Quarterly Activities Report September 2022

RNS Number : 4314E

GreenX Metals Limited

28 October 2022

 

GREENX METALS LIMITED

NEWS RELEASE 28 October 2022

Quarterly Activities Report September 2022

Highlights

· GreenX continued with its exploration work program to acquire up to 80% of the ARC copper project in Greenland:

o  ARC is a significant, large-scale project (5,774km² license area) with historical exploration results and recent analysis indicative of an extensive mineral system with potential to host world-class copper deposits.

o  In August 2022, laboratory XRF analysis of native copper samples from ARC showed high purity consistently over 99% copper. Analysis also confirmed the presence of silver in one sample, and no significant deleterious elements in any of the samples.

o  Despite adverse weather and ice conditions in Greenland affecting access to ARC during 2022, a site visit was made and limited samples were collected. GreenX was able to deliver the key exploration equipment into Greenland which should result in better efficiencies in the next field season.

o  Results for the 2022 site visit to be released in the coming weeks.

· International arbitration claims against the Republic of Poland under both the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty continue at pace:

o  Statement of Reply for ongoing arbitration against Poland has been filed with a revised claim for compensation in the amount of £737 million (A$1.3 billion/PLN 4.0 billion) as prepared by external quantum experts.

o  Claim includes an updated assessment of the value of GreenX's lost profits and damages related to both the Jan Karski and Debiensko mines, and accrued interest related to any damages.

o  Following the lodgement of final substantive filings from both parties subsequent to the end of the quarter, the next step in the arbitration process is for the hearing to be conducted in front of the Tribunal.

o  GreenX notes the recent success of AIM listed, Rockhopper Exploration plc's Energy Charter Treaty claim against the Republic of Italy in relation to oil and gas licenses including a unanimous decision against the Republic of Italy to award €190 million in damages plus interest.

· Cash balance at 30 September 2022 of A$4.2 million to fund activities at ARC plus A$7.4 million available under the litigation funding facility to continue pursuing GreenX's dispute against the Republic of Poland.

GreenX Metals Limited (ASX:GRX, LSE:GRX) (GreenX or the Company) is pleased to present its Quarterly Activities Report for the period during and subsequent to 30 September 2022.

LABORATORY ANALYSIS OF HISTORICAL SAMPLES FROM ARC CONFIRMS UP TO 99.8% PURE NATIVE COPPER

During the quarter, GreenX and its joint-venture (JV) partner Greenfields Exploration Ltd (Greenfields) announced the results of preliminary analysis on three historical samples of native copper nodules from the ARC Project (ARC or the Project) in Greenland. The samples were obtained from a recently opened government geological storage facility in Copenhagen. Three native copper samples found at Discovery Zone, Neergaard Dal, and Neergaard South within ARC were subject to advanced micro-XRF scanning, a more precise and comprehensive technology when compared to more common portable XRFs.

The best analysis result was for a sample found immediately south of the Discovery Zone, which indicated median copper purity of 99.8%, with 255 g/t silver, 0.004% antimony and 0.000% arsenic.

The samples from Neergard Dal and Neergard South indicated copper purity of 99.7% and 99.4% respectively, with low to no deleterious elements detected in any of the samples. The high quality of the analysed samples is comparable to blister copper, a product typically produced by smelting prior to being sent to a refinery.

The results of the micro-XRF analysis are supportive of the potential quality of the mineralisation at ARC and will inform future field programs which will incorporate geochemical sampling, portable core drilling, and geophysics at high-priority targets within ARC. The Discovery Zone, where the highest-purity analysed sample was recovered, is the highest priority exploration target.

Despite adverse weather and ice conditions in Greenland affecting access to ARC during 2022, a site visit was made and limited samples were collected. GreenX was able to deliver the key exploration equipment into Greenland which should result in better efficiencies in the next field season.

About ARC

ARC is an exploration joint venture between GreenX and Greenfields. GreenX can earn 80% of ARC by spending A$10 million by October 2026. ARC is targeting large scale copper in multiple settings across a 5,774 km² Special Exploration Licence in eastern North Greenland. The area has been historically underexplored yet is prospective for copper, forming part of the newly identified Kiffaanngissuseq metallogenic province.

GreenX and GEX consider the observed geological setting and features of ARC to be indicative of an extensive mineral system capable of hosting world-class copper deposits. The large scale of the mineral system, widespread copper anomalism, combined with dual mineralising events are analogous to the largest copper systems known worldwide. Accordingly, GreenX considers that ARC has the potential to be a globally significant metallogenic province.

Historical field programs identified widespread copper-silver occurrences at surface:

· geochemical sampling found that 80% of stream sediment samples contain native copper

· native copper is found in situ or as float, with individual clasts of native copper weighing up to 1 kg+

· high grade copper sulphides, grading up to 2.15% Cu and 35.5g/t Ag over 4.5m true width, are known from trench sampling of fault zones within sediments (see GreenX announcement dated 20 January 2022 entitled "New Copper Targets Identified at ARC")

· assay results from individual samples are much higher grade, including: 

o  53.8% Cu and 2,480g/t Ag	o  7.9% Cu and  53 g/t Ag
o  20.7% Cu and 488g/t Ag	o  5.3% Cu and 112 g/t Ag
o  12.5% Cu and 385g/t Ag	o  5.0% Cu and 304 g/t Ag
o  9.0% Cu and 112 g/t Ag	o  4.0% Cu and  82 g/t Ag

Very high-grade copper mineralisation identified at ARC is associated with the Minik Anomaly, a coincident magnetic-electromagnetic-gravity feature in an area where there is a change in oxidation state and widespread native copper in stream sediments. These features are presented as the footprint of a large-scale hydrothermal system.
The frequency and size of the native copper clasts, and the high grade of the copper-silver sulphides that are exposed at the surface, bode well for the prospectivity of copper deposits and will be a will be a key focus of the first field campaign.

There are multiple targets and favourable geological settings considered to be prospective within the ARC project area, including the following.

· The highly anomalous basalt is a high priority target that has not previously been the focus of commercial exploration.  These basalts are the source of the native copper.

· The sulphide mineralised faults passing through these basalts into the overlying sediments have been subject to first pass exploration and shown to be rich in copper and silver. The high-grade sulphides in these faults will be the focus of further exploration.

· The permeable coarse-grained sandstone within the Jyske Ås Fm has high grade copper that is effectively unexplored. This stratiform mineralisation adds the potential for significant lateral extension of the known mineralisation exposed in the faults of the Discovery Zone. 

As such, the extensive ARC mineral system is known to be prospective for basalt, fault, and sedimentary rock-hosted ('sediment-hosted') mineralisation that despite the attractive grades, is virtually unexplored.

CORPORATE

Financial Position

As at 30 September 2022, GreenX had A$4.2 million to fund activities at ARC plus A$7.4 million available under the litigation funding facility to continue pursuing GreenX's dispute against the Republic of Poland.

DISPUTE WITH POLISH GOVERNMENT

During the quarter, the Company reported that as part of the ongoing international arbitration claims (Claim) against the Republic of Poland under both the Energy Charter Treaty (ECT) and the Australia-Poland Bilateral Investment Treaty (BIT) (together the Treaties), GreenX had filed its Statement of Reply in the BIT arbitration.

This is the final material filing that GreenX has made for the BIT arbitration, with the next step in the arbitration process, following the lodgement of Poland's Rejoinder, is for the hearing to be conducted in front of the Tribunal.

Based upon revised external expert reports in response to Poland's Statement of Defence, GreenX is now seeking compensation in the amount of £737 million (equivalent to A$1.3 billion or PLN 4.0 billion).

Details of the Claim

The Company's Claim against the Republic of Poland is being prosecuted through an established and enforceable legal framework, with GreenX and Poland agreeing to apply the United Nations Commission on International Trade Law Rules (UNCITRAL) rules to the proceedings.

The claim Tribunals have been constituted, with both Claims being registered with the Permanent Court of Arbitration in the Hague. The BIT and ECT claim proceedings proceed at pace, with the Company now having filed a revised claim for damages against Poland with the Tribunal in the amount of £737 million (A$1.3 billion/PLN4.0 billion), which includes damages related to both the Jan Karski and Debiensko projects, and accrued interest related to any damages. The Claim for damages has been assessed by external quantum experts appointed by GreenX specifically for the purposes of the Claim.

In July 2020, the Company announced it had executed a Litigation Funding Agreement (LFA) for US$12.3 million with Litigation Capital Management (LCM). The facility is currently being drawn down to cover legal, tribunal and external expert costs as well as defined operating expenses associated with the Claim. The LFA is a limited recourse loan with LCM that is on a "no win - no fee" basis.

In September 2020, GreenX announced that it had formally commenced with the Claim by serving the Notices of Arbitration against the Republic of Poland. In June 2021, GreenX announced that it had formally lodged its Statement of Claim in the BIT arbitration, including the first assessed claim for compensation. The Company's Statement of Reply, the last significant filing to be made by the Company, has now been filed in both Arbitrations. The Statement of Reply addresses various points raised by the Republic of Poland in their Statement of Defence. The Statement of Reply also contains a re-evaluation of the claim for damages based on responses to Poland's Statement of Defence.

GreenX's dispute alleges that the Republic of Poland has breached its obligations under the applicable Treaties through its actions to block the development of the Company's Jan Karski and Debiensko projects in Poland which effectively deprives GreenX of the entire value of its investments in Poland.

In February 2019, GreenX formally notified the Polish Government that there exists an investment dispute between GreenX and the Polish Government. GreenX's notification called for prompt negotiations with the Government to amicably resolve the dispute and indicated GreenX's right to submit the dispute to international arbitration in the event of the dispute not being resolved amicably. As of the date of this report, no amicable resolution of the dispute has occurred, since the Polish Government has declined to participate in discussions related to the dispute and accordingly the Company has formally proceeded with its Claim as discussed above.

GreenX's investment dispute with the Republic of Poland is not unique, with international media widely reporting that the political environment and investment climate in Poland has deteriorated since the change in Government in 2015. As a result, there are a significant number of International Arbitration claims being bought against Poland.

Furthermore, GreenX notes the recent success of AIM listed Rockhopper Exploration plc's (Rockhopper) ECT claim against the Republic of Italy in relation to oil and gas licenses.

On 24 August 2022, Rockhopper announced that an ECT arbitration panel had reached a unanimous decision against the Republic of Italy to award Rockhopper €190 million in damages plus interest at EURIBOR +4% compounded annually from 2016 until the time of payment.

All costs associated with the Rockhopper arbitration were funded on a non-recourse ("no win - no fee") basis from a specialist arbitration funder, similar to GreenX's litigation funding arrangements. After payments due to the arbitration funder, Rockhopper expects to retain approximately 80% of the award.

-ENDS-

Forward Looking Statements

This release may include forward-looking statements. These forward-looking statements are based on GreenX's expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of GreenX, which could cause actual results to differ materially from such statements. GreenX makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

Competent Persons Statement

The information in this announcement that relates to Exploration Results for ARC is extracted from the ASX announcements dated 6 October 2021 and 22 January 2022 which are available to view at www.greenxmetals.com . GreenX confirms that (a) it is not aware of any new information or data that materially affects the information included in the original announcements; (b) all material assumptions and technical parameters underpinning the content in the relevant announcements continue to apply and have not materially changed; and (c) the form and context in which the Competent Person's findings are presented have not been materially modified from the original announcements.

To view this announcement in full, including all illustrations and figures, please refer to www.greenxmetals.com .

APPENDIX 1: TENEMENT INFORMATION

As at 30 September 2022, the Company has an interest in the following tenements:

Location	Tenement	Percentage Interest	Status	Tenement Type
Greenland	Arctic Rift Copper Project (Licence No. 2021-07 MEL-S)	-1	Granted	Exploration Licence
Jan Karski, Poland	Jan Karski Mine Plan Area (K-4-5, K6-7, K-8 and K-9)2	100	In dispute2	Exclusive Right to apply for a mining concession
Debiensko, Poland	Debiensko 1	100	In dispute2	Mining
Kaczyce, Poland	Kaczyce 1	100	Granted	Mining & Exploration (includes gas rights)

Notes:

¹  In October 2021, the Company announced that it had entered into an Earn-In Agreement (EIA) with GEX to acquire an interest of up to 80% in ARC. As at the date of this announcement, the Company held no beneficial interest in ARC, other than through the EIA.

²  GreenX formally commenced international arbitration claims against the Republic of Poland under both the ECT and the BIT in 2021. GreenX alleges that the Republic of Poland has breached its obligations under the Treaties through its actions to block the development of the Company's Jan Karski and Debiensko projects in Poland.

Appendix 2: Related Party Payments

During the quarter ended 30 September 2022, the Company made payments of $232,000 to related parties and their associates. These payments relate to existing remuneration arrangements (director fees, consulting fees and superannuation of ($140,000) and the provision of a serviced office and company secretarial and administration services ($92,000).

Appendix 3: Exploration and Mining Expenditure

During the quarter ended 30 September 2022, the Company made the following payments in relation to exploration activities:

Activity	$000
Greenland (ARC)
Project Management	163
Logistics (including transportation of equipment)	725
Other (field supplies, fuel, satellite imagery, etc)	181
Greenland sub-total as reported in the Appendix 5B (item 2.1(d))	1,069
Poland
Legal and permitting related expenditure	73
Consultants - technical and Debiensko statutory operations personnel	95
Other	195
Poland sub-total as reported in the Appendix 5B (item 1.2(a))	363
Total	1,432

There were no mining or production activities and expenses incurred during the quarter ended 30 September 2022.

Appendix 5B

Mining exploration entity or oil and gas exploration entity
quarterly cash flow report

Name of entity
GreenX Metals Limited
ABN		Quarter ended ("current quarter")
23 008 677 852		30 September 2022

Consolidated statement of cash flows		Current quarter $A'000	Year to date (3 months) $A'000
1.	Cash flows from operating activities	-	-
1.1	Receipts from customers
1.2	Payments for	(363)*	(363)*
	(a)  exploration & evaluation
	(b)  development	-	-
	(c)  production	-	-
	(d)  staff costs	(135)	(135)
	(e)  administration and corporate costs	(119)	(119)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	13	13
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	-
1.8	Other (provide details if material) (a)  Business Development (b)  Property rental and gas sales (c)  Arbitration related expenses (d)  Receipt of arbitration funding (e)  Occupancy	(62) 23 (584) 767 (336)	(62) 23 (584) 767 (336)
1.9	Net cash from / (used in) operating activities	(796)	(796)
*includes legal and permitting expenditure and payments made to consultants (Debiensko technical statutory operations personnel).
2.	Cash flows from investing activities	-	-
2.1	Payments to acquire or for:
	(a)  Entities
	(b)  Tenements	-	-
	(c)  property, plant and equipment	-	-
	(d)  exploration & evaluation	(1,069)	(1,069)
	(e)  investments	-	-
	(f)  other non-current assets	-	-
2.2	Proceeds from the disposal of:	-	-
	(a)  entities
	(b)  tenements	-	-
	(c)  property, plant and equipment	-	-
	(d)  investments	-	-
	(e)  other non-current assets	-	-
2.3	Cash flows from loans to other entities	-	-
2.4	Dividends received (see note 3)	-	-
2.5	Other (provide details if material)	-	-
2.6	Net cash from / (used in) investing activities	(1,069)	(1,069)
3.	Cash flows from financing activities	-	-
3.1	Proceeds from issues of equity securities (excluding convertible debt securities)
3.2	Proceeds from issue of convertible debt securities	-	-
3.3	Proceeds from exercise of options	-	-
3.4	Transaction costs related to issues of equity securities or convertible debt securities	-	-
3.5	Proceeds from borrowings	-	-
3.6	Repayment of borrowings	-	-
3.7	Transaction costs related to loans and borrowings	-	-
3.8	Dividends paid	-	-
3.9	Other (provide details if material)	-	-
3.10	Net cash from / (used in) financing activities	-	-
4.	Net increase / (decrease) in cash and cash equivalents for the period
4.1	Cash and cash equivalents at beginning of period	6,108	6,108
4.2	Net cash from / (used in) operating activities (item 1.9 above)	(796)	(796)
4.3	Net cash from / (used in) investing activities (item 2.6 above)	(1,069)	(1,069)
4.4	Net cash from / (used in) financing activities (item 3.10 above)	-	-
4.5	Effect of movement in exchange rates on cash held	-	-
4.6	Cash and cash equivalents at end of period	4,243	4,243

5.	Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A'000	Previous quarter $A'000
5.1	Bank balances	4,243	6,108
5.2	Call deposits	-	-
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end of quarter (should equal item 4.6 above)	4,243	6,108

 

6.	Payments to related parties of the entity and their associates	Current quarter $A'000
6.1	Aggregate amount of payments to related parties and their associates included in item 1	(232)
6.2	Aggregate amount of payments to related parties and their associates included in item 2	-
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.

7.	Financing facilities Note: the term "facility' includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity.	Total facility amount at quarter end $A'000	Amount drawn at quarter end $A'000
7.1	Loan facilities	18,917*	11,515
7.2	Credit standby arrangements	-	-
7.3	Other (please specify)	-	-
7.4	Total financing facilities	18,917*	11,515
7.5	Unused financing facilities available at quarter end		7,402
7.6	Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.
	On 30 June 2020, the Company executed a Litigation Funding Agreement (LFA) for US$12.3 million (*now worth A$18.9 million with the movement of the A$ compared to the $US) with LCM Funding UK Limited a subsidiary of Litigation Capital Management Limited (LCM), to pursue damages claims in relation to the investment dispute between GreenX and the Polish Government that has arisen out of certain measures taken by Poland in breach of the Energy Charter Treaty and the Australia - Poland Bilateral Investment Treaty (BIT). LCM will provide up to US$12.3million (~A$18.9 million), denominated in US$, in limited recourse financing which is repayable to LCM in the event of a successful Claim or settlement of the Dispute that results in the recovery of any monies. If there is no settlement or award, then LCM is not entitled to any repayment of the financing facility. In return for providing the financing facility, LCM shall be entitled to receive repayment of any funds drawn plus an amount equal to between two and five times the total of any funds drawn from the funding facility during the first five years, depending on the time frame over which funds have remained drawn, and then a 30% interest rate after the fifth year until receipt of damages payments.

8.	Estimated cash available for future operating activities	$A'000
8.1	Net cash from / (used in) operating activities (item 1.9)	(796)
8.2	(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))	(1,069)
8.3	Total relevant outgoings (item 8.1 + item 8.2)	(1,865)
8.4	Cash and cash equivalents at quarter end (item 4.6)	4,243
8.5	Unused finance facilities available at quarter end (item 7.5)	7,402
8.6	Total available funding (item 8.4 + item 8.5)	11,645
8.7	Estimated quarters of funding available (item 8.6 divided by item 8.3)	6
	Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as "N/A". Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.
8.8	If item 8.7 is less than 2 quarters, please provide answers to the following questions:
	8.8.1  Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer: Not applicable
	8.8.2  Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: Not applicable
	8.8.3  Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
	Answer: Not applicable
	Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

Compliance statement

1  This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2  This statement gives a true and fair view of the matters disclosed.

Date:  28 October 2022

Authorised by:  Company Secretary

(Name of body or officer authorising release - see note 4)

Notes

1.  This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2.  If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3.  Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4.  If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".

5.  If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

 

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