HIGHLIGHTS
· During the quarter, the hearing for the international arbitration claims against the Republic of Poland under both the Energy Charter Treaty and the Australia-Poland Bilateral Investment Treaty was concluded.
o Combined arbitration hearing took place in front of the Arbitral Tribunal in London under the UNCITRAL Arbitration Rules for GreenX’s claims against Poland.
o Damages of up to £737 million (A$1.3 billion / PLN4.0 billion) have been claimed including the assessed value of GreenX’s lost profits and damages related to both the Jan Karski and Debiensko projects, and accrued interest related to any damages.
o The Company has funded the Claim proceedings under its US$12.3 million Litigation Funding Agreement (LFA).
· In November, the Company announced highly encouraging results from an initial site visit to ARC.
o Analysis of the site visit results is underway and will be key to future work programs.
o GreenX can earn up to 80% of the ARC copper project in Greenland. 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.
· Cash balance as at 31 December 2022 of A$2.6 million with a further A$6.1 million available under the LFA.
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 31 December 2022.
DISPUTE WITH POLISH GOVERNMENT
During the quarter, the Company reported the conclusion of the hearing for the 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). The hearing took place in London in November 2022 and lasted two weeks.
Following completion of the hearing, the Arbitral Tribunal will render an Award (i.e., the legal term used for a ‘decision’ by the Tribunal) in due course with no specified date available for the Tribunal decision.
As previously advised, the arbitration and hearing proceedings in relation to the Claim are required to be kept confidential.
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 arbitration claims are being administered through the Permanent Court of Arbitration in the Hague.
The evidentiary hearing phase of the arbitration proceedings has now been completed in front of the Arbitral Tribunal. With completion of the hearing, the Arbitral Tribunal will render an Award in due course. There is no specified date for an Award to be rendered. The Company’s claims for damages against Poland are in the amount of up to £737 million (A$1.3 billion/PLN4.0 billion), which includes a revised assessment of the value of GreenX’s lost profits and 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 independent external quantum experts appointed by GreenX specifically for the purposes of the Claim.
In July 2020, the Company announced it had executed the 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 material filing to be made by the Company for the BIT arbitration proceedings, was submitted in July 2021. 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 deprived 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.
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.
HIGHLY ENCOURAGING RESULTS FROM INITIAL ARC SITE VISIT
During the quarter, GreenX and its joint-venture (JV) partner Greenfields Exploration Ltd (Greenfields) announced the results of from the first visit to the Arctic Rift Copper Project (ARC or the Project) in Greenland.
The results of this work program have demonstrated the high-grade nature of the known copper sulphide mineralisation and wider copper mineralization in fault hosted Black Earth zones and adjacent sandstone units. The exact position of a native copper fissure at the Neergaard Dal prospect was also identified.
Analysis of this new information is underway and will be key to future work programs.
A logistical base in Greenland was also secured as part of the site visit. The Company successfully established depots, and field trialed its SHERP vehicles and advanced satellite communications systems.
CORPORATE
Financial Position
As at 31 December 2022, GreenX had cash of A$2.6 million with a further A$6.1 million available to fund Claim related costs under the LFA.
-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, 22 January 2022 and 28 November 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.
APPENDIX 1: TENEMENT INFORMATION
As at 31 December 2022, the Company has an interest in the following tenements:
|
Location |
Tenement |
Percentage |
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 |
Granted2 |
Mining |
|
Debiensko, Poland |
Kaczyce 13 |
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 Greenfields 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 mines in Poland. Refer to discussion of the Claim above.
3 The Kaczyce 1 tenement was due to expire on 31 December 2021. The Company applied for an extension to the Kaczyce 1 tenement prior to its expiry and awaits a decision.
APPENDIX 2: RELATED PARTY PAYMENTS
During the quarter ended 31 December 2022, the Company made payments of $166,000 to related parties and their associates. These payments relate to existing remuneration arrangements (director fees, consulting fees and superannuation of ($118,000) and the provision of a serviced office and company secretarial and administration services ($48,000).
APPENDIX 3: EXPLORATION AND MINING EXPENDITURE
During the quarter ended 31 December 2022, the Company made the following payments in relation to exploration activities:
|
Activity |
$000 |
|
Greenland (ARC) |
|
|
Project Management |
163 |
|
Logistics (including transportation of equipment) |
241 |
|
Site visit related costs |
316 |
|
Other (field supplies, equipment, fuel, satellite imagery, etc) |
119 |
|
Greenland sub-total as reported in the Appendix 5B (item 2.1(d)) |
839 |
|
|
|
|
Poland |
|
|
Legal and permitting related expenditure |
52 |
|
Consultants – technical and Debiensko statutory operations personnel |
124 |
|
Other (VAT returned) |
(69) |
|
Poland sub-total as reported in the Appendix 5B (item 1.2(a)) |
107 |
|
Total |
946 |
There were no mining or production activities and expenses incurred during the quarter ended 31 December 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 |
31 December 2022 |
|
Consolidated statement of cash flows |
Current quarter |
Year to date |
|
|
1. |
Cash flows from operating activities |
– |
– |
|
1.1 |
Receipts from customers |
||
|
1.2 |
Payments for |
(107)* |
(471)* |
|
(a) exploration & evaluation |
|||
|
(b) development |
– |
– |
|
|
(c) production |
– |
– |
|
|
(d) staff costs |
(122) |
(258) |
|
|
(e) administration and corporate costs |
(85) |
(204) |
|
|
1.3 |
Dividends received (see note 3) |
– |
– |
|
1.4 |
Interest received |
15 |
28 |
|
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 |
(80) 73 (862) 420 (80) |
(141) 96 (1,446) 1,187 (415) |
|
1.9 |
Net cash from / (used in) operating activities |
(828) |
(1,624) |
|
*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 |
(839) |
(1,908) |
|
|
(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 |
(839) |
(1,908) |
|
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 |
4,243 |
6,108 |
|
4.2 |
Net cash from / (used in) operating activities (item 1.9 above) |
(828) |
(1,624) |
|
4.3 |
Net cash from / (used in) investing activities (item 2.6 above) |
(839) |
(1,908) |
|
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 |
2,576 |
2,576 |
|
5. |
Reconciliation of cash and cash equivalents
|
Current quarter |
Previous quarter |
|
5.1 |
Bank balances |
2,576 |
4,243 |
|
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) |
2,576 |
4,243 |
|
6. |
Payments to related parties of the entity and their associates |
Current quarter |
|
6.1 |
Aggregate amount of payments to related parties and their associates included in item 1 |
(166) |
|
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
|
Total facility amount at quarter end |
|
|
7.1 |
Loan facilities |
18,036* |
11,935 |
|
7.2 |
Credit standby arrangements |
– |
– |
|
7.3 |
Other (please specify) |
– |
– |
|
7.4 |
Total financing facilities |
18,036* |
11,935 |
|
|
|||
|
7.5 |
Unused financing facilities available at quarter end |
6,101 |
|
|
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$18.0 million with the movement of the A$ 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$18.0 million), denominated in US$, 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) |
(828) |
|
8.2 |
(Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) |
(839) |
|
8.3 |
Total relevant outgoings (item 8.1 + item 8.2) |
(1,667) |
|
8.4 |
Cash and cash equivalents at quarter end (item 4.6) |
2,576 |
|
8.5 |
Unused finance facilities available at quarter end (item 7.5) |
6,101 |
|
8.6 |
Total available funding (item 8.4 + item 8.5) |
8,677 |
|
8.7 |
Estimated quarters of funding available (item 8.6 divided by item 8.3) |
>5 |
|
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. |
||