Zinnwald Lithium Regulatory News (ZNWD)

Interim Condensed Consolidated Statement of Comprehensive Income

30 June

30 June

2021

2020

Unaudited

Unaudited

Notes

€

€

Revenue

-

-

Cost of sales

(13,797)

(40,695)

Gross (loss)/profit

(13,797)

(40,695)

Ireland and Sweden exploration project impairment

6

(1,549,875)

-

Administrative expenses

(357,579)

(368,074)

Operating loss

4

(1,921,251)

(408,769)

Finance income

422

-

Share of results of joint ventures

5

(52,911)

-

Revaluation gain on original joint venture holding

9

1,038,252

-

Loss before taxation

(935,488)

(408,769)

Tax on (loss)/profit

-

-

Loss for the financial period

(935,488)

(408,769)

Other comprehensive income

-

-

Total comprehensive income for the period

(935,488)

(408,769)

Earnings per share from continuing operations

 attributable to the owners of the parent company

Basic and diluted (cents per share) 7 (0.44) (1.31)

The income statement has been prepared on the basis that all operations are continuing operations.

Interim Condensed Consolidated Statement of Financial Position

30 June 2021 Unaudited

30 June 2020 Unaudited

31 December 2020

Audited

Notes

€

€

€

Non-current assets

Investments in joint venture

9

-

-

3,852,083

Intangible assets

8

8,303,034

2,140,610

1,546,111

Goodwill

8

5,531,474

-

-

Property, plant and equipment

10

46,974

-

3,662

13,881,482

2,140,610

5,401,856

Current assets

Trade and other receivables

11

122,137

51,330

170,926

Cash and cash equivalents

12

2,908,955

1,271,251

4,846,527

3,031,092

1,322,581

5,017,453

Total assets

16,912,574

3,463,191

10,419,309

Current liabilities

Trade and other payables

13

143,974

12,476

58,833

143,974

12,476

58,833

Net current assets

2,887,118

1,310,105

4,958,620

Total liabilities

143,974

12,476

58,833

Net assets

16,768,600

3,450,715

10,360,476

Equity

Share capital

15

2,867,979

437,480

2,278,155

Share premium

14,112,654

4,431,671

7,362,699

Other reserves

818,654

811,077

814,821

Retained earnings

(1,030,687)

(2,229,513)

(95,199)

Total equity

16,768,600

3,450,715

10,360,476

Interim Condensed Consolidated Statement of Changes in Equity

Share capital

Share premium

Other reserves

Retained earnings

Total

€

€

€

€

€

Balance at 1 January 2021

2,278,155

7,362,699

814,821

(95,199)

10,360,476

Six months ended 30 June 2021:

Loss and total other comprehensive income for the period

-

-

-

(935,488)

(935,488)

Total comprehensive income for the period

-

-

-

(935,488)

(935,488)

share-based payments

directly in equity

Balance at 30 June 2021

2,867,979

14,112,654

818,654

(1,030,687)

16,768,600

Share capital

Share premium

Other reserves

Retained earnings

Total

€

€

€

€

€

Balance at 1 January 2020

351,133

4,151,045

811,077

(1,820,744)

3,492,511

Six months ended 30 June 2020:

Loss and total other comprehensive income for the period

-

-

-

(408,769)

(408,769)

Total comprehensive income for the period

-

-

-

(408,769)

(408,769)

Balance at 30 June 2020

437,480

4,431,671

811,077

(2,229,513)

3,450,715

Interim Condensed Consolidated Statement of Cash Flows

30 June 2021

30 June 2020

Unaudited

Unaudited

Notes

€

€

€

€

Cash flows from operating activities

Cash (used in)/generated from operations

16

(390,310)

(363,352)

Net cash (used in)/generated from operating activities

(390,310)

(363,352)

Cash flows from investing activities

Investments in Joint Venture

(735,800)

-

Exploration expenditure in Ireland and Sweden

(3,764)

(138,276)

Purchase of remaining share of Deutsche Lithium

(1,500,000)

-

Cash acquired on acquisition of Deutsche Lithium

486,213

-

Interest received

422

-

Net cash used in investing activities

(1,752,929)

(138,276)

Cash flows from financing activities

Proceeds from issue of shares

58,717

366,973

Net cash generated from financing activities

58,717

366,973

Net decrease in cash and cash equivalents

(2,084,522)

(134,655)

Cash and cash equivalents at beginning of period

4,846,528

1,497,276

Effect of foreign exchange rates

146,949

(91,370)

Cash and cash equivalents at end of period

2,908,955

1,271,251

Notes to the Interim Condensed Consolidated Financial Statement

1

Accounting policies

Company information

Zinnwald Lithium Plc (the "Company") is a public limited company which is admitted to trading on the AIM Market of the London Stock Exchange and is domiciled and incorporated in England and Wales. The registered office address is 29-31 Castle Street, High Wycombe, Buckinghamshire, United Kingdom, HP13 6RU.

The Group consists of Zinnwald Lithium Plc and its wholly owned subsidiaries, Deutsche Lithium GmbH in Germany, Deutsche Lithium Holdings Ltd (formerly Erris Resources (Exploration) Ltd) in the UK, and Erris Zinc Limited in Ireland.

1.1

Basis of preparation

These unaudited interim condensed consolidated financial statements have been prepared under the historical cost convention and in accordance with the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The unaudited interim condensed financial statements should be read in conjunction with the annual report and financial statements for the year ended 31 December 2020, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The unaudited interim condensed consolidated financial statements do not constitute statutory financial statements within the meaning of the Companies Act 2006. They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of UK adopted international accounting standards. Statutory financial statements for the year ended 31 December 2020 were approved by the Board of Directors on 25 February 2021 and delivered to the Registrar of Companies. The report of the auditor on those financial statements was unqualified.

The same accounting policies, presentation and methods of computation are followed in these unaudited interim condensed financial statements as were applied in the preparation of the audited financial statements for the year ended 31 December 2020.

The financial statements are prepared in euros, which is the functional currency of the company and the group's presentation currency, since the majority of exploration expenditure is denominated in this currency. Monetary amounts in these financial statements are rounded to the nearest €.

1.2

Basis of consolidation

The consolidated financial statements incorporate those of Zinnwald Lithium Plc and all of its subsidiaries (ie entities that the Group controls when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity).

In regard to its shareholding in Deutsche Lithium, for the period from 1st January 2021 to 24th June 2021, the Board concluded that whilst it had significant influence over Deutsche Lithium (50% shareholding, 1 of the 2 co-managing directors and a casting vote on operational matters), it did not have control over that company and consequently the investment was accounted for using equity accounting rather than consolidated. On conclusion of the acquisition of the remaining 50% of Deutsche Lithium on 24th June 2021, the Company now consolidates the full results of Deutsche Lithium.

All intra-group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which control ceases.

1.3

Going concern

At the time of approving these financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company had a cash balance of €2.9m at the period end and keeps a tight control over all expenditure. Thus, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The Directors have reviewed the ongoing situation with COVID-19 and do not consider its effects to have a material impact on the Group's and Company's going concern.

1.4

Intangible fixed assets other than goodwill

Capitalised Exploration and Evaluation costs

Capitalised Exploration and Evaluation Costs consist of direct costs, licence payments and fixed salary/consultant costs, capitalised in accordance with IFRS 6 "Exploration for and Evaluation of Mineral Resources". The Group recognises expenditure in Exploration and Evaluation assets when it determines that those assets will be successful in finding specific mineral assets. Exploration and Evaluation assets are initially measured at cost. Exploration and Evaluation Costs are assessed for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. Any impairment is recognised directly in profit or loss.

1.5

Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

1.6

Impairment of non-current assets

At each reporting period end date, the Directors review the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Directors estimate the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets not yet ready to use and not yet subject to amortisation are reviewed for impairment whenever events or circumstances indicate that the carrying value may not be recoverable. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

1.7

Joint Arrangements

Up to 24th June 2021, the Group's core activities in relation to the Zinnwald Lithium project were conducted through joint arrangements in which two or more parties have joint control. A joint arrangement is classified as either a joint operation or a joint venture, depending on the rights and obligations of the parties to the arrangement.

Joint operations arise when the Group has a direct ownership interest in jointly controlled assets and obligations for liabilities. The Group does not currently hold this type of arrangement.

Joint ventures arise when the Group has rights to the net assets of the arrangement. For these arrangements, the Group used equity accounting and recognises initial and subsequent investments at cost, adjusting for the Group's share of the joint venture's income or loss, dividends received and other comprehensive income thereafter. When the Group's share of losses in a joint venture equals or exceeds its interest in a joint venture it does not recognise further losses. The transactions between the Group and the joint venture are assessed for recognition in accordance with IFRS.

No gain on acquisition, comprising the excess of the Group's share of the net fair value of the investee's identifiable assets and liabilities over the cost of investment, was recognised in profit or loss. The net fair value of the identifiable assets and liabilities were adjusted to equal cost.

Joint ventures are tested for impairment whenever objective evidence indicates that the carrying amount of the investment may not be recoverable under the equity method of accounting. The impairment amount is measured as the difference between the carrying amount of the investment and the higher of its fair value less costs of disposal and its value in use. Impairment losses are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised.

2

Judgements and key sources of estimation uncertainty

In the application of the accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements.

Joint venture investment

The Group applied IFRS 11 to all joint arrangements and classified them as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor. The Group held 50% of the voting rights of its joint arrangement with SolarWorld AG. The Group determined itself to have joint control over this arrangement as under the contractual agreements, unanimous consent is required from all parties to the agreements for certain key strategic, operating, investing and financing policies. The Group's joint arrangement was structured through a limited liability entity, Deutsche Lithium GmbH, and provided the Group and SolarWorld AG (parties to the joint venture agreement) with rights to the net assets of Deutsche Lithium under the arrangements. Therefore, this arrangement was classified as a joint venture up to 24 June 2021 when the Company acquired the remaining 50% of Deutsche Lithium and thereafter consolidated its full results.

The investment was assessed at each reporting period date for impairment. An impairment is recognised if there is objective evidence that events after the recognition of the investment have had an impact on the estimated future cash flows which can be reliably estimated. In addition, the assessment as to whether economically recoverable reserves exist is itself an estimation process. Under IFRS 3, on acquisition of the additional stake in the joint venture, the Company remeasured the fair value of its original investment in the joint venture and recognised a gain.

Impairment of Capitalised Exploration Costs

Excluding the newly acquired exploration assets of Deutsche Lithium, other Group capitalised exploration costs had a carrying value as at 31 December 2020 of €1,546,111. Ordinarily, Management tests annually whether capitalised exploration costs have a carrying value in accordance with the accounting policy stated in note 1.4. Due to the acquisition of the remaining shareholding in Deutsche Lithium and the Company's now sole focus on the Zinnwald Lithium project, the Directors elected to undertake a full review of non-core assets as part of the Interim accounts review. Each exploration project is subject to a review either by a consultant or an appropriately experienced Director to determine if the exploration results returned to date warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long-term metal prices, anticipated resource volumes and grades, permitting and infrastructure as well as the likelihood of on-going funding from joint venture partners. In the event that a project does not represent an economic exploration target and results indicate that there is no additional upside, or that future funding from joint venture partners is unlikely, a decision will be made to discontinue exploration.

In Ireland, five licences were originally granted for six years in 2013 and in Q3 2019, the Group extended these licences for a further six years. The exploration work identified excellent mineralisation in its drill holes and the metallurgical review has shown a good quality concentrate can be produced. However, in 2021, the Group elected to relinquish the four non-core licences but undertook the required further exploration work to maintain the core licence area (PL 3735) at Abbeytown and expects that this spend meets the requirement to maintain this licence in good standing through to Q3 2022. Whilst the current Zinc market is relatively subdued and Zinnwald is no longer focussed on Ireland, the Company still intends to find a JV Partner for PL 3735. Accordingly, the Board has concluded that an impairment charge should be made in the 2021 interim accounts in regard to capitalised costs from the Irish licences, which has resulted in an impairment of €1,547,986.

In 2021 in Sweden, the Company has been unable to find a joint venture partner to further develop its licences and has elected to cease all operations, close its Filial branch and relinquish all licences. In 2020, the Company fully impaired its Swedish assets and the Board have recommended a further impairment charge of €1,889 for expenditure made in 2021.

3

Segmental reporting

The Group operates principally in the UK and Germany with largely dormant subsidiary activities in Ireland and Sweden. Activities in the UK include the Head Office and corporate and administrative costs, whilst the activities in Germany relate to the work done by Deutsche Lithium on the Group's primary asset of the Zinnwald Lithium Project. The reports used by the Board and Management are based on these geographical segments. As noted earlier, the results of Germany were reported as an Investment in Joint Venture for the period to 24 June 2021, and from thereon will be reported on a fully consolidated basis.

Ireland

Sweden

Germany

UK

Total

2021

2021

2021

2021

2021

€

€

€

€

€

Revenues

-

-

-

-

-

Cost of sales and administrative expenses

(3,818)

(1,513)

-

(514,642)

(519,973)

Gain/loss on foreign exchange

10

1

-

148,586

148,597

Project impairment

(1,547,986)

(1,889)

-

-

(1,549,875)

Profit/(loss) from operations per reportable segment

(1,551,794)

(3,401)

-

(362,224)

(1,921,251)

Reportable segment assets

16,887

2,145

14,395,408

2,498,134

16,912,574

Reportable segment liabilities

-

-

41,122

102,852

143,974

Ireland

Sweden

Others

UK

Total

2020

2020

2020

2020

2020

€

€

€

€

€

Revenues

-

-

-

-

-

Cost of sales and administrative expenses

(30,981)

-

(9,714)

(276,704)

(310,399)

Gain/loss on foreign exchange

(3,240)

(41)

-

(88,089)

(91,370)

Profit/(loss) from operations per reportable segment

(34,221)

(41)

(9,714)

(364,793)

(408,769)

Reportable segment assets

2,007,946

126,675

34,037

1,294,533

3,463,191

Reportable segment liabilities

4,671

-

-

7,805

12,476

4

Operating (loss)/profit

2021

2020

€

€

Operating (loss)/profit for the period is stated after charging:

Exchange gains/losses

148,597

(91,370)

Ireland and Sweden exploration projects impairment

1,549,875

-

Share-based payments

3,833

-

Operating lease charges

11,891

19,121

Exploration costs expensed

5,331

40,695

5

Share of results in Joint Venture

2021

2020

€

€

Share of Loss in Joint Venture for the period to 24 June 2021

(52,911)

-

6

Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2021

2020

€

€

In respect of:

Intangible assets

1,549,875

-

7

Earnings per share

2021

2020

Number

Number

Weighted average number of ordinary shares for basic earnings per share

213,439,290

31,098,212

Effect of dilutive potential ordinary shares:

- Weighted average number outstanding share options

2,700,000

3,150,000

Weighted average number of ordinary shares for diluted earnings per share

216,139,290

34,248,212

Earnings

€

€

Continuing operations

Loss for the period from continuing operations

(935,488)

(408,769)

Earnings for basic and diluted earnings per share attributable to equity shareholders of the company

(935,488)

(408,769)

Earnings per share for continuing operations

Basic and diluted earnings per share (cents)

Basic earnings per share

(0.44)

(1.31)

Diluted earnings per share

(0.44)

(1.31)

There is no difference between the basic and diluted earnings per share for the period ended 30 June 2021 and 2020 as the effect of the exercise of options would be to decrease the loss per share.

8

Intangible fixed assets

Germany Exploration and Evaluation costs

Ireland & Sweden Exploration and Evaluation costs

Goodwill

Total

€

€

€

€

Cost

At 1 January 2021

-

2,138,576

-

2,138,576

Additions on consolidation

8,303,034

3,764

5,531,474

13,838,272

At 30 June 2021

8,303,034

2,142,340

5,531,474

15,976,848

Amortisation and impairment

Charge for the period

-

(1,549,875)

-

(1,549,875)

At 30 June 2021

-

(2,142,340)

-

(2,142,340)

Carrying amount

At 30 June 2021

8,303,034

-

5,531,474

13,834,508

Intangible assets comprise capitalised exploration and evaluation costs (direct costs, licence fees and fixed salary / consultant costs) for the Zinnwald Lithium Project, Ireland Zinc Project and the Sweden Gold Projects.

9

Business combination

30 June

2021

31 December 2020

€

€

Investments in joint ventures

-

3,852,083

-

3,852,083

Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid.

9.1 Initial Investment in Deutsche Lithium

On 29 October 2020, the Company completed the acquisition of a 50% shareholding in Deutsche Lithium Gmbh ("Deutsche Lithium") from Bacanora Lithium Plc ("Bacanora") via a reverse takeover. Bacanora contributed its share in Deutsche Lithium and €1.35m in cash in exchange for 90,619,170 new shares in the Company at a price of 5p per share and a 2% Net Profits Royalty. The Company thereafter took over the obligations due under the Deutsche Lithium Joint Venture Agreement and made all payments due monthly from October 2020 to June 2021.

The Company held one of the two managing director positions and a 50% shareholding in Deutsche Lithium, but only had a casting vote on purely operational development matters. Therefore, the Directors concluded that the Company only had significant influence over Deutsche Lithium and not control.

The Company followed the requirements of IAS 28 in applying the equity method and increased or decreased the investment by recognising its share of the profit or loss and other comprehensive income from Deutsche Lithium.

The table below shows the movements in the equity accounted investment:

Value of second acquisition

€ 8,781,062

Control premium (30%) of Net Value

€ 2,388,525

Less: Cash in company

(€ 486,213)

Fair Value of original investment

€ 5,573,224

Less: Free Carry eliminated

(€ 333,100)

Cash

€ 486,213

Net Value of second acquisition

€ 7,961,749

Release of obligation

€ 333,100

Value of second Acquisition

€ 8,781,062

Carrying Value at 24 June 2021

€ 4,534,972

Gain recognised on revaluation

€ 1,038,252

9.3 Accounting for acquisition of remaining 50% of Deutsche Lithium

On 24 June 2021, the Company completed the acquisition of SolarWorld AG's 50% shareholding in Deutsche Lithium by the payment of €1.5m in cash and the issuance of 49,999,996 new shares in the Company. These new shares were valued at the closing price on 21 June 2021 of 12.5p, as all legal agreements became legally binding on completion on the morning of 22 June 2021, conditional solely on admission of the new shares on 24 June 2021. These 49,999,996 new shares were valued at 12.5p per share and an exchange rate of €1.16497, equating to a total value of €8,781,062 including the cash element.

On 24 June 2021, by virtue of acquiring the remaining 50% of Deutsche Lithium it did not own, the Company became the owner of 100% of Deutsche Lithium and the Joint Venture Agreement that covered its management was automatically terminated. This transaction is categorised as a 'step acquisition' under IFRS 3 whereby the Company now has a 100% owned subsidiary. Management has concluded that the acquisition is one of a business rather than an asset and accordingly, Deutsche Lithium moves from being equity accounted as a Joint Venture to being fully consolidated as a subsidiary undertaking.

On consolidation as at 24 June 2021, a calculation was required under normal acquisition rules to calculate the goodwill arising at the date of acquisition, but taking into consideration the 50% already owned at that date. The previously held 50% investment in Deutsche Lithium at Fair Value is derecognised and replaced with the assets and liabilities of Deutsche Lithium, so that going forward it is consolidated in full as normal as a subsidiary undertaking. The Directors have concluded that there should be no adjustment to the carrying value of Deutsche Lithium's Net Assets. The Directors undertook a detailed review of Deutsche Lithium's balance sheet at the time of the Company's acquisition of the remaining 50% of Deutsche Lithium it did not own and concluded that no adjustments were required. Since that date, Deutsche Lithium has continued with the same accounting policies, which are in accordance with those of the Company.

9.4 Commitments under the Deutsche Lithium JV Agreement

The Company signed a Deed of Adherence to abide by the terms of the Joint Venture Agreement. The only outstanding financial commitment was the 2nd Amendment entered into by Bacanora in February 2020 by which it committed to fund Deutsche Lithium with €1.35m in monthly instalments over two years. At the date of completion of the initial acquisition of 50% of Deutsche Lithium by the Company, the amount outstanding was €0.935m, as at 31 December 2020 it was €0.770m and as at 24 June 2021 it was €440,000. On completion of the acquisition of the remaining 50% of Deutsche Lithium, the Joint Venture Agreement was formally terminated and the Company shall henceforth fund the operations at Deutsche Lithium as a normal subsidiary undertaking.

10

Property, plant and equipment

12

Cash and cash equivalents

30 June

2021

31 December

2020

€

€

Cash and cash equivalents

2,422,742

4,846,527

Cash acquired on acquisition of subsidiary

486,213

-

At 30 June 2021

2,908,955

4,846,527

13

Trade and other payables

14

Subsidiaries

Details of the company's subsidiaries at 30 June 2021 are as follows:

% Held

Name of undertaking

Registered office

Nature of business

Class of shares held

Direct

Indirect

Deutsche Lithium Holdings Ltd

United Kingdom

Holding

Ordinary

100.00

-

Erris Zinc Ltd

Ireland

Exploration

Ordinary

100.00

-

Deutsche Lithium GmbH

Germany

Exploration and Development

Ordinary

100.00

-

The registered office address of Deutsche Lithium Holdings Ltd (formerly Erris Resources (Exploration) Ltd) is 29-31 Castle Street, High Wycombe, Bucks, HP13 6RU.

The registered office address of Erris Zinc Ltd is The Bungalow, Newport Road, Castlebar, Co Mayo, F23 YF24.

The registered office address of Deutsche Holdings GmbH is Am St. Niclas Schacht 13, Freiberg, Germany, 09599.

15

Share capital

30 June 2021

31 December 2020

Ordinary share capital

€

€

Issued and fully paid

255,105,953 ordinary shares of 1p each (2020: 204,455,957)

2,867,979

2,278,155

2,867,979

2,278,155

The Group's share capital is issued in GBP but is converted into the functional currency of the Group (Euros) at the date of issue of the shares.

Reconciliation of movements during the period:

Ordinary

Ordinary

Number

€

Ordinary shares of 1p each

At 1 January 2021

204,455,957

2,278,155

Issue of fully paid shares (share options exercised)

650,000

7,339

Issue of fully paid shares (consideration for shares in subsidiary)

49,999,996

582,485

At 30 June 2021

255,105,953

2,867,979

16

Cash (used in)/generated from group operations

2021

2020

€

€

(Loss)/profit for the period after tax

(935,488)

(408,769)

Adjustments for:

Investment income

(422)

-

Depreciation and impairment of property, plant and equipment

488

-

Ireland and Sweden exploration project impairment

1,549,875

-

Revaluation gain on original joint venture holding

(1,038,252)

-

Share of loss of Joint Venture

52,911

-

Equity-settled share-based payment expense

3,833

-

Foreign exchange

(146,949)

91,370

Movements in working capital:

Decrease/(Increase) in trade and other receivables

79,674

(16,032)

Increase/(Decrease) in trade and other payables

44,020

(29,921)

Cash (used in)/generated from operations

(390,310)

(363,352)

17

Events after the reporting date

On 25 August 2021, Bacanora published a Rule 2.7 announcement regarding the recommended cash offer by Ganfeng International Trading (Shanghai) Ltd ("Ganfeng") for the entire issued and to be issued share capital of Bacanora, other than that which Ganfeng already owns (the "Offer"). As part of this Offer, the independent directors of Bacanora intend to make a distribution in specie of the shares held by Bacanora in Zinnwald to Bacanora's shareholders, including Ganfeng, subject to the Offer becoming or being declared unconditional in all respects. In the event that the Offer and distribution of shares complete, Bacanora will cease to be a shareholder in Zinnwald and the Relationship Agreement will automatically terminate.

On 12 August 2021, the Company issued 500,000 new ordinary shares in accordance with the exercise of Options originally granted at the time of the Company's original IPO in 2017. As a result of this share issuance, the Company has 255,603,953 ordinary shares in issue as at the date of this report.

18

Approval of interim condensed consolidated financial statements

These interim condensed financial statements were approved by the Board of Directors on 7 September 2021.

Anton du Plessis

Zinnwald Lithium plc

info@zinnwaldlithium.com

David Hart/Liz Kirchner

Allenby Capital Limited

Nominated Adviser

+44 (0) 20 3328 5656

James Pope/Andy Thacker

Turner Pope Investments (TPI) Ltd

Broker

+44 (0) 20 3657 0050

Isabel de Salis/Oonagh Reidy

St Brides Partners Ltd

Financial PR

info@stbridespartners.co.uk