A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Summary of Certain Risk Factors
You should consider all
the information contained in this Annual Report in deciding how to vote for the proposals presented in this Annual Report. In particular,
you should consider the risk factors described under “Risk Factors” beginning on page 3. Such risks include, but are not
limited to:
● Our current liquidity resources raise substantial doubt about our ability to continue as a going concern unless we raise additional capital to meet our obligations in the near term.
● Our business operates in the mining exploration and evaluation industry. The Tanbreez Project in Greenland and the Wolfsberg Project in Austria are at the exploration and evaluation stage, and there are no guarantees that subsequent development of these projects into operating mines will occur or that such development will result in the commercial extraction of mineral deposits. In addition, even if an economic mineral deposit is mined, we may not realize profits from our development activities in the short, medium or long term.
● Our long-term success will depend ultimately on implementing our business strategy and operational plan, as well as our ability to generate revenues, achieve and maintain profitability and develop positive cash flows from our activities.
● Our long-term success depends, in part, on our ability to negotiate and enter into binding offtake or sales agreements with, and deliver our product to, third party customers on commercially viable terms. This may not occur or, should it occur, may not result in the appreciation of our share price similar of what other companies in our industry have experienced following the announcement of such agreements.
● We may seek to raise additional funds through equity or debt financing, joint ventures, production sharing arrangements, grants or facilities available under the Defense Production Act, financing opportunities from the U.S. Export-Import Bank (“U.S. Ex-Im”) which includes but is not limited to loans in direct support of the recently-created Supply Chain Resiliency Initiative and/or under the Make More in America rubric, financing opportunities from the European Investment Bank (“EIB”) and/or other means. Consequently, we depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future growth.
● The industry in which we operate is subject to domestic and global competition. We have no influence or control over the activities or actions of our competitors, which activities or actions may negatively affect the operating and financial performance of our projects and business.
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● Our current management has limited experience operating a U.S. public company and the recruitment of some of our new management team with experience in operating a U.S. public company has been delayed pending us raising additional capital.
● We are now incurring significant increased expenses and administrative burdens now that we are a public company, which could have an adverse effect on our business, financial condition and results of operations.
● If we fail to maintain effective internal control over financial reporting, the price of our ordinary shares may be adversely affected.
● We have concluded that there are significant deficiencies in our internal control over financial reporting related to segregation of duties, related party transactions, accounting for accounts payable and accrued expenses, income tax provision and related disclosures, accounting for complex financial instruments, and cybersecurity programs and we cannot assure you that additional sufficient deficiencies will not be identified in the future. These significant deficiencies may not be timely remediated and general reputational harm could result or persist, which could affect our business, operations and financial condition. The failure to implement and maintain effective internal control over financial reporting could result in material misstatements in the financial statements, which could require us to restate financial statements, cause investors to lose confidence in the reported financial information and have a negative effect on the price of our ordinary shares.
● Our failure to comply with applicable anti-corruption, anti-bribery, anti-money laundering and similar laws and regulations could negatively impact our reputation and results of operations.
● The requirements of being a public company in the U.S. may strain our resources and divert management’s attention, and the increases in legal, accounting and compliance expenses that will result from being a public company in the U.S. may be greater than we anticipate.
● The further development of the Tanbreez Project, Wolfsberg Project and at other locations is dependent on a number of factors, many of which are beyond our control. If we commence production at either of our projects, our operations may be disrupted by a variety of risks and hazards that could have a material adverse effect on our future operating costs, financial condition and ability to develop and operate a mine.
● Our resource estimates may change significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, our estimates are likely to change and these changes may result in a reduction in our resources. These changes may also result in alterations to our future plans, which may, in turn, adversely affect our operations.
● We are a “controlled company” within the meaning of Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements.
● We do not expect to declare any dividends in the foreseeable future.
● There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
● If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, the price and trading volume of our securities could decline.
● A market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities.
● Our issuance of additional capital stock in connection with financings, acquisitions, investments, share incentive plans or otherwise may dilute our current stockholders and may and have a negative impact on the market price of our ordinary shares.
2
RISK FACTORS
Investing in our securities
involves risks. Before you make a decision to buy our securities, in addition to the risks and uncertainties discussed above under “Cautionary
Note Regarding Forward-Looking Statements,” you should carefully consider the specific risks set forth herein. If
any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As
a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks
and uncertainties described in this Annual Report are not the only risks and uncertainties that we face. We may face additional risks
and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business, prospects,
financial condition or operating results. The following discussion should be read in conjunction with our financial statements and notes
to the financial statements included herein.
Unless the context otherwise
requires, all references in this section to “European Lithium AT (Investments) Limited,” or “ELAT” refer
to European Lithium AT (Investments) Limited and its subsidiaries prior to the consummation of the Business Combination, which became
the business of the Company and its subsidiaries upon consummation of the Business Combination.
Risks Related to our Business and our Industry
Our current liquidity resources raise substantial
doubt about our ability to continue as a going concern unless we raise additional capital to meet our obligations in the near term.
We have incurred losses after income tax of $51.9 million and
$139.4 million for the year ended June 30, 2025 and the year ended June 30, 2024, respectively. As of June 30, 2025, we had
net cash outflows from operating activities of $14.5 million, a working capital deficit (excluding liabilities that will be settled
in CRML shares) of $15.6 million and cash on hand of $7.3 million. Until commercial production is achieved from the Tanbreez
Project and the Wolfsberg Project, we will continue to incur operating and investing net cash outflows associated with maintaining and
acquiring exploration properties, undertaking ongoing exploration activities and the funding obligations to develop the assets of our
planned projects.
During the year ended
June 30, 2025 we received funds of $24.55 million from the PIPE Financing and $2,000,000 from the exercise of Private Warrants held by
the Empery Funds (as defined below). We used proceeds from the PIPE Financing and exercise of the Private Warrants held by the Empery
Funds to fund exploration expenditures at our exploration projects and for general working capital purposes.
Substantial doubt exists
about our ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
We will continue efforts to remedy the conditions or events that raise this substantial doubt, however, as some components of these plans
are outside of management’s control, we cannot offer any assurances they will be effectively implemented. We also cannot offer
any assurance that any additional financing will be available on acceptable terms or at all. Our consolidated financial statements have
been prepared on a going concern basis, which contemplates the continuity of normal business activities and the realization of assets
and the settlement of liabilities in the ordinary course of business.
We intend to seek to raise funds through
equity or debt financing transactions, and we may also pursue joint ventures, production sharing arrangements or other transactions.
Consequently, we depend on our ability to successfully access the capital and financial markets. Any inability to access the capital
or financial markets may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may
rely on for future growth.
Until commercial production
is achieved from our planned projects, we will continue to incur operating and investing net cash outflows associated with maintaining
and acquiring exploration properties, undertaking ongoing exploration activities and the funding obligations to develop the assets of
our planned projects. Prior to the Business Combination, we relied upon European Lithium’s access to capital markets as a source
of funding for our capital and operating requirements, and we will continue to rely on capital markets for near-term sources of cash.
We will require additional capital to fund our ongoing operations, explore and define lithium, other critical metals and minerals geological
formations and mineralization and establish any future mining or lithium based products and other critical metals and minerals based
manufacturing operations. We cannot assure you that such additional funding will be available to us on satisfactory terms, or at all.
3
In order to finance our
future ongoing operations and future capital needs, we will require additional funds through the issuance of additional equity or debt
securities. Depending on the type and terms of any financing we pursue, our shareholders’ rights and the value of their investment
in our ordinary shares could be reduced. Any additional equity financing may dilute our existing shareholders. If the issuance of new
securities results in diminished rights to holders of our ordinary shares, the market price of our ordinary shares could be negatively
impacted. New or additional debt financing, if available, may involve restrictions on financing and operating activities. In addition,
if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of shareholders
until the debt is paid. Interest on such debt securities would increase costs and negatively impact operating results.
If we are unable to obtain
additional financing on favorable terms, as needed, at competitive rates, our ability to fund our current operations and implement our
business plan and strategy will be affected, and we would be required to reduce the scope of our operations and scale back our exploration,
evaluation, as well as any subsequent development and mining programs. There is, however, no guarantee that we will be able to secure
any additional funding or be able to secure funding which will provide us with sufficient funds to meet our objectives, which may adversely
affect our business and financial position.
In addition, certain market
disruptions may increase our cost of borrowing or affect our ability to access one or more financial markets. Such market disruptions
could result from:
● adverse economic conditions, including inflationary factors and recessionary fears;
● adverse general capital market conditions, including rising interest rates;
● low prices of lithium hydroxide, carbonate and spodumene;
● low prices of some or all of the relevant HREEs and/or other critical metals and minerals;
● poor performance and health of the HREE industry, the lithium industry, and/or mining industries in general;
● bankruptcy or financial distress of unrelated companies who extract, process, and/or market HREEs or lithium;
● significant decrease in the demand for lithium and/or HREEs;
● delays and/or disruptions in potential investments or funding in our industry by the U.S. Import-Export Bank, U.S. Department of Defense, or the U.S. National Energy Dominance Council; or
● adverse regulatory actions that affect our exploration and construction plans or the use of lithium, critical metals or rare earths generally.
The mining industry is capital intensive,
and we may be unable to fund our capital requirements or meet contractual commitments.
Mining requires a substantial
amount of capital in order to identify and delineate mineral reserves and mineral resources through geological mapping and drilling,
to identify geological features that may prevent or restrict the extraction of ore, to construct mining and processing facilities, expand
production capacity (including by sinking or deepening existing shafts), to replenish reserves, to purchase, maintain and improve assets,
equipment and infrastructure, to comply with legal or regulatory requirements or industry standards as well as to meet unexpected liabilities.
For example, the Company commenced a 2000-meter resource diamond drilling program at the Tanbreez Project site in July 2025, which program
is intended to increase the size of the current mineral resource estimate in order to expedite the finalization of the bankable feasibility
study. Large amounts of capital are required to implement projects, and long-term production and processing requires both significant
capital expenditure and ongoing maintenance expenditure. We expect to materially increase our capital expenditures to support the growth
in our business and operations. Our business plan is based on, among other things, expectations as to capital expenditures and if we
are unable to fund those capital expenditures we will not achieve the targets set forth in our business plan or be able to develop future
capital projects. If we are unable to fund our planned capital expenditure projects as a result of our operations being unable to generate
sufficient cash flow or as a result of difficulties in raising debt or equity funding to support future capital expenditures and investments,
we may no longer be able to complete existing capital projects. In addition, we may be unable to develop new capital projects so as to
continue production at cost-effective levels. Furthermore, any such reduction in capital expenditure may cause us to forego some
of the benefits of any future increases in commodity prices, as it is generally costly or impossible to resume production immediately
or complete a deferred expansionary capital expenditure project, which in the longer term may adversely affect our results of operations
or financial condition.
4
Our business operates in the mining exploration
and evaluation industry. The Tanbreez Project and the Wolfsberg Project are each at the exploration and evaluation stage, and there are
no guarantees that further development of these projects into mines will occur or that such development will result in the commercial
extraction of mineral deposits. In addition, even if an economic mineral deposit is mined, we may not realize profits from
our activities in the short, medium or long term.
We are engaged in the business
of exploring and evaluating mineral properties with the intention of locating economic deposits of HREEs and/or other minerals. We have
declared mineral resources related to the Tanbreez Project and the Wolfsberg Project but have not yet begun to extract mineral from any
of our properties. Accordingly, we cannot assure you that we will realize profits in the medium to long term. Any profitability in the
future from our business will be dependent upon development of an economic deposit of minerals and further exploration, evaluation and
subsequent development of other economic deposits of minerals, each of which is subject to numerous risk factors.
Further, we cannot assure
you that any of our property interests can be commercially mined or that our ongoing exploration programs will result in profitable commercial
mining operations. The exploration and evaluation of mineral deposits involves a high degree of financial risk over a significant period
of time which may or may not be eliminated through a combination of careful evaluation, experience and skilled management. Few properties
which are explored are ultimately developed into producing mines. Major expenses will be required to construct mining and processing
facilities and to establish additional reserves. The profitability of our operations will be, in part, directly related to the cost and
success of our exploration and evaluation programs which may be affected by a number of factors. Additional expenditures are required
to construct, complete and install mining and processing facilities in those properties that are actually mined and developed.
In addition, exploration
and evaluation projects like ours have no operating history upon which to base estimates of future operating costs and capital requirements.
Exploration project items, such as any future estimates of reserves, metal recoveries or cash operating costs will, to a large extent,
be based upon the interpretation of geologic data obtained from a limited number of drill holes and other sampling techniques. Actual
operating costs and economic returns of any and all exploration projects may materially differ from the costs and returns estimated,
and accordingly our financial condition, results of operations and cash flows may be negatively affected.
Our future performance is difficult to
evaluate because we have a limited operating history in the mining, energy and resources sector, including in the battery metals industry.
We have not realized any
revenues to date from the sale of HREEs, lithium or any other critical minerals mined from our properties, and our operating cash flow
needs have been financed primarily through the issuances of debt and equity raises and not through cash flows derived from our operations.
As a result, we have little historical financial and operating information available to help you evaluate our performance.
Our long-term success will depend ultimately
on implementing our business strategy and operational plan, as well as our ability to generate revenues, achieve and maintain profitability
and develop positive cash flows from our mining activities.
Our ability to (i) recover
carrying values of our assets, (ii) acquire additional lithium, critical minerals or rare earths exploration and evaluation projects,
(iii) continue with further exploration and evaluation of existing properties and projects and (iv) potential commercialization
of lithium hydroxide at the Wolfsberg Project ultimately depends on our ability to generate revenues, achieve and maintain profitability
and generate positive cash flow from our operations. The economic viability of our future mining activities has many risks and uncertainties
including, but not limited to:
● a significant, prolonged decrease in the market price of HREEs, lithium concentrate, lithium hydroxide and other critical metals and minerals;
5
● difficulty in marketing, selling, and/or entering into long term offtake agreements for HREEs, lithium or lithium hydroxide;
● significantly higher than expected capital costs to construct our mine;
● significantly higher than expected extraction costs;
● significantly lower volumes than expected HREE or lithium extraction;
● significantly lower recovery of HREE or lithium;
● significantly lower than expected grade of various HREEs or lithium concentrate;
● significant delays, reductions or stoppages of mineral extraction activities;
● difficulty or delays constructing any export facilities, refining and processing plants, magnetic separation technology, and other forms of on-site infrastructure needed after extraction of HREEs or lithium from our projects;
● shortages of adequate and skilled labor or a significant increase in labor costs;
● acts of God, epidemics or pandemics, earthquakes, fire, lightning, ice, fog, storms, cyclones and landslides; perils of the sea, delays relating to demurrage and other force majeure events in the critical metals and mining markets;
● industrial action of an individual or an industry wide nature, lockout;
● accidents and damage to our mines and processing plants;
● insufficiency of supplies or transportation, non-availability of charter parties of suitable vessels for the transportation of workers or material;
● interference caused by war, insurrection, acts of terrorism, acts of foreign enemies, riots and civil commotions, embargos or native title claims;
● actions and measures of protesters (e.g. blockages) which inhibit (i) the works at our mines or related operations or (ii) the transport to or from our mines or processing plants as well as injunctions which stop the performance of works;
● acts of intervention of constituted authorities, including government; sanctions;
● the introduction of significantly more stringent regulatory laws and regulations; and
● delays in the availability of construction equipment.
Our future mining and processing
of HREEs and/or lithium, as well as the associated manufacturing activities, may change as a result of any one or more of these risks
and uncertainties. We cannot assure you that any deposit from which we extract mineralized materials will result in achieving and maintaining
profitability and developing positive cash flows.
6
We are substantially dependent on the continued
growth of the demand for specialty magnets, aircraft avionics, missile guidance systems, drone components, other advanced weapons systems,
the electric vehicle industry and other industries focused on the transition toward next-generation technology in environmental, commercial
and government applications.
For the Tanbreez Project,
our goal is to explore and to develop the Tanbreez rare earths deposit, located in Southern Greenland, to become a reliable western world
(non-PRC linked) supplier of rare earths and other critical metals and minerals to advance the transition toward next generation technology
in environmental, commercial and government applications. The market for such technologies is relatively new, rapidly evolving, and could
be affected by numerous external factors including, but not limited to:
● volatility of the global markets for the rare earths products, disruptions of the supply chains, foreign governments’ interventions to control the strategic supply of the materials;
● environmental impacts of the rare earths exploration and mining activities;
● high costs of production, inflation, changes in the local mining, environmental, tax and economic legislation; and
● anti-mining movements, including local community protests, political and social movements.
We aim to be one of a few
producers of a range of HREEs, critical metals, critical minerals and performance lithium compounds that are a critical input in current
and next generation high energy density batteries used in electric vehicle applications. For the lithium-based products, our growth is
dependent upon the continued adoption of electric vehicles by consumers. If the market for electric vehicles does not develop as we expect,
or develops more slowly than we expect, our business, prospects, financial condition and results of operations will be affected. The
market for electric vehicles is relatively new, rapidly evolving, and could be affected by numerous external factors, such as:
● government regulations and automakers’ responses to those regulations;
● tax and economic incentives;
● rates of consumer adoption, which is driven in part by perceptions about electric vehicle features (including range per charge), quality, safety, performance, cost and charging infrastructure;
● competition, including from other types of alternative fuel vehicles, plug-in hybrid electric vehicles and high fuel-economy internal combustion engine vehicles;
● volatility in the cost of battery materials, oil and gasoline;
● rates of customer adoption of higher performance lithium compounds;
● the environmental impacts of lithium mining;
● emergence of substitute products, replacement lithium hydroxide products by lithium carbonate products;
● rates of development and adoption of next generation high nickel battery technologies, hydrogen fuel cells and other technologies; and
● anti-mining movements, including local community protests, political and social movements.
7
Our long-term success depends, in part,
on our ability to negotiate and enter into binding offtake or sales agreements with, and deliver our product to, third party customers
on commercially viable terms. This may not occur or, should it occur, may not result in the appreciation of our share price similar of
what other companies in our industry have experienced following the announcement of such agreements.
Our success depends on our
ability to generate revenue and operate profitably, which depends in part on our ability to identify target both civilian and military
off-take customers and convert such contacts into meaningful orders or expand on current customer relationships. We do not currently
have any revenue or definitive off-take or sales agreements with customers in place, other than our lithium Offtake Agreement with
BMW. On August 26, 2025, we entered into a letter of intent for an offtake agreement with Ucore Rare Metals Inc. (“Ucore”)
for rare earth concentrate from the Tanbreez Project, but there can be no guarantee that we will enter into a binding agreement with
Ucore on terms favorable to the Company or at all. If we are unable to negotiate, finalize and maintain such agreements and satisfy the
conditions thereto in order to enter into definitive agreements, or are only able to do so on terms that are unfavorable to us, we will
not be able to generate any revenue, which would have a material adverse effect on our business, prospects, operating results and financial
condition.
We anticipate that in some
cases our products will be delivered to certain customers on an early trial deployment basis, where such customers have the ability to
evaluate whether our products meet their performance requirements before they commit to meaningful orders. If our targeted customers
do not commit to make meaningful orders, or at all, it could adversely affect our business, prospects and results of operations. Our
customers may require protections in the form of price reductions and similar arrangements that allow them to require us to deliver additional
product or reimburse them for losses they suffer as a result of our late delivery or failure to meet agreed upon performance specification.
Delays in delivery of our products, unexpected performance problems or other events could cause us to fail to meet these contractual
commitments, resulting in delays in obtaining necessary materials used in our production process, defects in material or workmanship
or unexpected problems in our manufacturing process, which could lead to unanticipated revenue and earnings losses and financial penalties.
The occurrence of any of these events could harm our business, prospects, results of operations and financial results.
Even if we do enter into
offtake and/or sales agreements, we may fail to deliver the product required by such agreements or may experience production costs in
excess of the fixed price to be paid to us under such agreements. In December 2022, we entered into a long-term Offtake Agreement
(the “Offtake Agreement”) with European auto manufacturer, BMW (“BMW”). The Offtake Agreement
is conditioned upon the successful start of commercial production at the Wolfsberg Project and full product qualification and certification.
Pursuant to the Offtake Agreement, on June 5, 2024, BMW made an advance payment of US$15.0 million to us, which is secured by a
bank guarantee at Citi New York (the “Bank Guarantee”) and is subject to be repaid through equal setoffs against battery
grade lithium hydroxide delivered to BMW. The advance payment is not yet freely accessible to CRML, and the Company may only access
the funds under certain conditions. Our business, results of operations and financial condition may be materially and adversely affected
if we are unable to (i) realize the expected benefits under the Offtake Agreement; (ii) enter into similar agreements with
other buyers; (iii) deliver the products required by such agreements; or (iv) experience costs in excess of the price set forth
in such agreements.
Changes in demand signals, macro-economic
trends, technology preferences for particular types of permanent magnets or other developments could adversely affect demand for HREEs
and/or lithium compounds or result in preferences for substitute products.
Demand and market dynamics
for HREEs, particularly demand by the U.S. Government and NATO for HREEs mined and developed outside of China, are evolving and unpredictable.
Supply and demand for particular HREEs remain unclear and are often based on factors outside of our control.
8
Similarly, lithium and its
derivatives are preferred raw materials for certain industrial applications, such as rechargeable batteries. For example, current and
future high energy density batteries for use in electric vehicles will rely on lithium compounds as a critical input. The pace of advances
in current battery technologies, development and adoption of new battery technologies that rely on inputs other than lithium compounds
(such as sulfur and aluminum), the acceptance of hydrogen fuel cells in transport applications or a delay in the development and adoption
of future high nickel battery technologies that utilize lithium hydroxide could significantly impact our prospects and future revenues.
Many materials and technologies are being researched and developed with the goal of making batteries lighter, more efficient, faster
charging and less expensive, some of which could be less reliant on lithium hydroxide or other lithium compounds. Some of these technologies,
such as commercialized battery technologies that use no, or significantly less, lithium compounds, could be successful and could adversely
affect demand for lithium batteries in personal electronics, electric and hybrid vehicles and other applications. We cannot predict which
new technologies may ultimately prove to be commercially viable and on what time horizon. In addition, alternatives to industrial applications
dependent on lithium compounds may become more economically attractive as global commodity prices shift. Our investment in our research
and development infrastructure may not lead to marketable products. Additionally, our competitors may improve their technologies or even
achieve technological breakthroughs either as alternatives to lithium-based battery systems or improvements on existing lithium-based battery
systems that would render our products obsolete or less marketable. Any of these events could adversely affect demand for and market
prices of lithium, thereby resulting in a material adverse effect on the economic feasibility of extracting any mineralization we discover
and reducing or eliminating any reserves we identify.
Our possible future revenues will be mainly
derived from the sale of minerals extracted from our Tanbreez and Wolfsberg projects, including a range of HREEs, lithium hydroxide,
and their respective byproducts. Consequently, our success largely depends on long term market prices for HREEs, lithium and associated
byproducts remaining higher than our realized costs on any future production.
We expect to derive revenues
from the extraction and sale of lithium hydroxide, rare earths and their byproducts. The prices of lithium hydroxide, rare earths and
their byproducts may fluctuate widely and are affected by numerous factors beyond our control, including international, economic and
political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns,
speculative activities, increased production due to new extraction developments and improved extraction and production methods and technological
changes in the markets for the end products. The effect of these factors on prices, and therefore the economic viability of any of our
exploration properties, cannot accurately be predicted.
Additionally, new production
of lithium hydroxide or lithium carbonate from current or new competitors in the lithium markets could adversely affect prices. In recent years,
new and existing competitors have increased the supply of lithium hydroxide and lithium carbonate, which has affected its price. Further
production increases could negatively affect prices. There is limited information on the status of new lithium hydroxide production capacity
expansion projects being developed by current and potential competitors and, as such, we cannot make accurate projections regarding the
capacities of possible new entrants into the market and the dates on which they could become operational. If these potential projects
are completed in the short term, they could adversely affect market lithium prices, thereby resulting in a material adverse effect on
the economic feasibility of extracting any mineralization we discover and reducing or eliminating any reserves we identify.
When compared to many industrial and commercial
operations, mining exploration and evaluation projects are high risk and subject to uncertainties. Each mineral resource is unique and
the nature of the mineralization, and the occurrence and grades of the minerals found in our Tanbreez and Wolfsberg projects, as well
as their behavior during mining, can never be wholly predicted. Our mineral resource estimates may be materially different from mineral
quantities we may ultimately recover, our life-of-mine estimates may prove inaccurate and changes in operating and capital costs
may render mineral resources uneconomic to mine.
We report our mineral resources
in accordance with the requirements of the Modernization of Property Disclosures for Mining Registrants set forth in subpart 1300 of
Regulation S-K. There are numerous uncertainties inherent in estimating quantities of mineral resources and in projecting potential
future rates of mineral production, including many factors beyond our control. The accuracy of any mineral reserve or mineral resource
estimate is a function of a number of factors, including the quality of the methodologies employed, the quality and quantity of available
data and geological interpretation and judgment, and is also dependent on economic conditions and market prices being generally in line
with estimates.
Furthermore, estimates of
different geologists and mining engineers may vary, and results of our mining and production subsequent to the date of an estimate may
lead to revision of estimates due to, for example, reduced recovery rates or increased production costs due to inflation or other factors
which may render mineral reserves and mineral resources containing lower grades of mineralization uneconomic to exploit and may ultimately
result in a restatement mineral reserves and/or mineral resources and may adversely impact future cash flows. Further, mineral estimates
are based on limited sampling and, consequently, are uncertain as the samples may not be representative of the entire deposit and mineral
resource. As a better understanding of a deposit is obtained, the estimates may change significantly. In addition, the mineral reserves
we ultimately exploit may not conform to geological, metallurgical or other expectations and the volume and grade of mineralization recovered
may be below the estimated levels. Mineral reserve and mineral resource data is not indicative of future production.
9
Substantial capital expenditures
are required to identify and delineate mineral reserves and mineral resources through geological surveying and drilling, to identify
geological features that may prevent or restrict the extraction of mineralization, to determine the metallurgical processes to extract
the metals from the mineralization and, in the case of new properties, to construct mining and processing facilities.
There can be no assurance
that we will in the long term be able to identify additional mineral reserves or mineral resources or continue to extend the mine life
of our existing operations. Without such additional mineral reserves and mineral resources, any increase in the level of annual production
would therefore shorten the life of our existing operations. Any failure to identify, delineate and realize mineral reserves and mineral
resources in the future could have an adverse effect on our business, financial condition and results of operations.
The industry in which we operate is subject
to domestic and global competition. We have no influence or control over the activities or actions of our competitors, which activities
or actions may negatively affect the operating and financial performance of our projects and business.
The mining industry is highly
competitive. Much of 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, more staff
and equipment, 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, or expend greater amounts of resources, including capital, in acquiring new and prospective mining projects. 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. 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 or results of operations.
Certain of our officers and directors are
now, and some or all of them may in the future become, affiliated with entities engaged in business activities similar to those conducted
by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business
opportunity should be presented.
Our officers and directors
may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary or contractual duties. Our charter provides that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as our director or officer and such
opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to
the extent the director or officer is permitted to refer that opportunity to us without violating any legal obligation.
In the absence of the “corporate
opportunity” waiver in our charter, certain candidates would not be able to serve as an officer or director. We believe we substantially
benefit from having representatives who bring significant, relevant and valuable experience to our management, and, as a result, the
inclusion of the “corporate opportunity” waiver in our amended and restated certificate of incorporation provides us with
greater flexibility to attract and retain the officers and directors that we feel are the best candidates.
However, the personal and
financial interests of our directors and officers in other corporate opportunities may influence their allocation of time to our current
and future business activities. Consequently, our directors’ and officers’ discretion in identifying and pursuing other corporate
opportunities may result in a conflict of interest, which could negatively impact our operations.
10
Any failure by management to manage growth
properly could have a material adverse effect on our business, operating results and financial condition.
Future growth may place
strains on our financial, technical, operational and administrative resources and cause us to rely more on project partners and independent
contractors, thus, potentially adversely affecting our financial position and results of operations. Our ability to grow will depend
on a number of factors, including:
● our ability to purchase, obtain leases on or obtain options on properties;
● our ability to identify and acquire new exploration prospects;
● our ability to develop existing prospects;
● our ability to continue to retain and attract skilled personnel;
● our ability to maintain or enter into new relationships with project partners and independent contractors;
● the results of our exploration programs;
● the market price for HREEs, lithium, and other critical metals based products and byproducts;
● our ability to successfully complete construction projects on time and within budget;
● our access to capital and our ability to raise capital to fund our operations; and
● our ability to enter into agreements for the sale of lithium rare earths and other critical metals based products and byproducts.
We may not be successful
in upgrading our technical, operational and administrative resources or increasing our internal resources sufficiently to provide certain
of the services currently provided by third parties. Our inability to achieve or manage growth may materially and adversely affect our
business, results of operations and financial condition.
Land reclamation and mine closure may be
burdensome and costly.
Land reclamation and mine
closure requirements are generally imposed on mineral exploration companies, such as ours, which require us, among other things, to minimize
the effects of land disturbance. Such requirements may include controlling the discharge of potentially dangerous effluents from a site
and restoring a site’s landscape to its pre-exploration form. The actual costs of reclamation and mine closure are uncertain
and planned expenditures may differ from the actual expenditures required. Therefore, the amount that we are required to spend could
be materially higher than any current or future estimates. Any additional amounts we are required to spend on reclamation and mine closure
may have a material adverse effect on our financial performance, financial position and results of operations and may cause us to alter
our operations. In addition, we may be required to maintain financial assurances, such as letters of credit, to secure reclamation obligations
under certain laws and regulations. The failure to acquire, maintain or renew such financial assurances could subject us to fines and
penalties or suspension of our operations. Letters of credit or other forms of financial assurance may represent only a portion of the
total amount of money that will be spent on reclamation over the life of a mine’s operation. Although we will include liabilities
for estimated reclamation and mine closure costs in our financial statements, it may be necessary to spend more than what we projected
to fund required reclamation and mine closure activities.
11
There can be no assurance that we will
deliver a definitive feasibility study that supports the economic viability of the Tanbreez Project moving forward or that the assumptions
used in the definitive feasibility study to underpin the viability of the Tanbreez Project will remain true and correct in the future.
The Tanbreez Project is
in the advanced exploration stage, and our planned principal operations have not commenced. There is currently no commercial production
on our project area and we have not yet completed a definitive feasibility study for the Tanbreez Project. We expect to complete a definitive
feasibility study for the Tanbreez Project by the end of 2025, but we could experience delays. Until that time, we cannot be confident
that the mine will operate profitably. We have conducted preliminary drilling programs, which have returned positive results. However,
results obtained from preliminary drilling programs are inherently less certain than data from a definitive feasibility study.
The business of exploring
minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing profitable
mining operations. In developing its mineral deposits, we will be subjected to an array of complex economic factors and accordingly there
is no assurance that a positive definitive feasibility study or any projected results contained in a feasibility study of a mineral deposit
will be attained. Additional potential problems that may prevent us from discovering any reserves of minerals on our project include,
but are not limited to, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates.
Most of these factors are beyond our control, and any of them could increase costs and make extraction of any identified mineral resource
unprofitable. In addition, the estimation of mineral resources (as well as mineral reserves) is a subjective process that is partially
dependent upon the judgment of the persons preparing the estimates. The process relies on the quantity and quality of available data
and is based on knowledge, mining experience, statistical analysis of drilling results and industry practices. Valid estimates made at
a given time may significantly change when new information becomes available.
We cannot assure you that
the definitive feasibility study, if completed, will identify economically extractable minerals, nor can we make assurances regarding
the quantity or grade of any mineralization we seek to extract. Our exploration prospects may not contain any reserves, and any funds
spent on feasibility studies and exploration may be lost. Even for the mineral resource reported on the preliminary feasibility study,
any quantity or grade of indicated resource must be considered as estimates only until the project is in operation. We do not know with
certainty that economically recoverable HREEs exist on the Tanbreez Project area.
In addition, if the commodity
prices change or there is a material change in ore parameter quality, grade and concentrate, recoveries may vary over the 28 years expected
initial life of mine and could affect the project economics and viability of our properties.
Our success depends on developing and maintaining
relationships with local communities and stakeholders.
Our ongoing and future success
depends on developing and maintaining productive relationships with the communities surrounding our mineral projects, including those
people who may have rights or may assert rights to certain of our properties and other stakeholders in our operating locations. Local
communities and stakeholders may be dissatisfied with our activities, or the level of benefits provided, which may result in legal or
administrative proceedings, civil unrest, protests, direct action or campaigns against us. Any such occurrence could materially and adversely
affect our business, financial condition or results of operations, as well as our ability to commence or continue exploration or mine
development activities.
Adverse global conditions, including macroeconomic
slowdowns and recessions, and geopolitical instability, may negatively impact our financial results.
Global conditions, dislocations
in the financial markets, inflation and increasing interest rates could adversely impact our business. The global macroeconomic environment
has been and may continue to be negatively affected by, among other things, instability in global economic markets, increased trade tariffs
and trade disputes, instability in the global credit markets, interest rates or even availability of credit, supply chain weaknesses,
instability in the geopolitical environment as a result of the Russian Ukraine conflict and the Middle East, and other political tensions,
and foreign governmental debt concerns. Such challenges have caused, and may continue to cause, uncertainty and instability in local economies
and in global financial markets, which may adversely affect our business.
12
High interest rates in Europe,
Australia, the U.S., or elsewhere could adversely affect our costs and earnings due to the impact those changes have on our variable-rate debt
instruments.
A strong variation in the
exchange rates between foreign currencies and the U.S. dollar could negatively affect our financial results, as a greater percentage
of our sales and raw material purchases are not made in U.S. dollars. Furthermore, we could be adversely affected by negative economic
conditions prevalent in the U.S. or other countries, even when economic conditions in such countries may differ significantly from
economic conditions in Europe or Australia, as investors’ reactions to developments in any of these other countries may have an
adverse effect on our securities. Consequently, the market value of our securities may be adversely affected by events taking place outside
of Europe, Australia or the U.S.
Additionally, economic downturns
and geopolitical challenges in regions of the world that are critical to our operations have in the past and could in the future cause
supply chain and other disruptions that impact our business. For example, Russia’s and Ukraine’s conflict, and the possibility
of retaliatory measures taken by the U.S. and NATO, the ongoing conflict in Israel, and the Houthi’s disruption to the movement
of goods in the Red Sea have created global security concerns that could have a lasting adverse impact on regional and global economies.
Our business may be adversely affected
by force majeure events outside our control, including labor unrest, civil disorder, war, geopolitical turmoil, subversive activities
or sabotage, extreme weather conditions, fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions.
Natural or environmental
disasters, such as earthquakes, fires, floods, hurricanes, tsunamis and other severe weather-related phenomena generally, and widespread
disease, including pandemics and epidemics, have been and can be highly disruptive to economies and markets and have recently led, and
may continue to lead, to increased market volatility and significant market losses. Such natural disaster and health crises could exacerbate
political, social and economic risks previously mentioned, and result in significant breakdowns, delays, shutdowns, social isolation
and other disruptions to important global, local and regional supply chains affected, with potential corresponding results on our operating
performance. A climate of uncertainty and panic, including the contagion of infectious viruses or diseases, may adversely affect global,
regional and local economies and increase the difficulty of modeling market conditions, potentially reducing the accuracy of our financial
projections. Under these circumstances, we may have difficulty achieving our objectives which may adversely impact performance. Further,
such events can be highly disruptive to economies and markets, significantly disrupt the operations of business partners, sectors, industries,
markets, securities and commodity exchanges, currencies, interest and inflation rates, credit ratings, investor sentiment and other factors
affecting our value.
A widespread crisis or pandemic
may also affect the global economy in ways that cannot necessarily be foreseen at the current time. How long such events will last and
whether they will continue or recur cannot be predicted. Impacts from these events could have significant impact on our performance,
resulting in losses.
Our current management has limited experience
operating a U.S. public company and the recruitment of some of our new management with experience in operating a U.S. public company
has been delayed pending us raising additional capital.
Several of our executive
officers and directors have experience in managing EUR, an Australian publicly traded company, however have no or limited experience
in the management of or governance over a U.S. publicly traded company. The recruitment of some of our new management team with experience
in operating a U.S. public company has been delaying pending raising additional capital. Our management team may not successfully or
effectively manage our transition to a public company which includes significant regulatory oversight and reporting obligations under
federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could
be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will
result in less time being devoted to our management and growth. It is possible that we will be required to expand our employee base and
hire additional employees to support our operations as a public company, which will increase our operating costs.
13
Risks Related to Legal, Compliance and Regulations
We will be required to obtain government
regulatory permits and approvals to conduct exploration and evaluation and subsequent development and mining operations, a process which
is often costly and time-consuming. There is no certainty that all necessary permits and approvals for our planned operations will be
granted.
We are required to obtain
and renew governmental permits and approvals in addition to the license for further exploration and evaluation activities. Prior to any
mining, construction, or on-ground disturbance activity, we are required to obtain additional governmental permits and approvals, some
of which are under application with relevant government regulators. Obtaining and renewing any of these governmental permits is a complex,
time-consuming and uncertain process involving numerous jurisdictions, public hearings and possibly costly undertakings. The timeliness
and success of permitting efforts are contingent upon many variables, some of which are not within our control, including the interpretation
of approval requirements administered by the applicable governmental authority as well as the time required for, and the outcome of,
environmental impact assessment proceedings in Austria and extension of the exclusive license for exploitation of rare earths minerals
for the Tanbreez Project in Greenland.
We may not be able to obtain
or renew permits or approvals that are necessary to our planned operations, or we may discover that the cost and time required to obtain
or renew such permits and approvals exceeds our expectations. Any unexpected delays, costs or conditions associated with the governmental
approval process could delay our planned exploration and evaluation as well as any subsequent development and mining operations, which
in turn could materially adversely affect our prospects, revenues and profitability. In addition, our prospects may be adversely affected
by the revocation or suspension of permits or by changes in the scope or conditions to use of any permits obtained.
For example, in addition
to the permits that we have been issued to date, we are required to obtain other permits and approvals before construction or operations
related to construction mining, mineral processing and chemical manufacturing.
Private parties, such as
environmental activist organizations, frequently attempt to intervene in the permitting process to persuade regulators to deny necessary
permits or seek to overturn permits that have been issued. These third-party actions can materially increase the costs and cause
delays in the permitting process and could cause us to not proceed with the development or operation of a property. In addition, our
ability to successfully obtain key permits and approvals to explore for, develop, operate and expand operations will likely depend on
our ability to undertake such activities in a manner consistent with the creation of social and economic benefits in the surrounding
communities, which may or may not be required by law. Our ability to obtain permits and approvals and to successfully operate in particular
communities may be adversely affected by real or perceived detrimental events associated with our activities.
Our failure to comply with applicable anti-corruption,
anti-bribery, anti-money laundering and similar laws and regulations could negatively impact our reputation and results of operations.
The legal and regulatory
framework in which we operate is complex, and our governance and compliance policies and processes may not prevent potential breaches
of law or accounting or other governance practices. Our operating and ethical codes, among other standards and guidance, may not prevent
instances of fraudulent behavior and dishonesty, nor guarantee compliance with legal and regulatory requirements.
We are required to comply
with anti-corruption laws and regulations imposed by governments around the world with jurisdiction over our operations, which may
include Austria and Australian anti-bribery and corruption legislation, as well as the laws of the other countries (for example,
the U.S. Foreign Corrupt Practices Act and the UK’s Bribery Act 2010) where we do business or have a close connection.
These laws and regulations may restrict our operations, trade practices, investment decisions and partnering activities. These and other
applicable laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from
corruptly offering, promising, authorizing or providing anything of value to “foreign officials” for the purposes of influencing
official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. We are subject to the jurisdiction
of various governments and regulatory agencies around the world, which may bring our personnel and representatives into contact with
“foreign officials” responsible for issuing or renewing permits, licenses or approvals or for enforcing other governmental
regulations.
14
Our failure to successfully
comply with these laws and regulations may expose us to reputational harm, as well as significant sanctions, including criminal fines,
imprisonment, civil penalties, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial
measures. Investigations of alleged violations can be expensive and disruptive. We continuously develop and maintain policies and procedures
designed to comply with applicable anti-corruption, anti-bribery, anti-money laundering and similar areas. However, there can be
no guarantee that our policies and procedures will effectively prevent violations by our employees or business partners acting on our
behalf, for which we may be held responsible, and any such violation could adversely affect our reputation, business, results of operations
and financial condition.
Our operations are subject to environmental,
health and safety regulations, which could impose additional costs and compliance requirements, and we may face claims and liability
for breaches, or alleged breaches, of such regulations and other applicable laws.
Our operations are subject
to compliance with various environmental, health and safety laws, regulations, permitting requirements and standards in Greenland, Austria,
and Saudi Arabia.
We are subject to environmental
laws, regulations and permits in the various jurisdictions in which we operate, including those relating to, among other things, the
removal and extraction of natural resources, the emission and discharge of materials into the environment, including plant and wildlife
protection, remediation of soil and groundwater contamination, reclamation and closure of properties, including waste storage facilities,
groundwater quality and availability, and the handling, storage, transport and disposal of wastes and hazardous materials. Pursuant to
such requirements, we may be subject to inspections or reviews by governmental authorities. Failure to comply with these environmental
requirements may expose us to litigation, fines or other sanctions, including the revocation of permits and suspension of operations.
We expect to continue to incur significant capital and other compliance costs related to such requirements. These laws, regulations and
permits, and the enforcement and interpretation thereof, change frequently and generally have become more stringent over time. If our
noncompliance with such regulations were to result in the release of hazardous materials into the environment, such as soil or groundwater,
we could be required to remediate such contamination, which could be costly. Moreover, noncompliance could subject us to private claims
for property damage or personal injury based on exposure to hazardous materials or unsafe working conditions. In addition, changes in
applicable requirements or stricter interpretation of existing requirements may result in costly compliance requirements or otherwise
subject us to future liabilities. The occurrence of any of the foregoing, as well as any new environmental, health and safety laws and
regulations applicable to our business or stricter interpretation or enforcement of existing laws and regulations, could have a material
adverse effect on our business, financial condition and results of operations.
We also could be liable
for any environmental contamination at, under or released from our or our predecessors’ currently or formerly owned or operated
properties or third-party waste disposal sites. Some environmental laws hold all parties strictly liable for hazardous substance
releases at properties or sites, regardless of fault or whether the original actions were legal. A generator of waste can be held responsible
for contamination resulting from the treatment or disposal of such waste at any off-site location (such as a landfill), regardless
of whether the generator arranged for the treatment or disposal of the waste in compliance with applicable laws. Costs associated with
liability for removal or remediation of contamination or damage to natural resources could be substantial and liability under these laws
may attach without regard to whether the responsible party knew of, or was responsible for, the presence of the contaminants. Accordingly,
we may be held responsible for more than our share of the contamination or other damages, up to and including the entire amount of such
damages. In addition to potentially significant investigation and remediation costs, such matters can give rise to claims from governmental
authorities and other third parties, including for orders, inspections, fines or penalties, natural resource damages, personal injury,
property damage, toxic torts and other damages.
Our costs, liabilities and
obligations relating to environmental matters could have a material adverse effect on our business, financial position and results of
operations.
The core health risks associated
with our exploration and evaluation operations arise from occupational exposure and community environmental exposure to silica dust,
noise and certain hazardous substances, including toxic gases and harmful particulates. The most significant occupational diseases affecting
our workforce include lung diseases (such as silicosis, tuberculosis, a combination of the two and chronic obstructive airways disease)
as well as noise-induced hearing loss. Past and current employees may be awarded compensation for occupational illnesses (and injuries)
in accordance with the legislative regime applicable to the illness contracted.
15
In the case of occupational
diseases such as silicosis, employees retain the right to seek additional compensation from their employer in a civil action under common
law (either as individuals or as a class) for the shortfall of their claims, to the extent that such claims are not fully satisfied under
the statutory workers compensation regime (which, due to the low thresholds set by statute, is often the case).
Additionally, due to the
nature of our operations, our employees and contractors are exposed to varying degrees of risk in the workplace. These risks may include
exposure to dangerous situations, machinery or materials and/or health hazards and have the potential to result in disease, personal
injury or death. We are responsible for the health, safety and security of our employees (including third-party personnel) working
at sites and persons who are not employed by us but may be directly affected by our operations under our management and, accordingly,
must implement adequate health and safety systems and procedures. Health and safety incidents can result in loss of life, losses and
liabilities, work stoppages, serious damage to equipment or property or environmental damage. These risk factors can, singularly or in
combination, have a material effect on our reputation, results of operations and financial condition. In the event of disease, injury
or death arising out of the negligence of an employer or its employees, a risk of criminal and, in certain circumstances, civil litigation
exists. In the case of a work-related fatality, an employer may be subjected to criminal charges in a court of law. Furthermore,
such incidents can result in violations of various health and safety laws and regulations that could have a material adverse effect on
our results of operations, financial condition and/or prospects.
The impact of climate change may adversely
affect our operations and/or result in increased costs to comply with changes in regulations.
Climate change is an international
and community concern which may directly or indirectly affect our business and current and future activities. The continuing rise in
global average temperatures has created varying changes to regional climates across the world and extreme weather events have the potential
to delay or hinder our exploration activities at our mineral projects, and to delay or cease operations at any future mine. This may
require us to make additional expenditures to mitigate the impact of such events which may materially and adversely increase our costs
and/or reduce production at a future mining operation. Governments at all levels are amending or enacting additional legislation to address
climate change by regulating, among other things, carbon emissions and energy efficiency, or where legislation has already been enacted,
regulation regarding emission levels and energy efficiency are becoming more stringent. As a significant emitter of greenhouse gas emissions,
the mining industry is particularly exposed to such regulations. Compliance with such legislation, including the associated costs, may
have a material adverse effect on our business, financial condition, results of operations, prospects and our ability to commence or
continue our exploration, evaluation and any future development and mining operations.
Changing climate patterns
may also affect the availability of water. If the effects of climate change cause prolonged disruption in the delivery of essential commodities,
then production efficiency may be reduced, which may have a material adverse effect on our business, financial condition, results of
operations and prospects.
In addition, climate change
is perceived as a threat to communities and governments globally and stakeholders may demand reductions in emissions or call upon mining
companies to better manage their consumption of climate-relevant resources. Negative social and reputational attention toward our
operations may have a material adverse effect on our business, financial condition, results of operations and prospects. A number of
governments have already introduced or are moving to introduce climate change legislation and treaties at the international, national,
state/provincial and local levels. Regulations relating to emission levels (such as carbon taxes) and energy efficiency are becoming
more stringent. If the current regulatory trend continues, this may result in increased costs at some or all of our mineral projects.
We face opposition from organizations that
oppose mining which may disrupt or delay our mining projects.
There is an increasing level
of public concern relating to the effects of our exploration and evaluation activities on the natural landscape, in communities and on
the environment. Certain non-governmental organizations, public interest groups and reporting organizations (“NGOs”)
that oppose resource development can be vocal critics of the mining industry. In addition, there have been many instances in which local
community groups have opposed resource extraction activities, which have resulted in disruption and delays to the relevant operation.
NGOs or local community organizations could create direct adverse publicity against and/or disrupt the operations of our properties,
regardless of our successful compliance with social and environmental best practices, due to political factors. Any such actions and
the resulting media coverage could have an adverse effect on our reputation and financial condition or our relationships with the communities
in which we operate, which could have a material adverse effect on our business, financial condition or results of operations.
16
The requirements of being a public company
in the U.S. may strain our resources and divert management’s attention, and the increases in legal, taxation, accounting and
compliance expenses that will result from being a public company in the U.S. may be greater than we anticipate.
Requirements associated
with being a public company in the United States require significant resources and management attention. We are subject to reporting
requirements of the Exchange Act and Nasdaq. We are also subject to different taxation legislation in the jurisdictions in which
we operate in addition to various other regulatory requirements, including the Sarbanes-Oxley Act. We expect these rules and regulations
to increase our legal, accounting and financial compliance costs and to make some activities more time-consuming and costly. For
example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors’ and
officers’ liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of
directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs.
In addition, complying with rules and regulations and the increasingly complex laws pertaining to public companies will require substantial
attention from our senior management, which could divert their attention away from the day-to-day management of our business.
These cost increases and the diversion of management’s attention could materially and adversely affect our business, results of
operations and financial condition. We will also need to hire additional personnel to support our financial reporting function and may
face challenges in doing so.
Our business could be adversely affected
by trade tariffs or other trade barriers.
Our business will be subject
to the imposition of tariffs and other trade barriers, which may make it more costly for us to export our minerals to the imposing country.
If we experience cost increases as a result of existing or future tariffs and are unable to pass on such additional costs to our customers,
or otherwise mitigate the costs, or if demand for our exported minerals decreases due to the higher cost, our business, prospects, financial
condition, results of operations and cash flows may be materially and adversely affected.
We are exposed to possible litigation risks,
including mining permit disputes (including in respect of access and/or validity of tenure), environmental claims, occupational
health and safety claims and employee claims. Further, we may be involved in disputes with other parties in the future that may result
in litigation. Current or future litigation or administrative proceedings could have a material adverse effect on our business, financial
condition and results of operations.
We may become involved in,
named as a party to, or be the subject of, various legal proceedings, including regulatory proceedings, tax proceedings and legal actions,
relating to personal injuries, property damage, property taxes, land rights, the environment and contract disputes.
The outcome of outstanding,
pending or future proceedings cannot be predicted with certainty and may be determined adversely to us and as a result, could have a
material adverse effect on our assets, liabilities, business, financial condition or results of operations. Even if we prevail in any
such legal proceeding, the proceedings could be costly, time-consuming and may divert the attention of management and key personnel
from our business operations, which could adversely affect our financial condition.
We are subject to risks from legal and
arbitration proceedings, including those related to the GEM Agreements, that may prevent us from pursuing our business activities or
require us to incur additional costs in defending against claims or paying damages.
We may become subject to
legal disputes and regulatory proceedings in connection with our business activities. We may not be insured against all potential damages
that may arise out of any claims to which we may be party in the ordinary course of our business. A negative outcome of these proceedings
may prevent us from pursuing certain activities and/or require us to incur additional costs in order to do so and pay damages. In addition,
securities class action litigation has often been instituted against companies following periods of volatility in the market price of
a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s
attention and resources, which would harm our business, financial condition, results of operations and prospects. Additionally, the significant
increase in the cost of directors’ and officers’ liability insurance may cause us to opt for lower overall policy limits
or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs.
17
We are currently involved
in arbitration proceedings with the Gem Global Yield LLC SCS (together with its affiliates, the “GEM Investor”) related
to the Share Purchase Agreement, dated July 4, 2023 (together with the GEM Letter Agreements (as defined below) the “GEM Agreements”).
The GEM Agreements permit the draw down up to $125 million of gross proceeds in exchange for the
issuance of ordinary shares on the terms and conditions set forth in the GEM Agreements. At the time we entered into the GEM Agreement
in connection with the closing of the Business Combination, we issued 122,549 ordinary shares to the GEM Investor as a “commitment
fee,” as well as warrants to purchase 1,814,797 ordinary shares (which we refer to as the “GEM Warrant”). In
addition, in connection with the closing of the Business Combination, we entered into a letter agreement (the “First Letter
Agreement”) with the GEM Investor and GYBL, pursuant to which, in exchange for certain commitments from the GEM Investor, the
GEM Investor was granted the option to sell the commitment fee shares back to us for $1.875 million on the 61st day following the closing
of the Business Combination (the “Commitment Fee Put Amount”). In addition, under the First Letter Agreement the GEM
Investor was granted the right to purchase the GEM Warrant on the one-year anniversary of the closing of the Business Combination from
GEM Global in exchange for a number of ordinary shares having a value equal to $27,200,000. On April 29, 2024, we, GEM Global and GYBL
entered into a second letter agreement (the “Second Letter Agreement”) pursuant to which, among other things, we were
granted the option to deliver, in lieu of the Commitment Fee Put Amount on the date upon which it was otherwise due and payable, a payment
of $3,020,000 on or prior to the 120th day after the closing of the Business Combination. On September 27, 2024, we, GEM Global and GYBL
entered into a third letter agreement (the “Third Letter Agreement” and together with the First Letter Agreement and
the Second Letter Agreement, the “GEM Letter Agreements”), pursuant to which, among other things, we agreed to deliver,
in lieu of the Commitment Fee Put Amount on the date upon which it was otherwise due and payable, a cash payment of $3,500,000 following
the consummation of a capital raising transaction, which amount would incur interest at a 10% annual rate. On February 7, 2025 we
completed a capital raising transaction. On February 27, 2025 the GEM Investor exercised its right to require us to purchase the GEM
Warrant for an amount of ordinary shares having a value equal to $27,200,000. As of the date of this report, we have not made the cash
payment described above or issued the ordinary shares to repurchase the GEM Warrant since we are involved in arbitration proceedings
with the GEM Investor. In connection with the arbitration we have made certain counterclaims concerning actions taken by the GEM Investor
under the GEM Agreement. We cannot predict the outcome of this arbitration, and as a result we may be required to pay all or a portion
of the $3,500,000 and/or issue a material amount of ordinary shares to repurchase the GEM Warrant, in each case plus interest.
The outcomes of pending
or potential future legal and arbitration proceedings, including those related to the GEM Agreements described above, are difficult to
predict with certainty. In the event of a negative outcome of any material legal or arbitration proceeding, whether based on a judgment
or a settlement agreement, we could be obligated to make substantial payments or issue a material amount of our ordinary shares, which
could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, the costs
related to litigation and arbitration proceedings may be significant, and any legal or arbitration proceedings could have a material
adverse effect on our business, financial condition, results of operations and prospects, even if ultimately resolved in our favor.
Risks Related to Technology
Any unauthorized access to, disclosure,
or theft of personal information we gather, store, or use could harm our reputation and subject us to claims or litigation.
We maintain information
necessary to conduct our businesses, including confidential and proprietary information as well as personal information regarding our
customers and employees, in digital form. We also use computer systems to deliver our products and services and operate our businesses.
Data maintained in digital form is subject to the risk of unauthorized access, modification, exfiltration, destruction or denial of access
and our computer systems are subject to cyberattacks that may result in disruptions in service. We use many third-party systems
and software, which are also subject to supply chain and other cyberattacks. We develop and maintain information security programs to
identify and mitigate cyber risks but the development and maintenance of these programs is costly and requires ongoing monitoring and
updating as technology changes and efforts to overcome security measures become more sophisticated. Accordingly, despite our efforts,
the risk of unauthorized access, modification, exfiltration, destruction or denial of access with respect to data or systems and other
cybersecurity attacks cannot be eliminated entirely, and the risks associated with a potentially material incident remain. In addition,
we provide some confidential, proprietary and personal information to third parties in certain cases when it is necessary to pursue business
objectives. While we obtain assurances that these third parties will protect this information and, where we believe appropriate, monitor
the protections employed by these third parties, there is a risk the confidentiality of data held by third parties may be compromised.
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If our information or cyber
security systems or data are compromised in a material way, our ability to conduct our business may be impaired, we may lose profitable
opportunities or the value of those opportunities may be diminished and, as described above, we may lose revenue as a result of unlicensed
use of our intellectual property. If personal information of our customers or employees is misappropriated, our reputation with our customers
and employees may be damaged, resulting in loss of business or morale, and we may incur costs to remediate possible harm to our customers
and employees or damages arising from litigation and/or to pay fines or take other action with respect to judicial or regulatory actions
arising out of the incident. Insurance we obtain may not cover losses or damages associated with such attacks or events.
A failure of our information technology
and data security infrastructure could adversely affect our business and operations.
We rely on various information
technology systems. These systems remain vulnerable to disruption, damage or failure from a variety of sources, including, but not limited
to, errors by employees or contractors, computer viruses, cyberattacks, including phishing, ransomware, and similar malware, misappropriation
of data by outside parties, and various other threats. Techniques used to obtain unauthorized access to or sabotage our systems are under
continuous and rapid evolution, and we may be unable to detect efforts to disrupt our data and systems in advance. Breaches and unauthorized
access carry the potential to cause losses of assets or production, operational delays, equipment failure that could cause other risks
to be realized, inaccurate recordkeeping, or disclosure of confidential information, any of which could result in financial losses and
regulatory or legal exposure, and could have a material adverse effect on our business, financial condition or results of operations.
We may incur material losses relating to cyberattacks or other information security breaches in the future. Our risk and exposure to
these matters cannot be fully mitigated because of, among other things, the evolving nature of these threats. As such threats continue
to evolve, we may be required to expend additional resources to modify or enhance any protective measures or to investigate and remediate
any security vulnerabilities.
Operating Risks
The development of mining operations at
the Tanbreez Project in Greenland and the Wolfsberg Project in Austria is dependent on a number of factors, many of which are beyond
our control. If we commence production at the Tanbreez Project and the Wolfsberg Project, our operations may be disrupted by a variety
of risks and hazards that could have a material adverse effect on our future operating costs, financial condition and ability to develop
and operate a mine.
Mining by its nature involves
significant risks and hazards, including environmental hazards, as well as industrial and mining accidents. These include, for example,
seismic events, fires, cave-ins and blockages, flooding, discharges of gasses and toxic substances, contamination of water, air
or soil resources, unusual and unexpected rock formation affecting mineralization or wall rock characteristics, ground or slope failures,
rock bursts, wildfires, radioactivity and other accidents or conditions resulting from mining activities, including, among others, blasting
and the transport, storage and handling of hazardous materials. In addition, production, in general, is negatively affected by high rainfall
and inclement weather conditions affecting mining in an open pit environment.
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We remain at risk of experiencing
environmental and other industrial hazards, as well as industrial and mining accidents. Any such incident could have a material adverse
effect on our business, operating results and financial condition. Seismic activity is of particular concern in the underground mining
environment. Seismic events have intermittently in the past caused death and injury to workers and can result in safety-related stoppages.
Additionally, seismic activity has also caused a loss of mining equipment, damage to and destruction of mineral properties and production
facilities, monetary losses, environmental damage and potential legal liabilities.
Furthermore, there is the
risk that relevant regulators may impose fines and work stoppages for non-compliant mining operating procedures and activities,
which could reduce or halt production until lifted. The occurrence of any of these events could delay or halt production, increase production
costs and result in financial and regulatory liability for us, which could have a material adverse effect on our business, results of
operations and financial condition. In addition, the relevant environmental authorities have issued and may issue administrative directives
and compliance notices in the future, to enforce the provisions of the relevant statutes to take specific anti-pollution measures,
continue with those measures and/or to complete those measures. The authorities may also order the suspension of part, or all of, our
operations if there is non-compliance with legislation. Contravention of some of these statutes may also constitute a criminal offense
and an offender may be liable for a fine or imprisonment, or both, in addition to administrative penalties.
As a result, the occurrence
of any of these events may have a material adverse effect on our business, results of operations and financial condition.
The occurrence of significant events against
which we may not be fully insured could have a material adverse effect on our business, financial condition and results of operations.
Although we have an insurance
program, we may become subject to liability for pollution, occupational illness or other hazards against which we have not been insured,
cannot insure or are insufficiently insured, including those relating to future mining activities. Our existing property and liability
insurance contain specific exclusions and limitations on coverage. Should we suffer a major loss, which is insufficiently covered, future
earnings could be affected. In addition, certain classes of insurance may not continue to be available at economically acceptable premiums.
As a result, in the future, our insurance coverage may not fully cover the extent of claims against it or any cross-claims made.
Risks Related to Our Projected Mining Operations
Actual capital costs, operating costs,
production and economic returns may differ significantly from those we have anticipated and future development activities may not result
in profitable mining operations.
The actual operating
costs at any mineral project that we are able to develop into an operating mine will depend upon changes in the availability and
prices of labor, equipment and infrastructure, variances in mineralization recovery and mining rates from those assumed in any
mining plan that may be generated, operational risks, changes in governmental regulation, including taxation, environmental,
permitting and other regulations and other factors, many of which are beyond our control. Due to any of these or other factors, the
operating costs at any such future mine may be significantly higher than those forth in the applicable Technical Report Summary
and will use as a basis for construction of a mine. As a result of higher capital and operating costs, production and economic
returns may differ significantly from those set forth in such report and any future development activities may not result in
profitable mining operations.
Mining projects such as ours have no operating
history on which to base estimates of future operating costs and capital requirements. Any projections we make are based upon estimates
and assumptions made at the time they were prepared. If these estimates or assumptions prove to be incorrect or inaccurate, our actual
operating results may differ materially from our forecasted results.
Our exploration and evaluation
projects have no operating history on which to base estimates of future commercial viability. Estimates of mineral resources and mineral
reserves are largely based on the interpretation of geological data obtained from drill holes and other sampling techniques and feasibility
studies. This information is used to calculate estimates of the capital cost and operating costs based on anticipated tonnage and grades
of mineralization to be mined and processed, the configuration of the mineral resource, expected recovery rates, comparable facility
and equipment operating costs, anticipated climatic conditions and other factors. As a result, the actual capital cost, operating costs
and economic returns of any proposed mine may differ from those estimated, and such differences could have a material adverse effect
on our business, results of operations, financial condition and prospects. There can be no assurance that we will be able to complete
the development of our mineral projects, or any of them, at all or on time or to budget due to, among other things, and in addition to
those factors described above, changes in the economics of the mineral projects, delays in receiving required consents, permits and licenses
(including mining licenses), the delivery and installation of plant and equipment and cost overruns, or that the current personnel, systems,
procedures and controls will be adequate to support our operations. Should any of these events occur, it would have a material adverse
effect on our business, results of operations, financial condition and prospects.
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Our resource estimates may change significantly
when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to
some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork
and analysis, our estimates are likely to change and these changes may result in a reduction in our resources. These changes may also
result in alterations to our further exploration and any future development and mining plans, which may, in turn, adversely affect our
operations.
Estimated mineral resources
(and mineral reserves) may have to be recalculated based on changes in commodity prices, further exploration or subsequent development
activity, loss or change in permits or actual production experience. Such changes could materially and adversely affect estimates of
the volume or grade of mineralization, estimated recovery rates or other important factors that influence mineral resource estimates.
The extent to which our mineral resources may ultimately be reclassified as mineral reserves depends on the demonstration of their profitable
recovery and economic mineability. You should not assume that any part of an inferred mineral resource will be upgraded to a higher category
or that any of the mineral resources will be reclassified as mineral reserves.
Material changes in mineral
resources, if any, grades, stripping ratios or recovery rates may affect the economic viability of any project. Our future growth and
productivity will depend, in part, on our ability to develop and maintain commercially mineable mineral rights at our existing properties
or identify and acquire other commercially mineable mineral rights, and on the costs and results of continued exploration and potential
development programs.
Risk Related to our Structure and Regulatory
Matters
European Lithium is listed on the Australian
Securities Exchange, which could divert our management’s time and resources away from our exploration efforts. We may face claims
and liability for breaches, or alleged breaches, of Australian regulations and other applicable laws.
European Lithium will remain
listed, and will be required to comply with Australian corporate law and the listing rules of the Australian Securities Exchange (the
“ASX”). We have policies and procedures that we believe are designed to provide reasonable assurance that our actions
will not infringe on either Australian corporate law or the ASX listing rules. These laws, regulations and standards are subject to varying
interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by Australian regulatory
and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may
result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities
to compliance activities. If, notwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatory
authorities may initiate legal proceedings against us and our business may be harmed.
We are dependent upon distributions from
our subsidiaries to pay taxes and cover our corporate and other overhead expenses and pay dividends, if any, on our ordinary shares.
We do not currently intend to pay dividends on our ordinary shares and, consequently, your ability to achieve a return on your investment
will depend on appreciation in the price of our ordinary shares.
We are a holding company
and have no material assets other than our equity interest in our subsidiaries. We have no independent means of generating revenue and
depend on our subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations,
including our expenses as a publicly traded company, and to pay any dividends with respect to our ordinary shares. Legal and contractual
restrictions may limit our ability to obtain cash from our subsidiaries. Thus, we do not currently expect to pay cash dividends
on our ordinary shares. Any future dividend payments are within the absolute discretion of the Board of Directors of the Company (the
“Board”) and will depend on, among other things, our results of operations, working capital requirements, capital
expenditure requirements, financial condition, level of indebtedness, contractual restrictions with respect to payment of dividends,
business opportunities, anticipated cash needs, provisions of applicable law and other factors that the Board may deem relevant.
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As a “foreign private issuer”
under the rules and regulations of the SEC, we are permitted to, and may, file less or different information with the SEC than a company
incorporated in the United States or otherwise not filing as a “foreign private issuer,” and will follow certain home
country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.
We are a “foreign
private issuer” under the SEC rules and are therefore exempt from certain rules under the Exchange Act, including the proxy
rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover,
we are not required to file periodic reports and financial statements with the SEC as frequently or within the same timeframes as U.S. companies
with securities registered under the Exchange Act. We currently prepare our financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board, and we are not required to reconcile our financial
statements to U.S. GAAP. We are not required to comply with Regulation Fair Disclosure, or Regulation FD, which imposes
restrictions on the selective disclosure of material information to shareholders. In addition, our officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act
and the rules under the Exchange Act with respect to their purchases and sales of our securities.
In addition, as a “foreign
private issuer” whose shares are listed on Nasdaq, we are permitted, subject to certain exceptions, to follow certain home country
rules in lieu of certain Nasdaq listing requirements. We have the
option to rely on available exemptions under the Listing Rules that would allow us to follow home country practice, including, among
other things, the ability to opt out of (i) the requirement that the Board be comprised of a majority independent directors, (ii) the
requirement that our independent directors meet regularly in executive sessions and (iii) the requirement that we obtain shareholder
approval prior to the issuance of securities in connection with certain acquisitions, private placements of securities, or the establishment
or amendment of certain stock option, purchase or other compensation plans.
We have elected to
follow certain home country rules. Accordingly, our shareholders may receive less or different information about us than they would
receive about a U.S. domestic public company, and our shareholders may not have the ability to vote on or approve certain
transactions that are typical of a U.S. domestic public company. Please see “Item 16G. Corporate Governance” for
additional information.
We may lose our foreign private issuer
status which would then require us to comply with the domestic reporting regime of the Securities Exchange Act of 1934,
as amended, and cause us to incur significant additional legal, accounting and other expenses.
As discussed above, we are
a foreign private issuer and therefore are not required to comply with all of the periodic disclosure and current reporting requirements
of the Exchange Act, and we take advantage of certain exemptions to Nasdaq’s corporate governance rules. The determination
of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal
quarter, and, accordingly, our most recent determination of foreign private issuer status was made on December 31, 2023. In the
future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents
and (2) a majority of our directors or executive officers are U.S. citizens or residents, or if we fail to meet additional
requirements necessary to avoid loss of foreign private issuer status. If we lose our foreign private issuer status, we will be required
to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive
than the forms available to a foreign private issuer. In such an event, we would have to mandatorily comply with U.S. federal proxy
requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and
recovery provisions of Section 16 of the Exchange Act. In addition, we would lose our ability to rely upon exemptions from
certain corporate governance requirements under the listing rules of Nasdaq. As a U.S. listed public company that is not a foreign
private issuer, we would incur significant additional legal, accounting and other expenses that it will not incur as a foreign private
issuer.
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We are a “controlled company”
within the meaning of Nasdaq rules and, as a result, qualify for exemptions from certain corporate governance requirements.
EUR controls a majority
of the voting power of our outstanding shares. As a result of its voting control, EUR is effectively able to determine the outcome of
all matters requiring shareholder approval, including the election and removal of directors (subject to the contractual designation rights
set forth in the Investors Agreement). As a result of being able to appoint and remove directors, EUR will indirectly effectively control
mergers and acquisitions, payment of dividends, and other matters of corporate or management policy. Under Nasdaq rules, a listed company
of which more than 50% of the voting power for the election of directors is held by any person or group of persons acting together is
a “controlled company” and may elect not to comply with certain Nasdaq corporate governance requirements, including the requirement
(i) that a majority of our Board consist of independent directors, as defined under the Nasdaq rules, (ii) to have a nominating
and governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose
and responsibilities, (iii) to have director nominees selected, or recommended for our Board’s selection, either by a majority
of the independent directors or a nominating committee comprised solely of independent directors, and (iv) to have a compensation
committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
We have elected to be treated as a “controlled company.” Accordingly, you may not have the same protections afforded to shareholders
of companies that are subject to all of the Nasdaq corporate governance requirements.
EUR may have its interest
in us diluted due to future equity issuances or its own actions in selling our ordinary shares, in each case, which could result in a
loss of the “controlled company” exemption under Nasdaq listing rules. We would then be required to comply with those provisions
of Nasdaq listing requirements.
If we fail to maintain effective internal
control over financial reporting, the price of our ordinary shares may be adversely affected.
We are required to establish
and maintain appropriate internal control over financial reporting. Failure to establish those controls, or any failure of those controls
once established, could adversely affect our public disclosures regarding our business, financial condition or results of operations.
In addition, management’s assessment of internal control over financial reporting may identify weaknesses and conditions that need
to be addressed in our internal control over financial reporting, or other matters that may raise concerns for investors. Any actual
or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting, or disclosure of management’s
assessment of our internal control over financial reporting, may have an adverse impact on the price of our ordinary shares.
In connection with the audit
of our consolidated financial statements for the years ended June 30, 2025 and 2024, we and the auditors identified six significant deficiencies
in our internal control over financial reporting. The significant deficiencies related to the following:
● The Company did not maintain a sufficient complement of personnel and lack of to permit the segregation of duties among personnel with access to the Company’s accounting and information systems and controls.
● As a result of the lack of personnel, the Company lacks the controls needed to ensure that the accounting for its related party transactions is accurate and complete.
● The Company lacks the controls needed to assure that the accounting for its accounts payable and accrued expenses is accurate and complete.
● The Company lacks the controls needed to perform an adequate review of the income tax provision and to assure the complete disclosures in the financial statements’ footnotes.
● The Company lacks the controls needed for the proper accounting for complex financial instruments, including private warrants.
● The Company does not maintain an adequate cybersecurity program to help prevent, detect and respond to risks such as financial loss, or loss of financial data, damage or disruption to operations, susceptibility to a repeated attack, and overall failure of information technology systems.
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The requirements of being a public company
may strain our resources and divert management’s attention.
As a public company, we
are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing
requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increase
our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our
systems and resources, particularly after it is no longer an “emerging growth company.” The Sarbanes-Oxley Act requires,
among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order
to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this
standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from
other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future
or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
In addition, changing laws,
regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing
legal and financial compliance costs and making some activities more time consuming. 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. We intend to invest resources to comply
with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a
diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to
comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities
related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely
affected.
We have concluded that there are significant
deficiencies in our internal control over financial reporting and we cannot assure you that additional sufficient deficiencies will not
be identified in the future. These significant deficiencies may not be timely remediated and general reputational harm could result or
persist, which could affect our business, operations and financial condition. The failure to implement and maintain effective internal
control over financial reporting could result in material misstatements in the financial statements, which could require us to restate
financial statements, cause investors to lose confidence in the reported financial information and have a negative effect on the price
of our ordinary shares.
In the course of auditing
the consolidated financial statements for the years ended June 30, 2025, we and our independent registered public accounting firm identified
six significant deficiencies in the internal control over financial reporting as of June 30, 2025, in accordance with the standards established
by the PCAOB. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting
that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the financial
reporting. These significant deficiencies relate to the segregation of duties, related party transactions, accounting for accounts payable
and accrued expenses, income tax provision and related disclosures, accounting for complex financial instruments, and cybersecurity programs.
We aim to take certain measures by hiring additional personnel and implement policies and procedures to remediate the identified significant
deficiencies, although no assurance can be given as to whether these steps will be sufficient. The implementation of these improvements
may increase our administrative expenses. To the extent these steps are not successful, we could be forced to incur additional expenses
and require more of management’s time.
We cannot assure you that
additional significant deficiencies in the internal control over financial reporting will not be identified in the future. Any failure
to maintain or implement required new or improved controls, or any difficulties we encounter in the implementation of new or improved
controls, could result in additional significant deficiencies or material weaknesses, cause us to fail to meet the periodic reporting
obligations or result in material misstatements in the financial statements. Any such failure could also adversely affect the results
of periodic management evaluations regarding the effectiveness of the internal control over financial reporting. Furthermore, we are
required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness
of the internal control over financial reporting as of the end of the fiscal year that coincides with the filing of our second annual
report on Form 20-F. However, for as long as we are an “emerging growth company” under the JOBS Act, the independent registered
public accounting firm will not be required to attest to the effectiveness of the internal control over financial reporting pursuant
to Section 404. We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal
control over financial reporting could detect problems that the management’s assessment of our internal control over financial
reporting might not. The existence of a significant deficiency could result in errors in the financial statements that could result in
a restatement of financial statements, cause us to fail to meet the reporting obligations and cause investors to lose confidence in the
reported financial information, leading to a decline in the price of our ordinary shares.
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We are an “emerging growth company”
and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Ordinary Shares
less attractive to investors.
We are an “emerging
growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Additionally, as an
emerging growth company, we elected to delay the adoption of new or revised accounting standards that have different effective dates
for public and private companies until those standards apply to private companies. As such, our financial statements may not be comparable
to companies that comply with public company effective dates. It cannot be predicted if investors will find our ordinary shares less
attractive because we may rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may
be a less active trading market for the ordinary shares and our share price may be more volatile.
The future exercise of registration rights
may adversely affect the market price of the ordinary shares.
Pursuant to a registration
rights agreement to entered into concurrently with the Closing, we registered the ordinary shares held by EUR, Sizzle, the Sponsor and
certain other holders of ordinary shares (including ordinary shares issuable upon the exercise, conversion, exchange or redemption of
any other security therefor). In addition, the certain holders of our ordinary shares have been granted both demand and piggyback registration
rights for our securities received in connection with the Business Combination.
The registration of these
securities will permit the public resale of such securities, subject to any applicable contractual lock-up obligations. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market
price of the ordinary shares.
Anti-takeover provisions contained
in our Charter, as well as provisions of British Virgin Islands law, could impair a takeover attempt and limit the price investors might
be willing to pay in the future for ordinary shares and could entrench management.
Our Charter contains provisions
that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject
to anti-takeover provisions under British Virgin Islands law, which could delay or prevent a change of control. Together these provisions
may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over
prevailing market prices for our securities.
These provisions include
the ability of the Board to designate the terms of and issue new series of preferred shares without shareholder approval, which may make
more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing
market prices for our securities. The Charter also provides that the board of directors shall be classified into three classes of directors.
As a result, in most circumstances, a person can gain control of the board only by successfully engaging in a proxy contest at two or
more annual general meetings. There are advance notice requirements for shareholders seeking to nominated directors and propose matters
to be acted upon at shareholder meetings, which could discourage or make more difficult an attempt to obtain control over us by means
of a proxy contest, tender offer, merger, or otherwise.
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Our Charter provides, subject to limited
exceptions, that the courts of the British Virgin Islands will be the exclusive forum for matters arising out of or in connection with
our Charter, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our
directors, officers, employees or stockholders.
Our Charter provides that,
unless we otherwise consent in writing to the selection of an alternative forum, each party shall be deemed to have agreed that the courts
of the British Virgin Islands shall have exclusive jurisdiction to hear and determine all any dispute, suit, action, proceedings, controversy
or claim of any kind arising out of or in connection with the Charter and for such purposes we and each member shall be deemed to have
irrevocably submitted to the jurisdiction of such courts.
Additionally, unless we
otherwise consent in writing, the federal district courts of the United States will be the exclusive forum for the resolution of
claims arising under the Securities Act and Exchange Act.
This choice of forum provision
may limit a stockholder’s ability to bring such claims in a judicial forum that it finds favorable for disputes with us or any
of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively,
if a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, we may
incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results
and financial condition.
Risks Related to Ownership of Our Ordinary
Shares
The price of our securities may be volatile.
The market price of our
ordinary shares and Public Warrants may fluctuate significantly, depending on many factors, some of which may be beyond our control,
including:
● actual or anticipated fluctuations in our operating results due to factors related to our business;
● failure to meet or exceed financial estimates and projections of the investment community or that we to the public;
● the failure of securities analysts to cover, or maintain coverage of, the ordinary shares;
● issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general;
● operating and share price performance of other companies in the industry or related markets;
● the timing and magnitude of investments in the growth of the business;
● success or failure of our business strategies;
● our ability to obtain financing as needed;
● announcements by us or our competitors of significant acquisitions, dispositions or strategic investments;
● additions or departures of key management or other personnel;
● sales of substantial amounts of ordinary shares by our directors, executive officers or significant stockholders or the perception that such sales could occur;
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● changes in capital structure, including future issuances of securities or the incurrence of debt;
● changes in accounting standards, policies, guidance, interpretations or principles;
● investor perception of the Company and our industry;
● overall market fluctuations;
● results from any material litigation or government investigation;
● changes in laws and regulations (including tax laws and regulations) affecting our business;
● changes in capital gains taxes and taxes on dividends affecting stockholders; and
● general economic conditions and other external factors.
Low trading volume for our
ordinary shares, which may occur if an active trading market is not sustained, among other reasons, would amplify the effect of the above
factors on our stock price volatility.
Stock markets in general
can experience volatility that is unrelated to the operating performance of a particular company. These broad market fluctuations could
adversely affect the trading price of our ordinary shares and Public Warrants.
We do not expect to declare any dividends
in the foreseeable future.
We do not anticipate declaring
any cash dividends to holders of its shares in the foreseeable future. Consequently, investors may need to rely on sales of their shares
after price appreciation, which may never occur, as the only way to realize any future gains on their investment. The timing, declaration,
amount and payment of future dividends to stockholders falls within the discretion of the Board. The Board’s decisions regarding
the amount and payment of future dividends will depend on many factors, including our financial condition, earnings, capital requirements
of our business and covenants associated with debt obligations, as well as legal requirements, regulatory constraints, industry practice
and other factors that the Board deems relevant.
There can be no assurance that we will
be able to comply with the continued listing standards of Nasdaq.
Our continued eligibility
for listing on Nasdaq depends on our ability to continue to meet Nasdaq’s listing standards, including having a minimum level of
shareholders’ equity.
If Nasdaq delists the ordinary
shares from trading on its exchange for failure to meet the listing standards, we and our shareholders could face significant material
adverse consequences including:
● a limited availability of market quotations for our securities;
● reduced liquidity for our securities;
● a determination that the ordinary shares are a “penny stock” which will require brokers trading in the ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
● a limited amount of news and analyst coverage; and
● a decreased ability to issue additional securities or obtain additional financing in the future.
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If analysts do not publish research about
our business or if they publish inaccurate or unfavorable research, the price and trading volume of our securities could decline.
The trading market for our
securities will depend in part on the research and reports that analysts publish about our business. We will not have any control over
these analysts, and the analysts who publish information about us may have relatively little experience with us or our industry, which
could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. If
few or no securities or industry analysts cover us, if one or more of the analysts who cover us ceases coverage of us or fails to publish
reports on us regularly, the trading price for our securities would be negatively impacted. If one or more of the analysts who cover
us downgrades our securities or publishes inaccurate or unfavorable research about our business, the price of the ordinary shares would
likely decline.
A market for our securities may not be
sustained, which would adversely affect the liquidity and price of our securities.
Although our ordinary shares
are traded on Nasdaq, an active trading market may not be sustained. The average trading volume in our ordinary shares been historically
low, as approximately 91% of the ordinary shares are subject to lock-up restrictions for a period of one-year following the Closing of
the Business Combination (which was February 27, 2024). As a result, the trading price of our ordinary shares may be impacted by low
trading volume and public float, and an investor may find it difficult to dispose of, or to obtain accurate quotations of the price of,
our ordinary shares. In addition, the trading price of our ordinary shares could vary due to general economic conditions and forecasts,
our general business conditions and the release of our financial reports. In the absence of an active trading market for our ordinary
shares, investors may be unable to sell their shares.
Our Warrants are exercisable for ordinary
shares, which would increase the number of shares eligible for resale in the public market and result in dilution to our shareholders.
As of the date hereof, we
have outstanding warrants to purchase an aggregate of 15,692,881 Ordinary Shares consisting of (i) warrants to purchase 7,673,484 Ordinary
Shares, which were assumed by the Company at the closing of the Business Combination, each with an exercise price of $11.50 per share
(the “Public Warrants”), (ii) warrants to purchase 1,000,000 Ordinary Shares issued to certain funds affiliated with Empery
Asset Management, LP, with an exercise price of $7.00 per share (subject to further adjustments) and expiring on June 18, 2029 (the “Empery
Warrants”), (iii) warrants to purchase 1,814,797 Ordinary Shares issued to the GEM Investor, with an exercise price of $7.00 per
share (subject to further adjustments) and expiring on February 27, 2027 the (“GEM Warrants”), and (iv) warrants to purchase
4,910,000 Ordinary Shares issued to the PIPE Investors and 294,600 warrants to brokers, both with an exercise price of $7.00 per share
(subject to further adjustments) and expiring on June 18, 2029 (the “PIPE Warrants” and, together with the Public Warrants,
Empery Warrants, and the GEM Warrants, the “Warrants”). Each Warrant entitles the holder thereof to purchase one ordinary
share at the applicable exercise price of such Warrant. We believe that the likelihood that Warrant holders determine to exercise their
Warrants is dependent upon the market price of our ordinary shares. If the market price for our ordinary shares is less than the applicable
exercise price of the Warrants (on a per share basis), we believe that Warrant holders will be unlikely to exercise any of their Warrants.
Conversely, we believe the Warrant holders are more likely to exercise their Warrants the higher the price of our ordinary shares Is above
the applicable exercise price of such Warrants. To the extent the Warrants are exercised, additional ordinary shares will be issued, which
will result in dilution to the holders of ordinary shares and increase the number of shares eligible for resale in the public market.
Sales of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adversely affect
the market price of our ordinary shares.
Your unexpired Public Warrants may be redeemed
prior to their exercise at a time that may be disadvantageous to you, thereby making your Public Warrants worthless.
We have the ability to redeem
outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant,
provided that the last reported sales price of the ordinary shares equals or exceeds $18.00 per share (as adjusted for share splits,
share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) on each of 20 trading days within any
30 trading day period commencing after the Public Warrants become exercisable and ending on the third trading day prior to the date on
which notice of redemption is given and provided that there is an effective registration statement covering the ordinary shares issuable
upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day redemption or the Company has
elected to require the exercise of the Warrants on a cashless basis. If and when the Public Warrants become redeemable, we may not exercise
such redemption right if the issuance of the ordinary shares upon exercise of the Public Warrants is not exempt from registration or
qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. Redemption of the outstanding
Public Warrants could force you to: (i) exercise your Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so; (ii) sell your Public Warrants at the then-current market price when you might otherwise wish to hold your Public Warrants;
or (iii) accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely
to be substantially less than the market value of your Public Warrants.
28
Sales of a substantial number of our securities
in the public market by certain of our securityholders could cause the price of our ordinary shares and public warrants to fall.
Certain of our securityholders can sell, under a registration statement
that we have filed with the SEC, up to 100,312,567 ordinary shares, constituting approximately 74% of the 106,900,304 ordinary shares
outstanding on September 24, 2025 on a fully diluted basis (assuming and after giving effect to (x) the issuance of 15,692,881 ordinary
shares upon exercise of all outstanding warrants and (y) the issuance of 12,500,000 ordinary shares pursuant to the GEM Agreement) as
of June 30, 2025. The sale of all or a portion of such securities could result in a significant decline in the public trading price of
our securities. The resale, or expected or potential resale, of a substantial number of shares of our ordinary shares in the public market
could occur at any time. Such sales, or the perception that such sales could occur, could adversely affect the market price for our ordinary
shares and make it more difficult for you to sell your holdings at times and prices that you determine are appropriate. Accordingly, the
adverse market and price pressures resulting from an offering pursuant to the registration statement may continue for an extended period
of t
Our issuance of additional capital stock
in connection with financings, acquisitions, investments, share incentive plans or otherwise may dilute our current stockholders and
may and have a negative impact on the market price of our ordinary shares.
Our existing cash and cash
equivalents may not be sufficient to meet our working capital needs in the future. Further, our estimates may prove to be inaccurate,
and we could spend our capital resources faster than we currently expect. Additionally, changing circumstances, some of which may be
beyond our control, could also cause us to spend capital significantly faster than we currently anticipate, and we may need to seek additional
funding sooner than planned. Accordingly, we expect to issue additional shares in the future to fund our operations and working capital
needs, which may result in dilution to other shareholders.
In addition, we have
granted equity awards to employees, directors, and consultants under our share incentive plans and we may do so in the future. We
also expect to raise capital through equity financings in the future. As part of our business strategy, we may acquire or make
investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or
investment. We have elected to comply with the Nasdaq home country corporate governance rules applicable to foreign private issuers,
which means that we follow certain corporate governance rules that conform to requirements of the British Virgin
Islands in lieu of many of the Nasdaq corporate governance rules. For example, among other things, we have opted out of the
requirement that we obtain shareholder approval prior to the issuance of securities in connection with certain acquisitions or
private placements of securities. Accordingly, our shareholders will not have the same protections afforded to shareholders of
companies that are subject to all of the corporate governance requirements of Nasdaq. We may utilize these exemptions for as long as
we continue to qualify as a foreign private issuer. Please see “Item 16G. Corporate Governance.”
Any such issuances of additional
shares may cause shareholders to experience significant dilution of their ownership interests and could have a negative impact on the
market price of the Company ordinary shares and the Company’s ability to obtain additional financing in the future.
Risks Related to U.S. Federal Income
Tax
The IRS may not agree that we should be
treated as a non-U.S. corporation for U.S. federal income tax purposes.
Although we are incorporated
in the British Virgin Islands and a UK tax resident, the U.S. Internal Revenue Service (the “IRS”) may assert that we should be treated as a U.S. corporation for U.S. federal
income tax purposes pursuant to Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)
as a result of the Business Combination. For U.S. federal income tax purposes, a corporation is generally classified as a U.S. (or
“domestic”) corporation if it is created or organized in or under the laws of the United States, any state thereof,
or the District of Columbia. Because the Company is not so created or organized (but is instead incorporated only in the British Virgin
Islands), it would generally be classified as a foreign corporation (that is, a corporation other than a U.S. (or “domestic”)
corporation) under these general rules. Section 7874 of the Code provides an exception under which a corporation created or organized
only under non-U.S. law may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes.
29
We are not currently expected
to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code as a result of
the Business Combination. However, the application of Section 7874 of the Code is complex, is subject to detailed rules regulations
(the application of which is uncertain in various respects and could be impacted by changes in such rules and regulations with possible
retroactive effect), there can be no assurance that the IRS will not challenge our status as a foreign corporation under Section 7874
of the Code or that such challenge would not be sustained by a court. In addition, our U.S. counsel expresses no opinion
as to the status of the Company as a foreign corporation under Section 7874 of the Code.
If the IRS were to successfully
challenge under Section 7874 of the Code our status as a foreign corporation for U.S. federal income tax purposes, we and certain
of our shareholders would be subject to significant adverse tax consequences, including a higher effective corporate income tax rate
and potential future withholding taxes on certain of our shareholders. In particular, holders of our ordinary shares would be treated
as holders of stock of a U.S. corporation.
Investors should consult
their own advisors regarding the potential application of Section 7874 of the Code to the Company.
If a U.S. person is treated as owning
at least 10% of our stock, such person may be subject to adverse U.S. federal income tax consequences.
If a U.S. person
is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our stock, such person
may be treated as a “United States shareholder” with respect to us and our direct and indirect subsidiaries (the
“Company Group” or the “Group”) that is a “controlled foreign corporation,” or CFC, for
U.S. federal income tax purposes. A non-U.S. corporation is considered a CFC if more than 50% of (1) the total
combined voting power of all classes of stock of such corporation entitled to vote, or (2) the total value of the stock of such
corporation, in the aggregate, is owned, or is considered as owned by applying certain constructive ownership rules, by
United States shareholders on any day during the taxable year of such non-U.S. corporation.. Moreover, regardless of
whether we are a CFC, if the Company Group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries
could be treated as CFCs regardless of whether we are treated as a CFC pursuant to a “downward attribution” rule under
current law. The Company Group currently includes a U.S. subsidiary. This rule, however, will cease to apply to treat such
non-U.S. subsidiaries as CFCs for taxable years beginning after December 31, 2025.
If we or any of our non-U.S. subsidiaries
is a CFC, “United States shareholders” will be subject to adverse income inclusion and reporting requirements with respect
to such CFC. No assurance can be provided that we will assist holders in determining
whether we or any of our non-U.S. subsidiaries is treated as a CFC or whether any holder is treated as a is treated as a “United States shareholder” with respect to any of such CFCs
or furnish to any holder information that may be necessary to comply with reporting and tax payment obligations with respect to such
CFCs.
U.S. investors may suffer adverse
U.S. federal income tax consequences if we are treated as a passive foreign investment company.
A non-U.S. corporation
generally will be treated as a “passive foreign investment company,” or a PFIC, for U.S. federal income tax purposes,
in any taxable year if either (1) at least 75% of its gross income for such year is passive income (which generally includes interest,
dividends, rents and royalties (other than certain rents or derived from the active conduct of a trade or business) and gains from the
disposition of assets giving rise to passive income) or (2) at least 50% of the value of its assets (ordinarily based on an average
of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive
income. Whether we are a PFIC for any taxable year is a factual determination that depends on, among other things, the composition of
our income and assets, and the market value of our shares and assets, including the composition of income and assets and the market value
of shares and assets of certain subsidiaries, from time to time. Accordingly, a complete determination can only be made annually after
the close of each taxable year. As of the date hereof, we have not made a determination as to our PFIC status for our most recent taxable
year or any other taxable year. Thus, no assurance can be given as to whether we were a PFIC for our recently ended taxable year or any
other taxable year. Thus, no assurance can be given as to whether we were a PFIC for our most recently ended taxable year or whether
we will be a PFIC in our current taxable year or for any future taxable year. In addition, our U.S. counsel expresses no opinion
with respect to our PFIC status for any taxable year.
If we are a PFIC for
any taxable year during a U.S. Holder’s (as defined in the section of this Annual Report entitled “Material U.S.
Federal Income Tax Considerations”) holding period for our ordinary shares, such U.S. Holder may be subject to adverse
tax consequences and may incur certain information reporting obligations. Under the PFIC rules, unless such U.S. Holder is
eligible for and timely makes one of the elections available under the Code (which such election could itself have adverse
consequences for such U.S. Holder), such U.S. Holder may be subject to U.S. federal income tax at the then prevailing
maximum rates on ordinary income and possibly an “interest” charge, in respect of “excess distributions” and
upon any gain from the disposition of our ordinary shares, as if the excess distribution or gain had been recognized ratably over
such U.S. Holder’s holding period of our ordinary shares. There can be no assurance that we will have timely knowledge of
its status as a PFIC in any taxable year or that we will timely provide information that would be required in order for a
U.S. Holder to make any such election. For a further discussion, see “Material U.S. Federal Income Tax
Considerations — Passive Foreign Investment Company Rules.” U.S. investors are strongly encouraged to
consult their own advisors regarding the potential application of these rules to us and their investment in our ordinary shares.
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Item 4. Information on the Company.
A. History and Development of the Company
We are a leading mining
evaluation and exploration company focused on HREEs, critical metals and minerals, and producing strategic products essential to electrification
and next generation technologies for Europe and its Western world partners. Our primary strategy is to acquire, explore and develop unique
and permitted critical metals mining assets that we expect will benefit from robust regulatory tailwinds in both Europe and North America
and long-term secular trends for next generation technology in environmental, commercial and government applications. At the closing
of our Business Combination, our efforts were solely focused on the exploration and evaluation of our wholly owned Wolfsberg Lithium
Project (the “Wolfsberg Project”) located in Carinthia, Austria, which is approximately 270 kilometers south of Vienna.
In addition, we held additional Austrian projects, including the 20% interest European Lithium transferred to us at the Closing of the
Business Combination (which was February 27, 2024). On June 5, 2024, we announced an agreement to acquire an interest in the Tanbreez
Green Rare Earth Mine (the “Tanbreez Project”). The Tanbreez Project is a permitted, globally significant critical
minerals asset positioned to unlock a sustainable, reliable and long-term rare earth supply for North America and Europe. Once operational,
Tanbreez is expected to supply heavy rare earth elements (“HREEs”) to customers in the western hemisphere to support
the production of a wide range of next-generation commercial products, as well as demand from the defense industry.
Our executive offices are
located at c/o Maples Corporate Services (BVI) Limited, Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin Islands.
Critical Metals is a holding
company incorporated in the British Virgin Islands. We conduct our operations through our subsidiaries. Investments in our securities
are not purchases of equity securities of these operating subsidiaries but instead are purchases of equity securities of a BVI holding
company with no material operations of its own. With a holding company structure, we are subject to various restrictions on intercompany
fund transfers and foreign exchange control under current laws and regulations and could be subject to additional restrictions under
new laws and regulations that may come into effect in the future.
As of the date of this Annual
Report, we have not made any dividends or distributions to our shareholders. Any determination to pay dividends will be at the discretion
of our board of directors. Currently, we do not anticipate that we would distribute earnings even after we become profitable and generate
cash flows from operations.
We are required to make
certain filings with the SEC. The SEC maintains an internet website that contains reports, proxy statements and other information about
issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.
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B. Business Overview
BUSINESS
Unless otherwise indicated
or the context otherwise requires, references in this section “we,” “us,” “our,” and other similar
terms refer to European Lithium AT (Investments) Limited and its subsidiaries prior to the Business Combination and refer to the Company
(including European Lithium AT (Investments) Limited) and its subsidiaries immediately following the consummation of the Business
Combination.
Overview
We are a mining exploration
and evaluation company focused on critical metals and minerals and producing strategic products essential to (i) the production of magnets
for consumer and national defense-related purposes and (ii) electrification and next generation technologies for Europe and its Western
world partners. Our primary strategy is to acquire, explore and develop unique and permitted critical metals mining assets that we expect
will benefit from robust regulatory tailwinds in both Europe and North America and long-term secular trends for next generation technology
in environmental, commercial and government applications. Our main efforts are focused on the exploration and evaluation of the Tanbreez
Projected located in Greenland as well as the Wolfsberg Project located in Carinthia, Austria, which is approximately 270 kilometers
south of Vienna. In addition, we hold a 20% interest in the Weinebene and Eastern Alps Lithium Projects (each as defined below), which
was previously held by European Lithium immediately prior to the closing of the Business Combination, and a 42% interest in the Tanbreez
Project in Southern Greenland. The Tanbreez Project in Greenland and the Wolfsberg Project in Austria are currently at the exploration
and evaluation stage. Please see the sections entitled “—Description of the Wolfsberg Project”, “—The
Weinebene and Eastern Alps Projects” and “Description of the Tanbreez Project” for additional information
on the projects, respectively.
The Tanbreez Project, located
in Southern Greenland, is a permitted, globally significant critical minerals asset positioned to unlock a sustainable, reliable and
long-term rare earths supply for North America and Europe. Once operational, the Tanbreez Project is expected to supply REEs to customers
in the western hemisphere to support the production of a wide range of next-generation commercial products, as well as demand from the
defense industry. By centralizing the supply chain for critical metals, the Tanbreez Project is expected to provide secure, sustainable
and reliable sources of critical metals, reducing the dependence of the western world partners on imports and bolstering their national
security. As such, we expect this strategic rare earth asset to benefit from robust regulatory changes taking place in Europe and North
America. Establishing a western focused supply chain for critical metals will be essential for everything from renewable energy to high-tech
manufacturing to defense applications.
More specifically, the Tanbreez
Rare Earth Project is one of the world’s largest hard rock rare earth elements (“REE”) deposits, located in southern
Greenland near the town of Quaqortoq. The project is notable for its high concentration of heavy rare earth elements (“HREEs”),
which are critical for high-tech applications, clean energy, and defence industries. Unlike other major REE deposits, Tanbreez contains
very low levels of uranium and thorium, making it more environmentally and politically viable.
● Deposit Type: Kakortokite (a layered igneous rock rich in HREEs)
● Kakortokite Estimate: -4.7 billion tonnes of REE-bearing mineralisation
● Heavy REE Content: -27% of Total Rare Earth Oxides (TREO)
● Uranium & Thorium: Extremely low (avoiding nuclear regulatory issues)
● Location: Near Quaqortoq, southern Greenland, near a nearly finalized new international airport.
● The distance is only 12kms from the Tanbreez deposit to near Quaqortoq
● No ice or permafrost, temperature ranges from -5°C to 15°C which allows for all year mining
● Mining exploitation license granted for initial 500,000 tonnes per annum
● Deep water (70m) from edge of deposit to allow Pana-Max ships to easily access ore body
● There is no need for a port, Critical Metals Corp expects to leverage a maneuverable floating dock
32
The Tanbreez Project is
expected to possess greater than 27% heavy rare earth elements (“HREE”), which carry a much higher value than light
rare earth elements. In an industry where competitors primarily target light rare earth elements (“LREE”), the Tanbreez
Project is believed to be unique not only due to its significant size, but also because of its HREE asset mix.
The Wolfsberg Project is
geographically located in a supportive region that we believe is the center of the growing European lithium battery and electric vehicle
(“EV”) industry. The region boasts strong local infrastructure, located close to Graz and Klagenfurt airport, and is serviced
by nearby railways and highways. Located nearby to the Wolfsberg Project are several planned giga factories that are to be built by battery
suppliers and some of Europe’s leading automakers, seeking to satisfy the growing demand for lithium-ion batteries in the EV market.
We believe the proximity of the Wolfsberg Project to potential resources, planned production operations, a strong local workforce and
our potential customer base will allow us to deliver a valuable supply of lithium products, a key lithium-based compound in lithium-ion
batteries, which is preferred by most EV manufacturers.
The Wolfsberg Project comprises
54 exploration licenses, which covers a total area of 1,133 hectares and a mining license over 20 mining areas occupying 86.7 hectare
that lie within the exploration area.
We are aiming to commence
spodumene production at the Wolfsberg Project in 2028 or 2029, subject to funding, relevant approvals by the Austrian government and the
recovery of commodity prices for lithium and lithium products. Please see the section entitled “Risk Factors,” including “Risk
Factors — Operating Risks” for a description of risks related to the Wolfsberg Project.
History and Development of the Tanbreez Project
The discovery of uranium
at the northern end of the Tanbreez Project intrusion in the 1950’s resulted in two groups intensely exploring from 1960 to 1980.
In the north, outside the current license, the Danish government was exploring for uranium and a cryolite mining company in the south,
was exploring the eudialyte. This spurred on much activity, hundreds of papers, books, comparison with the large eudialyte deposits on
the Kola Peninsula at Lovozero and Khibina. After the Danish government decided against going nuclear and the cryolite company decided
to halt its zirconium research the exploration faded away in the 1970s.
Eudialyte Exploration 1985 to the Present
Exploration of the zirconium-rich
kakortokites continued in 1985, when the Danish company A/S Carl Nielsen obtained an exclusive license to carry out exploration centered
around the exposed kakortokites and the adjacent marginal pegmatite in the southern part of the complex. The thickest layer of red kakortokite,
layer +16, was examined in two drill holes in 1986. During 1987, potentially economic eudialyte-rich parts of the marginal pegmatite,
kakortokites and Naujaites within the concession area were mapped and sampled, and samples of the marginal pegmatite were metallurgically
tested.
In 1987, the Canadian company
Highwood Resources Ltd. was granted permission to explore areas be-ween the fjords Tunulliarfik and Kangerluarsuk and carried out bulk
sampling and drilling to test the feasibility of exploitation of eudialyte-rich rocks. This company was joined by Platinova Resources
Ltd. and Aber Resources Ltd. In 1988 this group and A/S Carl Nielsen formed a joint venture, combining their mineral licenses. The main
target was the exposed kakortokites, minor targets were the marginal pegmatites in the southern part of the complex. The joint venture
co-operation was continued in 1990 with extensive drilling programs and metallurgical testing of potential ores from the southern
part of the complex. At the end of this activity the Canadian partners and the Danish participants went through a period of restructuring
resulting in Highwood Resources taking over all interests in the prospect at the end of 1992.
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In 1992 the Danish company
Mineral Development International A/S (MDI) obtained the exclusive right to explore the sodalite-rich Naujaites in the northern part
of the complex. The aim was to investigate the possibilities of using sodalite as raw material to produce synthetic zeolites.
Several research projects
involving colleagues from other countries have been supported by various foundations. The Danish Natural Science Research Council supported
a Canadian Danish project aiming at a comparison of the mineralogy of Mont Saint-Hilaire, Quebec, with the Narssârssuk mineral
occurrence associated with the Igaliko Complex, South Greenland, and the Ilímaussaq complex. The Danish company First Development
International A/S in 1993 supported a Danish–Russian project consisting of an examination of the drill cores from the 1977 drilling
program kept at the Risø National Laboratory. The aim was to find some of the water-soluble minerals discovered in the Khibina
and Lovozero complexes. The drill cores are rich in villiaumite, but holes in the samples indicate that other water-soluble minerals
have been dissolved during and after drilling. Only one of the Kola minerals was discovered, natrophosphate.
In 1994–1997 INTAS
(International Association for the Promotion of Co-operation with Scientists from the Independent States of the Former Soviet Union)
supported a Danish–French Russian Spanish research co-operation with the purpose of promoting comparative studies of the mineralogy
of agpaitic nepheline syenites in Ilímaussaq, the Khibina and Lovozero complexes of the Kola Peninsula, and the Tamazeght complex,
Morocco. Field work was carried out in Ilímaussaq in 1994, in Khibina and Lovozero in 1997 and in Tamazeght in 1999.
The Danish Natural Science
Research Council in 1997 supported an Austrian Danish research project with the purpose of studying pegmatites and hydrothermal veins
and the relations to their country rocks in the Ilímaussaq complex and at the Narssârssuk mineral locality associated with
the Igaliko Complex in South Greenland.
History and Development of the Wolfsberg Project
The Wolfsberg Project was
initially discovered by Minerex (“Minerex”), an Austrian government company, in 1981. Following extensive exploration,
technical and commercial studies, a pre-feasibility study was completed in 1987. Minerex completed exploration work that included
initial surface geology mapping along with 9,940 cubic meters of surface trenches and a diamond-drilling program totaling 12,012
meters collared from surface. In 1985, an underground exploration program was undertaken that included development of a decline from
the surface from the northern side of Brandrucken Mountain through the amphibole schist to provide access to the pegmatite veins. Crosscutting
drifts were driven along strike of selected veins to provide access for mapping and sampling and an additional decline was driven to
access the veins in the mica schist. In all 1,389 meters of underground development was mined. A diamond drilling campaign of 4,715 meters
was undertaken from underground to effectively infill the surface drilling to about 50-meter intervals in the eastern part of Zone
1. The Austrian government ultimately decided not to proceed with developing the Wolfsberg Project due to the low demand for and the
price of lithium, and, as a result, Minerex was dissolved. In 1988, the Wolfsberg Project was transferred to Bleiberger Bergwerksunion
(“BBU”), a government owned miner of lead and zinc.
In 1991, BBU was dissolved
by the Austrian government, and the Wolfsberg Project was sold to Kärntner Montanindustrie GmbH (“KMI”), a private
mining company. KMI carried out the necessary work specified by the Austrian mining authorities to hold the exploration licenses and
maintain the mine in good order.
In 2011, KMI was granted
a mining license for the Wolfsberg Project. In 2011, ASX-listed Global Strategic Metals Limited (“GSM”), previously
named East Coast Minerals NL, and Exchange Minerals (through jointly owned subsidiary ECM Lithium AT GmbH), acquired the Wolfsberg
Project from KMI for €9.7m plus 20% VAT.
Following its acquisition
of the Wolfsberg Project, GSM undertook exploration drilling in 2012 on the southern limb of the anticline, which confirmed the structural
interpretation and presence of lithium bearing pegmatite veins. Trial mining was undertaken in 2013 to validate the mining license and
to collect 500 ton bulk samples from the two mineralization styles for metallurgical testing. The Minerex drilling data was utilized
to develop a three-dimensional resource model for use in mine planning. In 2014, GSM undertook a corporate restructuring to separate
its lithium and silver businesses. The demerger was effected via a pro-rata in-specie distribution of shares in European Lithium
Limited to GSM shareholders.
34
In 2016, European Lithium,
formerly Paynes Find Gold Limited, completed its acquisition of the Company. Following its acquisition, European Lithium completed its
verification of the original Minerex exploration data. To complete the verification, European Lithium digitized the original Minerex
data and then applied a verification program that incorporated (i) channel sampling along exposed pegmatite veins in the underground
drifts to replicate the channel sampling conducted by Minerex on every new face after blasting to extend the tunnels along the strike
of the veins and (ii) twin-hole drilling from underground to compare the drill core logs from Minerex for seven drill holes
selected to maximize the number of pegmatite intersections.
Overview of our Projects
The Tanbreez Project
The Tanbreez Project is located in Southern Greenland.
The Tanbreez Project is expected to possess greater
than 27% HREEs, which carry a much higher value than LREEs. In an industry where competitors primarily target LREE, the Tanbreez Project
is believed to be unique not only due to its significant size, but also because of its HREE asset mix.
The Tanbreez Project is expected to have access
to key transportation outlets as the project’s area features year-round direct shipping access via deep water fjords that lead
directly to the North Atlantic Ocean. The outcropping ore body known as Kakortokite covers an area of 8 x 5 km and is approximately 400m
thick. Tanbreez was granted an exploitation license by the Greenland Government in 2020.
Tanbreez 2025 Resource drilling Contractors
and Company Geologists
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This foundational rare earth asset is expected
to benefit from robust regulatory tailwinds in both Europe and North American and long-term secular trends for next-generation technology
for both commercial and government applications. With China dominating more than 90% of the world’s rare earth assets, this acquisition
would represent a strategic move for the Company as it continues to position itself as a leading supplier of critical minerals for the
western world. By centralizing the supply chain for critical minerals and working with the Company and Rimbal, western countries can
reduce their dependence on foreign imports, thereby bolstering their national security.
See the section entitled
“Description of the Tanbreez Project” for additional information on the Tanbreez Project.
Tanbreez Project Geological Map and MRE Resource
locations
36
The Wolfsberg Project
The Wolfsberg Project’s
mine is located just to the south of Wolfsberg. This location allows access to the nearby A2 motorway and the natural gas transmission
pipeline that follows the motorway. Wolfsberg is an industrial town of approximately 25,000 residents with a growing light industrial
sector. In addition, the Wolfsberg Project is positioned in close proximity to large lithium import markets in Europe, such as Germany,
Belgium, France, Italy and Spain, and planned battery projects in Hungary, Germany, Sweden and the United Kingdom.
On August 15, 2023,
EUR announced it had received a grant of new mining licenses and extensions for the Wolfsberg Project located in a new mining field called
Barbara. The grant of new licenses and extensions grows the Wolfsberg Project to a total of 20 licenses, nearly doubling the footprint
for the underground mining operations. Currently, we hold 22 original and 32 overlapping exploration licenses covering Zones 1 and 2
of the Wolfsberg Project. All exploration licenses have been extended by the Austrian Mining Authority. We also hold a mining license
that covers 20 mining areas until December 31, 2025. The mining license can be renewed on an ongoing basis provided its conditions
are maintained. Please see the section entitled “Description of the Wolfsberg Project” for additional information
on the Wolfsberg Project.
Exploration and Evaluation
As part of EUR’s verification
and validation of the Minerex data in 2016, a number of twin channel samples were taken across the pegmatites. After samples positions
are marked, sample boundaries were cut perpendicular to the pegmatite strike direction using a diamond saw. The samples were 5 centimeters
wide by 10 centimeters deep. Once cut, the samples were broken out using jackhammer and large pieces were broken with a hand-held hammer
and the over break discarded. Channel sample field duplicates were also collected from selected channel samples by either deepening or
widening the channel sampled.
In 2017, EUR commenced a
surface drilling program, which comprised four HQ3 diameter holes designed to verify the extension to depth of the pegmatite veins identified
by Minerex and three HQ3 diameter holes to obtain more information on the extension of the pegmatite veins, totaling 2,576.6 meters.
In addition, EUR carried out 300 meters of trenching on the southern limb of the anticline, to identify overburden pegmatites and their
southern extension. The lithium grade of pegmatite samples identified in the trenching were too low to be of interest. The drilling program
in Zone 2, was completed in 2018 with an additional five HQ3 diameter holes for a total length of 1,338 meters.
See the section entitled
“Description of the Wolfsberg Project — Exploration and Drilling Activity” and Section 7 of the
Technical Report Summary related to the Wolfsberg Project (the “Wolfsberg Technical
Report Summary”) for additional information on the exploration and evaluation of the Wolfsberg Project.
Feasibility Studies
In April 2018, EUR
completed a prefeasibility study (the “PFS”) with respect to the Wolfsberg Project. The PFS was prepared in accordance
with the reporting requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the
“JORC Code”). In March 2023, EUR completed a definitive feasibility study (the “March 2023 DFS”)
with respect to the Wolfsberg Project, which was also prepared in accordance with the JORC Code. The PFS and the March 2023 DFS
were conducted by EUR, which is a publicly traded company listed on the ASX, and as a result were not prepared in accordance with Item 1300
of Regulation S-K, as promulgated by the SEC.
37
The Wolfsberg Technical
Report Summary, which is included as an exhibit to this Annual Report, was prepared in accordance with Item 1300 of
Regulation S-K, as promulgated by the SEC. No changes to the Wolfsberg Technical Report Summary, including
information related to the Company’s mineral resources disclosed therein, were made as a result of the completion of the
March 2023 DFS. Please see “Description of the Wolfsberg Project — Mineral Resources”
for a discussion of the Company’s mineral resources. For more information regarding the assumptions and parameters used to
estimate mineral resources on the Wolfsberg Project, please read the Wolfsberg Technical Report Summary.
We expect to complete another
definitive feasibility study with respect to spodumene production at the Wolfsberg Project, subject to the receipt of additional funding.
We refer to this definitive feasibility study throughout this Annual Report as the “DFS.” The DFS, if completed, is
expected to be compatible with both Regulation S-K 1300 and the JORC Code.
Environmental
The Wolfsberg Project is
located in a commercial forest. Our mining license requires the submission of an operating plan to the Austrian Mining Authority before
mining activities commence. This plan must also address environmental management.
The Company’s environmental
consultant, Umwelt Büro, has completed its environmental baseline studies for the purpose of the compulsory and independent second
mine access. A comprehensive report has been incorporated in the March 2023 DFS document.
A detailed review of all
work, reports and related documents to the base line studies is underway and will be integrated into the operational and technical applications
to all relevant authorities upon completion of the DFS. We appointed an experienced, independent consultant, Hasslinger & Nagele
in Vienna (“Hasslinger”), to lead the complex application process that will be based on the DFS findings. Hasslinger’s
engagement includes facilitation of numerous discussions at municipal, state and federal authorities to introduce the Wolfsberg Project’s
rollout.
In the second quarter of
2023, we conducted a complex work program to prepare a comprehensive application for pre-assessment of the Environmental Impact
Assessment (“EIA”) Determination Procedure. The decree issued after the pre-assessment evaluation forms the basis
for a fast-track-eligibility approval process covering the application of the final mining decree. The application has been filed
with the Austrian state government and is based on the detailed environment study results from the PFS and March 2023 DFS covering
several years of observations and documentation and the final technical layouts for the mine and concentrator. We expect the government
to be in communication with us in the near future in accordance with the EIA determination procedure.
Hydrogeology
The Company’s geological
consultant, GEO Unterweissacher GmbH (“GEO”), continues to manage its hydrogeology monitoring program by ensuring
in-hole hydrogeological test work has been completed appropriately and can continue in the future. Data from this process is fed
into a water measuring database from which an annual report is produced.
Marketing Activities
In December 2022, we entered
into the Offtake Agreement with BMW. Please see the section entitled “— Offtake Agreement with BMW AG”
below for more details on the long-term Offtake Agreement.
Offtake Agreement with BMW AG
In December 2022, we
entered into a long-term Offtake Agreement with BMW. The Offtake Agreement is conditioned upon the successful start of commercial
production at the Wolfsberg Project and full product qualification and certification. On June 5, 2024, pursuant to the Offtake Agreement,
BMW made an advance payment of US$15.0 million to us, which is secured by the Bank Guarantee and is subject to be repaid through
equal setoffs against battery grade lithium hydroxide delivered to BMW. The advance payment is not yet freely accessible by CRML, and
the Company may only access the funds under certain conditions.
38
Strategic Collaboration between the Company
and Obeikan Investment Group
In January 2023, EUR
entered into a non-binding memorandum of understanding (the “MoU”) with Obeikan to build and operate a hydroxide
plant in Saudi Arabia for the Wolfsberg Project. The MoU contemplates negotiating suitable commercial terms for the creation of a joint
venture between EUR and Obeikan for the purpose of construction and operation of a lithium hydroxide plant in Saudi Arabia.
On July 9, 2024, the Company
accepted the assignment of EUR’s interest in the Joint Venture. In connection with such assignment, the Company and Obeikan entered
into the Shareholders Agreement related to the Joint Venture. Obeikan has agreed to ratify the Shareholders Agreement to form a joint
venture with the Company related to the development and construction of a lithium hydroxide processing plant in the Kingdom of Saudi
Arabia to process spodumene concentrate produced from the Company’s Wolfsberg Project (Zone 1) located in Austria.
Under the Shareholders Agreement,
Arabian New Energy Company (“NewCo”) will be established and seek to have the exclusive right to purchase spodumene mined
from the current resource at the Wolfsberg Project (Zone 1), and the facility is expected to be developed to meet the minimum initial
capacity and product specifications based on the Company’s binding Long Term Supply Agreement with BMW. NewCo is expected to be
incorporated after successful registration and approval from the Kingdom of Saudi Arabia regulatory authorities. Additionally, and subject
to the successful commissioning of the hydroxide processing plant, the Wolfsberg Project Zone 1 will sell the lithium spodumene concentrate
to NewCo over the life of the current resources of the Wolfsberg Project a reduced rate, with a floor and ceiling price, subject to final
agreement of the Company and Obeikan. The Company and Obeikan will also establish a Development Committee for the purpose of jointly
collaborating on all key decisions in relation to the development of the hydroxide processing plant.
We expect that the Company
will ultimately benefit from the Joint Venture, including by reducing the Company’s cost to build and operate a lithium hydroxide
plant on its own. In addition, once operational, the hydroxide plant is expected to significantly reduce energy costs and deliver savings
in operating expenditures and capital expenditures related to the Wolfsberg Project that would otherwise be borne by the Company.
We can give no assurance
that the Joint Venture will be successful, that the lithium hydroxide plant will be completed on time or at all or that our expectations
with respect to the Joint Venture will ultimately be realized. Further, any agreements or arrangements between the Company, ELAT and
the joint venture in the future, including such agreements or arrangements described above, will be subject to approval by the Company’s
Board of Directors at such time and compliance with its related person transaction policy. See “Related Person Transactions — Related
Person Transactions Policy Following the Business Combination.”
The Weinebene and Eastern Alps Projects
In May 2021, European
Lithium announced that it acquired a 20% interest in the Weinebene Lithium Project (the “Weinebene Project”) and the
Eastern Alps Lithium Project (the “Eastern Alps Project”, and together with the Weinebene Project, the Wolfsberg Project,
and the Tanbreez Project the “Projects”), both of which are located in southern Austria, approximately three hours
south-west of Vienna. The Weinebene Project area directly encloses the Wolfsberg Project. The Eastern Alps Project comprises the
project areas of Glanzalm-Ratzell-Poling, Millstätter Seerücken, Hohenwart, Falkenberg, Pallbauernalm-Mittereck-Zinkenschlucht,
Mitterberg and St. Radegund. EV Resources Limited (formerly Jadar Resources Limited) (“EVR”) holds the remaining 80%
interest in the Weinebene and Eastern Alps Projects. The Weinebene Project and Eastern Alps Project are considered complimentary to the
Wolfsberg Project given their geographical proximity and are expected to provide European Lithium with optionality in terms of future
development and production scenarios. While the Weinebene Project and Eastern Alps Project are presently considered “non-core”,
each project contains indications of high-grade lithium targets that will be the subject of further exploration activities. As of
the date of this Annual Report, we hold a 20% interest in the Weinebene Project and Eastern Alps Project which was previously held by
European Lithium immediately prior to the closing of the Business Combination.
39
Prior to the consummation
of the Business Combination, EVR held EUR’s aforementioned 20% interest in the Projects in trust. On May 2, 2023, a new deed
of trust was executed whereby EVR held the 20% interest in the Projects in trust for the benefit of the Company. Under the terms of the
deed of trust, nil consideration was paid by the Company in respect to this acquisition.
Pursuant to a collaboration
agreement between European Lithium and EVR (the “Collaboration Agreement”), the parties established a technical advisory
committee for the purpose of jointly collaborating in connection with the Weinebene Project, the Eastern Alps Projects and the Wolfsberg
Project, and sharing information to identify the best options to advance those assets and operations. This includes making recommendations
for exploration programs, budgets and development scenarios in order to grow and expand the Wolfsberg Project. The Collaboration Agreement
has been assigned to the Company.
In November 2020, EVR
announced that it has completed a stratigraphic diamond drill-hole program at the Weinebene Project. The drilling program allowed
EVR to renew the Austrian tenement for a future 5-year term (which continues to be in full force and effect). EVR has undertaken
early-stage exploration work (including initial boulder sampling results which returned high-grade Li2O values with the highest
value returning 3.39% Li2O and the average value over the 11 samples being 1.61% Li2O) and it is our expectation that further exploration
work will be completed over at the Weinebene Project in the coming months.
40
In June 2022, EVR approved
GEO, to carry out the exploration strategy for the Eastern Alps Project. GEO reviewed relevant data and samples from the property in
order to send a team to three satellite projects and test pegmatite mineralization. These prospects contain indications of high-grade lithium
targets with significant residual brownfields plus greenfields exploration potential across the entire project area. Further exploration
and geological assessment work is ongoing.
Competition
We face intense competition
in the mineral exploration and exploitation industry on an international, national and local level. We compete with other mining and
exploration companies, many of which possess greater financial resources and technical facilities than we do, in connection with the
exploration and mining of suitable properties and in connection with the engagement of qualified personnel. The lithium, REE and other
critical minerals and metals exploration and mining industry is fragmented, and we are smaller participant in this sector relative to
some of our competitors. Many of our competitors explore for a variety of minerals and control many different properties around the world.
Many of them have been in business longer than we have and have established more strategic partnerships and relationships and have greater
financial accessibility than we have.
In addition, we also encounter
competition for the hiring of key personnel whether as employees, consultants or other service providers. The mineral exploration and
mining industry is currently facing a shortage of experienced mining professionals. Moreover, the demand for exploration equipment (including
drilling rigs), technical consultants and assay labs is very high, and such personnel and services may not be available, or if they are,
at costs that are greater than expected resulting in an increase in our costs. This competition affects us by increasing the time and
cost to conduct exploration activities.
Seasonality and Business Cycles
Mining is a cyclical industry
and commodity prices fluctuate according to global economic trends and conditions. At the present time, demand for lithium and other
commodities in many countries is driving increased prices, but it is difficult to assess how long such demand may continue. Fluctuations
in supply and demand of mined resources in various regions throughout the world are common.
Human Capital
Our key human capital management
objectives are to attract, retain and develop the highest quality talent throughout our company. As of June 30, 2025, we had 4 full-time employees
with a significant number of personnel engaged on a contractor basis. We believe we have good relations with our employees. None of our
employees are represented by a labor union or are parties to a collective bargaining agreement.
Government Regulations
We are required to comply
with numerous environmental laws, regulations and permits. We endeavor to conduct our mining operations in compliance with all applicable
laws and regulations. However, because of extensive and comprehensive regulatory requirements, violations during mining operations occur
from time to time in the industry. These requirements include, for example, various permits regulating road construction and drilling
at the Wolfsberg Project.
41
In Greenland, we are required
to comply with all regulations under the Greenlandic Mineral Resources Authority. Tanbreez was awarded an exploitation permit in 2020.
The Greenlandic Mineral Resources Authority in accordance with the Greenlandic Mineral Activities Act and the Permit approves all applications
or execution of provisions in agreements relating to mineral resources in the country. Our ability to increase our ownership in Tanbreez
beyond 50% requires approval of the Mineral License and Safety Authority, as well as prior approval under Section 69 in the Act on Mineral
Activities.
Overview
Our exploration activities
for the Wolfsberg Project are subject to extensive laws and regulations, which are overseen and enforced by multiple foreign, regional
and local authorities. These applicable laws govern exploration, development, production, exports, various taxes, labor standards, occupational
health and safety, waste disposal, protection and remediation of the environment, protection of endangered and protected species and
other matters. Our mineral exploration activities are subject to applicable Austrian laws and regulations that seek to maintain health
and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required
for drilling operations to be conducted, and we cannot assure you such permits will be received. Environmental laws and regulations may
also, among other things:
● require notice to shareholders of proposed and ongoing exploration, drilling, environmental studies, mining or production activities;
● require the installation of pollution control equipment;
● restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with exploration, drilling, mining, lithium hydroxide manufacturing or other production activities;
● limit or prohibit drilling, mining, lithium manufacturing or other production activities on lands located within wetlands, areas inhabited by endangered species and other protected areas, or otherwise restrict or prohibit activities that could impact the environment, including water resources;
● impose substantial liabilities for pollution resulting from current or former operations on or for any preexisting environmental impacts of our projects;
● require significant reclamation obligations in the future as a result of our mining and chemical operations; and
● require preparation of an environmental assessment or an environmental impact statement.
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Compliance with environmental
laws and regulations may impose substantial costs on us, subject us to significant potential liabilities, and have an adverse effect
on our capital expenditures, results of operations and/or competitive position. Violations and liabilities with respect to these laws
and regulations could result in significant administrative, civil, or criminal penalties, remedial clean-ups, natural resource damages,
permit modifications and/or revocations, operational interruptions and/or shutdowns and other liabilities. The costs of remedying such
conditions may be significant, and remediation obligations could adversely affect our business, results of operations and financial condition.
Additionally, foreign and local legislative bodies and agencies frequently revise environmental laws and regulations, and any changes
in these regulations, or the interpretations thereof, could require us to expend significant resources to comply with new laws or regulations
or changes to current requirements and could have a material adverse effect on our business operations. As of the date of this Annual
Report, other than with respect to the permitting activities of the Wolfsberg Project, we have not been required to spend material amounts
on compliance regarding environmental regulations.
Permits
Prior to developing or mining
any minerals that we discover, we will be required to obtain new governmental permits authorizing, among other things, any mining development
activities and mining operating activities. Obtaining and renewing governmental permits is a complex and time-consuming process
and involves numerous jurisdictions, public hearings and potentially costly undertakings. The timeliness and success of permitting efforts
are contingent upon many variables, some of which are not within our control, including the interpretation of permit approval requirements
administered by the applicable permitting authority. We may not be able to obtain or renew permits that are necessary to our planned
operations or the cost and time required to obtain or renew such permits may exceed our expectations. Any unexpected delays or costs
associated with the permitting process could delay the exploration, evaluation, development and/or operation of the Wolfsberg Project.
See “Risk Factors — Risks Related to Legal, Compliance and Regulations.”
Legal Proceedings
From time to time,
we may become involved in legal proceedings or be subject to claims that arise in the ordinary course of our business, the outcomes of
which are subject to uncertainty. Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation,
require significant management time and result in the diversion of significant operational resources. We are not currently a party to
any legal proceedings, the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse
effect on our business or financial condition.
GEM Arbitration
In March 2025, the GEM Investor
commenced an action in the U.S. against us, based on a breach of contract claim. These claims are now being arbitrated by the American
Arbitration Association. The GEM Investor is seeking a cash payment of $3,500,000 and an amount of ordinary shares having a value equal
to $27,200,000, in each case plus interest, under the GEM Agreements. We have denied the allegations made by the GEM Investor, including
any liability under the GEM Agreements, and we have filed certain counterclaims concerning actions taken by the GEM Investor under the
GEM Agreements. The arbitration proceeding is pending, and although we cannot predict the outcome, we believe that the proceeding will
be decided in our favor.
43
DESCRIPTION
OF THE Tanbreez PROJECT
Certain information
that follows relating to the Tanbreez Project is derived from, and in some instances is an extract from, the Technical Report
Summary (the ‘Tanbreez Technical Report Summary”) prepared in compliance with the SEC’s Modernization of Property
Disclosures for Mining Registrants. Portions of the following information are based upon assumptions, qualifications and procedures
that are not fully described herein. Reference is made to the full text of the Tanbreez Technical Report Summary, which is included
as an exhibit to this Annual Report. The Tanbreez Technical Report Summary covers only the Tanbreez Project and does not include
any information or reserve estimates on the Preliminary Feasibility Study or the Wolfsberg Project and the Weinebene and Eastern
Alps Projects.
Tanbreez Project Acquisition
On June 5, 2024, we entered
into a binding Heads of Agreement (as subsequently amended and restated, the “Heads of Agreement”) with Rimbal Pty
Ltd., a company controlled by geologist Gregory Barnes (“Rimbal”), pursuant to which we would acquire an interest
in the Tanbreez Project. On June 18, 2024, pursuant to the Heads of Agreement, we acquired a 5.55% interest in Tanbreez in exchange for
the payment of $5 million in cash to Rimbal. On July 23, 2024, pursuant to the Heads of Agreement, we acquired an additional 36.45% interest
(the “Stage 1 Interest”) in Tanbreez in exchange for the issuance by us to Rimbal of approximately 8.4 million ordinary
shares, bringing our total equity ownership in Tanbreez to 42%. The ordinary shares were issued to Rimbal in a private placement exempt
from the registration requirements of the Securities Act, in reliance on the exemptions set forth in Section 4(a)(2) of the Securities
Act. European Lithium, the Company’s largest shareholder, will retain its 7.5% ownership in Tanbreez.
Under the Heads of
Agreement, if the Company invested $10 million in exploration expenses in Tanbreez within the two years, the Company would have
the option to increase its stake in Tanbreez to 92.5% (the “Stage 2 Interest”) by issuing additional ordinary
shares to Rimbal with a value equal to $116 million at such time. On September 29, 2025, the Company entered into Amendment No. 1 to the Amended and Restated Heads of Agreement
(the “HoA Amendment”) with Rimbal. The HoA Amendment amended the Heads of Agreement to, among other things, (i) remove the
Company’s obligation to invest $10 million in Tanbreez to receive the Stage 2 Interest and (ii) upon approval from the Greenlandic
Mineral Resources Authority of Rimbal’s transfer of Tanbreez to the Company, obligates the Company to issue 14,500,000 Ordinary
Shares to Rimbal in exchange for the Stage 2 Interest.
The closing of the Stage 2 interest in Tanbreez will be subject to other customary closing
conditions, including additional governmental approvals by the Greenland government. There is no guarantee that the Company’s
acquisition of the Stage 2 Interest will occur.
Overview of the Tanbreez Project
The Tanbreez Project is
a permitted, globally significant critical minerals asset positioned to unlock a sustainable, reliable and long-term rare earth supply
for North America and Europe. Once operational, Tanbreez is expected to supply REEs to customers in the western hemisphere to support
the production of a wide range of next-generation commercial products, as well as demand from the defense industry. The Tanbreez Project
is expected to possess greater than 27% HREEs, which carry a much higher value than LREEs. In an industry where competitors primarily
target LREE, the Tanbreez Project is believed to be unique not only due to its significant size, but also because of its HREE asset mix.
The Tanbreez Project is
favorably located in Southern Greenland and is expected to have access to key transportation outlets as the project’s area
features year-round direct shipping access via deep water fjords that lead directly to the North Atlantic Ocean. The outcropping ore
body known as Kakortokite covers an area of 8 x 5 kilometers and is approximately 400m thick. Tanbreez is located in a mild part of
Greenland with average temperatures ranging from 0 to -5°C in winter to 10 to 15°C in summer. The Tanbreez Project covers
1,800 hectares.
This foundational rare earth
asset is expected to benefit from robust regulatory tailwinds in both Europe and North American and long-term secular trends for next-generation
technology for both commercial and government applications. With China dominating more than 90% of the world’s rare earth assets,
this acquisition would represent a strategic move for the Company as it continues to position itself as a leading supplier of critical
minerals for the western world. By centralizing the supply chain for critical minerals and working with the Company and Rimbal, western
countries can reduce their dependence on foreign imports, thereby bolstering their national security.
44
Tanbreez Project Geological Map and MRE Resource
locations
The Tanbreez deposit is classified
as a peralkaline igneous Rare Earth Element (REE)-Zirconium (Zr) deposit, specifically hosted within the Ilímaussaq Alkaline Complex
in South Greenland. It is enriched in TREO, tantalum, zirconium, niobium, and other critical metals. The formation setting is a Mesoproterozoic
continental rift-related intrusion (Gardar Rift) and is estimated at ~1.16 billion years old.
The Tanbreez license, MIN
2020-54 is in southern Greenland. The regional capital, Qaqortoq, is 20 kilometers to the south and the regional airport of Narsarsuaq
is being moved to approximately 12 kilometers south of the license. The major power line which is from hydro power passes 2 kilometers
south of the license. The tenement has ample supply of fresh water.
Qaqortoq is the capital of
the Kujalleq municipality in southern Greenland, located near Cape Thorvaldsen. it is the most populous town in southern Greenland with
a population of approximately 3,500 people, and the fourth or fifth-largest town in Greenland. Qaqortoq Heliport operates year-round,
linking Qaqortoq with Narsarsuaq Airport (a distance of 60 kilometers) and, indirectly, with the rest of Greenland and Europe. Feasibility
assessments were underway regarding building a landing strip for fixed-wing aircraft.
Given the proximity of the
Tanbreez rare earth deposit to Qaqortoq, the new airport could significantly enhance logistics and transportation for mining operations,
offering more efficient routes for personnel and equipment.
The Tanbreez tenure is a
Mineral Exploitation License, MIN 2020-54, in southern Greenland covering 18 kilometers. The regional capital, Qaqortoq, is 20 kilometers
to the south and the regional airport of Narsarsuaq is being moved to approximately 12 kilometers south of the license. The major power
line which is from hydro power passes 2 kilometers south of the license. The tenement has ample supply of fresh water. The Tanbreez license
is registered in the name Tanbreez Mining Greenland A/S (“Tanbreez Mining”), a subsidiary of Rimbal Pty Ltd.
Critical Metals currently
owns 42% of the equity interests in Tanbreez.
Permitting Requirements
The permitting process for
an exploitation license required for the initiation of mining activities involves the submission of an Environmental Impact Assessment
(EIA) and a Social Impact Assessment (SIA). Both assessments require baseline studies and consultations with stakeholders with a strong
emphasis on public hearings and reviews by the authorities. The outcome of this multi-stage process is the Impact Benefit Agreement (IBA)
which forms the basis of the mining permit.
45
An EIA must be prepared when
a company plans to exploit a mineral deposit following the routines described in the guidelines (Bureau of Minerals and Petroleum 2011).
The EIA must cover the entire exploitation period from mine development before the mine starts until the closure of the mine including
a subsequent monitoring period. Environmental studies must be able to predict impacts from the specific mining project and describe baseline
conditions before areas are affected by construction and operations. Studies must cover some years before construction starts so that
the annual and seasonal variations of environmental parameters are considered in the baseline description. The number of years needed
to conduct the environmental studies will depend on the project and the site. Often 2–3 years of studies are needed in advance of
the EIA report preparation.
Encumbrances
Qaqortukulooq (Hvalsey) contains 11 Norse and two Thule sites, including
the best preserved Norse ruin in Greenland and the site of the last recorded mention of Europeans in Greenland in 1408 Hvalsey Viking
Church ruins are situated approximately 11km south of the proposed mine. The church was the main cathedral for Greenland, and it is thought
that the first church on this site was built in the 11th century by Thorkell Farserk, a relative of Eric the Red. The church and its surroundings
have been designated a world heritage site. Around this the local community, the central government in cooperation with Tanbreez Mining
have put up a buffer zone. The buffer zone recommended and accepted by all parties is the top of the rugged range with south flowing creeks
in the heritage and buffer zone, and the north flowing creeks in the mining area. They are separated by rugged ranges which reach a height
of approximately 1,000m, effectively isolating the UNESCO site from the mineral resource areas.
For a complete
description of the Tanbreez Project, including the exploration and mineral resource estimates, refer to the Tanbreez Technical
Report Summary prepared by Agricola Mining Consultants Pty Ltd.
History of the discovery & exploration
The discovery of uranium at the northern end
of the intrusion in the 1950’s meant two groups were intensely exploring from 1960 to 1980. In the north, outside the current license,
the Danish government was exploring for uranium and a cryolite mining company in the south, was exploring the eudialyte. This spurred
on much activity, hundreds of papers, books, comparison with the large eudialyte deposits on the Kola Peninsula at Lovozero and Khibina.
After the Danish government decided against going nuclear and the cryolite company decided to halt its zirconium research the exploration
faded away in the 1970s.
Eudialyte Exploration 1985 to the Present
Exploration of the zirconium-rich
kakortokites continued in 1985, when the Danish company A/S Carl Nielsen obtained an exclusive license to carry out exploration centered
around the exposed kakortokites and the adjacent marginal pegmatite in the southern part of the complex. The thickest layer of red kakortokite,
layer +16, was examined in two drill holes in 1986. During 1987, potentially economic eudialyte-rich parts of the marginal pegmatite,
kakortokites and Naujaites within the concession area were mapped and sampled, and samples of the marginal pegmatite were metallurgically
tested.
In 1987, the Canadian company
Highwood Re-sources Ltd. obtained permission to explore areas be-tween the fjords Tunulliarfik and Kangerluarsuk and carried out bulk
sampling and drilling to test the feasibility of exploitation of eudialyte-rich rocks. This company was joined by Platinova Resources
Ltd. and Aber Resources Ltd. In 1988 this group and A/S Carl Nielsen formed a joint venture, combining their mineral licenses. The main
target was the exposed kakortokites, minor targets were the marginal pegmatites in the southern part of the complex. The joint venture
co-operation was continued in 1990 with an extensive drilling program and metallurgical testing of potential ores from the southern part
of the complex. At the end of this activity the Canadian partners and the Danish participants went through a period of restructuring
resulting in Highwood Resources taking over all interests in the prospect at the end of 1992.
In 1992 the Danish company
Mineral Development International A/S (MDI) obtained the exclusive right to explore the sodalite-rich Naujaites in the northern part
of the complex. The aim was to investigate the possibilities of using sodalite as raw material to produce synthetic zeolites.
Several research projects
involving colleagues from other countries have been supported by various foundations. The Danish Natural Science Research Council supported
a Canadian Danish project aiming at a comparison of the mineralogy of Mont Saint-Hilaire, Quebec, with the Narssârssuk mineral
occurrence associated with the Igaliko Complex, South Greenland, and the Ilímaussaq complex. The Danish company First Development
International A/S in 1993 supported a Danish–Russian project consisting of an examination of the drill cores from the 1977 drilling
program kept at the Risø National Laboratory. The aim was to find some of the water-soluble minerals discovered in the Khibina
and Lovozero complexes. The drill cores are rich in villiaumite, but holes in the samples indicate that other water-soluble minerals
have been dissolved during and after drilling. Only one of the Kola minerals was discovered, natrophosphate.
In 1994–1997 INTAS
(International Association for the Promotion of Co-operation with Scientists from the Independent States of the Former Soviet Union)
supported a Danish–French Russian Spanish research co-operation with the purpose of promoting comparative studies of the mineralogy
of agpaitic nepheline syenites in Ilímaussaq, the Khibina and Lovozero complexes of the Kola Peninsula, and the Tamazeght complex,
Morocco. Field work was carried out in Ilímaussaq in 1994, in Khibina and Lovozero in 1997 and in Tamazeght in 1999.
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The Danish Natural Science
Research Council in 1997 supported an Austrian Danish research project with the purpose of studying pegmatites and hydro-thermal veins
and the relations to their country rocks in the Ilímaussaq complex and at the Narssârssuk mineral locality associated with
the Igaliko Complex in South Greenland.
The Tanbreez Deposit
Tanbreez parent company,
Rimbal, took up the Tanbreez license in 2001 and the whole intrusion subsequently in 2005. It subsequently sold the northern part of
the intrusion, including the previous uranium exploration areas to Greenland Minerals & Energy in 2007. Since then, that company
has been able to establish a JORC deposit more than 1 billion tonnes of ore containing rare earth, uranium and zinc. In 2010 Rimbal transferred
its initial license into the Greenlandic company, Tanbreez Mining, which, in 2012, applied for the Exploitation License,
MIN 2020-54, that was granted in September 2020. Tanbreez is an anagram of the chemical symbols for tantalum (Ta), niobium (Nb), rare
earths REE) and zirconium (Zr) - Ta-Nb-REE-Z.
The government of Greenland,
and earlier Denmark, have completed several surveys of the region including Aerial magnetic survey, Aerial regional radiometric survey,
Regional gravity survey and Regional geochemical survey.
Tanbreez has extended this
with their own localized aerial magnetic, radiometric and topographic surveys. The aerial magnetic survey, radiometric survey and
gravity survey do not show any anomalies on this license which was expected. With the radiometric surveys identifying the uranium and
thorium anomalies associated with this deposit north of this license. No radiometric anomalies were located within the Tanbreez Project.
Exploration
The initial Mineral Resource
Estimation was completed in 2016. The work was commissioned by Rimbal, a private Australian company and not required to make a public
release. Assays for uranium demonstrate background levels, at 10-20 ppm. Thorium does not exceed 100 ppm. Neither appears to concentrate
during processing and remain at background levels. The company believes it can sell the main co-products, arfvedsonite and feldspar,
which is anticipated to offset much of the concentrate operating cost.
The Environmental
Impact Assessment (EIA) and Social Impact Assessment (SIA) were presented to the government and on September 8, 2020 and Tanbreez
Mining exploitation license and Impact Benefit Agreement (IBA) were signed, marking the official granting of the
exploitation license (MIN 2020-54).
Early Exploration (Before 2000)
Initial geological surveys and sampling identified
the presence of eudialyte, a mineral rich in zirconium, niobium, tantalum, and REEs, within the Ilímaussaq intrusive complex.
These findings prompted further investigative efforts to assess the deposit’s potential.
Resource Delineation and Licensing (2000–2016)
Comprehensive drilling programs were conducted
to delineate the deposit’s scale and composition. These efforts culminated in the Greenland government’s issuance of an exploitation
license in August 2020, authorizing mining operations and marking a significant milestone in the project’s development.
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Geological Exploration Drilling
Key highlights of the drilling campaigns related
to the Tanbreez project are as follows:
● Early Exploration (2000s): Initial geological surveys and sampling confirmed the presence of eudialyte, a rare-earth-rich mineral. Early assessments indicated that the deposit contained significant heavy rare earth elements (HREEs) alongside zirconium, tantalum, and niobium. Highwood Resources and others drilled 296 drill holes into the area, many of those were less than 20 meters deep exploring the surface material. The holes are historical and insufficient details are available.
● 2007-2010: Targeted drilling programs were conducted to delineate the deposit’s scale and composition, supporting applications for mining licenses. Several drill holes were completed to establish a clearer picture of the deposit’s scale and mineral composition. These efforts supported Tanbreez Mining’s application for an exploitation license. Rimbal drilled 14 diamond holes in 2007 and 46 diamond holes plus 49 RC holes in 2010.
● 2013-2016: Additional drilling and metallurgical testing refined estimates of the deposit’s size and economic feasibility. Studies confirmed that approximately 30% of the total REEs at Tanbreez were heavy REEs, which are particularly valuable. Rimbal drilled 9 diamond holes in 2013. The overall drill database of 414 drill holes was used to compile a Mineral Resource Estimate and a Definitive Feasibility Study in 2016. 184 drill holes were included in the MRE assessment, including 66 valid holed drilled by Highwood.
● 2017: This work and the Environmental Impact Assessment (EIA), Social Impact Assessment (SIA) and Impact Benefit Agreement (IBA) were presented to the government as an application for an exploitation licence.
● 2020: The Greenland government granted an exploitation license (MIN 2020-54), marking a transition from exploration to development. This was based on extensive prior drilling and feasibility studies. By 2020, Tanbreez was considered one of the world’s largest REE deposits, with over 4 billion tonnes of mineralized kakortokite. The focus then shifted toward securing investment and infrastructure for future mining operations.
● September 2024: A diamond drilling program commenced, consisting of 14 holes totaling up to 2,200 meters. The objective was to upgrade the resource to U.S. SEC standards and enhance potential mine throughput.
● October 2024: The Greenland Cabinet of Ministers granted an extension to the project’s exploitation license. The revised timeline requires submission of exploitation and closure plans by the end of 2025, provision of financial security by June 30, 2026, and commencement of mineral exploitation by the end of 2028.
● December 2024: Drilling activities led to the discovery of high-grade zones, including significant concentrations of gallium—an essential element for computer chips and defense applications.
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June 2025 Deep Resource Diamond Drilling above
the Fjord Deposit designed to intersect the 2024 confirmation drilling
The September 2024 diamond
drilling program was designed to optimize the resource for future production capacity and to extend the mine life of the Tanbreez Project.
The program was conducted by the experienced Greenland drilling contractor, 60 North Greenland, and was supervised by a team of internationally
acclaimed rare earths experts including Mr. Gregory Barnes, the founder of the Tanbreez Project, Mr. Hans Kristian Schønwandt,
a former Deputy Minister of Mines for Greenland, and Mr. Ole Christiansen. These industry experts bring together an extensive knowledge
of the Tanbreez deposit and over 40 years of experience in the development of mining projects from greenfield stage to production. The
samples from the first hole have now been received from the laboratory.
For more information regarding
exploration and drilling on the Tanbreez Project, see Section 7 of the Tanbreez Technical Report Summary.
Mineral Resource Estimate
A “mineral
resource” is 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. A mineral resource is a reasonable
estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or
continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become
economically extractable. It is not merely an inventory of all mineralization drilled or sampled. We have reported our mineral
resources in accordance with Item 1300 of Regulation S-K, as part of our exploration and evaluation activities.
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The mineral resources are
not Mineral Reserves (as such term is defined in Item 1300 of Regulation S-K) and do not have demonstrated economic viability.
The reported inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that
would enable them to be categorized as Mineral Reserves. There is no certainty that all or any part of this mineral resource will be
converted into Mineral Reserves.
The Tanbreez mineralization
is a highly fractionated Zr-Nb-Ta- REE, including HREE, deposit in the southern part of the Ilimaussaq intrusive complex in South Greenland.
The Ilimaussaq intrusion is possibly the most differentiated deposit known globally to date, covering a potential area of 18 square kilometers
and of significant depth of approximately 350 meters, that covers a portion of the Tanbreez tenement.
The following table contains
a summary of our mineral resource estimate. No Mineral Reserves were estimated for the Tanrbeez Project. The mineral resource estimate
was constrained based on drilling data.
TANBREEZ PROJECT Mtonnes TREO ZrO2 Nb2O5
Tanbreez Hill and Fjord
Indicated Resource 25.42 0.37 % 1.37 % 0.13 %
Inferred Resource 19.45 0.39 % 1.42 % 0.15 %
Total 44.87 0.38 % 1.39 % 0.14 %
A portion of the mineral
resource estimate reported for the Tanbreez Project is classified as “inferred.” Inferred mineral resource is that part of
a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The
level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors
likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred
mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying
factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the
economic viability of a mining project and may not be converted to a Mineral Reserve.
The commodities are hosted
in the mineral eudialyte being concentrated in the kakortokite rock layer at the floor of the exposed intrusion. The kakortokite sequence
outcrops over an area of 5.0 kilometers by 2.5 kilometers and has a total thickness of 270 meters to 350 meters. Based on initial results
obtained from our recent drilling program, four high-grade zones have now been identified. These zones are expected to play a significant
role in the Company’s strategy for optimizing its mining operations and increasing throughput (the Tanbreez Project is currently
licensed for 500,000 metric tons per year). The identification of these zones is a key milestone in the ongoing development of the project.
The four high-grade zones are:
● Unit Zero – This unit is up to 5 meters thick and is located approximately 50 meters behind the proposed plant location. This unit represents a potential target for future exploration.
● Base of the Kakortokite – At this zone there is a metasomatic replacement by eudialyte of the underlying unit. The unit possesses a high-grade rare earth element material, which is located approximately 40 meters below the surface.
● EALS – This horizon is entirely separate from the Kakortokite and occurs within the overlying naujaite. In some areas, the unit is high-grade and can be traced for approximately 3 kilometers, with a thickness of up to 80 meters. This year, the company conducted surface diamond drilling and extensive sampling across the unit. Notably, the percentage of heavy rare earths within the rare earth fraction ranged up to 40.8%.
● Area G – This area, identified this year, spans over 1 kilometer and contains extensive late-stage pegmatites and pegmatite scree. The area also holds high-grade ore in a zone that will adjoin the proposed road to the tailings area. There was a high concentration of Gallium discovered in this zone, with values reaching up to 147 ppm Ga2O3.
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The suite of minerals within
the Mineral Resource Estimate was based on assay results of the drill core and RC sample splits. Individual assays for ZrO2, TREO and
Nb2O5 are quoted separately, and no equivalent grades were assessed.
Diamond drill holes, R.C.
holes, channel chip samples with samples cross checked at separate laboratories, at different times. The samples have also been independently
checked twice with a handheld XRF machine using pressed duplicates. Drill holes have been twinned with diamond, R.C. and even channel
samples repeat. Repeat holes of diamond drilling, R.C. holes and surface samples are almost identical in assays.
The sampling shows very
even grade with no nugget effect at approx. 2% ZrO2 the grade is remarkably constant. All mineralisation is within the mineral eudialyte
with as a result the Zr is directly proportional to HF, Ta, Nb, all the REE etc.
All the assaying was done
by Ultra Trace Pty Ltd in Perth, Western Australia by ICP analysis. The remaining pulps not used for assaying are stored in Perth. Initially
a full scale ICP analysis was done on holes 2010DD10-D20, 2010DD10-D13, 2010DD10-D30 and 2010DD10-D42. After these results were obtained
it was decided that the remaining samples would be assayed for Zr, Ce, Dy, Nb, and Y only for the 2010 drilling program. A full suite
of rare Earth oxides, ZrO2, Nb2O5 and other oxides were analyzed for the 2013 drilling campagne under the guidelines of JORC 2012. There
is a clear relationship between ZrO2 and REO (using Dy2O3 as a proxy) and the median was used to estimate REO values for the earlier
drilling programs.
Some of the measured mineral
resource is informed by a single intersection, resulting in estimates of thickness (and therefore tonnage) and grade that may be considered
to be of lower confidence than one would generally expect of a measured mineral resource. Considering the continuity of the pegmatite
veins, the risk is considered low.
No cut-off grades applied
to the resources as the deposit will be bulk mined. The anticipated mining method and detailed review of grade variability suggests that
all the mineralized zones will be sent to the ROM Pad. Arfvedsonite and Feldspar may be recovered and sold with estimated waste materials
less than 5%. The average grade without applying a cut - off grade is 0.38% TREO. The average grade for the entire length of the stratigraphic
holes below the Mineral Resource Estimate is 0.40 to 0.45% TREO.
For more information
regarding the assumptions and parameters used to estimate mineral resources on the Tanbreez Project, see Section 11 of the
Tanbreez Technical Report Summary.
Preliminary Economic Assessment
On March 31, 2025, we issued
a press release relating to the Preliminary Economic Assessment (the “PEA”) on the Tanbreez Project. The PEA states
that the Tanbreez Project is expected to have a Net Present Value (“NPV”) of approximately US$3 billion (approximately US$2.8
Billion to 3.6 Billion at discount rates of 15% and 12.5%, respectively, before tax) with an internal rate of return of approximately
180%. The NPV was calculated based off an initial Mineral Resource Estimate of 44.97 million metric tons of rare earth materials (indicated
and inferred resources), which is approximately 1% of the 4.7 billion metric ton host rock. Other highlights include:
● Phased Growth Strategy: Planned initial production ~85,000 tonnes per annum (“tpa”) of rare earth element; scalable to ~425,000 tpa with modular expansion.
● Permitted & ESG-Aligned: Granted exploitation license; low radioactivity and minimal environmental footprint.
● Strategic Location: Coastal site with deep-water fjord access and proximity to existing infrastructure, including environmentally friendly hydropower.
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● Western Supply Chain Partner: Positioned as a long-term supplier to United States’s and European Union’s critical mineral and defense sectors.
● Large-Scale HREE Project: Resource base of 45 million tonnes (indicated and inferred resources) at 0.40% total rare-earth oxide grades with 27% heavy rare earth elements (“HREE”).
● Fully Permitted: Mining license granted through to 2050; low radioactivity mineralization and ESG-aligned development path.
● Modular Processing: Dry beneficiation to concentrate; hydrometallurgical refining planned in the United States or European Union.
● Logistical Advantage: Fjord-side location with year-round deep-water access; proximity to existing infrastructure.
● Strategic Supply Source: One of the few Western-aligned HREE sources; potential supply partner for United States’s and European Union’s critical materials strategy, and associated stockpiling of reserves.
● Low Capex to commence mining.
● Two easily separated by products available for sale (namely, feldspar and arvendsonite.
● Only 3% of waste material.
Exploitation License Extension
On October 15, 2024, we
announced that the Greenland Government granted an extension to certain deadlines under the Exploitation license of the Tanbreez Project
(License No. 2020-54) to 2028. Under the new amendment, Tanbreez Mining Greenland A/S is required to submit its exploitation and closure
plans by the end of 2025, provide financial security and a company guarantee by June 30, 2026, and commence the exploitation of minerals
by the end of 2028.
Discovery of Gallium
Discovery of Gallium.
The discovery of a significant amount of Gallium (at 147ppm Gallium Oxide Ga203) at Area G, further demonstrates the Tanbreez Project’s
immense value. Gallium is a critical metal that is primarily produced as a by-product of bauxite mining, with additional sources from
zinc smelters. The growing gallium market, currently worth billions of dollars per year and expanding at an annual rate of approximately
20%, presents a valuable opportunity for the Company. Critical Metals Corp plans to investigate the mineralogy of the gallium in this
zone and in all current sampling protocols and assess its potential as a viable by-product. The Company is currently conducting
strategic metallurgical concentrate laboratory test work on Gallium confirming previous historical results and process route. Confirming
assay results from the concentrates are expected to be published in October 2025. The distribution of Gallium and other REE’s into
the 2 primary concentrate products Eudialyte and Arfvedsonite concentrates is well underway.
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DESCRIPTION
OF THE WOLFSBERG PROJECT
Certain information
that follows relating to the Wolfsberg Project is derived from, and in some instances is an extract from, the Wolfsberg Technical
Report Summary prepared in compliance with the SEC’s Modernization of Property Disclosures for Mining Registrants. Portions of
the following information are based upon assumptions, qualifications and procedures that are not fully described herein. Reference
is made to the full text of the Wolfsberg Technical Report Summary, which is included as an exhibit to this Annual Report forms a
part. The Wolfsberg Technical Report Summary covers only the Wolfsberg Lithium Project and does not include any information or
reserve estimates on the Preliminary Feasibility Study or the Weinebene and Eastern Alps Projects.
Overview
The Wolfsberg Project lithium
deposit was discovered and explored by Minerex between 1981 and 1987. Minerex completed a preliminary feasibility study but, as lithium
demand and its price at that time did not support the development of a fully-fledged mine, the project was terminated. The project
passed through a number of ownerships before being acquired by the present owners European Lithium. As of June 30, 2025, the book carrying
value of the Wolfsberg Project was USD$39.7 million (Euro 33.8 million), as set forth in our historical audited consolidated
financial statements included elsewhere in this Annual Report, and was free of any encumbrances.
The Wolfsberg Project consists
of 54 exploration licenses covering 1,133 hectare (“ha”) and includes 20 mining areas occupying 86.7 hectares that
lie within the exploration area at the Koralpe mountain range. The Wolfsberg Project is located in Carinthia, 270 kilometers south of
Vienna, Austria and 20 kilometers east of Wolfsberg. Wolfsberg is an industrial town with established infrastructure, including access
to the European motorway and railway network.
The Wolfsberg Project area
is characterized by a sequence of mica schists and amphibolites, into which the spodumene-bearing pegmatite veins have intruded.
The Wolfsberg Project areas occurs within the Koralpe anticline and within its northern slopes (referred to herein as “Zone
1”), the strata uniformly strike west-northwest to east-southeast and dip to the north-northeast. The southern limb
of the anticline (referred to herein as “Zone 2”) dips to the south-southwest and is also a host to a number
of spodumene-bearing pegmatites. The pegmatites in Zone 1 comprise a series of parallel spodumene-bearing pegmatite veins striking
NW-SE and dipping at approximately 60° to the northeast. Dependent on their host rock, the pegmatites have been subdivided into
an amphibolite hosted pegmatite (“AHP”) and mica schist hosted pegmatite (“MHP”). The MHP lack
the typical features and textures of pegmatites and almost all of the original pegmatite minerals are completely recrystallized to produce
a fine-grained gneissic texture. The AHP displays the primary pegmatitic textures with a slight metamorphic overprint and greyish
to locally greenish spodumene crystals, ranging from 2-3 centimeters long, which are more or less homogeneously distributed
in a fine-grained matrix of feldspars and quartz and are aligned sub-parallel to the pegmatite contacts. The spodumene content
of the MHP is considerably lower than that of the AHP, which averages approximately 15 wt% by volume, but the bulk mineralogy is otherwise
the same.
The exploration of the Wolfsberg
Project by Minerex and European Lithium has identified up to 15 spodumene-bearing pegmatites, within both amphibolite and mica schist
host rocks, as having economic potential based on lithium grade and vein thickness. Veins up to 5.5 meters have been encountered, but
the average vein thickness is approximately 1.4 meters. The MHP veins have been followed along strike for 1,500 meters and the AHP veins
for 650 meters. The deposit type is considered to be a class of rare-element pegmatite of the lithium-caesium-tantalum family,
of the albite-spodumene type.
Exploration drilling by
European Lithium was conducted from 2012 to 2021 and focused mainly on the pegmatites in Zone 1, with some scout drilling in Zone
2 completed in 2012, 2017 and 2018. The 2016 exploration focused on the validation and verification of the historical Minerex data which
included twinning a number of drill holes and channel samples. The Independent Qualified Person at the time, Mr. Don Hains, P. Geo.,
declared that all the Minerex data could be utilized in a mineral resource estimate in accordance with the JORC Code (2012). Infill drilling
was conducted in 2019 and resource extension drilling in 2021. Sufficient detailed exploration has been undertaken for these veins to
be accurately modelled and used as the basis for the Mineral Resource estimate, which currently stands at a combined Measured and Indicated
Resource of 9.7 Mt at 1.03% % Li2O and an Inferred Resource of 3.1 Mt at 0.90% Li2O, a 0.2% Li2O
cut-off and 0.5 m thickness cut-off. See “— Mineral Resources.”
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For a description of certain
completed and planned feasibility studies with respect to the Wolfsberg Project, please read “Information about the Company — Overview
of Our Projects — Feasibility Studies.” For a complete description of the Wolfsberg Project, including the
exploration and mineral resource estimates, refer to the Wolfsberg Technical Report Summary prepared by CSA Global.
Description and Location
The Wolfsberg Project is
in the Wolfsberg District (a second-level administrative division) of Carinthia, the southernmost of the nine states of the federal
republic of Austria. It is in mountainous terrain in the Koralpe mountain range, part of Lavanttal Alps, and in the catchment of the
Lavant River. The Project area and existing underground workings are in the Koralpe mountain range, close to the watershed dividing the
states of Carinthia and Styria, and opposite each other in the valley of the Brandgraben River.
The Wolfsberg Project area
is located in Carinthia, the southernmost province of Austria, which is almost adjacent to the state border with Styria, and is located
approximately 20 kilometers east of the town of Wolfsberg and approximately 270 kilometers to the southwest of Vienna. The approximate
geographic coordinates for the area are 46º 50’11”N latitude 14º 59’17”E longitude. The terrain is
primarily mountainous, with dense commercial forestry in the surrounding area.
The Carinthia region, in
which the mine is located, has a continental climate, with hot and moderately wet summers and long, harsh winters. The mine site is located
in the Koralpe mountain range, with elevation ranging between 1,450 meters and 1,750 meters. It is in an area of commercial pine forests.
Snow is typical from November until April, but the weather does not significantly impact mining and processing operations, which are
conducted throughout the year.
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The closest town to the
Wolfsberg Project is the town of Wolfsberg, which is situated within the Lavantal Alps, west of the Koralpe range and in the Lavantal
River valley. The town of Wolfsberg is located approximately 20 kilometers to the west of the Wolfsberg Project area. Wolfsberg’s
municipal area of 279 square-kilometers is the fourth largest in Austria. The Wolfsberg Project area is within the Franschach St
Gertraud municipality, which has a population of approximately 2,800 people. The Franschach St Gertraud municipality is located directly
to the north of Wolfsberg and until 1997 was part of the Wolfsberg municipality.
The Wolfsberg Project is
accessed from the town of Wolfsberg to the west via surfaced road for 18 kilometers and forest unsurfaced road for two kilometers or
from the town of Deutschlandsberg in Styria to the east via surfaced road for 26 kilometers. Road access to the project site is maintained
year-round with routine clearance during the winter to keep the Wolfsberg — Deutschlandsberg road open and maintain
access to the Weinebene ski resort, which is adjacent to the mine property.
Wolfsberg has a growing
light industrial sector and a population of approximately 25,000 people. The town is actively promoting itself as a business location
with good transport infrastructure, availability of natural gas and power and a qualified and productive workforce. The adjacent municipality
of Franschach St Gertraud hosts a major Mondi pulp and paper mill. The towns offer a wide variety of accommodations for employees of
the Wolfsberg Project as well as a broad range of services in support of its operations.
Graz is the capital city
of Styria and is the second largest city in Austria, after Vienna, with an urban population over 600,000, Graz is located approximately
70 kilometers from the Wolfsberg Project and is the major industrial city of Austria with considerable activity supporting the European
motor industry. Jaguar has announced it intends to build its e-Pace electric car in Graz at the facilities of Magna Steyr. Magna
Steyr recently sold its battery division in Graz to SDI Samsung which is using Graz as its European headquarters to expand lithium battery
production in Europe. Graz is a university town with approximately 44,000 students. International airports at Graz and Klagenfurt are
only 60 kilometers away from the project. Austria has a mining tradition and hosts Europe’s second oldest mining university in
Leoben, 93 kilometers from Wolfsberg, and currently has over 3,000 students.
Klagenfurt, 60 kilometers
to the southwest of Wolfsberg, is the capital and economic center of Carinthia mainly in light industry, electronics and tourism. It
has a population of approximately 100,000. The Wolfsberg Project operation sites are readily accessible to skilled labor, electricity,
natural gas, water, communications and transportation to meet the needs of a moderate sized underground mine.
History
Between 1981, when it was
discovered, and 1987, the Wolfsberg Project was the focus of extensive exploration work by the original owners, Minerex, an Austrian
Government company. During this time, Minerex completed exploration work that comprised initial surface geology mapping along with 9,940
cubic meters of surface trenches and a diamond drilling program totaling 12,012 meters collared from surface. In 1985, an underground
exploration program was undertaken that included the development of a decline from the surface from the northern side of Brandrucken
Mountain through the amphibole schist to provide access to the pegmatite veins. Crosscutting drifts were driven along strike of selected
veins to provide access for mapping and sampling and an additional decline was driven to access the veins in the mica schist. In all,
1,389 meters of underground development was mined. A diamond drilling campaign of 4,715 meters was undertaken from underground to effectively
infill the surface drilling to about 50-meter intervals in the eastern part of Zone 1. In 1987, Minerex undertook a pre-feasibility study,
however, due to the then current lithium prices and the revaluation of the Austrian Schilling to the US Dollar, this study concluded
that the Wolfsberg Project did not meet the investment criteria to continue to develop the project. As a result, in 1988, the Austrian
Government decided not to develop the Wolfsberg Project and Minerex was closed.
After the closure of Minerex,
the company archive (comprising many other projects) was transferred to BBU as the legal successor of Minerex. BBU was a lead-zinc miner
that also operated by the Austrian Government. In 1991, BBU was closed by the Austrian Government and the company abandoned their development
plans. All of the mineral tenements, as well as the underground infrastructure, were then sold to KMI, a private mining company that
mined micaceous hematite in Carinthia and Morocco. KMI continued to carry out all necessary work and other requirements specified by
the authorities to maintain the mine and the exploration licenses in good order.
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In 2011, ECM Lithium AT
GmbH (“ECM Lithium”) acquired the Wolfsberg Project from KMI. ECM Lithium was beneficially owned by East Coast
Minerals NL (later renamed Global Strategic Metals NL) (80%) and Exchange Minerals (20%), a private company, through BVI Company ECM
Lithium AT (Holdings) Ltd (“Holdings”). Holdings was renamed European Lithium Limited following a demerger of Global
Strategic Metals interest in the company through an in specie share distribution to shareholders.
In 2016, a reverse takeover
was successfully completed by European Lithium selling its Austrian lithium assets to Paynes Find Gold, an ASX listed company, for shares
in Paynes Find Gold. Paynes Find Gold was renamed European Lithium Limited and was subsequently readmitted to the ASX while the original
European Lithium Limited remains an unlisted BVI company.
Property Ownership and Agreements
Tenure and Property Agreements
In Austria, the legal basis
for mining is regulated under the Mineralrohstoffgesetz of 1999 (“MinroG”). MinroG regulates the prospecting, exploring
and mining of all mineral raw materials and contains detailed regulations concerning prospecting, exploration licenses, mining licenses,
operating plans, mining installations, supervision and other related topics. Mineralization is categorized in three groups: (i) bergfreie (i.e.,
free for exploitation by persons who are not necessarily owner of the land on which it is found) mineral resources such as iron, gold,
copper and lithium; (ii) bundeseigene or state owned mineral resources (e.g. rock salt, hydrocarbon, uranium) and (iii) grundeigene or
mineral resources owned by the landowner (all mineral resources not listed in the previous two categories e.g. quartz, feldspar, etc.).
Exploration for bergfreie raw
materials, including lithium, requires an exploration license obtained from the Mining Authority, which is part of the Ministry for Sustainability
and Tourism. Each exploration license forms a circle with radius of 425 meters and gives the holder the exclusive right to explore for bergfreie minerals
for a term of five years. At the end of each calendar year, the holder must submit a report covering exploration, and the results
thereof, to the Mining Authority. Exploration licenses can be extended for additional periods of five years; provided,
that exploration works have been performed at least once within the five years for which the exploration licenses have been granted.
Performing works in one license is sufficient for the extension of up to 100 exploration licenses.
Mining licenses entitle
the holder to exclusively exploit and mine bergfreie mineral raw materials in a certain area and to exclusively acquire
title to the minerals that are mined. Additionally, the holder of a mining license is entitled to acquire title to grundeigene mineral
raw materials if they result from mining activities for bergfreie mineral raw materials and a separate mining of the grundeigene mineral
raw materials is not economically justified. This is the situation at the Wolfsberg Project, where feldspar, quartz and mica are potential
by-products from the mining and processing of the lithium bearing pegmatite veins.
Mining licenses are granted
by the Mining Authority for Grubenmaße, which is a rectangular surface area of 48,000 meters squared. In order
to obtain such license, the applicant must demonstrate that the deposit is workable and that mining will be economically feasible. This
is done by the submission of detailed data followed by an oral hearing on-site. A maximum of sixteen Grubenmaße licenses
may be granted to one applicant and the total area is called Grubenfeld. The holder of a Grubenmaße mining
license is obliged to commence mining operations within two years in at least one Grubemaß and mining has
to be performed during at least four months per year.
The holder of a mining license
is granted the right to appropriate and use the waters that accrue under the surface of the ground and water streams that come to the
surface before they get confused with surface water.
For the owner of mining
licenses to be entitled to perform mining activities, a mining program has to be submitted to the Mining Authority for approval. Prior
to approving the mining program, the government authorities are invited to raise their concern and an oral hearing has to take place
on-site with the property neighbors invited.
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According to MinroG, the
right to access and use the surface of the land on which prospecting works are to be carried out has to be obtained from the respective
property owners. The holder of a mining license has to seek approval of the landowner for the use of the surface of such land for mining
activity, including access to the deposit and necessary plants. In the case that no agreement can be reached, the interest of the holder
of the mining license shall prevail. In case the landowner consents to the use of the land, but no agreement can be found on the amount
of compensation, both parties may request the Mining Authority to decide the compensation amount. If the landowner does not consent to
the use of the land, the holder may apply to the Mining Authority to grant a compulsory right of use. Such access and usage agreements
do not concern either rights in rem or registered rights, these are merely agreements under civil law in a two-party relationship.
Royalty Obligation
No royalty obligations are
due to Austria for materials mined from the Wolfsberg Project.
Exploration and Drilling Activity
Most of the drilling completed
by EUR has focused on Zone 1, the northern limb of the anticline, which is covered by the mineral resource estimate (as set forth
below). The exploration work completed has included collation and verification and validation of historical data through channel sampling
and drilling of a number of twin drill holes as well as additional exploration drilling. A limited amount of scout drilling has also
been conducted on the southern limb of the anticline but none of the pegmatites intersected form part of the mineral resource estimate.
Historical Exploration
Previous exploration work
completed by previous owners, includes geological mapping, structural mapping and interpretation, geochemical soil surveys, pitting,
trenching, and the development of an underground access decline and drives along selected veins, underground trial mining and excavation
of two 500-ton bulk samples from each of the two mineralization styles.
Initial surface geological
mapping was undertaken by Minerex and coupled to early trenching, formed the basis of the early exploration programs. In 2011, an extensive
geological mapping program was undertaken covering a considerably larger area than the original Minerex investigation area. The program
included the location of outcrops of different rock type, orientation of bedding and stratification and location of pegmatite boulders
on surface. The following is a simplified geographical map of the broader deposit area.
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According to Moser (1986), 35
trenches were executed and investigated (9,940 cubic meters and 200 samples) by Minerex. The location and shape of the trenches is shown
on a site map for the year 1983. No indication of the samples and the lithium grade is included. This information can however be found
in the detailed geological mapping documents of the trenches. The geometric location of the trenches and the pegmatites were digitized
during the data recovery program. ECM Lithium carried out 300 m of trenching in 2017 to the southeast of Zone 2 to identify overburden
pegmatite and their southern extension. Lithium grade of pegmatite samples were too low to be of interest.
During 1985, a detailed
underground exploration program was undertaken, including the development of a decline from the surface to provide access to the pegmatite
veins. Cross-cutting drifts were then driven along strike of selected veins to provide access for mapping and sampling, while 1,389
meters of underground decline development and other drives were mined. A diamond drilling campaign was then undertaken from selected
underground sites to infill the drill holes drilled from the surface. Two experimental stopes were also mined to evaluate cut and fill
and long-hole sub-level stopping methods, providing bulk samples for future metallurgical testing. Geo-mechanical measurements
of the sidewalls of the stopes were also taken as part of the mining trial. In 2016, a verification program of this data was undertaken
that included underground twin hole drilling and channel sampling along exposed pegmatite veins in the underground drifts, to replicate
the channel sampling conducted by Minerex.
Exploration
As part of EUR’s verification
and validation of the Minerex data in 2016, a number of twin channel samples were taken across the pegmatites. After samples positions
are marked, sample boundaries were cut perpendicular to the pegmatite strike direction using a diamond saw. The samples were 5 centimeters
wide by 10 centimeters deep. Once cut, the samples were broken out using jackhammer and large pieces were broken with a hand-held hammer
and the over break discarded. Channel sample field duplicates were also collected from selected channel samples by either deepening or
widening the channel sampled.
In 2017, EUR commenced a
surface drilling program, which comprised four HQ3 diameter holes designed to verify the extension to depth of the pegmatite veins identified
by Minerex and three HQ3 diameter holes to obtain more information on the extension of the pegmatite veins, totaling 2,576.6 meters.
In addition, EUR carried out 300 meters of trenching on the southern limb of the anticline, to identify overburden pegmatites and their
southern extension. The lithium grade of pegmatite samples identified in the trenching were too low to be of interest. The drilling program
in Zone 2, was completed in 2018 with an additional five HQ3 diameter holes for a total length of 1,338 meters.
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Drilling
Following EUR’s acquisition
of the Wolfsberg Project, Global Strategic Metals undertook exploration scout drilling in 2012 in Zone 2, on the southern limb of
the anticline, which confirmed the structural interpretation, and presence of spodumene bearing pegmatite veins. A total of five HQ diameter
holes were drilled.
In 2016, underground drilling
program of seven drill holes was undertaken by the contractor Swietelsky Tunnelbau GmbH & Co KG, using a Sandvik DE130 hydraulic
core drill rig with a 50 millimeter diamond coring bit and 3-meter length standard coring tube. The total length of the seven drill
holes was 829.6 meters with the aim of twinning a number of the Minerex drill holes. Site surveys were conducted by an external licensed
surveyor, using a total station instrument Leica 1600 with standard accuracies of ±2 millimeter per kilometer. All coordinates
were reported within the Austrian National Grid — MGI/Austria Gauss-Kruger (GK) Central — EPSG:
31255.
Fugro Austria GmbH was contracted
to run drill hole deviation surveys. The surveys were undertaken at 5-meter intervals using a Mount Sopris winch and two different
probe models: MDEV (magnetic deviation) and GDEV (gyroscope deviation).
The 2017 surface drilling
program was undertaken by VA Erzberg GmbH using an Atlas Copco (Mustang A66CBT) drill rig. The program comprised four HQ3 diameter holes
designed to verify the extension to depth of the pegmatite veins identified by Minerex, and three HQ3 diameter holes to obtain more information
on the extension of the pegmatite veins into Zone 2, the southern limb of the anticline, for a total length of 2,576.6 meters. The
drilling program in Zone 2, on the southern limb of the anticline, was undertaken in 2018 with an additional five HQ3 diameter holes
for a total length of 1,338 meters.
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In 2019, European Lithium
conducted a Phase 1 drilling program to verify the vein continuity between the deep drilling undertaken in 2017 and the historical
drilling undertaken by Minerex. The objective of the infill drilling program was to convert inferred resources from 2017 into indicated
resources and to confirm the extension of the deposit toward the west. The program included five shallow HQ3 diameter drill holes totaling
1,330.7 meters.
In 2021, a Phase 2
resource extension and infill drilling program took place to significantly increase the existing JORC Resources for the planned Bankable
Feasibility Study (“BFS”) and deposit extensions for future drilling programs. This target infill drilling program
is a continuation of the drilling programs undertaken from 2016 to 2019. The drilling program comprised 20 HQ3 diameter drill holes with
a total length of 7,923.0 meters.
For more information regarding
exploration and drilling on the Wolfsberg Project, see Section 7 of the Wolfsberg Technical Report Summary.
Mineral Resources
A “mineral resource”
is 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. A mineral resource is a reasonable estimate of mineralization,
taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed
and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely
an inventory of all mineralization drilled or sampled. We have reported our mineral resources in accordance Item 1300 of Regulation S-K,
as part of our exploration and evaluation activities.
The mineral resources are
not Mineral Reserves (as such term is defined in Item 1300 of Regulation S-K) and do not have demonstrated economic viability.
The reported inferred mineral resources are considered too speculative geologically to have economic considerations applied to them that
would enable them to be categorized as Mineral Reserves. There is no certainty that all or any part of this mineral resource will be
converted into Mineral Reserves.
Mining dilution is
assumed to be at 0% Li2O, in part because the pegmatite lithium has a direct and substantial contact with the rock enclosing it.
While determining cut-off grade parameters during the PFS, the third-party engineering firm that authored the study
concluded that economic viability was primarily influenced by the amount of dilution incurred during extraction. Certain inputs to
the model were modified to run a “goal-seek” process, such as the impacts of ore sorting resulting in a gross lithium
hydroxide production cost of US$8,738.60/t, which comprises costs related to mine site spodumene production of US$5,824.10/t,
spodumene transport costs of US$49.60, hydrometallurgical conversion to LiOH costs of US2,571.10/t and management costs of $294.80,
and a viable lithium hydroxide selling price range from US$15,000/t to US$24,750/t. In addition, the model reflects a total
spodumene production cost of US$882.90/t, which comprises spodumene mining costs of US$570.40/t, tailing backfill costs of
US$44.50/t, crushing and sorter costs of US$16.90/t and concentrator costs of US$251.20/t. For additional information about the key
parameters and costs used in this calculation, see Section 11.6 of the Wolfsberg Technical Report Summary. The overall lithium
recovery from run-of-mine to 6% Li2O concentrate was 75.8%. The Li2O recovery value in conversion was 89.7%.
The following table contains
a summary of our mineral resource estimate, which contains no changes from our mineral resource estimates disclosed as of June 30, 2024.
The mineral resource estimate is reported on 100% ownership basis. No Mineral Reserves were estimated for the Wolfsberg Project. The mineral
resource estimate was constrained based on drilling data. The mineral resource is reported at a 0.2% Li2O grade cut-off and
0.5 meter thickness cut-off. A constant bulk density value of 2.73 metric tons is applied to pegmatite volumes to estimate tonnage.
Mineral Resource Classification Tonnage (Mt) Grade (% Li2O) Content (kt Li2O) Cut-Off Grade (% Li2O)
Measured 4.31 1.13 48.7
Indicated 5.43 0.95 51.6 0.2 %
Measured + Indicated 9.74 1.03 100.4
Inferred 3.14 0.90 28.2
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Notes:
● Mt is million tonnes, kt is thousand tonnes.
● Figures have been rounded to the appropriate level of precision for the reporting of mineral resources.
● Mineral Resources are stated as in situ dry tonnes; figures are reported in metric tonnes.
● The mineral resource has been classified under the guidelines of S-K 1300.
● The mineral resource has demonstrated reasonable prospects for economic extraction based on pre-feasibility study work conducted in 2018.
● Historic underground development volumes have not been depleted from the mineral resource; however, these volumes are considered negligible relative to the size of the mineral resource.
● Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
A portion of the mineral
resource estimate reported for the Wolfsberg Project is classified as “inferred.” Inferred mineral resource is that part
of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling.
The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic
factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an
inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the
modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing
the economic viability of a mining project and may not be converted to a Mineral Reserve.
Some of the measured mineral
resource is informed by a single intersection, resulting in estimates of thickness (and therefore tonnage) and grade that may be considered
to be of lower confidence than one would generally expect of a measured mineral resource. Considering the continuity of the pegmatite
veins, the risk is considered low.
For more information
regarding the assumptions and parameters used to estimate mineral resources on the Wolfsberg Project, see Section 11 of the
Wolfsberg Technical Report Summary.
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C. Organizational Structure
The legal name of our company is Critical Metals
Corp. and we are a BVI business company incorporated under the laws of the British Virgin Islands. We conduct our operations through our subsidiaries,
which are listed below:
Name of Subsidiary Country of Incorporation and Place of Business
European Lithium AT (Investments) Limited British Virgin Islands
CM Sub Corp. (previously Sizzle Acquisition Corp.) Delaware, United States
ECM Lithium AT GmbH Austria
ECM Lithium AT Operating GmbH Austria
Critical BTC LLC Delaware, United States
Tanbreez Mining Greenland A/S Greenland
D. Property, Plant and Equipment
Not applicable.