European Lithium Ltd

("European Lithium", "EUR" or "the Company")

Winance Convertible Notes

On 31 July 2019 European Lithium Limited (Company) announced a $10 million funding facility with Winance Investment LLC. The Company has elected to draw down on this facility and following this notice will issue 2,000 convertible notes (each with a face value of $1,000) (Convertible Notes) to Winance Investment LLC. 

Effect of the issue of the Convertible Note on the Company

The Convertible Notes were issued under a convertible security agreement (Agreement) with Winance Investment LLC (Winance) announced to ASX on 31 July 2019 under which Winance will subscribe for convertible securities issued by the Company with a total face value of up to A$10 million (Convertible Notes) over the term of the facility.

Funds raised under the Agreement will be used to repay the residual amount owing to MEF I, L.P. (Magna ), to fast-track the completion of a DFS at the Company's Wolfsberg Lithium Project in Austria and for general working capital purposes.

The facility is available through the issue of convertible securities in the Company.  An initial amount of A$2.0m is available for immediate drawdown, with this to occur at the Company's election prior to 31 October 2019.  Further drawdowns of $1,000,000 each are available upon full conversion of the notes from the previous drawdown, subject to a cooling off period.

The principle effects of the issue are to:

(a)        increase the Company's cash reserves by $1,840,000 (after costs);

(b)       increase the number of convertible notes on issue by 2,000;

(c)        increase the Company's indebtedness by $2,000,000;

(d)       in the event the Convertible Notes are converted, increase the number of fully paid ordinary shares on issue by that number determined by the then prevailing share price, with maximum number of 36,363,636 Shares issued.

The Company's capital structure following the issue will be as follows:

The number of Shares to be issued on conversion is determined by the then prevailing price at which Shares trade on ASX.  The maximum number of Shares that can be issued upon conversion is 36,363,636, assuming conversion at the floor price of $0.055.

Rights and liabilities attaching to Convertible Notes

The material terms of the Convertible Notes are as follows:

Rights and liabilities attaching to new Shares

Shares issued on conversion of Convertible Notes will be fully paid ordinary shares (Shares) and will rank equally in all respects with all of the Company's then existing ordinary shares on issue. 

Full details of the rights and liabilities attaching to the Shares are:

•           detailed in the Company's constitution (Constitution), a copy of which can be inspected, free of charge, at the registered office of the Company during normal business hours; and

•           in certain circumstances, regulated by the Act, the ASX Listing Rules and the general law.

The following is a summary of the more significant rights and liabilities attaching to the Shares.  This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of holders of Shares.  To obtain such a statement, persons should seek independent legal advice.

(a)        Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting of members every member has one vote on a show of hands and one vote per Share on a poll.  Voting may be in person or by proxy, attorney or representative.

(b)        Dividends

Subject to the rights of holders of shares issued with any special rights (at present there are none), the profits of the Company which the Company's board may from time to time determine to distribute by way of dividend are divisible to each share of a class on which the Company's board resolves to pay a dividend in proportion to the amount for the time being paid on a share bears to the total issue price of the share.  All Shares currently on issue and the shares to be issued under this Prospectus are fully paid Shares.

(c)        Future issues of securities

Subject to the Corporations Act and the Listing Rules, the Directors may issue, grant options over, or otherwise dispose of unissued shares in the Company at the times and on the terms that the Directors think proper and a share may be issued with preferential or special rights.

(d)        Transfer of Shares

A shareholder may transfer Shares by a market transfer in accordance with any computerised or electronic system established or recognised by ASX for the purpose of facilitating transfers in Shares or by an instrument in writing in a form approved by ASX or the Company's board.

(e)        Meetings and notices

Each shareholder is entitled to receive notice of, and to attend, general meetings for the Company and to receive all notices, accounts and other documents required to be sent to shareholders under the Constitution, the Corporations Act or the Listing Rules.

Shareholders may requisition meetings in accordance with the Corporations Act.

(f)        Liquidation rights

The Company has one class of shares on issue, ordinary shares. Each ordinary Share ranks equally in the event of liquidation.

(g)        Variation of rights

Subject to the Listing Rules, the rights attached to the Shares may be varied with the consent in writing of shareholders holding three-quarters of the Shares or by a special resolution passed at a separate meeting of the holders of the Shares in accordance with the Corporations Act

(h)        Election of directors

There must be a minimum of 3 Directors.  At every annual general meeting one third of the Directors (rounded to the nearest whole number) must retire from office. Any Director who would have held office for more than 3 years if that Director remains in office until the next general meeting must retire. These retirement rules do not apply to certain appointments including the managing director.

(i)         Indemnities

To the extent permitted by law the Company must indemnify each past and present Director and secretary against any liability incurred by that person as an officer of the Company and any legal costs incurred in defending an action in respect of such liability.

(j)        Winding up

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, on a winding up of the Company any surplus must be divided among the shareholders of the Company.

(k)        Shareholder liability

As the Shares under the Prospectus are fully paid Shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(l)         Alteration to the Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of shareholders present and voting at the general meeting. At least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

(m)       Listing Rules

If the Company is admitted to trading on the Official List, then despite anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision and it does not contain such a provision, the Constitution is deemed to contain that provision. If the Listing Rules require the Constitution not to contain a provision and it contains such a provision, the Constitution is deemed not to contain that provision. If a provision of the Constitution is inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

The full ASX announcement can be seen at: https://www.asx.com.au/asx/share-price-research/company/EUR

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The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014

Visit the Company's website to find out more about the advanced Wolfsberg Lithium Project located in Austria.

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