Core Lithium : Half-year Report

For personal use only

Interim Consolidated Financial Statements

for the half-year ended 31 December 2021

For personal use only

Contents

Directors' Report	3
Auditor's Independence Declaration	7
Financial Report
Statement of Profit or Loss and Other	8
Comprehensive Income
Statement of Financial Position	9
Statement of Changes in Equity	10
Statement of Cash Flows	11
Notes to the Consolidated Financial	12
Statements
Directors' Declaration	25
Independent Auditor's Review Report	26

These Financial Statements cover Core Lithium Ltd ("Core" or the "Company") as a Group consisting of Core Lithium Ltd and its subsidiaries, collectively referred to as the "Group". The financial report is presented in Australian currency.

Core is a company limited by shares, incorporated, and domiciled in Australia. Its registered office and principal place of business is:

Core Lithium Ltd

ACN 146 287 809

Level 5, 149 Flinders Street

ADELAIDE South Australia 5000

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Directors' Report

Your Directors present their report together with the financial statements of the consolidated entity, being Core Lithium Ltd ("Core" or "the Company") and its controlled entities ("the Group") for the half year ended 31 December 2021 and the Independent Review Report thereon.

DIRECTORS

The Directors of the Company who held office during the half-year and up to the date of this report are stated below. Directors were in office for this entire period unless otherwise stated.

Gregory English	Non-Executive Chairman
Stephen Biggins	Managing Director
Heath Hellewell	Non-Executive Director
Malcolm McComas	Non-Executive Director

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

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Operations

Core is constructing Australia's next lithium mine, the Finniss Lithium Project ("the Project") - one of Australia's most capital efficient and lowest cost hard rock spodumene lithium projects - located near Darwin Port in the Northern Territory, Australia (NT).

Lithium is the core element in the batteries that power electric vehicles, and the Project boasts world-class,high-grade, and high-quality lithium suitable for use in this high growth market.

Lithium prices remain at record highs as the uptake of battery and electric vehicle technology continues to grow exponentially, and Core's entry to market as a lithium producer is well timed to capitalise on the growing demand for high-quality spodumene concentrate.

Finniss lies within 25km in a straight line from power, gas and rail and one hour by sealed road to workforce accommodated in Darwin and Darwin Port - Australia's nearest port to Asia.

The Company's other project areas are focused on targets within prospective geological terrains for lithium, precious and base metals and uranium in Northern Territory and South Australia.

The half year to 31 December 2021 was a transformational period for the Company. Finniss is now fully funded and fully permitted, approximately 80% of Stage 1 for the first four years is now under binding offtake agreements, construction at Finniss has commenced and the Company is on track for production of first lithium concentrate in Q4 of 2022.

During the period, Core achieved the following key milestones:

• completed a Definitive Feasibility Study (DFS) and Expansion Scoping Study (ESS) for the Project confirming a mine life of 7 years and 10 years respectively;
• secured capital to fully fund the construction of the Finniss Project;
• made a Final Investment Decision (FID);
• awarded contracts to Lucas Total Contract Solutions (Lucas) for mining services and Primero Group (Primero) as Engineering, Procurement and Construction (EPC) for the Dense Media Separation (DMS) processing plant;
• secured a binding offtake agreement with Ganfeng Lithium (which is in addition to its binding offtake with Sichuan Yahua, also over four years); and
• commenced construction of the Project.

In July, Core reported an updated Stage 1 DFS that took into account a significant, 30% increase in the Total Ore Reserve at Finniss, increasing the total to 7.4Mt at 1.3% lithium with an initial eight-year Life of Mine (LoM).

Finniss was confirmed as a simple, low risk and low capital intensity project with high cash-generating potential with the release of the DFS and ESS in July 2021. These studies demonstrated compelling project economics including a low start-up capex of $89 million and a simple gravity fed DMS processing plant producing 175ktpa of spodumene concentrate on average over the LoM.

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Directors' Report

REVIEW OF OPERATIONS AND FINANCIAL RESULTS (continued)

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In August 2021, the Company signed an offtake agreement with Ganfeng Lithium for the supply of 75ktpa over four years. Ganfeng has a proven track record of investing in high-quality lithium projects, and Core looks forward to growing this relationship. The offtake agreement was made unconditional on 22 October 2021, following confirmation of regulatory approvals.

This offtake agreement is in addition to Core's existing offtake with Yahua of 75ktpa over four years. Together, these offtake agreements amount to approximately 80% of production from Stage 1 being contracted for four years.

In September 2021, Core awarded a three-year mining services agreement to Lucas for the construction of the Grants Open Pit Mine - the first mine to be developed at Finniss. The scope includes clear and grub, topsoil management, pads, roads, dumps, dams, bunds and water controls, and open pit mining (load and haul plus drill and blast).

Core awarded Primero the EPC contract for the construction of the 1Mtpa DMS plant. The high- grade ore at Finniss combined with exceptional spodumene metallurgy means that Core can produce high quality, coarse lithium concentrate using gravity only DMS.

Primero is an experienced and successful lithium EPC contractor and will be responsible for project management, engineering and detailed design, equipment and materials procurement, DMS plant construction, quality assurance and construction verification, and ore commissioning on receipt of first ore.

On 30 September 2021, the Core Board announced the FID to proceed with construction at Finniss, allowing project execution to begin immediately. FID represented the culmination of more than five years of work in which the Company was able to put together a low-risk,capital-efficient and high- margin lithium project that is capable of delivering both immediate and long-term value to our employees, shareholders, partners and stakeholders.

On 26 October 2021, Core announced that construction at Finniss had commenced. Over the one-year construction period before first lithium production in Q4 of 2022, Finniss will create more than 250 jobs for residents in Darwin, Palmerston and rural areas of the NT.

Exploration

The Company has continued with its exploration program at Finniss. Core has focused on Mineral Resource growth and conversion, as well as regional exploration to extend the LoM and to lay the foundations for production expansion within the broader Project.

In December 2021, Core exercised an option to acquire six prospective Mineral Leases (MLs) adjacent to the Finniss Lithium Project after a first pass drill assessment was completed during 2021 which included 29 RC holes. Subsequent to the reporting period the transfer of these titles has been completed under the Call Option Deed executed in March 2021.

Subsequent to the reporting period, an extensional drilling program at the BP33 deposit during the 2021 field season returned broad, high grade lithium intersections outside of the current Mineral Resource that the Company believes will deliver substantial extensions. The program consisted of seven RC holes and two diamond holes and confirmed that a spodumene-bearing pegmatite extends to the south and beyond the limits of the current Mineral Resource estimate.

Corporate and Results of Operations

During the period, the Company transitioned to larger premises to cater for a growing workforce and corporate demands on the business, as it makes a transition from explorer to producer.

The consolidated net loss of the Group for the six months to 31 December 2021 was $3,288,667 (31 December 2020: net loss of $914,980).

The Company's basic earnings per share was loss of

0.22 cents per share (31 December 2020: loss of 0.09 cents per share). No dividend has been paid during or is recommended for the half-year ended 31 December 2021 (31 December 2020: $Nil).

In July 2021, Core was successful in an application for a $6 million grant under the Federal Government's Modern Manufacturing Initiative ("Grant"). The Australian Federal Government has awarded the Grant in recognition of the future commercial potential for Core to produce battery-grade lithium chemical near the Finniss Project. This is a highly encouraging early step in Core's path to assessing the longer-term potential of the Finniss Project, through local downstream processing of Finniss lithium concentrate.

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Directors' Report

REVIEW OF OPERATIONS AND FINANCIAL RESULTS (continued)

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In August 2021, Core announced a $140 million equity raising comprising a $91 million placement, a $34 million equity investment from Ganfeng Lithium as a part of a binding offtake agreement, and a $15 million Share Purchase Plan (SPP) that was increased to $25 million following strong investor interest, bringing the total raised to $150 million.

The $34 million equity investment by Ganfeng was part of the binding offtake agreement for 75ktpa of spodumene concentrate from the Project over four years. The placement was issued at 33.8 cents per share - representing a 10% premium to the 10-dayvolume-weighted average price.

Liquidity

At 31 December 2021 the Company had a cash and cash equivalents balance of $157 million (30 June 2021: $38 million).

Significant cash inflows and outflows during the half-year (as shown in the chart below) include:

• receipt of $143 million (net of fees) from capital raising activity in the period;
• receipt of $9 million from exercise of options;
• payment of $23 million for construction activities including an environmental bond to the Northern Territory Government; and
• payment of $8 million for exploration activities, less $2 million received from the Federal Government as part of a $6 million Modern Manufacturing Initiative (MMI) Grant; and
• $5 million for corporate and other expenses.

Events Subsequent to Reporting Date

The following events occurred subsequent to the Reporting Date:

• The exercise of 23,205,857 unlisted share options with an exercise price of 45 cents per share resulting in $10,442,636 in cash receipts to the date of this report.
• In February 2022, Core was notified by the NT Department of Industry, Tourism and Trade that its application to transfer the six Mineral Leases (MLs) adjacent to the Finniss Lithium Project to the Company had been accepted, with Core making a $5 million cash payment to the vendors in order to close the transaction.
• In March 2022, Core announced that it had entered into a legally binding Term Sheet with Tesla, Inc. (Tesla) for the supply of up to 110,000 tonnes of Li2O spodumene concentrate from the Finniss Lithium Project over a term of 4 years, with pricing referenced to the market price for spodumene concentrate, subject to a price floor and ceiling (Term Sheet). The Term Sheet is subject to the parties completing negotiations and execution of a definitive product purchase agreement by 27 August 2022, which is to provide for a supply commencement date before 31 July 2023 (subject to extension by mutual agreement).

For

									Cash Movements ($ million)
									for the 6 months to December 2021
250.0
200.0
						9.2		0.2
											23.0
					143.2
150.0													5.8		0.2		4.5		157.1
100.0
50.0
	38.1
-
Opening	Capital Raise	45c Share	Other Income Finniss	Exploration	Other Plant &		Other	Closing
		Balance	Funds (net)		Option		Lithium	Expenditure	Equipment	Expenses	Balance
							Converstion		Project
							Funds (net)	Operations

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