Announcement PDF LIVIUM LTD ACN 126 129 413 Financial Report For the Half -Year Ended 31 December 2024 Livium Ltd ACN 126 129 413 +61 (0) 3 7017 2656 info@lithium-au.com liviumcorp.com Financial Report For the Half -Year Ended 31 December 2024 Table of Contents Table of Contents Corporate Directory ...................................................................................................................... 1 Directors’ Report ........................................................................................................................... 2 1 Director’s Report ................................................................................................................................... 2 2 Review of Operations ............................................................................................................................ 4 Auditor’s Independence Declaration ......................................................................................... 12 Condensed Consolidated Statement of Comprehensive Income for the Half Year Ended 31 December 2024 ........................................................................................................................... 13 Condensed Consolidated Statement of Financial Position as at 31 December 2024............. 14 Condensed Consolidated Statement of Changes in Equity for the Half Year Ended 31 December 2024 ........................................................................................................................... 15 Condensed Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2024.............................................................................................................................................. 17 Notes to the Condensed Consolidated Financial Statements for the Half-Year Ended 31 December 2024 ........................................................................................................................... 18 Note 1 Statement of material accounting policies ..................................................................... 18 Note 2 Other income ..................................................................................................................... 19 Note 3 Finance costs ..................................................................................................................... 19 Note 4 Expenses from ordinary activities ................................................................................... 19 Note 5 Provisions .......................................................................................................................... 20 Note 6 Loans and borrowings ...................................................................................................... 20 Note 7 Advanced share capital .................................................................................................... 20 Note 8 Intangible assets ............................................................................................................... 21 Note 9 Issued capital ..................................................................................................................... 21 Note 10 Operating segments .......................................................................................................... 21 Note 11 Share based payments ..................................................................................................... 21 Note 12 Subsequent events............................................................................................................ 25 Directors’ Declaration ................................................................................................................. 27 Independent Auditor’s Report .................................................................................................... 28 Livium Ltd Page i Financial Report For the Half -Year Ended 31 December 2024 Corporate Directory Corporate Directory On 30 October 2024, Lithium Australia Limited changed its name to Livium Ltd. Livium Ltd Corporate Directory Directors Managing Director and CEO: Simon Linge Non-Executive Chair: George Bauk (resigned on 3 January 2025) Phil Thick (appointed interim Non-Executive Chair on 3 January 2025) Non-Executive Directors: Kristie Young Phil Thick Executive Management Chief Financial Officer: Stuart Tarrant Joint-Company Secretary: Catherine Grant-Edwards Melissa Chapman Business Details Registered Office: Suite 1, 79 - 83 High Street, Kew VIC 3101 Principal Place of Business: Suite 1, 79 - 83 High Street, Kew VIC 3101 Phone: +61 (0) 3 7017 2656 Email: info@lithium-au.com Website: www.liviumcorp.com Stock Exchange Listing: Livium Ltd securities are listed on Australian Securities Exchange (ASX Codes: LIT, LITOA, LITOB) Other Details Bank: National Australia Bank, 100 St Georges Terrace, Perth WA 6000 Auditors: Hall Chadwick WA Audit Pty Ltd (Hall Chadwick), 283 Rokeby Road, Subiaco WA 6008 Share Registry: Automic Group on 1300 429 179 (domestic calls) or +61 2 7208 4522 (international calls) or by email at corporate.actions@automicgroup.com.au Livium Ltd Page 1 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report Directors’ Report The Directors present their report on Livium Ltd (“LIT” or the “Group”) and its controlled entities (the “Group”) for the half-year ended 31 December 2024 (the “half-year”). 1 Director’s Report 1.1 Results of operations The operating loss after income tax of the Group for the half-year ended 31 December 2024 was $3.70m (31 December 2023: loss of $4.54m). The key movements between the half-years are summarised in the following graphic: Gross Profit: In the half-year ended 31 Dec 2024, our Battery Recycling Division, Envirostream, delivered higher sales, driven by a 138% increase in large format lithium-ion battery volumes on the prior corresponding period (pcp) while maintaining strict control over the cost of sales. R&D: In the half-year ended 31 Dec 2024, the Group received total R&D tax incentive rebates of A$0.90m. These rebates have been received for wholly owned subsidiaries of Envirostream (A$0.47m in Nov 24) and VSPC (A$0.43m in Dec 24). The R&D rebate for LieNA was received post half year end (A$0.76m in Jan 25). Net assets of the Group for the half year ended 31 December 2024 were $3.04m (30 June 2024: $3.36m). The key movements between the financial years are summarised in the following graphic: Current Assets: Due to the capital raising funds from Lind Global Fund II LP, funds from Share Purchase Plan (SPP), sale of shares, sale of Bynoe and R&D refunds. Livium Ltd Page 2 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report Non-Current Assets: Primarily due to a further spend of $1.45m on LieNA® development costs in accordance with the joint development agreement (JDA) with Mineral Resources Limited (MinRes). These activities are funded under the Convertible Note deed with MinRes. Current Liabilities: Primarily due to $1.55m in loans and borrowings from drawdowns under the Convertible Note Deed with MinRes, as well as $1.78m prepaid ordinary shares from Lind Global Fund II LP that have yet to be converted into equity. At 31 December 2024, the Group’s working capital deficit, being current assets less current liabilities was $8.26m (30 June 2024: working capital deficit $6.65m). The working capital deficit for half year ended 31 December 2024 included a $7.5m provision for remediation for legal claims relating to a fire in January 2019 at the premises of Envirostream Australia Pty Ltd, a wholly owned subsidiary of the Group. It is expected that insurances are sufficient to meet the provision (refer to Note 5 for further details). In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable. 1.2 Dividends There are no dividend or distribution reinvestment plans in operation and there have been no dividend or distribution payments during the financial half-year ended 31 December 2024 (31 December 2023: Nil). Livium Ltd Page 3 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2 Review of Operations 2.1 Overview Livium is aiming to lead and enable the global transition to sustainable lithium production. The Company operates Australia’s market leading battery recycler, produces critical battery material lithium ferro phosphate (LFP), and has developed a patented lithium extraction technology (LieNA®). Livium’s revenue-generating recycling business and technologies are well-placed to capitalise on growing global lithium-ion battery demand and provides diversification benefits to global supply chains. 2.1.1 Change of name During the period, the Company’s name changed from Lithium Australia Limited to Livium Ltd reflecting the final step in our shift from mining to critical materials in the battery industry. ‘Liv’ connotes life, further reinforcing our commitment to a better life for all. A promise which is positive, optimistic, enabling and purposeful. Built for today’s increasingly environmentally conscious and activated marketplace. Whilst ‘ium’ represents both our core capability - Lithium, as well as being aligned to the word continuum. Which speaks to our dedication to delivering a truly sustainable circular economy. 2.1.2 Funding During the period, Livium announced a capital raising. An initial A$1.8m was raised through a placement agreement with The Lind Partners, with access to further funding up to a total of A$7.5m. In addition, a share purchase plan was launched and completed, raising ~A$1.0m. Proceeds raised will be used to fund key growth and business development initiatives across the Company. Additionally, the Company received ~A$1.8m in government grants and tax incentives during the period and ~A$1.2m in cash was received in drawdowns under the Convertible Note Deed with Mineral Resources Limited (ASX: MIN). 2.1.3 Listed and Unlisted Investments The Company continued to dispose of non-core assets in the six months to 31 December 2024. During the period, Livium completed the sale of the Company’s 30% joint venture interest in the Bynoe Lithium Project to Charger Metals NL (ASX: CHR), receiving $0.5m from the transaction. The sale supports Livium’s transition away from non-core assets, while also strengthening the Company’s balance sheet. During the period, Livium sold its remaining 7.6m shares in Charger Metals NL (ASX: CHR) to Core Lithium Ltd. (ASX: CXO), receiving 0.8 CXO shares for every 1 CHR share. 2.1.4 Cost restructure Subsequent to the period, the Company announced a restructure to the organisation and reduction of other activities. These changes allow the Company to maintain only those resources necessary to achieve the activities identified as key to delivering value in the near term: • Battery Recycling: Continued safe operations, growing end-of-life volumes, and seeking partners to scale operations in line with the expected waste outlook and to expand into related services • Battery Materials: Secure funding for an Australian LFP demonstration plant from government and private strategic partners, who will invest directly into VSPC • Lithium Chemicals: Complete JDA activities with MinRes, including assessment of alternate commercialisation pathways and selection of the preferred lithium product This cost restructure targets a reduction of 25% of roles across the organisation. The Company estimates that severance payments and other associated costs of this organisational review will be absorbed, and the benefit of reduced personnel costs seen by the end of the 2025 financial year. Other cost reduction activities are also being implemented, including the use of third-party support. Total estimated annual cost savings from the restructure are expected to be at least A$1.5 million. Livium Ltd Page 4 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.2 Battery Recycling Division The Company operates Australia’s market leading battery recycler through wholly owned subsidiary Envirostream Australia Pty Ltd (“Envirostream”). 2.2.1 Strong financial performance During the period, Envirostream continued to deliver record results following the Company’s transition to an upstream ‘Fee for service’ model in FY24. In the six months to 31 December 2024, Envirostream delivered revenue of ~A$3.8m (46% increase on pcp) and gross profit of ~A$2.2m (922% increase on pcp), representing a gross profit margin of ~61% (pcp: 9%). A shift in focus towards large-format lithium-ion batteries (LIB) resulted in lower overall volumes than the pcp with a total of 511 tonnes collected over the period (pcp: 753 tonnes) but higher large-format LIB collections of 384 tonnes, a 138% increase relative to the pcp. The importance of this focus on large-format LIBs is because of the significantly higher margin opportunity relative to other mixed battery chemistries, as demonstrated by the relative gross profit unit rates in Table 1 in Q2 FY25 relative to the pcp. 400 138 350 300 235 66 167 174 250 46 31 200 50 76 73 89 110 Q3 FY24 100 300 67 107 Q2 FY24 150 242 18 32 85 Q2 FY25 Small-format LIBs Q1 FY25 Large-format LIBs Q4 FY24 0 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other % of LIBs % of LIBs 450 Q1 FY24 Collection volume (Tonnes) Envirostream’s shift towards large-format LIBs, exposes the Company to potentially higher volatility in collection volumes. This is observed in the figure below where lower LIB collections were received in the December 2024 quarter. These lower volumes were expected and were due to seasonal changes and in light of acceleration of collections in the prior quarter to satisfy customer requirements – effectively accelerating revenues in the September 2024 quarter. Figure: Battery collections volume and mix (FY24 and year to date FY25) Based on collected volumes above, revenue unit rate, cost of sales unit rate and gross profit unit rates all performed strongly as represented in the table below which demonstrates an uplift in revenue unit rates and decrease of cost of sales unit rates throughout FY24. Table: Battery recycling – financial information Unit Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 Q2 FY25 Revenue Cost of sales Gross profit Gross margin A$m A$m A$m % $1.33 $1.31 $0.02 1% $1.25 $1.05 $0.20 17% $1.54 $1.12 $0.41 27% $2.50 $0.95 $1.56 62% $2.45 $0.72 $1.75 71% $1.31 $0.75 $0.56 43% Revenue unit rate Gross profit unit rate A$/kg A$/kg $3.05/kg $0.04/kg $3.52/kg↑ $0.60/kg↑ $4.48/kg↑ $1.21/kg↑ $5.63/kg↑ $3.50/kg↑ $6.51/kg↑ $4.61/kg↑ $9.77/kg↑ $4.15/kg↓ 2.2.2 Volume growth outlook Envirostream is the largest recycler of lithium-ion batteries in the country, drawing on our technical expertise to provide value-added services and has strong commercial relationships. Strategic focus for the Company is Livium Ltd Page 5 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report being placed on Battery Recycling, through Envirostream, due to the potential of increased recycling volumes over the coming years. 550 90% 500 80% 450 70% 400 60% 350 300 50% 250 40% 200 30% 150 20% 100 Forecast (Mixed) tonnes Forecast (ESS) tonnes Forecast (EV) tonnes 2045 2044 2043 2042 2041 2040 2039 2038 2037 2036 2035 2034 2033 2032 2031 2030 2029 2028 0% 2027 - 2026 10% 2025 50 % EV/ESS of Total EOL Batteries EOL Battery Volumes (kT) During CY2024, Envirostream successfully increased volumes of EV 1 and ESS2 with most of the volume being received under exclusive customer arrangements. Over CY2024, Envirostream collected 736k tonnes of large format batteries and it is estimated that there are five times these volumes available today which are increasingly expected to be recycled due to consumer demand and government regulation. In their Battery Market Analysis, B-cycle show how EV and ESS batteries are expected to dominate 3. Forecast (Lead Acid) tonnes Figure: EOL Battery Projections by Market Segment3 30 30 25 25 20 20 15 15 10 10 5 5 - Multiple of EV/ESS EOL Batteries to CY25 Envirostream EV / ESS Collections EOL Battery Volumes (kT) Focusing on only EV / ESS for the balance of the decade demonstrates the near-term opportunity for Envirostream collections growth relative to current performance. 2025 2026 2027 Forecast (ESS) tonnes 2028 2029 Forecast (EV) tonnes 2030 Figure: 5-Year EV and ESS EOL Battery Projections3 The near-term outlook for Envirostream is positive, enabling increases of volumes collected and processed, and providing an opportunity to expand our service offerings in line with market requirements. Electric Vehicle: including light and commercial e-mobility Energy Storage Systems: including residential and grid-scale applications 3 Source: Battery Market Analysis - The latest market data for the battery industry in Australia: B-cycle (Oct23), Company analysis 1 2 Livium Ltd Page 6 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.2.3 Exclusive recycling and off-take agreements The Company remains focused on growing the battery recycling business to meet the strong medium-term forecast for end-of-life batteries. The Company is well positioned to access these volumes with the growing number of recycling services agreements. During the period, Envirostream entered into new exclusive recycling agreements with BYD Auto, a global leader in New Energy vehicles, Wabtec, a global leader in the rail and mining industries, Infinitev, a leading provider of remanufactured EV batteries in Australia for consumers, and ReSource, a company dedicated to transforming how materials are recovered and reused. These agreements diversify end-of-life lithium-ion battery sources, complementing previously executed battery recycling agreements with major original equipment manufacturers (“OEM’s”) such as LG Energy Solution, Volvo Bus, and Hyundai Glovis. 2.2.4 Expansion planning To accommodate expectations of market growth, the business intends to explore deploying growth capital to improve operating efficiencies and expand capacity. The company has appointed advisors to coordinate discussions around partnership and growth funding options, which includes both strategic partners and other financiers. Livium Ltd Page 7 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.3 Lithium Chemicals Division Livium has developed a patented lithium extraction technology (LieNA®) and a entered into a joint development agreement (JDA) with leading ASX-listed mining company Mineral Resources Ltd. (ASX: MIN) (“MinRes”) to commercialise the lithium extraction technology. 2.3.1 Joint development agreement with Mineral Resources During the period, the Company completed activities under the JDA. These activities included the development and operation of a pilot plant, successful refinement of lithium phosphate and completion of a demonstration plant engineering study (“Stage 1 Activities”). The completion of these activities marked a key milestone in the collaborative development of the Company’s patented LieNA® technology. Subsequent to the period, the Company further announced that it has agreed with MinRes the next steps for the commercialisation of the LieNA® technology. Considering current lithium market conditions, Livium and MinRes will undertake additional activities to optimise the development of the LieNA® technology. The additional activities will include an assessment of alternate commercialisation pathways for the LieNA® technology, and the selection of the preferred lithium product for the LieNA® development, including the potential to produce a battery grade lithium carbonate (“Stage 1A Activities”). Stage 1A Activities are fully funded through the remaining balance of MinRes’ convertible note and LieNA® R&D tax incentive rebates. To allow Stage 1A Activities to be completed, MinRes and Livium have executed necessary variations to the JDA including extending the maturity date of the Convertible Note Deed to 30 September 2025, from its original date of 31 January 2025. On successful completion of the Stage 1A Activities, MinRes’ convertible note will convert into equity in a new joint venture (“JV”) between MinRes and Livium, with each holding a 50% interest in the JV entity, LieNA Pty Ltd, which owns the LieNA® technology. LieNA Pty Ltd is currently a wholly owned subsidiary of Livium. If the Stage 1A Activities are not completed successfully and MinRes elects not to convert to equity, then the JV entity will pay MinRes 50% of the value of the LieNA® technology (as agreed or otherwise determined by an expert) as repayment of the purchase price under the convertible note. The JV plans to license the LieNA® technology to third parties at a target headline gross product royalty rate of 8%4. The royalty model materially expands Livium’s addressable market as it has the potential to capture a fee on all tonnage processed via any mine utilising the LieNA® technology. 4 The Company cautions that although it considers this to be a reasonable expectation, there is no guarantee that this rate will be achieved Livium Ltd Page 8 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.4 Battery Materials Division Livium produces critical battery material lithium ferro phosphate (LFP) through its wholly owned subsidiary VSPC Pty Ltd (VSPC). 2.4.1 Pathway to commercialisation During the period, the Company confirmed that is has selected Australia as its preferred location for establishing a demonstration plant, following internal risk assessments and customer engagement. Two key factors of the assessment related to the expected availability of Australian government funding coupled with the requirement to build a larger offshore plant, which introduces higher risks. The proposed development pathway includes the construction of a demonstration plant capable of continuous operation to produce both lithium ferro phosphate, and the emerging lithium manganese ferro phosphate (LMFP). The small-scale demonstration plant is capital efficient and allows sample sizes in line with customer’s product qualification requirements, which will facilitate the securing of binding offtake for VSPC products. With binding offtake expected from this development, the demonstration plant serves as a critical stepping stone toward the establishment of a full-scale production facility with an expected capacity of 25,000 tpa of LFP or LMFP. A 25,000 tpa production facility has the potential to generate annual revenues of ~US$319m, assuming an LFP price of ~US$12.75/kg5. The Company has continued to evolve its VSPC product suite and has recently added new offerings in line with market demand and with the potential for reduced production costs. The demonstration plant will have capability to produce these new product offerings without significant change to the prior designs. Livium’s preferred funding pathway seeks to eliminate reliance on shareholder contributions, whilst maximising value creation for stakeholders. To achieve this the Company is pursuing non-dilutive government funding combined with private strategic partners, who will invest directly into VSPC. Progress has been made to fund the development and operation of the demonstration plant. 5 Avenira Limited (ASX; AEV) Announcement (Scoping Study, 2 March 2023), Ave. LFP Basket Livium Ltd Page 9 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.4.2 Subsequent events • On 3 January 2025, Mr George Bauk resigned as Non-Executive Chair effective 3 January 2025 to pursue a new executive role. Phil Thick was appointed interim Non-Executive Chair on 3 January 2025. • On 8 January 2025, the Group received A$0.76m cash for the research and development (“R&D”) tax incentive rebate from the Australian Tax Office for the 2024 financial year for LieNa Pty Ltd. • On 13 January 2025, the Group announced it had agreed with Mineral Resources Ltd (ASX: MIN) (“MinRes”) the next steps for the commercialisation of the LieNA® technology. The additional Stage 1A activities will be fully funded via the remaining balance of the Convertible Note Deed and LieNA® R&D tax incentive rebates. To allow the Stage 1A Activities to complete, the maturity date of the Convertible Note Deed has been extended to 30 September 2025. • On 15 January 2025, the Group announced it had signed an exclusive recycling agreement with Hithium, a leading global energy storage solutions provider. The agreement commences on 1 January 2025, for an initial term of 3 years and complements other executed battery recycling agreements. • On 28 January 2025, the Group announced a strategic update and cost restructuring plan, with estimated annual ongoing savings of A$1.5m. • On 20 February 2025, the Group announced VSPC has executed an Agreement with the Australian Renewable Energy Agency (ARENA) for non-recourse funding of up to A$30m related to VSPC’s LFP demonstration plant. This grant follows extensive due diligence by ARENA, covers 50% of the estimated funding required to build and complete two years of operation of the LFP demonstration plant. • On 24 February 2025, the Group announced that it has provided notice to conclude the existing Placement Agreement with Lind Global Fund II. Under the terms of the Lind Facility, the Company is required to repay the value of the pre-payment amount (A$2.16m) to Lind, together with exit fees (Repayment). Lind retains the option to subscribe for one third of the Repayment in shares. The Repayment will be partially offset by receipt from Lind for subscription for the advanced shares previously issued to Lind under the Lind Facility. The value of these shares is yet to be determined but are expected to be up to A$650k. • On 24 February 2025, the Group announced it has received firm commitments from existing shareholders, alongside new institutional and sophisticated investors, to raise gross proceeds of A$4.5m. Funds raised from the placement will be used for general working capital including progressing the Australian LFP Demonstration Plant, increasing LIB collections for recycling and to repay the outstanding Lind facility. • On 25 February 2025, the Group announced that it has signed an exclusive recycling agreement with Zeco Energy, a leading sustainable energy solutions provider. The agreement is to provide a range of recycling services for lithium-ion batteries supplied by Zeco Energy. The agreement commences on 19 February 2025, for an initial term of 5 years and complements other executed battery recycling agreements. Livium Ltd Page 10 Financial Report For the Half -Year Ended 31 December 2024 Directors’ Report 2.4.2.1 Fair value of listed investments On 24 February 2025, the increase/(decrease) in share price had the following effect on the fair value of the investments held: Fair Value of Listed Investments Investment Share Price at 31 December 2024 Share Price at 24 February 2025 Increase / (Decrease) in Share Price Number of Shares Held* Increase / (Decrease) in Fair Value Core Lithium (ASX: CXO) $0.089 $0.086 ($0.003) - - Evion Group (ASX: EVG) $0.027 $0.023 ($0.004) 2,500,000 ($10,000) ($10,000) * Subsequent to the period, the Company disposed of the balance of its holding of Core Lithium shares (4,230,000) at a price of A$0.10/Share. Subsequent to the period, the Company disposed of the 2,000,000 Evion Group shares at a price of A$0.022/Share. There are no other events subsequent to 31 December 2024 and up to the date of this report that would materially affect the results of those operations of the Group or its state of affairs which have not otherwise been disclosed in this financial report. 2.5 Auditor’s independence declaration Section 307C of the Corporations Act 2001 requires our auditors, Hall Chadwick, to provide the Directors of the Group with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 12 and forms part of this directors’ report for the half-year ended 31 December 2024. This report is made in accordance with a resolution of the Directors. Phil Thick Non-executive Chair Dated at Melbourne this 25th day of February 2025 Livium Ltd Page 11 To the Board of Directors, AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 As lead audit Director for the review of the financial statements of Livium Limited and its controlled entities for the half year ended 31 December 2024, I declare that to the best of my knowledge and belief, there have been no contraventions of: • the auditor independence requirements of the Corporations Act 2001 in relation to the review; and • any applicable code of professional conduct in relation to the review. Yours Faithfully, HALL CHADWICK WA AUDIT PTY LTD Dated this 25th day of February 2025 Perth, Western Australia MARK DELAURENTIS CA Director Financial Report For the Half -Year Ended 31 December 2024 Condensed Consolidated Statement of Comprehensive Income for the Half-Year Ended 31 December 2024 Condensed Consolidated Statement of Comprehensive Income for the Half-Year Ended 31 December 2024 Half-Year December 2024 Half-Year December 2023 $ $ Revenue from continuing operations 3,763,685 2,584,792 Cost of sales (1,467,488) (2,360,206) Gross profit / (loss) 2,296,197 224,586 Condensed Consolidated Statement of Comprehensive Income Note Finance income Other income Note 2 Laboratory/plant expense Employee benefits expense Note 4 59,273 36,894 2,388,590 2,215,378 (