Announcement PDF Prospectus Lithium Consolidated Limited ACN 612 008 358 (Company) A non-renounceable rights issue to Eligible Shareholders of 1 New Share for every 4 Shares held at an issue price of $0.05 per New Share to raise approximately $1,179,026 before the costs of the Offer, together with 1 Attaching Option for every New Share allotted, exercisable at $0.05 on or before 30 September 2020 (Entitlement Offer). and An additional Offer to other Investors of New Shares on the same terms as are set out above, including 1 Attaching Option for every New Share allotted, exercisable at $0.05 on or before 30 September 2020 to raise approximately $2,000,000 before the costs of the Offer (Additional Offer, together with Entitlement offer, the Offers). This document is important and it should be read in its entirety Your Entitlement and Acceptance Form must be received by the Share Registry with your payment no later than 5.00pm (Brisbane time) on the Closing Date. Please refer to the timetable set out in this Prospectus for the Important Dates. If you are in any doubt as to the contents of this document, you should consult your stockbroker, solicitor, banker, financial advisor or accountant as soon as possible. The securities offered by this Prospectus are considered to be speculative. 1946466 - 19596359v8 Important information Offer statistics Number of New Shares to be issued under the Entitlement Offer, on a 1 for 4 basis: ........................................................... up to 23,580,531* Number of New Shares that may be issued under the Additional Offer............................................................................................... up to 40,000,000 New Share Issue Price: ................................................................................................................... $0.05 Number of Attaching Options to be issued under the Entitlement Offer, on a 1 for 1 New Share basis: ......................................... up to 23,580,531* Number of Attaching Options to be issued under the Additional Offer, on a 1 for 1 New Share basis: ............................................ up to 40,000,000 Attaching Option Issue Price: ................................................................................................................ nil Attaching Option Exercise Price: ..................................................................................................... $0.05 Attaching Option Maturity Date: ................................................................................ 30 September 2020 *Excludes any New Shares or Attaching Options which may be issued in the event that any Existing Options are exercised prior to the Record Date and the Management Options. Key dates for investors Record Date for determining entitlements under the Issue: .............................................. 2 August 2019 Offers open: ....................................................................................................................... 7 August 2019 Offers expected to close: ............................................................................................. 4 September 2019 Commencement of trading of New Shares on ASX: ................................................. 11 September 2019 Expected date of EGM to approve the issue of New Shares under the Additional Offer: ......................................................................................... 10 September 2019 Issue of New Shares and Options under the Additional Offer: .................................. 10 September 2019 Expected date for despatch of New Shareholding statements: ................................ 12 September 2019 Further details regarding the timetable for the Offers are set out in section 2.2. All dates are subject to change and accordingly are indicative only. In particular, the Company has the right to vary the dates of the Offers, without prior notice. Investors are encouraged to submit their Entitlement and Acceptance Forms or Application Form (as relevant) as soon as possible after the Offers opens. Important notice This Prospectus is dated 30 July 2019 and was lodged with the ASIC on the same date. Neither the ASIC nor the ASX takes any responsibility as to the contents of this Prospectus. No securities will be 1946466 - 19596359v8 Page 2 of 62 issued on the basis of this Prospectus any later than 13 months after the date of issue of this Prospectus. This Prospectus contains an offer to Eligible Shareholders of continuously quoted securities (as defined in the Corporations Act) and to Other Investors (who subscribe for additional shares under any shortfall or the Additional Offer) and has been prepared in accordance with section 713 of the Corporations Act. No person is authorised to give any information or to make any representation in connection with the Issue described in this document which is not contained in this document. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Issue. Foreign shareholders This document does not constitute an offer of New Shares and Attaching Options in any jurisdiction in which it would be unlawful. New Shares and Attaching Options may not be offered or sold in any country outside Australia except to the extent permitted below. The Company has decided that it is unreasonable to make offers under the Issue to Shareholders with registered addresses outside of Australia and New Zealand having regard to the number of Shareholders in those places, the number and value of the New Shares they would be offered and the cost of complying with the legal and regulatory requirements in those places. Accordingly, the Offer is not being extended to, and does not qualify for distribution or sale by, and no New Shares will be issued to Shareholders having registered addresses outside of Australia and New Zealand. The Company has not made any investigation as to the regulatory requirements that may prevail in the countries, outside of Australia and New Zealand, in which the Company’s Shareholders may reside. It is the responsibility of overseas Applicants to ensure compliance with all laws of any country relevant to their Acceptance. The Offer may only be accepted by Eligible Shareholders and does not constitute an offer in any place in which or to any person to whom, it would be unlawful to make such an offer. The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe those restrictions. Any failure to comply with restrictions might constitute a violation of applicable securities laws. See section 2.9 for further information on Offer restrictions with respect to shareholders who do not have registered addresses in Australia or New Zealand. New Zealand The New Securities are not being offered to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2016 (New Zealand). This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (New Zealand). This document is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain. 1946466 - 19596359v8 Page 3 of 62 United States This document may not be released or distributed in the United States. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Any securities described in this document have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws. How to accept Entitlement to New Shares and Attaching Options Entitlements to New Shares and Attaching Options can be accepted by Eligible Shareholders in full or in part by completing and returning the Entitlement and Acceptance Form which is accompanying this Prospectus or making payment of Acceptance Money by BPAY® in accordance with the instructions set out in this Prospectus and on the Entitlement and Acceptance Form. Eligible Shareholders can also apply for additional new Shares using this form, to be filled for any shortfall or the Additional Offer at the Company’s discretion. How to Apply for New Shares and Attaching Options under the Additional Offer Applications by Other Investors for the Additional Offer can be made by completing and returning the Application Form which is accompanying this Prospectus and making payment in accordance with the instructions set out in this Prospectus and on the Application Form. This Prospectus is available in electronic form on the internet at https://li3limited.com/. If you wish to obtain a free copy of this Prospectus, please contact the Company on +61 7 3212 6299. Enquiries If you are an Eligible Shareholder or Other Investor and have any questions in relation to the Offers, please contact your stockbroker or professional adviser. If Eligible Shareholders have questions in relation to the Shares upon which their Entitlement has been calculated, or how to complete the Entitlement and Acceptance Form, take up your Entitlement, please call the Share Registry on 1300 494 861. Deciding to accept the Offers No person named in this Prospectus, nor any other person, guarantees the performance of Li3, the repayment of capital or the payment of a return on the New Shares or the Attaching Options. Please read this Prospectus carefully before you make a decision to invest. An investment in the Company has a number of specific risks which you should consider before making a decision to invest. Some of these risks are summarised in section 1.5 of this Prospectus and set out in more detail in section 6 of this Prospectus. This Prospectus is an important document and you should read it in full before deciding whether to invest pursuant to the Offers. You should also have regard to other publicly available information about the Company, including ASX announcements, which can be found at the Company’s website: https://li3limited.com/. Terms used A number of terms and abbreviations used in this Prospectus have defined meanings, which are explained in the definitions and glossary in section 8. 1946466 - 19596359v8 Page 4 of 62 Money as expressed in this Prospectus is in Australian dollars unless otherwise indicated. Forward looking statements Some of the information contained in this Prospectus constitutes forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements include those containing such words as ‘anticipate’, ‘estimate’, ‘should’, ‘will’, ‘expects’, ‘plans’ or similar expressions. These statements discuss future objectives or expectations concerning results of operations or financial conditions or provide other forward-looking information. The Company’s actual results, performance or achievements could be significantly different from the results or objectives expressed in, or implied by, those forward-looking statements. This Prospectus details some important factors that could cause the Company’s actual results to differ from the forward-looking statements made in this Prospectus. No representations No person is authorised to give any information or to make any representation in connection with the Offers which is not contained in this Prospectus. Any information or representation in connection with the Offers not contained in this Prospectus may not be relied on as having been authorised by the Company or its officers. This Prospectus does not provide investment advice or advice on the taxation consequences of accepting the Offers. The Offers and the information in this Prospectus, do not take into account your investment objectives, financial situation and particular needs (including financial and tax issues) as an investor. Competent person statement The information contained in this Prospectus that relates to geology and exploration results for the Company’s Zimbabwe and Mozambique projects is based on, and fairly reflects, information compiled and conclusions derived by Mr Michael Cronwright, a Competent Person who is a fellow of The Geological Society of South Africa and Pr. Sci. Nat. (Geological Sciences) registered with the South African Council for Natural Professions. Mr Cronwright is a Principal Consultant with CSA Global in South African, independent mining industry consultants. Mr Cronwright has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Cronwright consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which it appears. The information contained in this Prospectus that relates to geology and exploration results for the Company’s Western Australia projects is based on, and fairly reflects, information compiled and conclusions derived by Mr Adrian Black, a Competent Person who is a member of the Australian Institute of Geoscientists. Mr. Black is a director of Newexco Services Pty Ltd, an independent geological consultancy contracted by the Company. Mr Black has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Black consents to the inclusion in this Prospectus of the matters based on his information in the form and context in which it appears. 1946466 - 19596359v8 Page 5 of 62 Table of Contents 1. 2. 3. 4. 5. 6. 7. 8. Investment summary ....................................................................................................................8 Details of the Offers....................................................................................................................15 How to apply...............................................................................................................................19 Company Information .................................................................................................................23 Effect of the Offer on the Company............................................................................................38 Risk factors.................................................................................................................................42 Additional information .................................................................................................................48 Definitions and glossary .............................................................................................................59 1946466 - 19596359v8 Page 6 of 62 Chairman’s letter 30 July 2019 Dear Shareholders, It is my pleasure to introduce this Prospectus and invite Eligible Shareholders to take up their Entitlement of New Shares and Attaching Options in Lithium Consolidated Limited under the Entitlement Offer. As announced on 30 July 2019 the Directors wish to provide the opportunity for Eligible Shareholders and Other Investors to invest in New Shares under the Entitlement Offer. The Entitlement Offer is a non-renounceable rights issue of 1 New Share for every 4 Shares held at an issue price of $0.05 per New Share, to raise approximately $1,179,026 (before Entitlement Offer costs). The Company has also reserved the right to accept subscriptions from Eligible Shareholders for additional New Shares over and above their Entitlement (Additional Offer Shares), and to accept applications for other investors as identified by the Company and the lead managers, up to a maximum value of $2,000,000 under an Additional Offer. The issue price represents a 10% discount to the 30 day volume-weighted average Share price (being $0.056) and a 23% discount to the 60 day volume-weighted average Share price (being $0.065) as at 29 July 2019. Every New Share (under both the Entitlement Offer and the Additional Offer) will have 1 Attaching Option, being an option to subscribe for one ordinary share in the Company exercisable at $0.05 cents per share on or before 30 September 2020. It is proposed that the funds raised from the Offers will be applied for the purposes of undertaking exploration on the Company’s Western Australia, Zimbabwe and Mozambique projects, the costs of the Offers and to provide working capital. The Directors intend to take up some or all their entitlement to New Shares as disclosed in section 1.9. A personalised Entitlement and Acceptance Form is attached to this Offer Document and sets out the number of New Shares and Attaching Options you are entitled to subscribe for as an Eligible Shareholder (Entitlement). Shareholders may, in addition to their Entitlement apply for additional shares, which will be filled at the Company’s discretion from Shortfall Shares or under the Additional Offer. Entitlements to New Shares and Attaching Options, and applications for additional New Shares can be accepted in full or in part by completing and returning the Entitlement and Acceptance Form or Application Form which accompany this Prospectus or making payment of Acceptance Money by BPAY in accordance with the instructions set out below and on the relevant form. Subscription money for the New Shares and any additional shares (if applicable) must be received by the Company at its Share Registry by the Closing Date. Please refer to the timetable for the important dates of the Offers. The Entitlement Offer is non-renounceable and therefore Eligible Shareholder’s Entitlements will not be tradeable on the ASX or otherwise transferable. Southern Cross Financial Pty Ltd and Harbury Advisors Pty Ltd are the Lead Managers of the Offers and the Offers are not underwritten. The Company will work with the Lead Managers to fill the Additional Offer and to place any Shortfall not subscribed to by Eligible Shareholders. On behalf of the Directors, I thank you for your continued support and I invite you to consider this investment opportunity. Yours sincerely, Brian Moller Chairman Lithium Consolidated Limited 1946466 - 19596359v8 Page 7 of 62 1. Investment summary The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus. 1.1 The Offers This Prospectus is for: (a) the non-renounceable rights issue of approximately 23,580,531 New Shares at an issue price of $0.05 per New Share, on the basis of 1 New Share for every 4 Shares held by Eligible Shareholders as at the Record Date, together with 1 Attaching Option exercisable at $0.05 cents each for every 1 New Share received, exercisable on or before 30 September 2020; and (b) the Additional Offer, described in greater detail in section 1.13 below. The Entitlement Offer is an offer to Eligible Shareholders only. The Additional Offer is an offer to Other Investors only. The Offers are not underwritten. The issue price of $0.05 per New Share represents a 10% discount to the 30 day volumeweighted average price for Shares (being $0.056) and a 23% discount to the 60 day volumeweighted average Share price (being $0.065) as at 29 July 2019. Application will be made to ASX for quotation of the New Shares offered under this Prospectus within 7 days of its issue. Official Quotation of the New Shares is expected to occur on or about 12 September 2019. The Company does not intend to seek listing of the Attaching Options. The Directors may at any time decide to withdraw this Prospectus and the offer of New Shares and Attaching Options made under this Prospectus, in which case the Company will return all applications moneys (without interest) within 28 days of giving notice of such withdrawal. Shareholders who apply for 100% of their entitlement are able to apply for Additional Shares to be issued from any Shortfall or the Additional Offer (at the Company’s discretion) at the Offer Price, subject to compliance with Chapter 6 of the Corporations Act and ASX Listing Rules. Any Additional Shares will firstly be allocated to Shareholders who apply for Additional Shares in addition to their Entitlement at the absolute discretion of the Directors. The Directors may then place any further Shortfall to persons who may or may not be Shareholders. The issue of the Additional Shares and the Offer of any Additional Shares will be at the absolute discretion of the Company and its Directors and as such there is no guarantee that any Additional Shares applied for will be issued to Eligible Shareholders. The allocation process is described in more detail in Sections 1.8. 1.2 Minimum subscription There is no minimum subscription to the Issue. 1.3 Purpose of the Issue The Directors intend to apply the proceeds from the Offer for the purposes of: (a) exploration programs over the next 6-12 months at the higher priority assets in Western Australia, Mozambique and Zimbabwe; 1946466 - 19596359v8 Page 8 of 62 (b) ongoing corporate and administration costs; (c) the costs of the Offers; and (d) working capital. The proceeds from the Offers (assuming that both are fully subscribed) are proposed to be allocated in the following manner: Proposed use of funds Exploration – Western Australia Exploration – Mozambique (b) (a) Funds raised under Entitlement Offer only (next 6 months of activities) Funds raised under Entitlement Offer and Additional Offer (next 12 months) $160,000 $600,000 $350,000 $1,000,000 (c) $100,000 $360,000 Corporate & Administration $390,000 $780,000 Working Capital $94,026 $209,026 Estimated costs of the Offers (including legal fees, Lead Manager’s fees, Share Registry fees, ASX fees and other miscellaneous costs associated with the Offer) $85,000 $230,000 Total (maximum raising) $1,179,026 $3,179,026 Exploration – Zimbabwe a) See Section 4.1(a) for further details on the Western Australia forward exploration program b) See Section 4.1(b) for further details on the Mozambique forward exploration program c) See Section 4.1(c) for further details on the Zimbabwe forward exploration program However, in the event that circumstances change or other better opportunities arise the Directors reserve the right to vary the proposed uses to maximise the benefit to Shareholders. 1.4 Investment highlights (a) Western Australia  16 Exploration Licenses, where 2 of which are under application, over 747 km in the Yilgarn Province of Western Australia, Australia.  Western Australia is the largest and most active lithium province globally, representing almost all the current global hard rock lithium production.  The YLP hard rock lithium targets are in extensions of known lithium pegmatite belts, in deeply weathered and shallowly covered areas of Archean Yilgarn Craton.  The Phase 1 drilling at the Yilgarn Lithium Project has confirmed the presence of concealed LCT pegmatites in at least 3 Licenses. 2 1946466 - 19596359v8 Page 9 of 62 (b) Mozambique  Five (5) granted exploration licenses over 31,481 ha provide a significant land position in the Alto Ligonha Pegmatite Province in northern Mozambique.  The outcropping pegmatites in our five (5) licenses have potential for extensions at shallow depths, which can be confirmed through modern lithium-focussed exploration.  Mozambique is ideally located on the east coast of Africa, with multiple bulk-handling ports and well-developed road and rail infrastructure for mining.  9166L license has been prioritized for immediate exploration based on a potentially very large interpreted pegmatite which appears to be 1,000m along strike with variable widths of up to 300m. (c) 1.5 Zimbabwe  Li3 has established a dominant land position in the Mutare Greenstone Belt in eastern Zimbabwe, through eight (8) lithium exploration assets consisting of 59 granted licences covering an area of 1,800 ha and an additional 11 licences under application (an additional 1,003 ha).  The Mutare Greenstone Belt is believed to be highly prospective for pegmatite hosted lithium deposits based on historical information and recent image analysis, in which flat-lying pegmatites with potential for open-pit mining were interpreted.  Li3 has completed initial grab sampling of the Nels Luck and Bepe pegmatites, with encouraging results of between 1.3% to 8.6% Li2O, confirming the presence of lithium minerals, including spodumene, at these pegmatites.  The Odzi West asset has been prioritized for immediate exploration. Risk factors Investing in the Company involves risk. There are factors, both specific to the Company and of a general nature, which may affect the future operating and financial performance of the Company. Some of these factors can be mitigated by appropriate commercial action. However, many are outside the control of the Company, dependent on the policies adopted and approaches taken by regulatory authorities, or cannot otherwise be mitigated. If you are unsure about subscribing for New Shares, you should first seek advice from your stockbroker, accountant, financial or other professional adviser. The following sets out a summary of some of the key risks relevant to the Company and its operations: Risk Details Exploration and Evaluation Risk Lithium exploration and development are high risk undertakings and even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. There can be no assurance that exploration will result in the discovery of an economic deposit and a number of factors outside the control of the Company can affect this outcome. The success of the Company is dependent on exploration success. Operational risks and costs Prosperity for the Company and its subsidiaries will depend largely upon an efficient and successful implementation of all the aspects of exploration, developments, business activities and management of commercial factors. Exploration has been and will continue to be hampered on occasions by 1946466 - 19596359v8 Page 10 of 62 Risk Details unforseen weather events, accidents, unforseen cost changes, environmental considerations, natural events and other incidents beyond the control of the Company. Contractual and joint venture risk The Company may wish to develop its projects or future projects through joint venture arrangements, while a number of the Company’s projects are already the subject of joint venture arrangements. Any joint ventures entered into by, or interests in joint ventures assigned to the Company, could be affected by the failure or default of any of the joint venture participants. With respect to the Company’s planned drilling, the Company has not yet secured the use of any drilling equipment. Failure to enter into drilling contracts in respect of the proposed drilling programmes for each of these projects will negatively impact on the ability of the Company to carry out its exploration and development programmes in these areas. Commodity prices The Company’s prospects and perceived value may be influenced from time to time by the prevailing short-term prices of the commodities targeted in its exploration programs. Commodity prices fluctuate and are affected by factors including supply and demand for mineral products, hedge activities associated with commodity markets, the costs of production and general global economic and financial market conditions. These factors may cause volatility which in turn, may affect the Company’s ability to finance its future exploration and/or bring the Company’s products to market. Additional requirements for capital The Company may require additional funds in the future to achieve its objectives. There is no assurance that these funds will be available in the future, or if they are available, that they will be on commercially acceptable terms to the Company. If adequate additional funding is not available or acceptable on the Company’s terms, the Company’s business will be materially and adversely affected. Any additional equity financing may also have the affect of diluting the existing share holdings. The Company may decide to raise additional funds in the future through further capital raisings. This may result in the Company issuing additional shares in the Company to third parties who are not presently shareholders of the Company. As a result, existing shareholdings may be diluted. Further details regarding risks which may affect the Company in the future are set out in section 6. The New Shares and Attaching Options offered under this Prospectus carry no guarantee of profitability, dividends, return of capital or the price at which they may trade on ASX. The past performance of the Company should not necessarily be considered a guide to their future performance. 1.6 New Share and Attaching Option terms Upon issue, each New Share will rank equally with all existing Shares then on issue. A summary of the rights attaching to the New Shares is set out in section 7.3. A summary of the rights attaching to the Attaching Options is set out in section 7.4. 1946466 - 19596359v8