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Lithic Metals&Energy (LMY)

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Wednesday 31 December, 2008

Lithic Metals&Energy

Half Yearly Report

RNS Number : 8938K
Lithic Metals and Energy Limited
31 December 2008
 



Lithic Metals and Energy Limited

('Lithic' or the Company')


Interim results for the 6 months ended 30 September 2008


Lithic (AIM code: LMY), the AIM-quoted African nickel and uranium exploration company, today announces its interim results for the six months ended 30th September 2008.


MANAGING DIRECTORS' REPORT


I have pleasure in presenting the unaudited accounts of Lithic for the six months ended 30 September 2008. During this period, Lithic has established its exploration activities across its ZambiaTogo and Mozambique assets, making significant progress on all fronts.


Significant Events

  • Commencement of Zambian uranium joint venture with Zambezi Resources Limited in April.

  • Completion of 36,000 line km programmes of airborne radiometric surveys of Zambian uranium JV licences.

  • Discovery of over 40 high priority uranium targets on Zambian properties.

  • Commencement of exploration activities on Togo properties.

  • Completion of airborne geophysical surveys over majority of Togo licences.

  • Discovery of broad areas of greater than 1% nickel mineralisation on Mt Haito licence, Togo.

  • Successful negotiation for 100% interest in Mavita nickel project, Mozambique from BHP Billiton.

  • Completion of VTEM survey over Mavita nickel project.


In Togo, the Company has completed the initial evaluation of its licences through the undertaking of comprehensive geophysical surveys, data acquisition and review and field activities.


This work has lead to the discovery of significant nickel saprolite mineralisation at the Kpoté project, where nickel values greater than 1% are now confirmed in test pitting over an area exceeding 1600m x 650m. Geophysical data, field mapping and extensional test pitting indicate potential to significantly extend the known area of nickel mineralisation through additional exploration.


In Zambia, extensive geophysical surveys over a large proportion of our uranium joint venture licences have identified over 40 high priority uranium anomalies. Field evaluation of these targets has commenced, with the results from the majority of field samples submitted for analysis still pending.


On the Mavita licence in Mozambique, the Company negotiated out of clawback and offtake provisions in the Memorandum of Understanding with BHP Billiton and now holds the licences 100% unencumbered. The Company has just completed a detailed VTEM geophysical survey over the identified ultramafic lithology in the search for nickel sulphides. 


Current Positioning


The current turbulent market conditions and significant decline in all commodity prices has, in the directors' opinion, resulted in a rapid sentiment shift against junior exploration companies. It is globally recognised that poor market conditions will make access to ongoing funding for junior explorers extremely difficult in the short term at least, prompting the Company's board of directors to initiate a comprehensive review of operations and forward expenditure, with a view of ensuring effective long term management and allocation of its capital resources.


As a result, the Company has moved decisively to stabilise its investment portfolio, significantly reducing its exploration expenditure across all assets. Corporate focus has now shifted to preserving cash resources, and concentrating on the identification of natural resource opportunities capable of generating significant returns for shareholders.


Financial Information


The Company and it subsidiaries report a loss for the half year ended 30 September 2008 of £305,977 (compared to a loss of £588,212 for the six months ended 30 September 2007).


No dividend was paid or declared during the period.


The basic loss and diluted loss per share for the period was £0.01.


For more information please contact:


Jim Kerr

David Youngman/ Katy Mitchell

Laurence Reed

Lithic Metals & Energy Ltd

WH Ireland

Threadneedle Communications

Tel: +61 (0) 428 948 552

Tel: +44 (0) 161 832 2174

Tel: +44 (0) 20 7936 9696




Consolidated Statement of Comprehensive Income 


For the six months ended 30 September 2008




Note

Unaudited 

six months ended


Unaudited six months ended


Audited 

year 

ended



September 2008


September 2007


March 

2008



£


£


£

Total revenue

Other expenses

2

2

222,982

(528,959)


33,791

(622,003)


150,380

(987,075)

Deficit before income tax


(305,977)


(588,212)


(836,695)

Income tax expense


-


-


-

Deficit after tax for the half-year


(305,977)


(588,212)


(836,695)








Other comprehensive income:







Exchange differences on translation of foreign entities


158,570


(19,533)


(11,856)

Income tax effect


-


-


-

Total other comprehensive income


158,570


(19,533)


(11,856)








TOTAL COMPREHENSIVE INCOME/(DEFICIT)

- attributable to owners



(147,407)



(607,745)



(848,551)















Earnings per share:







Basic and diluted deficit per share

3

(0.01)


(0.01)


(0.01)





Consolidated Statement of Cash Flows


for the six months ended 30 September 2008



Unaudited 

six months ended


Unaudited 

six months ended


Audited 

Year 

ended


September 2008


September 2007


March

 2008


£


£


£

Cash flows from operating activities

Payments to suppliers and employees

Interest received

Management fee received


(534,578)

99,690

122,893



(194,118)

33,791

-



(487,249)

150,380

-

Net cash utilised by operating activities

(311,995)


(160,327)


(336,869)

Cash flows from investing activities

Payments for mineral exploration activities

Purchase of RRCC Limited

Payments for business development projects

Payments for property, plant and equipment


(541,301)

-

(886,213)

(156,662)



(60,441)

-

(33,647)

(4,983)



(325,495)

(114,318)

(205,742)

(131,149)

Net cash utilised by investing activities

(1,584,176)


(99,071)


(776,704)

Cash flows from financing activities

Proceeds from issue of shares 

Share issue costs


-

-



1,992,500

-



6,000,000

(226,524)

Net cash generated from financing activities

-


1,992,500


5,773,476







Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

(1,896,171)

4,920,809


1,733,102

260,906


4,659,903

260,906

Cash and cash equivalents at end of the year - (Note 6)

3,024,639


1,994,008


4,920,809



Consolidated Statement of Financial Position


at 30 September 2008



Note

Unaudited


Unaudited


Audited



September 2008


September 2007


March 2008



£


£


£

ASSETS







Non-current assets

Property, plant and equipment

Mineral properties

Other assets



4

5


288,824

3,724,883

1,126,067



16,119

1,551,136

33,637



124,882

3,083,930

204,839

Total non current assets


5,139,774


  1,600,892


   3,413,651

Current assets

Trade and other receivables

Prepayments 

Cash and cash equivalents




6


130,620

133,321

3,024,638



15,903

7,609

1,994,008



52,725

46,681

4,920,809

Total current assets


3,288,579


2,017,520


5,020,215

Total assets


8,428,353


3,618,412


8,433,866

EQUITY AND LIABILITIES







Current liabilities

Trade and other payables

Provisions



317,000

36,370



94,055

4,930



283,934

19,213

Total current liabilities


353,370


98,985


303,147

Total liabilities


353,370


98,985


303,147

Equity

Issued capital

Share premium account

Options and Warrants Reserve

Foreign currency translation reserve

Accumulated deficit


8

8

9

9

9



1,522,972

7,838,278

272,492

113,251

(1,672,010)



753,741

3,826,533

109,699

(52,996)

(1,117,550)



1,522,972

7,838,278

180,821

(45,319)

(1,366,033)

Total equity

8,074,983


3,519,427


8,130,719

Total equity and liabilities

8,428,353


3,618,412


8,433,866



Statement of Changes in Equity


for the six months ended 30 September 2008



Unaudited 

September 2008


£

Issued Capital


Opening balance as at 1 April 2008

1,522,972

Issued during the period

-

Closing balance as at 30 September 2008

1,522,972

Share Premium Reserve 


Opening balance as at 1 April 2008

7,838,278

Premium on shares issued during the period

-

Closing balance as at 30 September 2008

7,838,278

Options & Warrants Reserve


Opening balance as at 1 April 2008

180,821

Recognition of share-based payments

91,671

Closing balance as at 30 September 2008

272,492

Accumulated Deficit


Opening balance as at 1 April 2008

(1,366,033)

Deficit for the period

(305,977)

Closing balance as at 30 September 2008

(1,672,010)

Foreign Currency Translation Reserve


Opening balance as at 1 April 2008

(45,319)

Exchange differences arising on translation of foreign operations

158,570

Closing balance as at 30 September 2008

113,251



Total of shareholders equity at 30 September 2008

8,074,983




Notes to the Annual Financial Statements


1. Key accounting policies


Lithic Metals and Energy Limited (hereafter 'Lithic' or the 'Company') is a company registered and domiciled in Bermuda whose principal activities comprise minerals exploration and development for the benefit of shareholders.


The Company's registered office is:

Canon's Court
22 Victoria Street

Hamilton HM 12
Bermuda


The financial statements incorporate the principal accounting policies set out below. Accounting policies of the subsidiaries are consistent with those of the holding company.


Statement of compliance


The Group financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB.


Basis of preparation


The Group financial statements are prepared on the historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Pounds Sterling, unless otherwise noted.


Principles of consolidation


The consolidated financial statements incorporate the assets and liabilities of Lithic and its subsidiaries (hereafter the 'Group' or 'Consolidated Entity') as at 30 September 2008, and the results of its subsidiaries for the six month period then ended. Subsidiaries are those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than fifty percent of the voting rights so as to obtain benefits from its activities. The existing and effect of potential voting rights which are currently exercisable or convertible are considered when assessing whether the Group controls another entity.


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


The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Inter-company 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 the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.


Minority interests (when relevant) in the results are shown separately in the consolidated income statement and balance sheet respectively.


The Group financial statements incorporate the assets, liabilities and results of operations of the Company and its subsidiaries acquired and disposed of during a financial period. These assets, liabilities and results are included from the effective dates of acquisition to the effective dates of disposal. Where necessary, the accounting policies of subsidiaries are changed to ensure the consistency with the policies adopted by the Group.


Mineral exploration expenditure


Exploration and evaluation costs incurred by the Group are accumulated separately for each area of interest. Such costs comprise net direct costs and an appropriate portion of related overhead costs, but do not include general overheads or administrative costs that do not have a specific association with a particular area of interest. Exploration and evaluation costs are carried forward to the extent that:


a) such costs are expected to be recouped through the successful development and utilisation of the area of interest, or alternatively by its sale; or


b) exploration and evaluation activities in the area of interest have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.


In the event that an area of interest is abandoned or if the Directors consider the costs incurred exceed the area of interest's recoverable amount, accumulated costs carried forward are written off in the year in which that assessment is made.


Exploration and evaluation costs are not carried forward in respect of any area of interest unless the Group's right of tenure to the property is current. Depletion is not charged on areas of interest under development until commercial production commences, at which time it will be recorded using a units of production basis which will be based on the mineral mined at each area of interest relative to the estimated resource relating of that area of interest.


Revenue recognition


Interest revenue is recorded on a time proportion basis, based on the effective yield of the asset. The effective yield of the asset is the rate of interest required to discount the stream of future cash receipts, expected over the life of the financial asset, to equate to its net carrying amount.


Foreign currency


The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Pounds Sterling which is the functional currency of Lithic Metals and Energy Limited and is the presentation currency for its consolidated financial statements.


Foreign currency translations are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.


Translation differences on non-monetary items, such as equities held at fair value through the profit and loss, are reported as part of the fair value gain or loss. 


The results and financial position of the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: 

  • Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.;

  • Income and expenses for each income statement are translated at average rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, in which case income and expenses are translated at the dates of the transactions); and

  • All resulting exchange differences are recognised as a separate component of equity.


On consolidation, exchange differences arising from the translation of any net investment in foreign entities and borrowings are taken to shareholders equity. When a foreign operation is sold or borrowings repaid, a proportionate share of such exchange differences are recognised in the income statement as part of the gain or loss on sale.


Earnings per share and dilutive earnings per share


Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.


Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other finance charges associated with diluted potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.



2. Reconciliation of Loss


The deficit before income tax was after the following income and expenses:



Unaudited

six months ended

 September 2008

Audited 

six months ended

September 2007

Audited

 year ended 

March 2007


£

£

£

Interest income

99,690

33,791

150,380

Management fee received

122,893

-

-

Profit on asset write-off

399

-

-

Total revenue

222,982

33,791

150,380

Auditors' remuneration




- audit services

(5,800)

1,425

(18,313)

Depreciation

(7,934)

(740)

(3,434)

Directors' fees

(39,327)

(18,750)

(43,908)

Exploration expenditure written off

-

(352,897)

(352,753)

Foreign exchange losses

(73,617)

(2,529)

(16,016)

Other costs

(175,405)

(138,301)

(232,220)

Personnel costs - defined contribution plan

(13,159)

-

(1,967)

Personnel costs - salaries

(122,046)

(72,515)

(209,646)

Share-based payments 

(91,671)

(37,696)

(108,818)

Total expenses

(528,959)

(622,003)

(987,075)





Deficit for period

(305,977)

(588,212)

(836,695)


  

3Loss Per Share


The calculation of the loss and diluted loss per share is based on the deficit for the financial period of £305,977 (2007 - £588,212) and the weighted number of average ordinary shares of 152,297,197 (2007 - 63,570,841). No warrants or options have been taken into account for the diluted loss per share as the impact of these instruments is non-dilutive.


Shares

Unaudited

six months ended

 September 2008

Unaudited 

six months ended

 September 2007

Audited

year ended

March 2008

Basic weighted average number of ordinary shares on issue


152,297,197


63,570,841


95,550,665


£

£

£

Basic loss per share 

(0.01)

(0.01)

(0.01)

The diluted loss per share is the same as the basic loss per share as the effect of the share options is non-dilutive.


4Mineral Interests


a)  Reconciliation



Unaudited

six months ended

 September 2008

Unaudited 

six months ended

September 2007

Audited

 year ended 

 March 2008


£

£

£





Opening balance

3,083,930

1,856,849

1,856,849

Exploration costs capitalised for the period

566,858

65,094

350,271

Purchase of exploration licences

-

-

1,236,371

Exploration costs written off

-

(352,897)

(352,753)

Foreign exchange movements

74,095

(17,910)

(6,808)

As at 30 September 2008

3,724,883

1,551,136

3,083,930


b)  Exploration expenditure per project



Unaudited

six months ended

  September 2008

Unaudited 

six months ended

 September 2007

Audited

 year ended 

 March 2008


£

£

£

Group exploration projects




Mitaba

1,578,636

1,411,557

1,488,897

Haito 

606,473

-

384,445

Pagala

445,716

-

339,386

Niamtougou


419,738

-

328,423

Kara

331,839

-

317,669

Mavita

342,481

139,579

225,110

As at 30 September 2008

3,724,883

1,551,136

3,083,930


  

5Other assets



Unaudited

six months ended

  September 2008

Unaudited 

six months ended

 September 2007

Audited

 year ended 

 March 2008


£

£

£





Opening balance

204,839

-

-

Investment in uranium JV farm-in projects for the year

921,228

33,637

204,839

Business development costs

1,126,067

33,637

204,839


Lithic is farming into a uranium Joint Venture with Zambezi Resources Limited. The costs associated with this farm-in are capitalised to business development projects and forms part of acquisition costs once the farm-in is earned. In the event that Lithic decides not to proceed with the Joint Venture, all costs capitalised to the Joint Venture will be expensed.


6Cash and cash equivalents



Unaudited

six months ended

  September 2008

Unaudited 

six months ended

 September 2007

Audited

 year ended 

 March 2008


£

£

£

Cash on hand and at bank

311,307

166,970

239,909

Cash on term deposits

2,713,331

1,827,038

4,680,900

Total cash and cash equivalents

3,024,638

1,994,008

4,920,809


7Investment in Subsidiaries


At 30 September 2008, the Company had interests in the following subsidiaries:


Company

Country of Incorporation

Holding Company

Class of Share Capital Held

% Held

Nature of Business

Investment Cost







£

MR Nickel (Bermuda) Limited

Bermuda

Lithic Metals and Energy Limited

Ordinary

100

Exploration

7,500

MR Nickel Limited

Zambia

MR Nickel (Bermuda) Limited

Ordinary

100

Exploration

12

Zambezi Niquel Mozambique Limitada

Mozambique

MR Nickel (Bermuda) Limited

Ordinary

100

Exploration

420

RRCC Limited (BVI)

British Virgin Islands

Lithic Metals and Energy Limited

Ordinary

100

Exploration

1,246,566

Regent Resources Capital Corporation SAU

Togo

RRCC (BVI) Limited

Ordinary

100

Exploration

10,195


Loans by the Company to its subsidiaries are at call, interest free with no agreed fixed terms of repayment. The Company has undertaken not to recall the loans within 12 months from the date of this report unless the respective subsidiaries are in a financial position to do so. The balance owing by subsidiaries at 30 September 200was £1,568,694.



8. Issued Capital


The Company has 302 million authorised ordinary par value shares at £0.01 each.



Number of Shares

Issued Capital

Share Premium


£

£

£

Issued and fully paid




Balance at 1 April 2007 

35,374,120

353,741

2,234,033

May 2007 placement issue

40,000,000

400,000

1,600,000

Capital raising costs



(7,500)

Balance at 30 September 2007

75,374,120

753,741

3,826,533

November 2007 placement issue

61,538,462

615,385

3,384,615

Issued for RRCC Ltd acquisition

15,384,615

153,846

846,154

Capital raising costs


-

(219,024)

Balance at 30 September 2008

152,297,197

1,522,972

7,838,278


Notes

a. There were 10,900,000 share options outstanding at the beginning of the period.

b. 2,000,000 share options were issued during the period.

c. No options were exercised during the period.

d. No options expired or were forfeited during the period.

e. The total of share options outstanding at the end of the period was 12,900,000.

f. The weighted average price of the share options outstanding at the end of the period was £0.11



9. Reserves



Share premium reserve

Accumulated deficit

Foreign currency translation reserve

Options and warrants reserve


£

£

£

£

As at 1 April 2008

7,838,278

(1,366,033)

(45,319)

180,821

Movements during the period

-

(305,977)

158,570

91,671

As at 30 September 2008

7,838,278

(1,672,010)

113,251

272,492


  • The share premium reserve reflects the amounts received for the issuance of shares in excess of the par value of the share.

  • The accumulated deficit represents the Group's operational losses since incorporation.

  • The foreign currency translation reserve represents the foreign exchange movements on the translation of all foreign entities controlled by the Group. 

  • The options and warrants reserve represents the value of all share based payments made to directors, staff and other persons as measured by the Black Scholes valuation model. The respective amounts are transferred out of the reserve and into share capital and share premium accounts as and when the options and warrants are exercised.


10. Commitments


On 21 May 2007 the Group entered into a joint venture 'Heads of Agreement' with Zambezi Resources Limited (hereafter 'ZRL') and signed the farm-in Joint Venture agreement on 28 April 2008 in which Lithic has the right to explore for uranium on certain of ZRL's mining licences. In terms of the agreement Lithic is required to contribute in aggregate US$5 million, over a period of 2.5 years, for a 51% equity participation in both Oryx Resources Limited and Sothern African Resources Limited. To achieve the 51% holding, Lithic must still contribute US$2,954,093 in aggregate, to the respective companies.


The Group had no contingent liabilities at 30 September 2008.

  


11. Post-balance Sheet Events 


On 16 October 2008 Dr Geoffrey Ian Johnson resigned as a Director of the Company following his relocation to Adelaide.


12. Related Party Transactions


The Group leased office premises and shared certain administrative overheads with Zambezi Resources Limited and during the period made payments of £233,480 to the Company. At period end the Group had an outstanding obligation of £43,120 payable to Zambezi Resources Limited. 


On 28 October 2008 Zambezi Resources Limited sold its shareholding of 26,633,621 ordinary shares in the Company in volatile market conditions. In order to stabilise the Company's shareholding and its Zambian investments, these shares were acquired at short notice by Lithic directors and management. At the date hereof the Company announced the restructuring of this transaction as a buyback of the shares acquired by directors and management by the Company following the lapse of the close period dealing restrictions.


13. General


Detailed financial statements for the 6 months ended 30 September 2008 can be viewed on the Company's web-site at www.lithicme.com.


Authorised on behalf of the Board.


                

James Kerr

Julian Ford

Director

Director

Date: 31 December 2008

Date: 31 December 2008



This information is provided by RNS
The company news service from the London Stock Exchange
 
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