Vancouver, B.C. April 30th, 2018: International Lithium Corp. (the “Company” or “ILC”) (TSX VENTURE: ILC) published its 2017 full year Consolidated Financial Statement and Management Discussion and Analysis. Highlighting specific topics of solid progress over the past year, actions to introduce financial stability and some of the focus areas in the future John Wisbey commented in his Chairman’s Statement as follows…
I am pleased to present International Lithium Corp.’s (“ILC” or “the Company”, www.internationallithium.com) annual financial statements for the financial year ended December 31, 2017. I became Chairman and CEO of the Company on March 14, 2018 having before that been a shareholder and then a director since January 23, 2017. I have long held the belief that the Company’s strategic policy needs greater emphasis on the acquisition of new investment assets as it is notable that the Company’s lithium property portfolio has not been added to since the Company’s initial public offering (“IPO”) in 2011. That said, the key issues for the Company over the past few years have been firstly the development of the Company’s projects with its selected partners, and secondly funding where needed for the Company’s share in those projects and ongoing operating expenses. The Company, with its partners, has made good progress with its projects but had not, certainly since the end of 2016, performed well with financing. Put simply, funds were not raised at the speed necessary to meet or exceed actual let alone anticipated cash calls on projects, and to meet salaries and other payables on a timely basis.
At the time of my appointment as Chairman and CEO, this situation threatened the Company’s asset position and could have threatened its solvency. The Company was at risk of facing double dilution on a cash call for Mariana. Moreover, the Company had CAD$400,000 of maturing convertible debt to refinance in April 2018. Since then, and as detailed below, the Company has raised significant funds in the second half of March and April 2018 and has brought payments on its project portfolio and other payables substantially up to date including repayment of the maturing convertibles.
The Company incurred a comprehensive loss for 2017 of CAD$2,786,084. (2016: loss CAD$1,098,605). The variance from the previous year is attributable to two non-cash accounting transactions which include the valuation of stock options and a write-down in value associated with the reduction from 20.000% to 17.246% of the Company’s ownership in Litio Minera Argentina, S.A. (“Litio”), the company which holds title to the Mariana property (“Mariana”).
As an exploration company, the profit and loss is not, at this stage in the Company’s evolution, the key measurement that the board of directors (“Board”) uses to assess the performance or shareholder value of the Company. The Company is funding projects that it hopes will be valuable in the future. In doing so, it is inevitable that the costs of the projects themselves and the ongoing costs of running the Company will cause the Company to be cash-consuming and in a loss position until either there is production from projects or a capital event. Metrics that the Board looks at, or which it seeks to gain clarity on, are the estimates of resources and, for a project that is nearing feasibility, the estimated costs of getting to production using various technologies.
In the absence of the acquisition of new properties for several years, it is clear that financing was and remains the Company’s main priority. The December 2017 private placement, which had sought to raise CAD$1,000,000, only succeeded in raising CAD$450,000 and the consequent shortfall in funding caused temporary liquidity issues. Since mid-March 2018, the Company has raised CAD$1,180,000 of funds, which has allowed the Company to bring all project cash calls up to date, repay the convertible debenture amounts due in April 2018, and bring payments of salaries and amounts due to other creditors substantially up to date. The Company has already initiated a further round of funding that will enable it to stay ahead of the funding curve, rather than revert to the cash flow problems that diverted management in 2017 and the first quarter of 2018. To this end, the Company has announced a further CAD$1,800,000 private placement, of which the Company expects to announce a first closing of CAD$275,000 very shortly. There is a lot more work to do over the next year on the funding front, and the Company estimates that around CAD$7,000,000 will be required to meet the Company’s current projections of investment related project payments to mid-2019 and to refinance other convertible repayments of CAD$1,175,000 if these are not converted.
The Company’s projects are, at a high level, in the following phases:
- Mariana in Argentina – the Company owns a 17.246% interest as at December 31, 2017 with Ganfeng Lithium Co. Ltd. (“Ganfeng Lithium”) owning the other 82.754%. The Joint Venture set a US$ 17,000,000 budget for 2018 of which the Company is funding its share. This will enable useful work on further resource estimation to be carried out including a Preliminary Economic Analysis, which the Joint Venture presently intends to complete in the third quarter of 2018.
- Mavis Lake and Raleigh in Ontario, Canada – the Company has entered into an option agreement with Pioneer Resources Limited (“Pioneer Resources”) whereby Pioneer Resources has the opportunity to earn 51% of the Company’s 100% interest in the project; preliminary assessments announced by Pioneer Resources in early April 2018 are encouraging and the Company anticipates being in a position to release further details in due course.
- Avalonia in the Republic of Ireland – the Company own 45% with Ganfeng Lithium owning the other 55%. By spending US$10,000,000 on Avalonia, Ganfeng can increase its share from 55% to 79%. The Joint Venture has set a US$1,000,000 budget for 2018. This provides some confidence in the worth of the project and a commitment to achieving substantial progress.
The Company is not currently required to provide funding to Mavis Lake, Raleigh and Avalonia as its joint venture partners will do so under relevant governing agreements. However, funding by the Company will be an outcome if the current work demonstrates commercial prospects.
The fiscal year ended December 31, 2017 was challenging in terms of management change, and I hope that with my appointment the Company has now drawn a firm line under the past, allowing the Company to concentrate on value creation for its shareholders. The Company would like to thank Kirill Klip, who I replaced as Chairman and CEO in March 2018, for his contribution to the Company for over 9 years and his passion and enthusiasm in promoting the Company and the wider lithium industry. Kirill is a founding Director of the Company, and served as its Non-Executive Co-Chairman from its formation in 2010, as a wholly-owned subsidiary of TNR Gold Corp. He became President in 2012, a year after the IPO, and later became Chairman and CEO in January 2017. He remains on the Board as a Non-Executive Director. The Company would also like to thank the other directors who stood down for various reasons during the year ended December 31, 2017, namely founding Chairman and CEO Gary Schellenberg, founding President Mike Sieb, and former Non-Executive Directors, Wayne Spilsbury, Xiaoshen Wang and David Shen. All of them, and others, played a significant role in getting the Company and its lithium property portfolio to where it now is.
The Company intends to appoint additional directors during 2018 and expects a re-alignment of its relationship with TNR Gold Corp. consequent on the reduction of TNR Gold Corp.’s shareholding in the Company to less than 7% compared to over 20% only three years ago, and 100% on formation.
I would like to thank all our staff, our partners at Ganfeng Lithium and Pioneer Resources, our advisors, and our shareholders for their patience with us in what was a challenging year. I and other members of the Board are optimistic about the prospects for shareholder value creation in 2018 and 2019.
Chairman and CEO
April 30, 2018
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Cautionary Statement Regarding Forward-Looking Information
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information or forward-looking statements in this news release include: continued agreement between the Company and Jiangxi Ganfeng Lithium Co. Ltd. regarding the Company’s percentage interest in the Mariana project, the success of raising funds for the Company to continue to operate, and the Company’s ability to maintain its ownership interest in its assets. Such forward-looking information is based on a number of assumptions and subject to a variety of risks and uncertainties, including but not limited to those discussed in the sections entitled “Risks” and “Forward-Looking Statements” in the interim and annual Management’s Discussion and Analysis which are available at www.sedar.com. While management believes that the assumptions made are reasonable, there can be no assurance that forward-looking statements will prove to be accurate. Should one or more of the risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. Forward-looking information herein, and all subsequent written and oral forward-looking information are based on expectations, estimates and opinions of management on the dates they are made that, while considered reasonable by the Company as of the time of such statements, are subject to significant business, economic and competitive uncertainties and contingencies. These estimates and assumptions may prove to be incorrect and are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change.