the debt component (C$271,642 – US$218,995) and the warrants component (C$90,769 – US$73,159) based on their relative fair values. The Company recognized C$101,565 (US$81,881) of accretion expense relating to accreting the debt component of the Debentures up to their principal value and C$38,699 (US$31,199) of cash interest payable.

 

The Company recognized C$32,676 (US$ 26,343) as a gain in the fair value of the conversion feature of the derivative liability, representing the change in fair value from inception to June 30, 2021.

 

Loss and comprehensive loss. As a result of the cumulative effect of the factors described above, we had a loss and comprehensive loss of C$552,436 (US$445,369) for the year ended June 30, 2021, as compared to C$182,116 for the year ended June 30, 2020, an increase of C$370,320 (US$298,549).

  

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Comparison of the six months ended December 31, 2021 and 2020

 

For the six months ended December 31, 2021, the Company had not yet placed any of its mineral properties into production, the Company incurred a net loss of C$2,412,658 (December 31, 2020 - $103,759). As of December 31, 2021, the Company had a deficit (accumulated losses) of C$4,684,182 (June 30, 2021 - $2,271,524) and current assets in excess of current liabilities of C$30,036,366, compared to an excess of current liabilities of C$977,358 for the year ended June 30, 2021. There is no certainty that additional financing at terms that are acceptable to the Company will be available, and an inability to obtain financing would have a direct impact on the Company’s ability to continue as a going concern.

 

The following schedule sets forth key components of our results of operations during the six-month periods ended Dec 31, 2021, and Dec 31, 2020.

 

Six months ended December 31,  2021   2020   Change 
   C$   C$   C$ 
Expenses            
Bank fees and interest   4,077    557    3,520 
Consulting fees   82,771    24,650    58,121 
Director and officer consulting fees   238,102    71,093    167,009 
General and administrative   32,118    6,593    25,525 
Interest expense and accretion on convertible debenture   126,884    -    126,884 
Other interest and charges   28,207    -    28,207 
Insurances   98,299    -    98,299 
Amortization of transaction cost   50,618    -    50,618 
Professional fees   393,811    5,897    387,914 
Share-based payments   1,713,160    -    1,713,160 
Transfer agent and regulatory fees   139,491    -    139,491 
Travel expenses   18,281    -    18,281 
    (2,925,819)   (108,790)   (2,817,029)

 

Revenues. We have not generated any revenues to date and do not anticipate generating any revenues until the fourth quarter of 2024, at the earliest.

 

Consulting fees: Consulting fees include the fees that we pay to our third-party consultants, including professional accounting services, taxation, and other related support. Our consulting fees increased during the six months period ended December 31, 2021, when compared to the six months ended December 31, 2020, mainly as a result of the initiation of environmental assessment activities as well as cost associated with our IPO. This account is mainly composed of sustainability and Environmental, Social, and Governance (ESG) services, where approximately C$38,000 were spent during the six months ended December 31, 2021, and approximately C$46,000 in accounting services related to the filing of the F-1 related to the Company’s IPO.

 

Director and officer consulting fees: Directors and officers fees increased by C$167,009 (US$130,711) resulting from an increase in compensation to senior executives.

 

General and administrative: The increase in general and administrative fees by C$25,525 is mainly related to investor relations website setup and monthly maintenance for the same.

  

Interest expenses and accretion on convertible debt. In February 2021, the Company issued the Debentures for a total of C$865,263 (the “Subscribed Amount”). The Debentures were sold at a discount of approximately 5% for proceeds of C$805,000, net of a C$15,000 cash commission. The Company incurred approximately C$35,000 in interest on the Debentures during the six months ended December 31, 2021. In addition, we incurred approximately C$92,000 in accreted expenses related to the Debentures.

 

Insurances. The increase in insurance expenses relates to new director and officers’ liability insurance contracted during the year.

 

Amortization of transaction cost. As part of the convertible debenture issued during February 2021, we accreted approximately C$51,000 of charges related to this debt financing.

 

Professional fees. Professional fees include the fees that we pay to professional advisors, such as our legal counsel. Our professional fees increased by C$387,914, resulting from an increase in legal fees related to Nasdaq application and other services associated with the listing of the Company. 

 

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Share based payments. On November 18, 2021, the Company granted an aggregate of 1,269,386 incentive stock options to officers, directors, and consultants of the Company. The fair value of each option was estimated on the date of the grant using the Black-Scholes option pricing model, with the following assumptions: share price of US$7.5, expected dividend yield of 0%, expected volatility of 70%; risk-free interest rate of 1.47%; and an expected average life of 5 years. The fair value of all these options was estimated at C$6,989,950 on granting. As the options vest over a period of a year at a rate of 25% per quarter, the Company has recognized the proportionate vested portion into income.

 

Transfer agent and regulatory fees. Transfer agent and regulatory fees increased by C$139,491 resulting from an increase in transfer agent fees and initial listing fees in Nasdaq, services that we did not have during the comparative period.

 

Loss and comprehensive loss. As a result of the cumulative effect of the factors described above, we had a loss and comprehensive loss of C$2,412,658 for the period ended December 31, 2021, as compared to C$103,759 for the period ended December 31, 2020, an increase of C$2,308,899.

 

Other items:

 

Foreign currency (loss) gain. For the period ended December 31, 2021, we incurred a foreign currency translation loss of C$18,198, as compared to a foreign currency translation loss of C$5,031 for the comparative period.

 

Gain on change in fair value of derivative liabilities. As the convertible debentures issued on February 2021, are considered a derivative liability due to its denomination in foreign currency, the Company is required to remeasure its value at each reporting period. The Company reported a gain in the change in the fair value of this derivative of C$463,968.

 

Liquidity and Capital Resources

 

As of June 30, 2021, we had not yet placed any of our mineral properties into production and we had cash in the amount of C$318,844 (US$257,049), a deficit (accumulated losses) of C$2,271,524 (US$1,831,283) and current liabilities in excess of current assets of C$977,358 (US$787,938). These conditions indicate a material uncertainty that may cast significant doubt on our ability to continue as a going concern. Therefore, the report of our auditors on our audited consolidated financial statements for the fiscal year ended June 30, 2021 contains a going concern qualification. Our audited consolidated financial statements do not reflect the adjustments to the carrying values and classifications of assets and liabilities that would be necessary if we were unable to realize our assets and settle our liabilities as a going concern in the normal course of operations. Such adjustments could be material.

 

As of December 31, 2021, we had not yet placed any of our mineral properties into production and we had cash in the amount of C$30,779,336 (June 30, 2021 - C$318,844), a deficit (accumulated losses) of C$4,684,182 (June 30, 2021 - C$2,271,524) and a working capital of C$30,036,366 (June 30, 2021 – deficiency of C$977,358). We have depended on loans, both from related and unrelated parties, and sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

 

During the six months ended December 31, 2021, the Company generated C$32,174,831, net of issuing costs, by issuing 4,590,899 common shares, with an average gross proceeds per share of $7.86. The breakdown is composed by the issuance of 3,680,000 shares issued on our IPO, 751,163 shares issued on conversion of convertible debt and 159,736 shares related to the conversion of warrants.

 

We have depended on loans, both from related and unrelated parties, and sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

 

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Anticipated Cash Requirements

 

We are planning to begin a two-phase exploration program that will include resource definition drilling of the TB-1 pegmatite as well as exploration drilling of the SG pegmatite cluster target.

 

As part of our planned phase 1 program, we intend to complete a stripping, mapping and sampling program on the SG pegmatite cluster in preparation for a phase 2 drilling program. Our preliminary cost estimate to complete phase 1 is C$250,000 (approximately US$201,548).

 

We are also planning a phase 2, 10,400 m   drilling program to expand the dimensions of the TB-1 pegmatite and define the deposit in more detail. We will also begin developing an initial permitting plan and conduct additional metallurgical test work. We will complete a preliminary economic assessment report for the project. Will also plan to prospect the Snow Lake Lithium™ property in phase 2. Our current cost estimate to complete phase 2 is C$3,000,000 (approximately US$2,418,575).

 

We note that the cost estimates for our two-phase planned exploration program are only estimates and, as such, they are subject to change as we move forward to carry out the budgeted exploration activities.

 

Please see “Business—Our Mineral Project–Snow Lake LithiumProject—Exploration Plan for Snow Lake Lithium™ Property” for more details regarding these phases.

 

At June 30, 2021, we estimate our minimum operating expenses and working capital requirements for the next 12-month period to be as follows:

 

Expense  Estimated Amount 
   C$   US$ 
Exploration   3,000,000    2,418,575 
Consulting fees   2,500,000    2,015,479 
Professional fees   750,000    604,644 
Travel expenses   200,000    161,238 
General and administrative expenses   350,000    282,167 
Transfer agent and regulatory fees   4,800    3,870 
Bank fees and interest   2,000    1,612 
           
Total Operating Expenses   6,806,800    5,487,585 

 

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If we do not raise any additional funds, we will not have enough working capital to follow our projected costs for the next 12-month period. Under such circumstances, we anticipate that exploration expenses would be reduced significantly, as we would only pay the minimum costs to keep our properties in good standing, and generally reduce our overhead costs. Specifically, under such circumstances we would reduce our consulting fees, professional fees, travel expenses and general and administrative expenses.

 

We plan to raise our required funds primarily through future sales of our equity securities. Under such circumstances, there is no assurance that we will be able to obtain further funds required for our continued working capital requirements. Any issuance of our equity securities in the near future may result in substantial dilution to our existing shareholders.

 

Outlook 

 

We are planning to begin a two-phase exploration program that will include resource definition drilling of the TB-1 pegmatite as well as exploration drilling of the SG pegmatite cluster target and additional outside targets as identified through prospecting and our ongoing geophysics drone survey.

 

As part of our planned phase 1 program, we intend to complete a stripping, mapping and sampling program on the SG pegmatite cluster in preparation for a phase 2 drilling program. Our preliminary cost estimate to complete phase 1 is C$250,000 (approximately US$201,548).

 

We are also planning a phase 2, 10,400 m drilling program to expand the dimensions of the TB-1 pegmatite and define the deposit in more detail. We will also begin developing an initial permitting plan and conduct additional metallurgical test work. The Company also plans to prospect the Snow Lake Lithium™ property in phase 2. Our current cost estimate to complete phase 2 is C$3,000,000 (approximately US$2,418,575).

 

We note that the cost estimates for our two-phase planned exploration program are only estimates and, as such, they are subject to change as we move forward to carry out the budgeted exploration activities.

 

We will conduct the following drilling programs and studies:

 

We will be conducting a winter ice road drilling program that will include three drills on the property and it is our intention to continue with at least two drills into the spring/summer season using helicopter support.

 

We have initiated the environmental base line studies with SLR who will be conducting the comprehensive process that is required ultimately for achieving permitting on the project.

 

We have initiated the metallurgy studies with SGS Lakefield in Ontario.

 

We are conducting an ongoing geophysical drone survey to identify additional anomalies across the property. We have to date only prospected approximately 1% of the entire footprint.

 

We are working closely with federal, provincial and municipal authorities to progress the various stages of the projects through the system.

 

Summary of Cash Flow

 

Comparison of Years Ended June 30, 2021 and 2020

 

The following table provides detailed information about our net cash flow for all financial statement periods presented in this prospectus.

 

   Years Ended June 30, 
   2021   2020 
   C$   US$   C$ 
Net cash used in operating activities   (363,476)   (293,031)   (257,981)
Net cash used in investing activities   (270,652)   (218,197)   (196,928)
Net cash provided by (used in) financing activities   809,883    652,920    (1,001)
Net increase (decrease) in cash   175,755    141,692    (455,910)
Cash, beginning of year   143,089    115,357    598,999 
Cash, end of year   318,844    257,049    143,089 

 

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Our net cash used in operating activities was C$363,476 (US$293,031) for the year ended June 30, 2021, as compared C$257,981 for the year ended June 30, 2020.

 

For the year ended June 30, 2021, our net loss of C$552,436 (US$445,369), and an increase in accounts payable of C$84,360 (US$68,010), an increase in accounts payable to related parties of C$61,694 (US$49,737) offset by increases in prepaids and deposits of C$67,179 (US$54,159), were the primary drivers of the net cash used in operating activities. Other non-cash items also affecting operating activities included interest expense and accretion and amortization of transaction costs related to the Debentures of C$153,548 (US$123,789) and a gain on change in the fair value of derivative liabilities of C$32,676 (US$26,343).

 

Our net cash used in investing activities was C$270,652 (US$218,197) for the year ended June 30, 2021, as compared to C$196,928 for the year ended June 30, 2020. Our net cash used in investing activities for the year ended June 30, 2021 and 2020 consisted entirely of payments for the exploration and evaluation of assets.

 

Our net cash provided by financing activities was C$809,883 (US$652,920) for the year ended June 30, 2021, as compared to C$1,001 net cash used in financing activities for the year ended June 30, 2020. Our net cash used in financing activities for the year ended June 30, 2020, consisted of payments for a loan from Nova Minerals Ltd. of C$1,114, offset by proceeds from the exercise of warrants of C$113, while our net cash provided by financing activities for the year ended June 30, 2021 consisted of proceeds from the issuance of Debentures for $805,000 (US$648,984) and proceeds from the exercise of options of C$4,883 (US$3,937).

 

Please see “Description of Share Capital—History of Securities Issuances” for a description of our recent private placements of securities.

 

Comparison of Six Months Ended December 31, 2021 and 2020

 

Six months ended December 31,  2021   2020 
   C$   C$ 
Net cash used in operating activities   (2,230,581)   (76,531)
Net cash provided by financing activities   33,015,215    32,700 
Net cash used in investing activities   (324,142)   (46,965)
Net increase (decrease) in cash   30,460,492    (90,796)
Cash, beginning of the period   318,844    143,089 
Cash, end of the period   30,779,336    52,293 

 

Our net cash used in operating activities was C$2,230,581 for the period ended December 31, 2021, as compared C$76,531 for the period ended December 31, 2020.

 

Non-cash items affecting (reducing) the loss for the period includes share-based payments for C$1,713,160, a gain in the change in fair value of derivative liabilities of C$463,968 and the change in non-cash working capital items for C$1,244,617.

 

Our net cash used in investing activities was C$324,142 for the period ended December 31, 2021, as compared to C$46,965 for the period ended December 31, 2021. Our net cash used in investing activities for the six months ended December 31, 2021 as well as for year ended June 30, 2021 consisted entirely of payments for the exploration and evaluation of assets.

 

Our net cash provided by financing activities was C$33,015,215 for the period ended December 31, 2021, as compared to C$32,700 for the period ended December 31, 2020.

 

The Company raised C$34,988,520 (before issue cost) in its IPO and C$854,656 through the conversion of the Debentures, as during November 2021 all debtholders exercised their conversion rights at a price of C$1.25 per common share. Also C$239,720 was raised through the exercise of warrants. Total share issue cost incurred for the period was C$3,932,926.

 

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Related Party Transactions 

 

The following schedule describes the amounts payable to related parties as of December 31, 2021, and for the year ended June 30, 2021 and 2020:

 

   Period Ended 
   December 30,   June 30,   June 30, 
   2021   2021   2020 
Payable to Nova Minerals  C$233,299   C$236,402   C$205,648 
Payable to officers & directors   16,271    43,240    12,300 
   C$249,570   C$279,642   C$217,948 

 

On March 8, 2019, we entered into a deed of assignment of debt with Nova Minerals Ltd. and Thompson Bros to facilitate the reassignment of the related party loan from Nova Minerals Ltd. to our company. Thereby, we are now a party to an amount owing from Thompson Bros of C$1,519,013 (approximately US$1,115,773) as of June 30, 2020. In consideration for the assignment, we issued one of our common shares to Nova Minerals Ltd. The related party loan is non-interest bearing and with no fixed repayment date or terms.

 

As of June 30, 2021 and 2020, we had C$236,402 (approximately US$190,585) and C$205,648, respectively, due to our major shareholder, Nova Minerals Ltd. This money was lent to us by Nova Minerals Ltd. to fund our startup as well as ongoing accounting, legal and general corporate costs. As of December 31, 2021 the balance outstanding was C$233,299.

 

During the six months ended December 31, 2021 and 2020, the Company incurred C$300,665 and C$71,093, respectively in directors & officers consulting fees.

 

Debenture Sales  

 

In February 2021, the Company issued the Debentures for a total of C$865,263 (US$697,568) (the “Subscribed Amount”). The Debentures were sold at a discount of approximately 5% for proceeds of C$805,000 (US$648,984), net of a C$15,000 (US$12,093) cash commission.

 

Under the terms of the Agreement, the Subscribed Amount plus interest accrued, at a rate which should be the higher of (i) 12% per annum or (ii) Wall Street Prime Rate (currently approximately 3.3%) + 7%, is convertible, at the option of the Debenture holder, into common shares of the Company at a price that is the lesser of (i) C$1.25 per share or (ii) a 20% discount to the price of a Liquidity Transaction (defined below). The conversion feature expires (the “Expiry Date”) on the earlier of twenty-four months from execution, or the closing of a registered public offering (the “Liquidity Transaction”).

 

In the event of a default, interest accrues at the lesser of (i) 24% per annum or (ii) the maximum legally authorized rate. The Company has the right to repay the note prior to maturity at 110% of the then outstanding principal and interest. The Company must provide 30 days’ notice and the Lender shall have the right to convert prior to the 30-day notice expiration.

 

The remaining undiscounted principal balance outstanding of the Debentures as at June 30, 2021 was C$865,263 (US$ 697,568).

 

During November 2021 all Debentures holders exercised their conversion rights at a price of C$1.25 per common share.

 

Contractual Obligations commitments and contingencies

 

As of June 30, 2021 and 2020 we had C$236,402 (approximately US$190,585) and C$205,648, respectively, due to our major shareholder, Nova Minerals. This money was lent to us by Nova Minerals to fund our startup as well as ongoing accounting, legal and general corporate costs. This loan is non-interest bearing and with no fixed repayment date or terms.

 

The Company’s only undiscounted liabilities are accounts payable and accrued liabilities and amounts due to related parties, which are due within one year and as at June 30, 2021 totaled $541,767 (US$436,768) (June 30, 2020 – $343,734).

 

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On December 2, 2020, the Company entered into a consulting agreement with its CEO, cancellable on three-months’ notice. As part of his remuneration package, the Company’s CEO is entitled to the following compensation:

 

US$15,000 signing fee;

 

US$10,000 retainer per month; and

 

240,000 Restricted Shares Units, to be awarded upon the achievement of the following targets:

 

  o 50,000 Restricted Share Units (“performance Shares”) to be awarded on completion of a preliminary economic assessment of Snow Lake Lithium™ property;

 

  o 70,000 Restricted Share Units to be awarded upon increasing the Snow Lake Lithium™ resource to above 12Mt lithium at or above 1% Li20 and at or above a cutoff grade of 0.4% Li20;

 

  o 120,000 Restricted Share Units to be awarded upon successful IPO.

 

In January 2022, as part of the CEO’s compensation package, the Company issued the following restricted stock units (RSU)  to its CEO:

 

70,000 Restricted Share Units awarded for increasing the Snow Lake Lithium™ resource to above 12Mt lithium at or above 1% Li20 and at or above a cutoff grade of 0.43% Li20;

 

120,000 Restricted Share Units awarded for successful completion of IPO; and

 

50,000 RSU units related to the completion of a preliminary economic assessment of Snow Lake Lithium™ property.

 

Except as indicated above, at June 30, 2021, and December 31, 2021, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.

  

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Quantitative and Qualitative Disclosures about Market Risk

 

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates as well as, to a lesser extent, inflation.

 

Interest Rate Risk

 

We are exposed to market risks in the ordinary course of our business. Our cash and short-term investments include cash in readily available checking accounts and guaranteed investment certificates. These securities are not dependent on interest rate fluctuations that may cause the principal amount of these assets to fluctuate.

 

Foreign Currency Exchange Risk

 

The majority of our cash flows, financial assets and liabilities are denominated in Canadian dollars, which is our functional and reporting currency. We are exposed to financial risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. Currency risk is limited to the proportion of our business transactions denominated in currencies other than the Canadian dollar, primarily for capital expenditures, debt and various operating expenses such as salaries and professional fees. We also purchase property, plant and equipment in Canadian dollars. We do not currently use derivative financial instruments to reduce our foreign exchange exposure and management does not believe our current exposure to currency risk to be significant.

 

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As of December 31, 2021, a 10.0% appreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.2777 per US$1.00 as of December 31, 2021 to a rate of C$1.40547 per US$1.00, will result in an increase of approximately C$2,276,861 in our cash equivalent position. in our net proceeds from this offering. Conversely, a 10.0% depreciation of the U.S. dollar against the Canadian dollar, from the exchange rate of C$1.2777 per US$1.00 as of December 31, 2021 to a rate of C$1.14993 for $1.00, will result in a decrease of C$2,276,861 in our cash equivalent position.

 

Inflation Risk

 

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

 

Critical Accounting Policies

 

The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with IFRS requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

 

(a) Foreign currency translation

 

The financial statements of the Company are prepared in its functional currency, determined on the basis of the primary economic environment in which the entity operates. Given that operations are in Canada, the presentation and functional currency of the Company is the Canadian dollar.

 

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the transaction dates. At each reporting date, monetary items denominated in foreign currencies are translated into the entity’s functional currency at the then prevailing rates and non-monetary items measured at historical cost are translated into the entity’s functional currency at rates in effect at the date the transaction took place.

 

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are included in the statements of loss and comprehensive loss for the period in which they arise.

 

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(b) Current and non-current classification

 

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

 

An asset is classified as current when: it is either expected to be realized or intended to be sold or consumed in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realized within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

 

A liability is classified as current when: it is either expected to be settled in the consolidated entity’s normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

 

Deferred tax assets and liabilities are always classified as non-current.

 

(c) Cash

 

Cash consist of cash on hand, and deposits held with banks.

 

(d) Exploration and evaluation assets

 

Title to exploration and evaluation assets including mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing historical characteristic of many properties. The Company has investigated title to all its mineral properties and, to the best of its knowledge title to all its properties are in good standing.

 

The Company accounts for exploration and evaluation assets in accordance with IFRS 6 – Exploration for and evaluation of mineral properties (“IFRS 6”). Once the legal right to explore a property has been acquired, costs directly related to exploration and evaluation are recognized and capitalized, in addition to the acquisition costs. These expenditures include but are not limited to acquiring licenses, researching and analyzing existing exploration data, conducting geological studies, exploration drilling and sampling and payments made to contractors and consultants in connection with the exploration and evaluation of the property. Costs not directly attributable to exploration and evaluation activities, including general administrative overhead costs, are expensed in the year in which they occur.

 

Acquisition costs incurred in obtaining legal right to explore a mineral property are deferred until the legal right is granted and thereon reclassified to mineral properties. Transaction costs incurred in acquiring an asset are deferred until the transaction is completed and then included in the purchase price of the asset acquired.

 

When a project is deemed to no longer have commercially viable prospects to the Company, exploration and evaluation expenditures in respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess of the estimated recoverable amount, are written off to the statement of loss and comprehensive loss.

 

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The Company assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use.

 

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered a mine under development. Exploration and evaluation assets are also tested for impairment before the assets are transferred to development properties.

 

As the Company currently has no operational income, any incidental revenues earned in connection with exploration activities are applied as a reduction to capitalized exploration costs.

 

(e) Provisions

 

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

 

(f) Impairment of assets

 

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

 

Where the asset does not generate cash inflows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs. Any intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset or CGU is estimated to be less than it carrying amount, the carrying amount is reduced to the recoverable amount and an impairment loss is recognized immediately in the statement of loss and comprehensive loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal of impairment is recognized in the statement of loss and comprehensive loss.

 

(g) Impairment of non-financial assets

 

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.

 

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

 

(h) Trade and other payables

 

These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortized cost and are not discounted. The amounts are unsecured.

 

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(i) Convertible debt

 

If convertible debt can be converted to equity at a fixed conversion rate at the option of the holder, the liability component of convertible debentures is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The conversion component is initially valued at fair value based on generally accepted valuation techniques, with the residual value of the convertible debt allocated to loan liability and warrant components. Subsequent to initial recognition, the liability component of a convertible debenture is measured at amortized cost using the effective interest method and accreted to face value over the term of the convertible debenture.

 

If convertible debt is convertible to equity at a variable conversion rate, where the quantity of shares or units into which the debt is convertible varies based on changes in variables affecting calculation of the conversion price, the value of the conversion component is first calculated and classified as a derivative liability, with the residual value allocated to the loan liability component, which is recognized as a liability and, where applicable, to warrants issued to debenture holders, which are recognized in reserves. Subsequent to initial recognition, the liability component of a convertible debenture is measured at amortized cost using the effective interest method and accreted to face value over the terms of the convertible debenture. The conversion component of the convertible debentures is remeasured to fair value at the end of each reporting period using the Black Scholes valuation model, with gains or losses on remeasurement recognized in income and loss.

 

Any difference between the proceeds (net of transaction costs) and the redemption value is recognized as an adjustment to accretion expense over the period of the borrowings using the effective interest method.

 

Convertible debt is classified as current liability unless the Company has an unconditional right to defer settlement of the liability, or a portion of the liability, for at least 12 months after the reporting date.

 

(j) Share capital

 

Common shares are classified as share capital. Costs directly attributable to the issue of common shares are recognized as a deduction from share capital, net of any tax effects.

 

(k) Warrants

 

Share purchase warrants are classified as a component of equity. Share purchase warrants issued along with shares in an equity unit financing are measured using the residual approach, whereby the fair value of the warrant is determined after deducting the fair value of the shares from the unit price less applicable financing costs. Share purchase warrants issued for broker/financing compensation, are recognized at the fair value using the Black-Scholes option pricing model at the date of issue. Share purchase warrants are initially recorded as a part of warrant reserves in equity at the recognized fair value. Upon exercise of the share purchase warrants the previously recognized fair value of the warrants exercised is reallocated to share capital from warrant reserves. The proceeds generated from the payment of the exercise price are also allocated to share capital.

 

(l) Flow-through shares

 

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period. The portion of the proceeds received but not yet expended at the end of the year is disclosed separately.

 

The issuance of flow-through common shares results in the tax deductibility of the qualifying resource expenditures funded from the proceeds of the sales of such common shares being transferred to the purchasers of the shares. On the issuance of such shares, the Company bifurcates the flow-through shares into a flow-through share premium, equal to the estimated fair value of the premium that investors pay for the flow-through tax feature, which is recognized as a liability, and equity values of share capital and/or warrants. As the related exploration expenditures are incurred, the Company derecognizes the premium liability and recognizes the related recovery.

 

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(m) Income taxes

 

Income tax reported in the statement of loss and comprehensive loss for the period presented comprises current and deferred income tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

 

Current income tax for each taxable entity in the Company is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the reporting date, and includes any adjustments to tax payable or recoverable with regards to previous periods.

 

Deferred income tax is determined using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred income tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using the expected future tax rates enacted or substantively enacted at the reporting date.

 

A deferred income tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

Deferred income tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.

 

(n) Financial instruments

 

The following are the Company’s accounting policies under IFRS 9:

 

Investments and other financial assets

 

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortized cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.

 

Financial assets are derecognized when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it’s carrying value is written off.

 

Impairment of financial assets

 

The consolidated entity recognizes a loss allowance for expected credit losses on financial assets which are either measured at amortized cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

 

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit loss recognized is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

 

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Financial assets at amortized cost

 

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date. Gains and losses on derecognition of financial assets classified amortized cost are recognized in profit or loss.

 

Financial liabilities

 

Where the fair value option is taken for financial liabilities, the part of a fair value change relating to the Company’s own credit risk is recorded in other comprehensive income rather than in profit or loss, unless this creates an accounting mismatch. Financial liabilities are recognized initially at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost. Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognized in profit and loss over the period to maturity using the effective interest method.

 

(o) Loss per share

 

Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the reporting period. The diluted loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding on a diluted basis. The weighted average number of shares outstanding on a diluted basis takes into account the additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting period.

 

(p) Comprehensive loss

 

Other comprehensive loss is the change in net assets arising from transactions and other events and circumstances from non-owner sources. Comprehensive loss comprises net loss and other comprehensive loss. Foreign currency translation differences arising on translation of foreign subsidiaries in functional currencies other than the reporting currency would also be included in other comprehensive loss.

 

(q) Changes in accounting policies

 

Leases

 

In January 2016, the IASB published a new accounting standard, IFRS 16 - Leases (“IFRS 16”) which supersedes IAS 17 - Leases. IFRS 16 specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value.

 

The Company adopted IFRS 16 effective July 1, 2019. As the Company does not have any material lease agreements, the adoption of this standard did not materially impact the financial statements.

 

(r) Accounting standards issued but not yet effective

 

There are no accounting standards issued but not yet effective that are expected to have a material impact on the financial statements.

 

49

 

 

CORPORATE HISTORY AND STRUCTURE

 

Our Corporate History

 

We were incorporated in the Province of Manitoba, Canada under the Corporations Act (Manitoba) on May 25, 2018. We have two wholly owned subsidiaries, Snow Lake Exploration and Snow Lake Crowduck.

 

Snow Lake Exploration was incorporated by us on May 25, 2018 in Manitoba, Canada. Snow Lake Exploration is an operating company formed to conduct the exploration and development of mineral resources.

 

Snow Lake Crowduck was incorporated by us on May 25, 2018 in Manitoba, Canada. Snow Lake Crowduck is an asset holding company that holds all of the ownership interests in 122 mineral claims on the Snow Lake Lithium™ property.

 

Thompson Bros was incorporated by our major shareholder, Nova, on May 11, 2016 under the name Manitoba Minerals Pty Ltd., or MMPL, in Melbourne, Australia. On March 8, 2019, we acquired all of the outstanding common shares of Thompson Bros from Nova by agreeing to exchange with Nova 47,999,900 of our common shares for all of the issued common shares of Thompson Bros. On July 14, 2019, we changed the name of MMPL to Thompson Bros. The claims held by Thompson Bros have been transferred to Snow Lake Crowduck. Thompson Bros has been deregistered in Australia and Manitoba.

 

Recent Development

 

Departure of Directors or Certain Officers and Appointment of Directors or Certain Officers

 

On July 11, 2022, we announced that Mr. Mario Miranda resigned as the Chief Financial Officer of the Company, effective as of June 30, 2022. Mr. Miranda’s decision to resign was not the result of any dispute or disagreements with the Company on any matter relating to the Company’s operation, policies (including accounting or financial policies) or practices. On the same date, the board of directors (the “Board”) of the Company appointed Mr. Keith Li as the Chief Financial Officer of the Company. See “Management” for Mr. Li’s biography.

 

On June 3, 2022, we announced that Mr. Louie Simens resigned as the Chairman of the Board of the Company, effective as of May 29, 2022. On the same date, the Board of the Company appointed Mr. Philip Gross as the Chairman of the Board of the Company.

 

On September 9, 2022, our independent director Nachum Labkowski, was removed as the Chair and member of the audit committee as well as member of the nominating and corporate governance committee. He remains as an independent director of our Board.

 

Shareholder Meeting Requisition Notice

 

As previously disclosed, we were provided with a shareholder meeting requisition notice (the “Requisition”) dated June 8, 2022 from a number of registered shareholders holding, collectively as a group, approximately 5.4% of the issued and outstanding shares in the Company (the “Concerned Shareholders”). The Concerned Shareholders include individuals and entities associated with Avrohom Mordechai (Avi) Kimelman, of St Kilda East, Victoria, Australia, a former director of the Company and former CEO and Director of Quantum Resources, which later changed its name to Nova Minerals Limited (NVA on the ASX). The Requisition requested that the directors of the Company call a meeting of the shareholders of the Company for the purpose of (a) removing all of the directors of the Company; (b) fixing the number of directors at six for the ensuing year; and (c) electing six nominee directors of the Kimelman Group.

 

The Requisition was reviewed by our professional advisors and we announced on June 29, 2022 that our Board has called a special meeting of shareholders to be held in conjunction with its annual meeting of shareholders on December 15, 2022 to consider the matters, among other business, raised by the Requisition. Shareholders will receive formal notice of the meeting and an information circular in sufficient time to consider all matters.

 

We filed an application on July 20, 2022 with the court for a declaration that the notice of meeting by the Concerned Shareholders was null and void.

 

We appeared in the Court of Queen’s Bench (Manitoba) on July 28, 2022 to have the special meeting of shareholders purportedly called by the Concerned Shareholders  for August 10, 2022 declared null and void. The Company’s application was successful in all respects. Pursuant to a Court order issued on August 5, 2022, the special meeting as called by the Concerned Shareholders was invalid, as was any business conducted at such meeting should one be convened. Additionally, the Court ordered that the special meeting of the shareholders of the Company called by the Board for December 15, 2022 was validly called in accordance with the relevant provisions of The Corporations Act (Manitoba), being the law applying to the Company’s corporate conduct and governance. Accordingly, any materials received from the Concerned Shareholders in connection with the August 10th invalidly called meeting was to be disregarded.

 

50

 

 

The decision of the Court is consistent with the position that we have taken since the dissident group led by the Concerned Shareholders announced its intention to hold its own shareholders’ meeting in the face of the Company’s decision to call an annual general meeting and special meeting of the shareholders for December 15, 2022. Shareholders will receive a formal notice of that meeting in due course together with an information circular stating with specificity the business to be conducted thereat.

 

Memorandum of Understanding (MOU) with Epiroc Canada Inc. (Epiroc)

 

On June 21, 2022, we signed a MOU with Epiroc for Epiroc to assist with the technical and commercial design of the world’s first fully electric lithium mine at our Snow Lake LithiumTM project in Manitoba, Canada.

 

As part of its collaboration with the Company, Epiroc will contribute to the review of site planning and design for our planned fully electric lithium mine and will give technical and engineering advice for the project’s overall development. Epiroc has a long history of offering innovative and safe equipment, as well as automation, digitalization, and electrification solutions to the industry. Epiroc has exhibited a remarkable aptitude in project coordination and vertical integration, as seen by its recent achievement in the Borden Mine project in Chapleau, Canada, which is the first all-electric gold mine in the world.

 

Collaborations with University of Manitoba

 

We announced on June 7, 2022 that we and the University of Manitoba undertook a research project to explore critical mineral inventory of the Snow Lake LithiumTM site. Results from the two-year project are expected to help shape the development of Canada’s future minerals and metals strategy to meet the growing demand for lithium. Our collaboration with the University of Manitoba will strengthen the understanding of the lithium deposits in Snow Lake LithiumTM site and to support the development of a framework to help shape Canada’s future minerals and metals strategy.

 

Received $158,000 Grant from Manitoba Chamber of Commerce

 

On April 12, 2022, we received a grant from the Manitoba Mineral Development Fund for the amount of CAD $157,500 to help fund the ongoing winter drilling campaign.

 

The previous grant from the Manitoba Mineral Development Fund of CAD $62,000 was utilized in the ongoing geophysics drone campaign that is proving extremely beneficial in identifying additional pegmatites across the 86 square mile property. The current drilling campaign has included three drills operating around the clock  across the original resource at Thompson Brothers as well as the outside targets at Grass Rivers, BYP and Sherritt Gordon. The strategy is to expand the existing resource while identifying additional resources that will serve as a starter pit for commercial mining.

 

The new grant will assist with costs relating to the next phase of the drilling campaign as we transition from ice roads to helicopter drilling over the spring and summer months. With the current resource standing at 11.1 million metric tonnes indicated and inferred resource at 1% Li2O and a ten-year mine life, the ambition is now to multiply the resource and extend the mine life by decades. We have been assisted in these efforts by Quesnel Bros. Diamond Drilling Ltd. of Denare Beach, Saskatchewan; Forage BRL Drilling of Temagami, Ontario; and Heli Source Ltd., based in Snow Lake, Manitoba.

 

Resale of Nova’s 3,000,000 common shares

 

On April 7, 2022, we entered into an underwriting agreement with Nova, as the selling shareholder, and ThinkEquity LLC, as the representative for the underwriters listed on Schedule 1 thereto.

 

Pursuant to the Underwriting Agreement, Nova agreed to sell, and the underwriters agreed, severally and not jointly, to purchase 3,000,000 common shares of our Company, at a public offering price of $6.00 per share, before underwriting discounts.

 

51

 

 

We did not receive any proceeds from the sale of 3,000,000 common shares by Nova. The offering was closed on April 12, 2022. Nova received gross proceeds from the offering of $18,000,000, before deducting underwriting discounts and other estimated expenses.

 

The offering was conducted pursuant to the Company’s registration statement on Form F-1 (File No. 333-264098) initially filed with the Securities and Exchange Commission on March 22, 2022 and declared effective on April 7, 2022.

 

Pursuant to the Underwriting Agreement, Nova sold the shares to the underwriters at the at the offering price less an underwriting discount of $0.45 per share. Nova also reimbursed the representative for certain expenses incurred in connection with the offering.

 

Our Claims History

 

On April 21, 2016, an agreement between Strider Resources Ltd, or Strider Resources, and Ashburton Ventures Inc., or Ashburton Ventures (now known as Progressive Planet Solutions Inc., or PPSL), was entered into pursuant to which Ashburton Ventures acquired the right to earn up to a 100% interest in the Snow Lake Lithium™ property then owned by Strider Resources and consisting, at that time, of the 20 claims, subject to a 2% net smelter royalty payable to Strider Resources, by meeting certain cash and share requirements to Strider Resources and certain expenditure requirements on the Snow Lake Lithium™ property exploration project.

 

On September 26, 2016, Ashburton Ventures entered into an agreement with MMPL (now known as Thompson Bros) pursuant to which MMPL acquired the right to earn up to a 95% interest in the Snow Lake Lithium™ property, subject to the 2% net smelter royalty payable to Strider Resources, by funding the option requirements of Ashburton Ventures in its agreement with Strider Resources of April 21, 2016. This agreement was amended on April 12, 2017, to reduce the maximum MMPL could earn to an 80% interest in the Snow Lake Lithium™ property.

 

In the fall of 2016, to meet the expenditure requirements of the previously mentioned agreements, a modest program of prospecting and soil sampling was completed on the Snow Lake Lithium™ property, followed by a five hole (1,007 m) drill program on the Snow Lake Lithium™ property.

 

In March to April of 2018, Snow Lake Crowduck staked the 18 claims.

 

On November 14, 2018, PPSL entered into a separate agreement with us pursuant to which we agreed to purchase the remaining 20% interest in the Snow Lake Lithium™ property from PPSL, subject to the 2% net smelter royalty payable to Strider Resources, in exchange for 2,400,000 (post consolidation) of our common shares. 300,000 (post consolidation) of these shares were issued to Strider Resources.

 

On November 15, 2018, an agreement among Strider Resources, PPSL and us was entered into to enable us to purchase of 100% of the Snow Lake Lithium™ property from Strider Resources.

 

On March 8, 2019, as amended on April 1, 2019, we entered into an agreement with Nova and MMPL to purchase MMPL from Nova in exchange for 9,599,980 of our common shares.

 

On April 12, 2019 we fulfilled our contractual obligations with Strider Resources and exercised our option to acquire the 100% ownership interest in the Snow Lake Lithium™ Property, subject to the 2% net smelter royalty payable to Strider Resources, 80% of which was in the name of MMPL at that time. In consideration of this acquisition, we issued 2,100,000 (post consolidation) of our common shares to PPSL and 300,000 (post consolidation) shares Strider Resources.

 

52

 

 

On February 11, 2020 we purchased from Thompson Bros (formerly MMPL) the 80% interest in the Snow Lake Lithium™ property held by Thompson Bros. After this transaction, we owned 100% of the Snow Lake Lithium ™ property interest.

 

On February 25, 2020 we transferred our 100% interest in the Snow Lake Lithium™ property to our wholly owned subsidiary, Snow Lake (Crowduck) Ltd. This interest remains subject to a 2% net smelter royalty payable to Strider Resources.

 

On May 22, 2020, we changed the recordation of the Snow Lake Lithium™ property claims so that the entire Snow Lake Lithium™ property made up of 38 claims covering 5596 hectares of land became registered in the name of Snow Lake (Crowduck) Ltd. Claim credits that we were entitled to were used to extend the expiry of all of the Snow Lake Lithium™ property claims to 2023 and beyond.

 

From May 21, 2021 through June 9, 2021 an additional 22 claims covering 3,187 hectares of land were staked by Snow Lake (Crowduck) Ltd., bringing the total claim package to 60 claims covering 8,783 hectares. From December 2021 through January 2022 an additional 13,603.30 hectares of land were staked by Snow Lake (Crowduck) Ltd. The status of these claims is pending with the Manitoba Department of Agriculture and Resource Development and until the claims are deemed to be active by the Manitoba Department of Agriculture and Resource Development they could be cancelled, rejected or otherwise not become the property of Snow lake (Crowduck) Ltd. If all the new claims which were staked are successfully included in our claim package, the entire land package would total 122 claims covering 22,386.30 hectares.

 

From January 26, 2022 through February 7, 2022, four mineral leases were requested from among land already covered by Snow Lake (Crowduck) Ltd.’s   existing mineral claim package and covering 1,335ha of land. These leases are presently in pending status.

 

To date, we have invested a limited amount of capital in the Snow Lake Lithium™ Project and historical drilling on the Snow Lake Lithium™ property has been limited as well. To prove our lithium resource on the Snow Lake Lithium™ property, we will need to engage in a drilling program that will require additional capital expenditure. We believe that the funds raised in our initial public offering provided us with the funds needed to complete our planned exploration drilling program, to generate the required data to prove our resources.

 

Our Corporate Structure

 

The chart below presents our corporate structure:

 

 

 

Thompson Bros (Lithium) Pty Ltd. has been deregistered in Australia and Manitoba.

 

53

 

 

INDUSTRY

 

Information included in this prospectus relating to our industry consists of estimates based on reports compiled by professional third-party organizations and analysts, data from external sources, our knowledge of the industry in which we operate, and our own calculations based on such information. While we have compiled, extracted, and reproduced industry data from external sources, including third-party, industry, or general publications, we have not independently verified the data. Similarly, while we believe our management estimates to be reasonable, they have not been verified by any independent sources. Forecasts and other forward-looking information with respect to industry and ranking are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus.

 

Market Overview

 

Mining accounts for a significant portion of Canada’s economy. Natural Resources Canada2 pegged domestic mineral production at C$47 billion (approximately US$37.89 billion) in 2018. Canada’s mining and exploration companies are also important players in the international mining industry. Manitoba hosts the historic Tanco mine, which sits atop the world-class Tanco lithium-cesium-tantalum deposit and is located at Bernic Lake. The Tanco pegmatite was first discovered in the 1920s and ultimately developed into a large deposit of spodumene, one of the primary minerals mined for its lithium content. While the Tanco mine first opened in 1969 as a tantalum operation, it was not until the 1980s that it began mining spodumene as a pyroceramic. In fact, one of the major uses of the Tanco spodumene was as an ingredient in Corningware cookware3.

 

Historically, the Tanco mine’s production focused on spodumene for industrial use with minimal focus on lithium production. With the advent and growth of lithium battery-powered cars, interest has developed in the Tanco mine region in the search for, and exploration of, lithium-rich spodumene deposits.

 

Lithium-bearing pegmatites occur across the Province of Manitoba including in areas such as Snow Lake, Red Sucker Lake, Gods Lake and Cross Lake, all hosting known pegmatite lithium deposits. The emergence of the Electronic vehicle, or EV, market has spurred investment and mining interest in Manitoba for lithium exploration activity with New Age Metals, Grid Metals, and Snow Lake’s neighbor Far Resources being a few of the mining companies exploring for lithium in Manitoba.

 

Lithium Production – Supply, Demand and Price Trends

 

Lithium prices almost tripled between mid-2015 and mid-2018 as the world’s fleet of electric vehicles hit 5 million and the auto industry began to become concerned regarding the supply of raw materials. As can be seen in the lithium spot price charts below, from mid-2018 through the beginning of 2021, lithium prices declined steadily. Recently, lithium prices have begun to rise again, we believe, reflecting an increase in demand for battery powered vehicles.

 

2https://www.nrcan.gc.ca/our-natural-resources/minerals-mining/minerals-metals-facts/minerals-and-the-economy/20529

 

3https://investingnews.com/daily/resource-investing/battery-metals-investing/lithium-investing/manitoba-a-little-known-source-of-lithium/
  

54

 

 

 

 

Source: Fastmarkets

 

In 2019, the world consumed approximately 315,000 tonnes of lithium carbonate equivalent, or LCE, a 21% increase from the 261,000 tonnes consumed in 2018, according to the December 2019 Resources and Energy Report on Lithium from the Australian government4. World lithium production is estimated to have grown to 470,000 tonnes in 2019, up 18% from 20185. In 2019, oversupply in the lithium market caused a significant pull back on price. At the end of 2018/beginning of 2019, Fastmarkets reported 99.5% lithium carbonate battery-grade spot prices, CIF China, Japan & Korea, of US$13,000-$15,000 per tonne6. In 2019, prices declined throughout the year. In June 2019, Fastmarkets reported 99.5% lithium carbonate battery-grade spot prices, CIF China, Japan & Korea, of US$11,000-$12,500 per tonne7, and by the end of December 2019, prices of US$8,000-$9,500 per tonne were reported8. The 99.5% lithium carbonate battery-grade spot prices for Europe and the U.S. were reported at US$10,000-$11,500 per tonne9.

 

Lithium prices plummeted in 2019, as a result of oversupply in the market and a slowdown in EV growth. This oversupply was attributed, primarily, to a number of new spodumene mines entering production in Australia. In China, in June 2019, the government cut subsidies for New Energy Vehicles, or NEVs, in half, by as much as 25,000 yuan (US$3,600) per vehicle10. Chinese NEV sales then began falling in July 2019 resulting in a reduction in NEV sales by 47% in October compared with the same month in the previous year11. These changes caused lithium consumers to hold back on purchases.

 

4https://publications.industry.gov.au/publications/resourcesandenergyquarterlydecember2019/documents/Resources-and-Energy-Quarterly-December-2019-Lithium.pdf

 

5Ibid

 

6https://www.metalbulletin.com/Article/3851378/GLOBAL-LITHIUM-WRAP-Chinese-lithium-prices-stable-ahead-of-year-end-
other-regional-markets-flat.html

 

7https://seekingalpha.com/article/4272099-lithium-miners-news-month-june-2019

 

8https://www.metalbulletin.com/Article/3914427/GLOBAL-LITHIUM-WRAP-Lunar-New-Year-production-logistics-halts-slow-
Asian-market-activity.html

 

9Ibid

 

10https://www.cnbc.com/2019/06/19/china-subsidy-cuts-for-electric-carmakers-could-lead-to-consolidation.html and https://www.bloomberg.com/news/articles/2019-11-08/china-is-considering-cutting-electric-car-subsidies-again

 

11https://stockhead.com.au/resources/tim-treadgold-lithium-stocks-close-to-the-bottom-its-time-to-revisit-a-sold-down-sector/

 

55

 

 

As lithium prices declined, high cost, marginal producers began to cut production and halt expansion plans. For example, in August 2019, Albemarle Corporation announced it would delay construction plans for approximately 125,000 tonnes of additional lithium processing capacity due to the effect of oversupply on lithium prices12. Pilbara Minerals postponed stage two and three expansion plans at its Pilgangoora lithium-tantalum project in Western Australia that were projected to result in the production of an additional 7.5 million tonnes of lithium ore a year13.

 

In November 2019, Albemarle and Mineral Resources put their Wodgina project into care and maintenance indefinitely14. Albemarle indicated that the Wodgina mine would remain idle until demand for spodumene warranted a re-start15. Nemaska Lithium suspended operations in October 2019 at its Whabouchi lithium mine and applied for creditor protection in December 2019, thus removing planned production of 37,000 tonnes of LiOH and 205,000 tonnes of lithium concentrate from the market16. In In 2020, the outlook for lithium pricing continued to be bearish with commentators such as Morgan Stanley expecting lithium prices to fall further or to at least be stable in 2021 and 202217. January 2020, Galaxy Resources announced that in response to market conditions, it had reviewed operations at Mount Cattlin facility, resulting in a reduction in operations by approximately 60%18.

 

We expect that the reduction in lithium production from the cutbacks referenced above will work through the lithium supply chain resulting in a reduction in lithium stockpile levels and an increase in lithium pricing and demand.

 

The chart below shows the 2019 percentage breakdown of lithium demand by category of use.

 

 

 

Source: Roskill19

 

As can be seen in this chart, in 2019, rechargeable batteries accounted for 54% of total lithium demand, consisting almost entirely of Li-ion battery technology. Though the rise of hybrid and electric vehicle sales leading up to 2020 brought expectations of increased demand for lithium compounds, falling EV sales in the second half of 2019 in China, the largest market for EVs, and a global reduction in EV sales in 2020, caused by the onset of the COVID-19 pandemic and related lockdowns, halted lithium demand growth, impacting demand from both battery and industrial applications. Countering this 2019 and early 2020 decrease in lithium demand, James Jeary of CRU Group noted that “The main surprise in the lithium market this year [2020] was on the demand side,” he told INN20 during a January 2021 interview. “EV sales were hugely resilient, particularly in Europe. Even in China, the recovery of sales in H2 after a sluggish H1 has been very strong.”

 

12https://uk.reuters.com/article/us-albemarle-results/albemarle-to-delay-construction-plans-for-125000-tonnes-of-lithium-
processing-idUKKCN1UY1QS

 

13https://www.asx.com.au/asxpdf/20190501/pdf/444qxyxr97r2h0.pdf

 

14https://www.afr.com/companies/mining/minres-reaps-us1-3-billion-for-stake-in-mothballed-lithium-mine-20191101-p536h2

 

15Ibid.

 

16https://www.nemaskalithium.com/en/investors/press-releases/2019/53f0e3be-0d29-475e-b37f-7090e58ede31/

 

17https://www.spglobal.com/platts/en/market-insights/latest-news/metals/110819-lithium-producers-paint-gloomy-picture-for-2020

 

18https://www.reuters.com/article/galaxy-rsrcs-output/australias-galaxy-resources-to-slash-output-at-flagship-lithium-mine-in-
2020-idUSL4N29S077

 

19 https://roskill.com/market-report/lithium/

 

20 https://investingnews.com/daily/resource-investing/battery-metals-investing/lithium-investing/lithium-outlook/

 

56

 

 

Increasing Lithium Demand

 

 

 

According to FastMarkets.com (see table above), demand for battery grade lithium is now expected to almost triple by 2025 to more than 850 thousand metric tonnes. The recent decline and cutbacks in upstream investment, however, could result in the market undersupply during the next few years. We believe that it is clear that investment needs to be made in lithium mining now to meet the upcoming expected increase in demand. Fastmarkets predicts the need for 16 new lithium mines of average size to go online prior to 2025. Roskill maintains the view that future refined lithium supply will remain tight, with a period of sustained supply deficit in the mid-2020s21 It is our understanding that further additions to lithium production capacity for mined and refined lithium products will be required to keep pace with demand growth, led by battery applications.

 

Demand for lithium is increasing outside of the EV market. According to the India Brand Equity Foundation22, electronics manufacturing is expected to grow at an annual rate of 30% between 2020 to 2025. Lithium primary cell batteries are central units in many consumer electronics goods. Major manufacturers in the primary battery market include Hitachi Maxell, Ultralife, Energizer, FDK Corporation, Tadiran, Vitzrocell, EVE Energy, Panasonic, SAFT, Varta, Duracell, EnerSys Ltd., Gp Batteries, Excell Battery Co., and Bren-tronics. The global lithium primary batteries market is expected to grow from $11.28 Billion in 2020 to $12.24 Billion in 2021 at a compound annual growth rate (CAGR) of 8.5%.23 The table below shows the expected growth of the consumer electronics lithium battery market in USD billions from 2020 to 202524.

 

 

 

The expectation of strong demand growth in the lithium market and related higher raw material prices has led some market participants to look at the economic viability of recycling to solve the projected lithium supply shortage. The table below presents a projection of the compound annual growth rate for the value of raw materials present in Li-ion batteries available for recycling.

 

21https://menafn.com/1101724172/Lithium-Primary-Batteries-Industry-Driven-By-Increasing-Demand-For-Consumer-Electronics

 

22https://menafn.com/1101724172/Lithium-Primary-Batteries-Industry-Driven-By-Increasing-Demand-For-Consumer-Electronics

 

23https://menafn.com/1101724172/Lithium-Primary-Batteries-Industry-Driven-By-Increasing-Demand-For-Consumer-Electronics

 

24https://menafn.com/1101724172/Lithium-Primary-Batteries-Industry-Driven-By-Increasing-Demand-For-Consumer-Electronics

 

57

 

 

 

 

 

Source: Engineering.com25

 

Roskill’s longer term scenarios show strong growth for lithium demand over the coming decade; Roskill forecasts demand to exceed 1.0Mt LCE in 2027, with growth in excess of 18% per year to 203026.

 

We believe that the long-term outlook for lithium products remains strong. In research by Signumbox published in April 2019 and commissioned by Deutsche Lithium for their feasibility study, SignumBox indicated that it anticipated a global annual demand for lithium chemicals to reach approximately 1,700,000 tonnes of LCE by 2037, equating to an average annual growth rate of approximately 11.5% over the next 20 years27. A key theme at the Fastmarkets’ 11th Lithium Supply and Markets Conference (June 11, 2019) was that global lithium demand could outpace supply in the coming years, with the number of new projects expected to fall short of expected production amid doubts on capital availability and low lithium prices28.

 

Key Market Growth Drivers - EVs

 

Although Lithium has multiple industrial and consumer electronics applications, the most prominent application is battery production. Future lithium demand is heavily linked to future EV production. We believe that a robust U.S. climate change policy agenda that includes plans to facilitate the ramping up of EV production and government-mandated targets for EV market penetration is a positive catalyst for further growth in lithium demand.

 

As can be seen in the chart on page 60 above, the leading driver for the growth in lithium consumption has been battery production. Future lithium demand is heavily linked to future EV production. The majority of lithium production and downstream EV battery supply is currently based in China. We believe that with governments seeking to prevent supply line bottlenecks and shortages due to geopolitical or other factors, there will be increasing demand for local, i.e., U.S. and Canadian, lithium production. We also believe that climate change policy agendas as well as government mandated targets for EV market penetration will be positive catalysts for a growth in lithium demand over the coming years.

 

 

25https://www.engineering.com/story/the-whos-who-of-lithium-ion-battery-recycling

 

26https://www.greencarcongress.com/2020/11/20201125-roskill.html

 

27http://www.deutschelithium.de/wp-content/uploads/2019/06/NI43-101-Zinnwald_Feasibility-Study_Summary.pdf

 

28https://www.indmin.com/Article/3878594/LITHIUM-CONF-Lithium-demand-could-outpace-supply-due-to-low-prices-few-projects.html

 

58

 

 

Due to serious issues surrounding global warming, we believe that it has become imperative to implement energy transformation. The Paris Agreement between counties around the world is an effort to collaborate on this transformation. It is estimated that to maintain the global temperature rise within 1.5 degrees, the consumption of electric energy as a renewable energy source will rise from 24 percent to 86 percent by 205029.This means that the EV industry should flourish in the coming years. Countries around the world have already formulated plans to support this change. For example, Japan and Germany have set plans to ban gas operated vehicles by the year 2050. It is estimated that global sales of new energy-efficient passenger vehicles are expected to reach 12 million in 2025, and the compound growth rate will reach 32.5% from 2019 to 2025. By 2030, the number of EVs on the road is expected to rise to 125 million30.

 

 

 

Annual global EV sales by market. (Source: Bloomberg New Energy Finance.)

 

29 https://www.engineering.com/story/the-whos-who-of-lithium-ion-battery-recycling

 

30 Ibid.

 

59

 

 

Government Growth Drivers for the Lithium Battery Market

 

The primary drivers of this forecasted growth in EV sales, as demonstrated in the table below, are expected to be government policies (particularly in China), new regulations (particularly in Europe), and steadily increasing consumer adoption, as evidenced by a wider availability of EV models being produced by original equipment manufacturers, or OEMs.

 

 

 

Source: Livant IPO filing31

 

Governments have instituted incentives and other subsidies to support the development of EVs by automotive OEMs and to increase consumer adoption of EVs.

 

After entering commercial markets in the first half of the last decade, electric car sales have soared. Only about 17,000 electric cars were on the world’s roads in 2010. By 2019, that number had grown to 7.2 million EVs, 47% of which were in China. 32 The Chinese government has declared that the electric vehicle industry is of strategic importance over the long term. The “new energy” vehicle industry is one of ten industries targeted as a key effort to further the Chinese government’s “Made in China” initiative by 2025. In addition to China, several other countries have also announced plans to phase out and eventually replace internal combustion engine, or ICE, vehicles with EV models. Countries such as France, Norway, and the UK have all set dates for these bans, with Norway’s being the most aggressive, as all new car sales in Norway must be zero emissions (battery EV or fuel cell) by 2025.33

 

31 https://www.sec.gov/Archives/edgar/data/1742924/000119312518258208/d603292ds1.htm

 

32 https://www.iea.org/reports/global-ev-outlook-2020

 

33 https://www.forbes.com/sites/pikeresearch/2020/11/04/ice-bans-begin-to-take-shape-in-the-us/?sh=52a3b5273e17

 

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To meet these target dates, governments will need to provide assistance to the EV industry, in general, and to the lithium mining sector, in particular, by supportive actions such as removing red tape for new mining projects. Some projects are already seeing such support as American Lithium announced receipt in March 2021 of a grant to support the development of a lithium hydroxide plant in Nevada34. E3 Metals Corp, an Alberta, Canada based lithium exploration company, announced a Canadian federal government grant for expanded lithium extraction technology research with the University of Alberta.35

 

We believe the growth in the EV market worldwide has been aided by various incentive programs extended by the national governments to both automakers and consumers. In the graphic below, for example, government of Singapore is advertising their program to encourage EV adoption by offering incentives to consumers.

 

 

 

In September 2017, China issued a New Energy Vehicles (including BEVs and PHEVs) credit mandate, which became effective in 2019, and in 2018, the Chinese government adjusted its subsidy policy to favor BEVs that offer longer driving ranges. Additionally, federal tax credit incentives in the United States of up to $7,500 have also been made available for persons buying certain hybrid and all-electric cars.36

 

 

34 https://thedeepdive.ca/american-lithium-receives-us-government-grant-for-lithium-processing-plant.

 

35 https://www.juniorminingnetwork.com/junior-miner-news/press-releases/2147-tsx-venture/etmc/44999-e3-metals-receives-federal-government-grant-for-expanded-lithium-extraction-technology-research-with-the-university-of-alberta.html

 

36 https://electrek.co/2021/03/03/which-electric-vehicles-still-qualify-for-us-federal-tax-credit/

 

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In response to the changing government policies and incentives favoring EVs, various OEMs have announced plans to expand EV production lines in the future. The chart below summarizes EV production plans from many major OEMs.

 

 

 

Source: Livant IPO filing37

 

In addition to expanding their offering of EV models, automotive OEMs are focused on improving total energy density and reducing weight in batteries to increase the driving range of EVs. To achieve these improvements, EV battery manufacturers are increasingly using high nickel content cathode materials that contain less cobalt and more nickel, while the lithium content remains largely unchanged.

 

High nickel content cathode technologies include lithium nickel-cobalt-aluminum oxide, or NCA, and lithium nickel-manganese-cobalt oxide containing 80% nickel, or NMC 811. NCA cathodes are already used in leading EV models, and automotive OEMs’ roadmaps for new EV models indicate an increasing transition to NMC 811 style batteries. Due to the underlying chemistry, battery-grade lithium hydroxide, the type of lithium we expect to mine, is required in the manufacturing of high nickel content cathode material, whereas lithium carbonate, produced from lithium brine, is used in lower energy density EV battery applications.

 

37 Ibid.

 

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Ideal Location

 

The Snow Lake Lithium™ Project is ideally located in North America’s “Auto Alley.” With the Hudson Bay Railway having a railhead 65 km from our project, the Snow Lake Lithium™ property has access to means of transportation to bring our lithium product north to the Port of Churchill, for shipment to Europe, or South to Auto Alley. The map below shows the extended reach of CN’s rail lines into the US Auto Alley.

 

Additionally, Manitoba is a green province, with 97%38 of electricity derived from renewable sources. This offers the potential to have a nearly net zero mine and production plant producing renewable products.

 

 

 

CN’s network of rail lines. Source: CN website

 

If one compares the map above to the map of the North American auto industry below, it can be seen that Snow Lake’s Snow Lake Lithium™ Project is strategically situated to access and address this market.

 

 

 

U.S “AutoAlley”.

 

Source: Global Infrastructure Connectivity Alliance39

 

38 https://www.hydro.mb.ca/your_home/electric_vehicles/

 

39 https://www.gica.global/initiative/north-americas-super-corridor-coalition-nasco

 

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The maps below present a more detailed depiction of the location of U.S. automotive plants, primarily in the “Auto Alley.”

 

 

 

Source: MarkLines – Automotive Industry Portal

 

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BUSINESS

 

Overview

 

We are an emerging lithium chemicals and exploration company focused on the development of our 100% owned Snow Lake Lithium™ property in the historic and preeminent mining center of Snow Lake, Manitoba, Canada. Our goal is to become a strategic supplier of battery-grade lithium hydroxide to the growing electric vehicle battery and battery storage markets. Our primary asset is the Snow Lake Lithium™ property, which consists of 38 contiguous mining claims located 20 km from Snow Lake, Manitoba. To capitalize on the fast-growing lithium market, our main focus is to monetize the resources and reserves held in the Snow Lake Lithium™ property. This property has an S-K 1300 compliant indicated and inferred mineral resource estimate of approximately 11.1 million tonnes of lithium bearing ore consisting of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% Li2O, for 91,200 Li2O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li2O, for 19,300 Li2O tonnes.

 

The Snow Lake Lithium™ Project is ideally located in the Province of Manitoba, Canada, where 97% of the electrical energy supply is from hydro- electric renewable sources. The region of Snow Lake, where the Snow Lake Lithium™ Property is situated, is mining friendly, and the Hudson Bay Railway is 65 km to the south of the Snow Lake Lithium™ property. The Hudson Bay rail runs north to the Port of Churchill which supplies access to Europe by ship, or south to the EV manufacturing markets in Michigan and the southern US. We intend to be the first producer of battery grade lithium in North America using fully renewable sources of energy to power all of our future mining operations. Our belief is that investors and customers will demand ethically mined commodities created through the use of renewable energy sources enabling the ecologically friendly development of the electric vehicle market as a viable alternative to ICE powered vehicles. We intend to be a leader in these efforts and our Snow Lake Lithium™ property’s location provides for that unique opportunity.

 

We are of exploring our Snow Lake Lithium™ property expecting that following a planned two-phase exploration program we will be in a position to move towards the development of our mineral resources, and, ultimately to the establishing of commercial operations. We are planning to complete a preliminary feasibility study, or PFS, which will be used to seek additional funding for the development of the Snow Lake Lithium™ property. The studies will review the test work, process design, vendor furnished equipment packages and other mine development requirements as well as cost estimates for the possible development of a commercial spodumene floatation plant. In addition, the studies will examine permitting and potential environmental issues for the proposed floatation plant locations as well as operational expenditures and capital expenditures, which will be inputted into a general economic model.

 

We engage in our exploration of lithium mineral resources through two subsidiaries: Snow Lake Exploration and Snow Lake Crowduck. Snow Lake Exploration is our operating company and Snow Lake Crowduck is our asset holding company. The Snow Lake Lithium™ property is located in north central Manitoba, measuring about 15 km by 6 km, comprises 122 mineral claims covering 22,386.30 hectares (approximately 55,318 acres) and straddles Crowduck Bay at the northeastern end of Lake Wekusko.

 

Our Exploration Target – Snow Lake LithiumProject – Indicated and Inferred Resources

 

On June 3, 2021, our major shareholder, Nova Minerals, announced the existence of an S-K 1300 compliant indicated and inferred lithium mineral resource at our Snow Lake Lithium™ Project in central Manitoba, Canada. The main features of this resource, as reflected in the table below, can be characterized as follows:

 

  An S-K 1300 compliant indicated and inferred mineral resource estimate of approximately 11.1 million tonnes of lithium bearing ore consisting of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% Li2O, for 91,200 Li2O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li2O, for 19,300 Li2O tonnes.

 

  The indicated and inferred resource is entirely from a single high grade lithium bearing spodumene pegmatite dyke partially outcropping at surface.

 

  The indicated and inferred resource covers less than 1% of the Snow Lake Lithium™ property area.

 

We note that the ranges of potential tonnage and grade (or quality) of the lithium resource at our Snow Lake Lithium™ Project are conceptual in nature. We have conducted insufficient exploration of our Snow Lake Lithium™ Project to estimate a mineral resource (i.e., a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction), and it is uncertain whether further exploration will result in the estimation of a mineral resource. Our Snow Lake Lithium™ Project exploration target, therefore, does not represent, and should not be construed to be, an estimate of a mineral resource or a mineral reserve.

 

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Snow Lake Lithium™ Project Indicated and Inferred Resource

 

Cut-Off 0.3 Li2O%  Tonnes (t)   Grade
Li2O%
   Li2O
tonnes
 
Indicated   9,082,600    1.00    91,200 
Inferred   1,967,900    0.98    19,300 

 

Our lithium resource is comprised entirely from one Spodumene bearing pegmatite dyke (the TB1 Dyke) as defined by our 2017/2018 drill programs with approximately 4,800 meters drilled during that period. This main dyke is close to additional lithium bearing mineralization that is as yet undefined and does not comprise part of the existing resource. The resource remains open at depth and along strike in both the north and south directions which have been among targets for the recent phase of drilling.

 

Estimation was conducted only within the mineralized pegmatite with internal and external waste excluded as identified by hard boundaries. Interpretation occurred on a two dimensional sectional basis then combined to form a three dimensional volume model of the in-situ pegmatite dyke. No waste material in the host country rock was estimated.

 

The resource was estimated using Micromine software with an inverse distance squared interpolation method due to insufficient data available to suit variography and kriging.

 

The resultant resource is classified as containing both indicated and inferred resource in accordance with S-K 1300 when taking into consideration, data density, deposit geometry, likely extensions and possible interpretation alternatives. A sufficient number of holes required to provide more than an indicated category confidence in the Snow Lake Lithium™ resource have not been drilled. We have not completed any economic modelling or reporting and, therefore, the available, historical drilling information is considered early stage, and the risk of the failure of additional drilling to provide confirmation of our indicated and inferred resource is great. To date, a limited amount of capital has been invested in the Snow Lake Lithium™ Project and the future success of the project will rely heavily on the availability of additional capital which may not be available to us on favorable terms, if at all. Future capital investment in us may result in dilution of your investment in our common shares and a failure to confirm our resource may result in a failure of our business and the complete loss of your investment.

 

Geology and Interpretation

 

The TBL dykes in the Snow Lake Lithium™ Project have been modelled as intrusions into pebble to clast rich metaconglomerates and greywackes of host sediments. The dyke has been interpreted as sub vertical, dipping between 2.5° – 8.5° towards 130° azimuth. The strike of the body has minor variations around a general trend azimuth of 040° and an interpreted plunge of 5° to the north based on visual trends seen from drill core. The dyke carries both mineralized and unmineralized pegmatite as identified by the presence of spodumene as the lithium bearing mineral. Spodumene is considered the most important lithium ore mineral due to its high lithium content. Only the lithium bearing pegmatite has been previously modelled in this instance, which at the time of the previous report extended for a total length of 1,012 m ranging in true thickness from a maximum of 18 m to a minimum of 1.8 m,

 

The dyke is generally orientated between 20° and 40° offset from the apparent foliation in the surrounding country rock and there is outcropping evidence of additional mineralized and unmineralized pegmatite in the area that is yet to be defined in terms of size and or orientation.

 

Drilling

 

All holes were drilled with diamond drill bits providing NQ sized core. The total number of meters drilled during our 2022 exploration program was 20,008 m from 59 holes with a maximum depth of 371 m. This includes 29 holes drilled for metallurgical and geotechnical assessment totaling 1,693 m. Holes were drilled at varying angles to allow multiple intersections and multiple holes to be drilled from single drill locations to minimize earthworks and clearing.

 

Sampling

 

Core was logged by professional consulting geologists and sampled on a geological basis. Sample lengths were typically 1 m intervals but some samples were as small as 0.14 m or as large as 1.75 m. Core was halved with a diamond saw and placed into plastic sample bags for delivery to SRC Geoanalytical Laboratories in Saskatoon, Canada for sample preparation and analysis. QA/QC sampling consisted of the regular insertion of blanks, reject duplicates, and Certified Reference Standards within each 20 sample batch.

 

Sample Analysis

 

Core samples were crushed to better than 70% -2 mm and a 1 kg split was pulverized to better than 85% passing 75μm. All samples were analyzed using SRC procedure code ICP1 using total and partial digestions and ICP analysis. SRC uses Internal QA/QC procedures to monitor the accuracy and precision of their work.

 

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Estimation Methodology

 

Estimation was conducted in Micromine software with parent cell dimensions of 1 m across strike, 25 m along strike and 5 m vertically to account for the vertically dipping narrow mineralization geometry and the sparse data availability nominally around 110 m vertically between intercepts and 100 m horizontally along strike. Sub-celling was used along the deposit margins to honor the interpreted wireframes. Deposit orientations were measured manually on screen and assigned within the estimation parameters.

 

Samples were composited to 1 m length weighted intervals with any residual added to the end of the intersection. No high grade cuts were deemed necessary due to the lack of any significant outliers although a 0.5% Li2O grade was used as a minimum basis for interpretation.

 

Li2O was estimated using an orientated inverse distance squared method along with discretization of 2x2x2 to avoid overly localized estimates. The model was interpolated with a single mineralization domain but conducted systematically due to minor variation in structural orientations within the dyke. The primary search ellipse radius used 120 m along strike, 2 m across strike and 120 m vertically oriented to the azimuth, dip and plunge of the respective structural orientations identified. A secondary search of 240 m x 8 m x 240 m was used to fill any remaining empty cells after the primary search.

 

A density factor of 2.75t/m3 was used for reporting of tonnes based on documented averages for pegmatite globally and a recent resource report from FAR Resources for their Zoro Lithium project located approximately 3km west of the Snow Lake Lithium™ property.

 

Both statistical and visual validation methods were conducted prior to final reporting.

 

Cut-off Grades

 

CIM Definition Standards for a Mineral Resource as a “concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality that there are reasonable prospect for eventual economic extraction.” In our case, a cut-off grade of 0.3% Li2O was used for resource reporting. This 0.3% Li2O cut-off grade was used to measure our resources as, according to our S-K 1300 Report, that is a reasonable grade necessary to cover estimated production costs in accordance with the following criteria (in US dollars):

 

6% Li2O Concentrate Price  $600 / per tonne 
Mining Cost/ton  $20 
Extraction Recovery   80%
Processing Cost/tonne   $32 – to 6% Li2O 
Concentrate Haulage/ton  $88 

 

Classification

 

The resource is classified entirely as a combination of indicated and inferred in accordance with the S-K 1300 when taking into consideration, data density, deposit geometry, likely extensions and possible interpretation alternatives.

 

Other Modifying Factors

 

A preliminary metallurgical test was conducted to determine possible concentrate grade recoverable from the Snow Lake Lithium™ deposit. The test returned a concentrate grade of 6.37% Li2O from a composite sample of 1.4% Li2O indicating the potential to make a commercial product from the Thompson Bros pegmatite. No engineering studies have been conducted however, given the sub vertical nature of the deposit, underground mining is anticipated to be the method of extraction.

 

Location and Description of Snow Lake LithiumProperty

 

The Snow Lake Lithium™ property is located in north central Manitoba, approximately 20 km (12.4 miles) east of the mining community of Snow Lake.

 

 

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The Snow Lake Lithium™ property comprises 122 contiguous mineral claims covering 22,386.30 hectares (approximately 55,318 acres) and is nearly four times the size of Manhattan. It straddles Crowduck Bay at the northeastern end of Lake Wekusko. The property is centered on UTM coordinates 455,000 E 6,080,000 N (NAD83, Zone 14) and lies within the National Topographic System map sheet 63JSE13. The map below shows an outline of our claims area as well as a proposed pipeline route to the nearest rail road junction.

 

 

 

Snow Lake is located some 684 km north of Winnipeg, a 7-hour (700 km) drive on well maintained, paved roadways. Daily flights are available from Winnipeg to both Flin Flon and Thompson. Flin Flon is a 2 hour (200 km) drive west on paved highway to Snow Lake. Thompson is a 2.5 hour (260 km) drive northeast from Snow Lake on paved highway.

 

The Snow Lake Lithium™ property is located in the Churchill geological province at the eastern end of the Flin Flon Belt. The Flin Flon Belt (1.92-1.88 Ga) is one of the largest Proterozoic volcanic-hosted massive sulphide districts in the world. The east-trending Flin Flon Volcanic Belt (230 X 50 km) is interpreted to be remnant of a Paleoproterozoic orogenic mountain belt which developed as new ocean basin and arc crust interacted with Archean rocks of the Hearne and Superior cratonnes along complex convergent plate boundaries.

 

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The Snow Lake Lithium™ property is bisected by the regional Crowduck Bay Fault. The rocks on the eastern side of this fault consist of folded Missi Group sandstones (greywackes) and conglomerates, part of the Eastern Missi Block. To the west, across the fault, the property is underlain by plutonic rocks intruding turbidites of the Burntwood Group, part of the Wekusko Lake Block.

 

There are two main clusters of spodumene-bearing pegmatite dykes on the property known as the Thompson Brothers and Sherritt Gordon lithium pegmatites. These dyke clusters occur on either side of the Crowduck Bay Fault. The dykes are all tabular in form, but each cluster has a distinct orientation. Additional north-northeast trending pegmatite dykes have been mapped along the Crowduck Bay Fault corridor towards the north.

 

Thompson Brothers Lithium Pegmatites

 

The Thompson Brothers dykes are located on the east shore of Grass River linking Wekusko Lake with Crowduck Bay. Here, three mineralized dykes, the TB-1, 2 and 3, intrude Missi Group pebble to cobble conglomerates and greywackes. The Thompson Brothers dykes were drilled by Nova in 2017 and 2018.

 

Dyke TB-1 strikes 040° and dips about 85o SE. The Thompson Brothers deposit has been drill tested over a 1Km strike and to a vertical depth of 1/2 Km. The deposit averages 7 to 10m in true width. The mineralized dyke remains open to depth and along strike. Dyke TB-2 occurs to the north of TB-1 has been traced for about 400 m along strike. Based on limited drilling, dyke TB-2 is up to 2.8 m thick and its orientation is interpreted to be sub-parallel to dyke TB-1. Dyke TB-2 could represent the faulted northern extension of dyke TB-1 or an en-echelon, dilational structure. Dyke TB-2 remains open along strike to the north and to depth. Dyke TB-3 is located about 250 m to the northwest of dykes TB-1 and 2. TB-3 has been traced for about 150 m along strike. The TB-3 pegmatite is up to 2.0 m thick, strikes 040° and dips about 080° towards the northwest. In general, the Thompson Brothers dykes appear concordant with the northeast-trending foliation and strata.

 

Sherritt Gordon Lithium Pegmatites

 

On April 10, 2018, we announced the discovery of a second pegmatite cluster on the Snow Lake Lithium™ property. As part of our compilation of historical data, our consulting geologists discovered details on a cluster of spodumene-bearing pegmatite dykes located about 2 km southwest of the recently drilled Thompson Brothers pegmatite. This cluster, known as the Sherritt Gordon pegmatites, intrudes the outermost quartz diorite phase of the Rex Lake Pluton and was traced about 600 m along strike by Sherritt Gordon Mines Limited in the 1940s. Dyke SG-1 ranges from 1.5 to 5 m in width and dips 80o to the southwest. Dyke SG-2 is thinner and located about 70 m to the northeast of SG-1 and dips 50o – 70o southwest.

 

The Sherritt Gordon, or SG, dykes intrude the outermost quart diorite phase of the compositional zoned Rex Lake Pluton on the west side of the Grassy River narrows. Both dykes display some pinch and swell structures along strike, as well as slight changes in strike. Dyke SG-1 has been traced for about 500 meters, striking 1200 and dipping 80o to the southwest. Dyke SG-1 ranges from 10 cm to 5 meters in width and splits into 3 thinner subparallel dykes at its southeastern end. Dyke SG-2 has been traced for almost 400 m, striking parallel to SG-1 at about 70 m towards the east. The dyke dips 50o-70o to the southwest and its width varies between 1.5 cm and 4 meters.

 

A third outcropping pegmatite dyke (Grassy River pegmatite) is located about 150 meters south of the SG dykes. Here, three spodumene bearing outcrops have been mapped more than a 150 m strike length, trending east.

 

History of Snow Lake LithiumProperty and Exploration Status

 

No records documenting the original discovery of lithium enriched pegmatite dykes on the Snow Lake Lithium™ property have been located. Since the early 1940s various portions of the current Snow Lake Lithium™ property have been explored by several companies. Certain target areas on the Snow Lake Lithium™ property have been known as the “Sherritt Gordon Property,” the “Violet Property”, the “Strider Lithium Property.” and the “Thompson Brothers Lithium Property” and now the “Snow Lake Lithium™ Property”.

 

The highlights of the exploration history are summarized as follows:

 

In 1942, Sherritt Gordon Mines drilled and cored 20 holes (632 meters), testing one of 2 spodumene bearing pegmatite dykes on the east side of the narrows linking Wekusko Lake to Crowduck Bay. These dykes were originally staked in 1931 by Peer Kobar.

 

In 1956, Combined Developments Ltd. explored parts of the property. The area was prospected, mapped and 26 cored drill holes were completed on the TB-1 pegmatite (2,356 meters).

 

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From 1976 until 1987, the Thompson brothers explored part of the property. They completed several trenches and sampling. In 1978, they cored their first drill hole to a depth of 28.2 meters in 1979, hole #1 was deepened to 58.6 meters. In 1981, the Thompson brothers cored their second drill hole. Hole #2 was drilled to a depth of 61 meters.

 

In 1989, Lakefield Research metallurgical test work produced a spodumene concentrate from a sample taken from a trench on claim ADD 13. The assay head grade of the rock sample was 2.93% Li2O. The resulting concentrate was 5.19% Li2O.

 

In 1995, minor trenching and sampling of the TB-1 dyke was completed by Strider Resources. In 1996, a 1,600-meter by 400-meter grid was cut by Strider Resources with lines spaced at 50 meter intervals. In 1997, a three-hole drill program, totaling 930 meters, was completed.

 

In April 2016, Ashburton Ventures (now known as Progressive Planet Solutions Inc.) optioned the Snow Lake Lithium™ property, at that time consisting of the 20 claims, from Strider Resources and entered into an option financing agreement with Thompson Bros (then known as Manitoba Minerals PTY Ltd.), at that time Nova Minerals’s wholly-owned subsidiary. Through financing provided by MMPL, parts of the property were prospected, and an attempt was made to locate the historical drill holes. Nine surface samples of pegmatite were assayed. In the fall of 2016, a modest program of prospecting and soil sampling was completed. In the winter of 2017, five drill holes targeting the TB-1 pegmatite totaling 1,007 meters were cored.

 

In March and April 2018, Snow Lake Crowduck staked an additional 18 mineral claims (3,319 hectares, approximately 8,201.43 acres) contiguous with the original Snow Lake Lithium™ property (20 claims, 2,277 hectares, approximately 5626.59 acres).

 

During the winter of 2018, Thompson Bros (then MMPL) cored 19 drill holes totaling 3,798 meters focusing on the Thompson brothers pegmatite cluster. Drill sections and plans were prepared, and interpretations of the geology and mineralization were completed. A project data base was created and a model for the deposit has been developed.

 

In July 2021, we completed an S-K 1300 compliant resource estimate of an Indicated Resource of 9,082,600 tonnes of lithium bearing ore grading 1.00% Li2O, for 91,200 Li2O tonnes, and an Inferred Resource of 1,967,900 tonnes of lithium bearing ore grading 0.98% Li2O, for 19,300 Li2O tonnes. This S-K 1300 Report was prepared by Canmine Consultants and Nuterra Geoscience, each of whom served as Qualified Persons as that term is defined in S-K 1300. This estimate was prepared taking into consideration data density, deposit geometry, likely extensions and interpretive alternatives. A density factor of 2.70 t/m3 was used. Surpac version 6.4.1 was the software used to create the geological model and to estimate the resources. We intend to complete a two-phase exploration program on the Snow Lake Lithium™ property including the completion of a PFS.

 

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Historical Mineral Processing and Metallurgical Testing

 

The Saskatchewan Research Council (SRC) completed a preliminary metallurgical testing program on the Snow Lake Lithium™ Project (Xia, L. and Adeoye, A., 2018). The primary objective of this preliminary testing program was to produce a spodumene concentrate with +6.0 % Li2O.

 

Test work was completed on a 55 kg composite sample of 67 individual assay reject samples crushed to -2.0 mm (10 mesh) received from SRC Geoanalytical Laboratories. All of the 67 individual assay rejects were combined and homogenized to create a composite feed sample. A head assay sample was taken from the homogenized composite sample for ICP analysis. The ICP analysis OLD indicated that the composite graded 1.43% Li2O.

 

The composite sample was ground to 100% passing 300 μm before being classified into two fractions: coarse fraction (53-300 μm) and fine fraction (-53 μm). Before flotation, de-sliming and magnetic separation were performed to minimize the interference of ultra fines (-38 μm) and magnetic (iron) materials on the flotation.

 

Preliminary flotation tests indicated that a spodumene concentrate with +6.0 % Li2O could be readily produced from the samples provided. The flotation process included one stage mica flotation, one stage spodumene rougher flotation, and five stages of cleaner flotations. H2SO4 was used to adjust the flotation pH in mica flotation. ArmacHT was used as the mica collector. Oleic acid was used as the spodumene collector. Vanofroth was used as the frother in all flotations. The reagent conditioning and dosages were not optimized.

 

Good spodumene concentrate can be produced from both coarse fraction (53-300 μm) and fine fraction (38-53 μm). A 43.3 % coarse recovery and a 22.9 % fine flotation recovery were achieved with concentrate grade of 6.35 % Li2O and 6.37% Li2O, respectively. A total 1905.5 g coarse spodumene concentrate with 6.35 % Li2O and 377.9 g fine spodumene concentrate with 6.37 % Li2O were produced. Mass balance and flotation optimization were not considered.

 

Xia and Adeoye recommend a second stage of test work including:

 

  Detailed mineralogy analysis including mineral association, liberation, grain size, etc.;

 

  Comminution test to determine crushing index and mill work index;

 

  Pre-concentration test to increase the feed grade such as sorting, gravity separation and magnetic separation;

 

  Flotation tests to determine the optimal reagent scheme and to maximize the Li2O recovery;

 

  Locked cycle flotation tests to validate the flotation performance and to establish mass balance; and,

 

  Further hydrometallurgical testing to produce better grade Li2CO3.

 

Currently, more advanced metallurgical testing is being conducted. We cannot be sure, however, when new test results will be available or what they will show.

 

Ownership of the Snow Lake Lithium™ Property

 

The Snow Lake Lithium™ property comprises 122 contiguous mineral claims, covering 22,386.30 hectares (approximately 55,318 acres).

 

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Below is a list of the claim names, numbers, areas ownership and expiry dates. All claims are registered with the Manitoba Mineral Resources Division (Formerly the Mines Branch) which, as of October 23, 2019, is a division of the Manitoba Department of Agriculture and Resource Development (ARD). Property surface rights are held by the Crown.

 

Claims Held by Snow Lake (Crowduck) Ltd.  
Disposition /
Lease Number
  Disposition /
Lease Name
  Method of
Acquisition
  Issue
Date
  Expiry
Date
  Area
(Hectares)
    Area
(Acres)
 
P2818F   ADD 13   Optioned1   1994-09-30   2030-11-29   16     39.536832  
MB1052   ADD 1052   Optioned1   2001-07-20   2030-09-18   235     580.69722  
MB1053   ADD 1053   Optioned1   2001-07-20   2030-09-18   83     205.097316  
P3033F   ADD 3033   Optioned1   1995-04-21   2030-06-20   32     79.073664  
P3035F   ADD 3035   Optioned1   1995-04-21   2030-06-20   53     130.965756  
P3203F   ADD 3203   Optioned1   1995-09-11   2030-11-10   82     202.626264  
W49853   ADD 49853   Optioned1   1996-04-22   2030-06-21   32     79.073664  
MB6301   ADD 6301   Optioned1   2006-03-24   2030-05-23   110     271.81572  
MB6303   ADD 6303   Optioned1   2008-03-17   2030-05-16   180     444.78936  
MB6305   ADD 6305   Optioned1   2009-02-11   2030-04-12   224     553.515648  
P7463B   THOMPSON #2   Optioned1   1964-11-05   2030-01-04   21     51.892092  
P7464B   THOMPSON #3   Optioned1   1964-11-05   2030-01-04   21     51.892092  
W47380   THOMPSON 6   Optioned1   1982-07-08   2030-09-06   16     39.536832  
W47378   THOMPSON 7   Optioned1   1982-07-08   2030-09-06   16     39.536832  
MB5735   CRO 5735   Optioned1   2010-02-11   2030-04-12   216     533.747232  
MB5736   CRO 5736   Optioned1   2010-02-11   2030-04-12   202     499.152504  
MB5737   CRO 5737   Optioned1   2010-02-11   2030-04-12   250     617.763  
MB9830   ADD 9830   Optioned1   2018-03-06   2030-05-05   40     98.84208  
MB12130   BAZ 12130   Optioned2   2017-12-05   2030-02-03   192     474.441984  
MB12132   BAZ 12132   Optioned2   2017-12-05   2031-02-03   256     632.589312  
MB13493   TBL 001   Staked by Company3   2018-04-06   2023-06-05   256     632.589312  
MB13494   TBL 002   Staked by Company3   2018-04-06   2023-06-05   243     600.465636  
MB13495   TBL 003   Staked by Company3   2018-04-06   2023-06-05   78     192.742056  
MB13496   TBL 004   Staked by Company3   2018-04-06   2023-06-05   151     373.128852  
MB13497   TBL 005   Staked by Company3   2018-04-06   2023-06-05   67     165.560484  
MB13498   TBL 006   Staked by Company3   2018-04-06   2023-06-05   230     568.34196  
MB13499   TBL 007   Staked by Company3   2018-04-06   2023-06-05   185     457.14462  
MB13500   TBL 008   Staked by Company3   2018-04-06   2023-06-05   78     192.742056  
MB13501   TBL 009   Staked by Company3   2018-04-06   2023-06-05   206     509.036712  
MB13502   TBL 010   Staked by Company3   2018-04-06   2023-06-05   173     427.491996  
MB13503   TBL 011   Staked by Company3   2018-04-06   2023-06-05   72     177.915744  
MB13504   TBL 012   Staked by Company3   2018-04-06   2023-06-05   250     617.763  
MB13505   TBL 013   Staked by Company3   2018-04-06   2023-06-05   237     585.639324  
MB13506   TBL 014   Staked by Company3   2018-04-06   2023-06-05   121     298.997292  
MB13507   TBL 015   Staked by Company3   2018-04-06   2023-06-05   256     632.589312  
MB13508   TBL 016   Staked by Company3   2018-04-06   2023-06-05   220     543.63144  
MB13509   TBL 017   Staked by Company3   2018-04-06   2023-06-05   240     593.05248  
MB13510   TBL 018   Staked by Company3   2018-04-06   2023-06-05   256     632.589312  

 

72

 

 

Claims Held by Snow Lake (Crowduck) Ltd.  
Disposition /
Lease Number
  Disposition /
Lease Name
  Method of
Acquisition
  Issue
Date
  Expiry
Date
  Area
(Hectares)
    Area
(Acres)
 
MB13851   HERB 1   Staked by Company4   2021-06-19   2023-08-18   240     593.05248  
MB13852   HERB 2   Staked by Company4   2021-06-19   2023-08-18   256     632.589312  
MB13853   HERB 3   Staked by Company4   2021-06-19   2023-08-18   189     467.028828  
MB13854   HERB 4   Staked by Company4   2021-06-19   2023-08-18   82     202.626264  
MB13785   HERB 5   Staked by Company4   2021-06-24   2023-08-23   64     158.147328  
MB13856   HERB 6   Staked by Company4   2021-06-19   2023-08-18   163     402.781476  
MB13857   HERB 7   Staked by Company4   2021-06-19   2023-08-18   88     217.452576  
MB13858   HERB 8   Staked by Company4   2021-06-22   2023-08-21   174     429.963048  
MB13859   HERB 9   Staked by Company4   2021-06-22   2023-08-21   246     607.878792  
MB13860   HERB 10   Staked by Company4   2021-06-22   2023-08-21   252     622.705104  
MB13861   HERB 11   Staked by Company4   2021-06-20   2023-08-19   250     617.763  
MB13862   HERB 12   Staked by Company4   2021-06-20   2023-08-19   138     341.005176  
MB13863   HERB 13   Staked by Company4   2021-06-23   2023-08-22   138     341.005176  
MB13864   HERB 14   Staked by Company4   2021-06-23   2023-08-22   219     541.160388  
MB13784   HERB 15   Staked by Company4   2021-06-23   2023-08-22   60     148.26312  
MB13866   HERB 16   Staked by Company4   2021-06-23   2023-08-22   40     98.84208  
MB13867   HERB 17   Staked by Company4   2021-06-23   2023-08-22   106     261.931512  
MB13868   HERB 18   Staked by Company4   2021-06-24   2023-08-23   32     79.073664  
MB13869   HERB 19   Staked by Company4   2021-06-24   2023-08-23   124     306.410448  
MB13870   HERB 20   Staked by Company4   2021-06-24   2023-08-23   220     543.63144  
MB13855   HERB 21   Staked by Company4   2021-06-24   2023-08-23   50     123.5526  
MB13865   HERB 22   Staked by Company4   2021-06-24   2023-08-23   56     138.378912  
MB12900   PGB2900   Staked by Company5   2022-01-01   2024-01-01   255.5     631.353786  
MB12901   PGB2901   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12902   PGB2902   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12903   PGB2903   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12904   PGB2904   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12905   PGB2905   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12906   PGB2906   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12907   PGB2907   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  

 

73

 

 

Claims Held by Snow Lake (Crowduck) Ltd.  
Disposition /
Lease Number
  Disposition /
Lease Name
  Method of
Acquisition
  Issue
Date
  Expiry
Date
  Area
(Hectares)
    Area
(Acres)
 
MB12908   PGB2908   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12909   PGB2909   Staked by Company5   2022-01-01   2024-01-01   112     276.757824  
MB12910   PGB2910   Staked by Company5   2022-01-01   2024-01-01   112     276.757824  
MB12911   PGB2911   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12912   PGB2912   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12913   PGB2913   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12914   PGB2914   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12915   PGB2915   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12916   PGB2916   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12917   PGB2917   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12918   PGB2918   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12919   PGB2919   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12920   PGB2920   Staked by Company5   2022-01-01   2024-01-01   144     355.831488  
MB12921   PGB2921   Staked by Company5   2022-01-01   2024-01-01   174     429.963048  
MB12922   PGB2922   Staked by Company5   2022-01-01   2024-01-01   152     375.599904  
MB12923   PGB2923   Staked by Company5   2022-01-01   2024-01-01   255.9     632.3422068  
MB12924   PGB2924   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12925   PGB2925   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12926   PGB2926   Staked by Company5   2022-01-01   2024-01-01   147.2     363.7388544  
MB12927   PGB2927   Staked by Company5   2022-01-01   2024-01-01   202     499.152504  
MB12928   PGB2928   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12929   PGB2929   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12934   PGB2934   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12935   PGB2935   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12936   PGB2936   Staked by Company5   2022-01-01   2024-01-01   136     336.063072  
MB12937   PGB2937   Staked by Company5   2022-01-01   2024-01-01   64     158.147328  
MB12938   PGB2938   Staked by Company5   2022-01-01   2024-01-01   178     439.847256  
MB12939   PGB2939   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12940   PGB2940   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12941   PGB2941   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  

 

74

 

 

Claims Held by Snow Lake (Crowduck) Ltd.  
Disposition /
Lease Number
  Disposition /
Lease Name
  Method of
Acquisition
  Issue
Date
  Expiry
Date
  Area
(Hectares)
    Area
(Acres)
 
MB12942   PGB2942   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12943   PGB2943   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12944   PGB2944   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12945   PGB2945   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12946   PGB2946   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12947   PGB2947   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12954   PGB2954   Staked by Company5   2022-01-01   2024-01-01   128     316.294656  
MB12955   PGB2955   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12956   PGB2956   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12957   PGB2957   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12958   PGB2958   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12959   PGB2959   Staked by Company5   2022-01-01   2024-01-01   128     316.294656  
MB12960   PGB2960   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12961   PGB2961   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12962   PGB2962   Staked by Company5   2022-01-01   2024-01-01   128     316.294656  
MB12963   PGB2963   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12964   PGB2964   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12965   PGB2965   Staked by Company5   2022-01-01   2024-01-01   128     316.294656  
MB12967   ROCH2967   Staked by Company5   2022-01-01   2024-01-01   64     158.147328  
MB12968   ROCH2968   Staked by Company5   2022-01-01   2024-01-01   256     632.589312  
MB12969   ROCH2969   Staked by Company5   2022-01-01   2024-01-01   183     452.202516  
MB12970   ROCH2970   Staked by Company5   2022-01-01   2024-01-01   247.5     611.58537  
MB12972   ROCH2972   Staked by Company5   2022-01-01   2024-01-01   93.4     230.7962568  
MB12973   ROCH2973   Staked by Company5   2022-01-01   2024-01-01   74.8     184.8346896  
                    Total =
22,386.30
hectares
    Total =
55,317.71
acres
 

 

1 - These claims were optioned 100% from Strider Resources, by Progressive Planet Solutions (PLAN) (formerly named Ashburton Ventures) April 21, 2016.  September 26, 2016 Thompson Bros (Lithium) Pty Ltd (TBLPL) (formerly named Manitoba Minerals PTY Ltd) optioned 100% rights of them from PLAN by funding the requirements of the Strider Option. April 12, 2017 the PLAN / TBLPL Option was amended to reduce the right to just 80% option purchase.  November 14, 2018 PLAN optioned the rights to the remaining 20% option to Snow Lake. November 15, 2018 PLAN and Strider amended their option to allow the sale of 100% of the project to Snow Lake via TBLPL. March 08, 2019 Snow Lake purchased TBLPL from Nova Minerals (TBLPL had 80% rights to the project). At this time Snow Lake held 20% from PLAN, and the remaining 80% through their purchase of TBLPL from Nova. April 12, 2019 all option requirements were fulfilled and the property was 100% held by Snow Lake (subject to 2% NSR)
2 - These two claims were added to the Option agreement as they were staked within the area of material interest. Snow Lake paid the staking costs to Strider and they were added to the option.
3 - These claims were staked by the Company on or around April 04, 2018
4 - These claims were staked by the Company May to June, 2021
5 - These claims were staked by the Company December 2021 to January 2022.  These claims are currently held in pending status.  If they are approved, it is estimated that the expiry of the claim would be 2 years following the issue date.

 

75

 

 

Leases Held by Snow Lake (Crowduck) Ltd.

 

Disposition /
Lease Number