initial research report (by rb milestone group) (july 20, 2016)
TRANSCRIPT
Zadar Ventures Limited
Zadar Ventures Limited
(OTCQB: ZADDF, TSXV: ZAD)
July 20, 2016
Global Green Energy Prospects to Benefit Zadar
Zadar Ventures (OTCQB:ZADDF, TSXV:ZAD) (“Zadar” or the “Company”) is a
Canadian exploration and development company. Zadar owns multiple assets across
the lithium and uranium space. The Company is currently focused on exploration of
lithium-enriched brines at its two lithium projects located in Clayton Valley, in
Nevada, USA. The Company’s strategic plans involve processing lithium into in-
demand battery grade chemicals. The Company has secured over 750 hectares of
placer claims in Clayton Valley, which are adjacent to the only active lithium mine in
North America (operated by a global lithium producer). Further, Zadar has recently
signed a Memorandum of Understanding (“MoU”) with Macarthur Minerals Limited
(TSX-V: MMS) (“Macarthur Minerals”) for entering into a Farm-In-Agreement (“FIA”)
at Macarthur Minerals’ Ravensthorpe lithium acreage, in the Ravensthorpe region of
South Western Australia, close to other ongoing major lithium projects. Zadar also
owns seven uranium projects in the Athabasca Basin in Saskatchewan, Canada. The
Basin is host to numerous uranium mining operations that have been producing high
grade uranium for the nuclear energy industry for decades. Diverse mineral bases at
strategic locations uniquely position the Company in the lithium and uranium space.
Investment Rationale
Strategic location of US lithium claims could help in inking a supply agreement
Zadar Ventures has two active lithium projects in Clayton Valley, which is located
only about 250 miles from Tesla’s Gigafactory. The Gigafactory has a planned
production of up to 500,000 lithium ion batteries per year by 2020. Tesla is in need of
large quantities of lithium to produce batteries. The Company’s close proximity to
Tesla’s new battery making facility may enable the Company to enter in a supply
agreement that could provide tremendous upside to the Company’s future prospects.
Further, Nevada’s favorable business environment for mining and exploration
companies should continue to help Zadar in its operations.
High-grade prospective mineralization should benefit Zadar
As per the United States Geological Survey (USGS), Clayton Valley in Nevada is
host to the best-known reserves of high-grade lithium rich brines. Preliminary drilling
carried out at one of Zadar’s project areas by the USGS estimated 55 parts per
million lithium content from the analyzed water samples. The presence of such high
lithium concentrations in basin-hosted brines along with successful and on-going
extraction of lithium at neighboring projects raises the Company’s future development
and commercialization prospects.
Macarthur Minerals partnership bodes well for Zadar's growth plans
On 12 July, 2016, Zadar entered into a MoU with Macarthur Minerals for entering into
a Farm-in Agreement (“FIA”) for lithium exploration on Macarthur Minerals’
Ravensthorpe acreage (subject to due diligence). The Ravensthorpe acreage
comprises two exploration license applications, covering an area of 91 square
kilometers. Most promisingly, at its closest point, the Ravensthorpe acreage, is only
approximately 7 kilometers from the Mount Cattlin Lithium Project, which is currently
mining and processing spodumene (source of lithium) with full capacity production of
approximately 137,000 tonnes, in addition to 56,000 lbs of contained tantalum. Such
partnerships should help expand Zadar's geographic reach and revenue potential.
Qualified Management Team
The management team, led by Mr. Paul D. Gray President & CEO of the Company,
is highly experienced to lead the Company to successful exploration and
Price (as of July 19, 2016): $0.15
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Source: Yahoo! Finance
Recent News
19-Jul-16: Completes detailed gravity survey at WSP lithium project. Results of gravity survey will be used to prioritize locations for exploration.
12-Jul-16: Zadar enters into MoU with Macarthur Minerals to farm its Ravensthorpe Lithium project in South Western Australia, approximately seven kilometers from the Mount Cattlin Lithium Project.
07-Jul-16: Begins detailed gravity survey at WSP lithium project.
22-Jun-16: Zadar starts geophysical survey and diamond drilling at its two projects in Clayton Valley.
15-Jun-16: Senior hydro geologist, Mr. Thomas Freehan joins Zadar's advisory board.
13-Jun-16: Zadar releases an update on its uranium projects, prioritizing its Passfield Lake Project as most compelling among its uranium projects.
07-Jun-16: Zadar commences trading on OTCQB Venture market under symbol ZADDF.
03-May-16: Zadar completes $0.7 million financing and meets requirements of two lithium project financings.
03-Mar-16: Zadar inks deal with GeoXplor Corp to buy stake in two lithium projects situated in Clayton Valley.
Shares Outstanding: 65.45 million
Market Cap: $14.5 million
52 Week (Low-High): $0.01 - $0.26
Note: All $ symbol represents Canadian Dollars
(CAD), unless otherwise specified.
www.RBMILESTONE.com
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Zadar Ventures Limited
commercialization of its lithium and uranium projects. The management team has 100 plus years of combined experience in the
mining and exploration industry with experienced investment advisors from Canada. The Zadar team also has an established
track record of identifying, funding and mining development projects in Canada and the US. Mr. Gray has more than 20 years of
extensive experience in handling exploration and development of uranium and precious metals mining projects. Further, senior
management has more than 22 years of successful experience in raising funds. They have also designed and supervised
quality assured successful ground and airborne geophysical surveys for uranium and many other commodities.
Compelling Lithium Market Dynamics enhances revenue potential
Demand for lithium is growing significantly, driven by its numerous applications in batteries, metals, ceramic/glass, polymers,
grease, air treatment, and others. Batteries are expected to play a vital role in the growth of lithium demand. This has led to an
exponential increase in demand from energy storage in transportation, grid storage and consumer electronics. Battery grade
lithium hydroxide (LiOH) traded at an average price of US$8,000 per ton in 2015, a 20% increase as compared to 2014. In
addition, the scheduled introduction of new model electric vehicles by numerous automakers will play an important role in driving
the demand for lithium. According to the International Energy Agency (IEA), global sales of electric vehicles sales increased at a
CAGR of 170% from 2010 to 2014 and are further estimated to grow at a CAGR of 77% till 2020. An existing supply deficit along
with an increasing demand scenario should lead to a short-term increase in lithium prices. This situation will undoubtedly benefit
lithium suppliers like Zadar.
Bottoming Uranium prices should result in recommencement of exploration activity
Uranium prices have been on a downward trend since the Fukushima nuclear accident in 2011. This was largely due to Japan’s
decision to shut down its nuclear energy program that led to a negative sentiment regarding uranium demand. Since 2011, the
price of uranium has been trading at approximately US$40 per pound. In the first half of 2016, the price fell below US$40 per
pound and is currently trading at US$26.65. Prolonged low uranium prices have led to numerous uranium producers reducing or
closing down exploration activities. However, the current price trend should reverse as the demand from nuclear energy
producers is estimated to increase. This increase is largely a factor of rising demand for electricity and several new nuclear
plants being constructed around the globe. Further, a large supply deficit and falling uranium stockpiles is expected to support
higher uranium prices. This trend should benefit uranium explorers such as Zadar and enable them to commence full-fledged
exploration.
Company Overview
Zadar Ventures is currently exploring and developing two lithium and five uranium projects across the Clayton Valley in the US
and Athabasca Basin in Canada, respectively. The Company plans to focus on its lithium projects due to favorable industry
prospects, primarily from lithium-ion batteries and an upward swing in lithium prices. We now present each project in detail
highlighting its feasibility, current status and mineralization, followed by a quick overview of the recent Macarthur Minerals’
Ravensthorpe MOU arrangement. We conclude this section with details on Zadar's uranium projects.
Key Lithium Projects (Clayton Valley) The Company operates two lithium projects WSP Placer Claims and CR Claims in Clayton Valley, Nevada, USA. Exhibit 1
displays the location of the Company’s lithium projects relative to the neighboring projects.
Exhibit 1: Zadar’s lithium projects location in Clayton Valley
Source: Company website
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Zadar Ventures Limited
Clayton Valley represents an internally drained, closed-basin with mountains, hills and ridges on all four sides. The valley is
comprised of Tertiary aged volcanic rocks that are interpreted to be the primary source for the lithium within the system. The
lithium, in solution, migrates from these Tertiary volcanics to the closed Clayton Valley Basin where lithium concentrates within
the confined in the aquifer of the Basin. Exhibit 2 displays a graphical representation of the working of an aquifer system.
Exhibit 2: Graphical representation of an aquifer system
Source: http://www.lgam.info/aquifer
WSP Project
On March 3, 2016, Zadar entered into an agreement with GeoXplor Corp. to acquire the WSP Placer Claims and CR Placer
Claims. The terms of the agreement are also given in detail below, after we discuss CR Claims. WSP Placer Claims are located
in the northern part of Clayton Valley, adjacent to the Albermarle Silver Peak mine complex, which is North America’s only
lithium production operation. The WSP Claims covers 425 hectares and are known to host to brines with an elevated
concentration of lithium. In 1986, the United States Geological Survey (USGS) drilled a 600 meter test hole just east of the
property and identified lithium concentration of up to 55 parts per million in the analyzed water sample.
Preliminary Economic Study
The Company plans to undertake a preliminary study in the near future. The project is expected to be commercially viable as the
neighboring Silver Peaks project has been successfully in extracting lithium from the brines present in Clayton Valley. Further,
other neighboring operations such as Pure Energy Minerals (TSXV: RE, OTCQB: HMGLF) have conducted pumping tests that
have shown the sustainability of extracting lithium from brine at their locations.
Current Status & Future Strategy
On July 7, 2016, Zadar completed detailed gravity survey on the WSP Claims to adequately define the basin shape and target
depths, which was according to their plan. The gravity survey on the WSP claim was conducted by Hasbrouck Geophysics, Inc.
from June 12 to June 23, 2016. A LaCoste & Romberg Model G gravity meter was used over entire WSP Claims, which
identified a total of 126 gravity station. The data was collected along 14 lines which were divided by 250 meters, at an interval of
125 and 250 meters. Currently, a bedrock depth modeling is under process on the WSP Claims. Further, the Company will start
exploration process depending upon the results obtained from the gravity survey. The Company’s future plans involve the
development of the WSP Claims by defining lithium brine host layers and implementing systematic extraction thereon.
CR Project As mentioned above, on March 3, 2016, the Company entered into an agreement with GeoXplor Corp to acquire the project.
The CR Claims are located in the eastern part of Clayton Valley, 18 kilometers southwest of the Rockwood Lithium Mine and
Processing Plant in Esmeralda Country, Nevada. The project covers over 330 hectares of an undrilled basin. Initial exploration
shows that the project is a potential host to brine, which is similar to lithium brine found at other Clayton Valley locations.
Preliminary Economic Study
Similar to WSP Placer Claims, the Company has planned to undertake feasibility studies in the near future. The project’s
proximity to the commercially successful neighboring projects raises the probability of its viability.
Current Project Status and Future Strategy
CR Claims project area has been the subject to initial gravity surveys that shows the features of an existing, isolated basin,
which has the potential to host lithium brines. The Company plans to undertake additional gravity survey and follow it up with
extensive drilling. Finally, the Company plans to test the presence of lithium concentrations from the brine solution samples
collected from the drill holes.
Terms of agreement with GeoXplor Corp. to acquire WSP and CR Placer Claims
Exhibit 3 presents the payment milestones and its status that provides the Company the option to earn 100% ownership in the
43 unpatented placer claims (WSP and CR Placer Claims).
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Zadar Ventures Limited
Exhibit 3: Zadar’s terms of agreement to acquire WSP and CR Placer Claims
Milestone Status
Pay US$50,000 on the effective date Completed
Issue 1,000,000 common shares on TSX.V approval Completed
Pay US$50,000 on or before March 25, 2016 Completed
Issue 1,000,000 common shares on each of the first four anniversaries of the effective date Pending
Pay US$75,000 on each of the first and second anniversaries of the effective date Pending
Pay US$100,000 on each of the third and fourth anniversaries of the effective date Pending Source: Company Website
Further, the Company is required to make exploration expenditures of US$0.2 million in year one, US$0.3 million in year two,
US$1 million in year three and finally US$1 million in year four. After the fifth anniversary of the effective date, Zadar shall pay
advanced royalties of US$0.1 million annually.
The agreement also states that upon completion of an inferred resource calculation and confirmation of the presence of a
minimum of 0.1 million tons of lithium carbonate equivalent at an average grade of 28 parts per million, at either of the projects,
then the Company shall pay GeoXplor US$1 million in cash or shares or a combination thereof. Further, upon completion of an
economic study on either of the properties, the Company shall pay GeoXplor US$2 million in cash or shares or a combination
thereof. GeoXplor will also maintain a 3% gross value royalty return, of which 2% can be purchased by Zadar at any time for
US$5 million.
Ravensthorpe lithium acreage (MoU with Macarthur Minerals)
On July 12, 2016, Zadar signed binding a Memorandum of Understanding (MoU) with Macarthur Minerals Limited’s (TSX-V:
MMS) subsidiary, Macarthur Lithium Pty Ltd for entering into a Farm-in Agreement (“FIA”) for lithium exploration on Macarthur
Minerals’ Ravensthorpe acreage. Zadar will conduct due diligence within three months to confirm the presence of lithium in the
Ravensthorpe acreage, before entering into the FIA. The Ravensthorpe lithium acreage covers around 91 square kilometers
and is located in the Ravensthorpe region in South Western Australia. The Ravensthorpe lithium acreage is about seven
kilometers from the Mount Cattlin Lithium Project, owned by Galaxy Resources Limited (ASX: GXY). The Mount Cattlin Lithium
Project has an expected full capacity of about 137,000 tonnes per year of lithium production, in addition to 56,000 lbs. of
tantalum. Currently, the lithium acreage consist two exploration license applications, namely, E74/587 and E74/588, as shown in
Exhibit 4. We remind the reader that pegmatite often contain rare earth minerals, in addition to being the primary source of
lithium, either as psodumene, lithiophyllite or lepidolite.
EL74/588 is situated near the margin between the Yilgarn Craton granites and the South-West Terrane greenstone (which is
intruded by numerous pegmatites, feldspar dykes, quartz veins and dolerite dykes) and Annabelle Volcanics to the south west
and the Youanmi Terrane greenstones to the north. Pegmatites are also known immediately south of the south-western portion
of the tenement.
E74/587 is positioned primarily on the Annabelle Volcanics (consisting mostly of metamorphosed basalt and pyroclastic tuff).
The area is also adjacent to the Manyutup Tonalite, which is located in the same setting as the well-explored Mount Cattlin
Lithium Project (ten kilometers to the north-east). Exhibit 4 shows that a large pegmatite is mapped on the exploration license
application and extends for almost half its length.
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Zadar Ventures Limited
Exhibit 4: Location of Ravensthorpe lithium acreage’s two exploration regions
Source: Company Website
Terms of MoU with Macarthur Minerals to Ravensthorpe acreage
Zadar will initially earn into a 51% stake in Ravensthorpe lithium acreage by spending AUD 2 million, within two years
after they receive the Ravensthorpe exploration license.
Zadar can also acquire an additional stake of 24% taking its total interest on the Ravensthorpe acreage to 75% after a
NI43-101 Preliminary Economic Assessment (“PEA”) is completed within three years of receiving the Ravensthorpe
exploration license.
Macarthur Minerals will manage the lithium exploration program on the Ravensthorpe acreage. Macarthur Mineral will
be paid project management fee of 15% of the total costs until Zadar completes a positive PEA report.
Macarthur Lithium will have a free carried interest of not less than 25% throughout the period of the FIA
Zadar will have the first right to offer to purchase Macarthur Lithium’s 25% share of Ravensthorpe acreage
Additionally, if Zadar fails to complete a positive PEA, a joint venture would be formed between Zadar and Macarthur
Lithium. Zadar will then have 51% interest the Ravensthorpe acreage and Macarthur Lithium will have 49% stake,
while maintaining a 25% free carried interest (effectively only contributing to 24% of expenditures).
Uranium Projects Zadar Ventures holds 64,735 hectares of high potential uranium projects located in Athabasca Basin. This basin is located in the
Northern Saskatchewan and Alberta provinces in Canada. The Company’s uranium projects are adjoining major existing
uranium projects such as Cigar Lake Mine, Key Lake Mine, McClean Lake Mine, Fission Uranium Mine and Rook Mine, which
are run by established companies such as Cameco Corp., Uranium Participation Corp. and Areva Resources. Athabasca Basin
is known for its high-grade uranium deposits and currently supplies approximately 20% of the world’s uranium. Currently, the
most important mine is the McArthur River Mine, which has the world’s largest deposits of high-grade uranium. According to
Rockstone Research, Athabasca Basin’s uranium deposits grades are 20 times higher averaging at 2% as compared to the
global average grade of 0.14%. Exhibit 5 displays the various mines located in the Athabasca Basin.
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Zadar Ventures Limited
Exhibit 5: Various uranium projects in the Athabasca Basin
Source: Company filings
Exhibit 6 presents the various uranium projects area and ownership on each of the projects.
Exhibit 6: Ownership and area of uranium projects
Source: Company filings
Passfield Lake Project
The Passfield Lake project, which covers 27,505 hectares, is located on the Passfield structure in the Athabasca Basin, SK. It is
located on a major regional shear zone, which has shown strong surface geochemical anomalies along with the presence of
highly altered and radioactive rocks.
The Passfield Lake Project has seen advanced exploration activities such as lake sediment sampling, soil and biogeochemical
sampling, airborne electromagnetic and gravity surveys, as well as targeted diamond drilling since project development in the
mid 2000’s. Initial diamond drilling and exploration activity has identified presence of uranium within the project area. Further,
soil and bio-geochemical surveys indicated the presence of boron, lead, molybdenum, vanadium and arsenic. Zadar expects to
conduct additional diamond drilling to follow-up the successful drilling campaigns of the late 2000’s towards definition of the
uranium mineralization and ultimately prepare a resource estimate. Exhibit 7 displays the location of the Company’s Passfield
Lake projects.
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Zadar Ventures Limited
Exhibit 7: Zadar’s Passfield Lake project (an extract from Exhibit 5)
Source: Company filings
Current Project Status and Future Strategy
On July 31, 2015, the Company wrote off $10,000 on the Passfield Lake project. The Company has currently reduced its
exploration expenditures due to the global economic slowdown. However, the Company has expressed confidence in project’s
long-term worth and should continue to carry out exploration activities once uranium prices rebound.
Terms of Agreement
On September 25, 2013, the Company entered into an agreement with Canterra Minerals Corporation, Triex Minerals Corp and
Thelon Capital to acquire a 100% interest in the mineral claims located in the Athabasca Basin, Canada. Total consideration
stood at $25,000 million in cash and 1.74 million shares. During 2014, the Company paid additional fees of $50,000 to extend
the option period along with a finder’s fee of $6,000. The vendor will retain a Net Smelter Return (NSR) of 2% out of which the
Company has the option to purchase 1% of the NSR for $1 million.
West Carswell Project
The West Carswell Project is located in the Western part of the Carswell Structure and covers approximately 8,157 hectares.
Exhibit 8 displays the location of West Carswell project. The Carswell Structure is considered to be a meteorite impact site. The
project’s neighboring areas such as Shea Creek and Harrison Shear Zone show presence of high-grade uranium deposits. The
Shea Creek is located outside Carswell Structure and is the third largest uranium deposit in the Athabasca Basin. Meanwhile,
the Company has conducted electromagnetic and geophysical surveys in the project area, which has shown strong presence of
uranium deposits. Presence of uranium deposits in the neighboring zones further increases the probability of presence of high-
grade uranium deposits at West Carswell.
Exhibit 8: Zadar’s West Carswell project location
Source: Company filings
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Zadar Ventures Limited
Current Project Status and Future Strategy
On July 31, 2015, the Company wrote off $10,000 as impairment to the West Carswell property. Similar to the Passfield Lake
Project, the Company has reduced activity in this project also owing to global economic slowdown.
Terms of Agreement
On December 17, 2013, the Company entered into an agreement with Canterra Minerals Corporation and Triex Minerals Corp
to acquire a 100% interest in certain mineral claims located in the Athabasca Basin, Saskatchewan by issuing 385,000 common
shares. Further, the vendor will keep a NSR of 2%, out of which the Company may purchase 1% for $1 million.
Riverlake Project
The Riverlake project covers approximately 5,583 hectares located in the Athabasca Basin. The project is considered to have
similar geology as the Key Lake mine, which remains as one of the high-grade deposits ever discovered (average grade of over
2% uranium). Historical exploration involves airborne and ground electromagnetic surveys and soil sampling. At the Riverlake
property, the Company identified a 1,200 meter long-600 meter wide anomaly with uranium values peaking at 3.74 parts per
million. Further, the Company also discovered the presence of arsenic, molybdenum, vanadium and lead.
Exhibit 9: Zadar’s Riverlake projects (an extract from Exhibit 5)
Source: Company filings
Current Project Status and Future Strategy
Currently, the Company has suspended all exploration and development activities at the Riverlake project due to unfavorable
market conditions. However, the Company plans to undertake additional exploration and development of the project once
uranium prices rebound.
Terms of Agreement
On November 21, 2013, the Company entered into an agreement with Canterra Minerals Corporation, Triex Minerals Corp and
African Oil Corp to acquire a 100% interest in the projects mineral claims located in the Athabasca Basin by issuing 0.33 million
shares. The vendor will be entitled to 2% NSR, out of which the Company has the option to purchase 1% of the NSR for $1
million.
Upper Poulton Lake Project
The Upper Poulton Lake project covers approximately 2,730 hectares and lies 21 kilometers southeast of Cigar Mine project,
which is the second largest high-grade uranium deposit in the world. The Company has not conducted any significant
exploration activity in the project. Historically, drilling has focused on the neighboring Bird Lake Fault. Drilling activity has shown
the presence of two and a half kilometers wide uranium and lead enriched boulder that partly covers the trace of the fault.
Future explorations target the clear determination of a series of electromagnetic anomalies that were identified through an
airborne survey conducted by the previous project owners’ in 2004. Further, drilling conducted by Cameco revealed the
evidence of hydrothermal alteration that is associated with the presence of uranium.
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Zadar Ventures Limited
Exhibit 10: Zadar’s Upper Poulton location and neighboring mines (an extract from Exhibit 5)
Source: Company filings
Terms of Agreement
On April 15, 2014, the Company entered into an agreement with an arm’s length vendor to acquire a 100% interest in the Upper
Poulton Lake Property located in Saskatchewan, Canada. Exhibit 11 shows the terms of agreement with the vendor.
Exhibit 11: Terms of agreement to acquire 100% interest in Upper Poulton
Milestone Status
Pay $10,000 non -refundable due diligence deposit Completed
Pay $40,000 and issue 100,000 shares by April 30, 2013 Complete
Pay $50,000 by January 18,2004 Complete
Issue 550,000 shares by April 10, 2014 Complete
Pay $75,000 by April 10, 2015 Complete
Pay $50,000 and issue 250,000 shares by April 10,2016 Complete
Spend a minimum of $2 million in exploration expenditure by April 10, 2017
Complete
Source: Company filings
The vendor will also be entitled to a 1% NSR, out of which the Company has the option purchase 0.5% of the NSR for $1
million.
Current Project Status and Future Strategy
During the fiscal year 2015, Zadar’s interest in Upper Poulton Lake project lapsed. Since, the Company did not meet the terms
of agreement they do not hold the property. However, the Company stated that it began negotiating settlement terms with the
arm’s length vendor. All the capitalized costs associated with the property were written off.
Whiskey Gap Project
The Whiskey Gap Property lies along the Alberta Montana border and consists of two metallic mineral permits, each containing
an area of approximately 36 square miles. The property is to host significant uranium deposits similar to that of uranium ore
bodies found in South Texas and Wyoming. In the past, the Company conducted preliminary sampling of water sources, which
indicated strong presence of uranium. Zadar also undertook extensive exploration and drilling activity. In 2011, the Company
released a technical report highlighting the results of the exploration actives, which were positive.
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Exhibit 12: Whiskey Gap project location
Source: Company filings
Current Project Status and Future Strategy
The Company entered into an agreement with Albert Limited on April 29, 2010 to acquire 60% of the Whiskey Gap property.
The terms of agreement are shown in Exhibit 13.
Exhibit 13: Terms of Agreement with Albert Limited to acquire 60% interest in the Whiskey Gap project
Milestone Status
Pay $12,500 and issue and allot 100,000 shares of the Company Completed
Pay $12,500 and issue and allot 200,000 shares of the Company on or before first anniversary of the effective date Completed
Pay $25,000 and issue 300,000 shares of the Company on or before second anniversary of the effective date Completed
Pay $100,000 by September 30, 2010 on exploration expenditure on the property Completed
Pay $100,000 by June 30, 2012 Completed
Pay $50,000 and allot 500,000 shares by December 31, 2012 Completed
Source: Company filings
Further, Zadar stated that it had the option to acquire the remaining 40% in the property by paying an additional $100,000 to the
vendor and issuing 1 million shares by September 30, 2016. The Company on July 31, 2015 decided to write off $10,000 as an
asset impairment cost and halted exploration activity in the property due to unfavorable market conditions.
Abandoned Project
In the year 2015, the Company returned the Bullrun property to the vendor without penalty. Similarly, in 2015, Zadar abandoned
Bullrun Blocks D and E. Further, in 2015, the Company abandoned the Patterson Northeast Property and allowed its interest in
the Stone Road claims to lapse. All capital costs associated with these properties were written off during the year ended 2015.
Zadar Ventures Limited
Company Timeline and Key Events
Exhibit 14 below shows the reverse chronological timeline of the evolution of Zadar Ventures, summarizing some key annual
events for the Company since 2011.
Exhibit 14: Timeline summarizing significant annual events since 2011
Dates Events
12-Jul-16 Zadar Ventures and Macarthur Lithium Pty Ltd signed a Memorandum of Understanding (MoU) for entering into Farm-in-Agreement (FIA) for lithium exploration on Macarthur’s Ravensthorpe acreage
07-Jul-16 Completed detailed gravity survey on WSP lithium project, to help prioritize lithium explorations
22-Jun-16 Zadar Ventures started geophysical survey and diamond drilling on two lithium projects in Clayton Valley
13-Jun-16 Zadar Ventures released an update of its uranium project portfolio indicating that its Pasfield Lake project has best potential among its uranium projects
07-Jun-16 Started trading on the OTCQB Venture market under symbol ZADDF
03-May-16 Completed $0.7 million financing and met purchase obligations of two lithium projects in Clayton Valley
03-Mar-16 Entered into an agreement with GeoXplor Corp to acquire two lithium projects in the Clayton Valley
07-Jan-16 Completed $0.235 million financing that allowed the Company to proceed with its current development plans
21-Sep-15 Appointed Ms. Yana Bobrovskaya to the Board of Directors. Ms. Bobrovskaya has over ten years of international business experience and has served on the board of several publicly listed companies.
27-Feb-14 Announced an incentive stock option plan for its directors, officers and employees
28-Jan-14 Completed a $2 million financing consisting of 0.93 million shares
19-Dec-13 Entered in an agreement with Canterra Minerals Corporation and Triex Minerals Corp to purchase 100% interest in West Carswell uranium project
27-Nov-13 Entered in an agreement with Canterra Minerals Corporation, Triex Minerals Corp and Magnum Uranium Corp to purchase Stony Road uranium projects
20-Nov-13 Entered into an agreement with Canterra Minerals Corporation, Triex Minerals Corp and African Oil Corp to purchase Highrock and Riverlake Uranium projects
18-Nov-13 Raised $2 million by issuing 10 million shares at $0.2 per share
22-Oct-13 Announced completion of Phase II program on Patterson Northeast Uranium (PNE)
09-Oct-13 Received acceptance letter from TSX Venture Exchange for purchase of Passfield Lake Uranium Project
17-Sep-13 Arranged a non-broker private placement to raise up to $2 million by issuing 10 million shares at $0.2 per share
26-Sep-13 Entered in an agreement with Canterra Minerals Corporation, Triex Minerals Corp and Thelon Capital to purchase Passfield Lake Uranium Project
11-Sep-13 Discovered radioactive boulders in Phase I exploration program in the Company's PNE uranium project and initiated follow-up phase II exploration program
29-May-13 Entered in an agreement with Canterra Minerals Corporation and Triex Minerals Corp to purchase all of the Canterra/Triex interest in five strategically located uranium project with substantial data package
16-May-13 Entered agreement with vendor to acquire a 100% stake in PNE project
24-Apr-13 Zadar Ventures entered in an option agreement with Geomode Mineral Exploration Ltd for material change
17-Apr-13 Entered a deal with vendor to purchase Bull Run Uranium Project in Patterson Lake Area which consisted of three claims
09-Apr-13 Zadar Ventures inked deal with vendor to acquire Upper Poulton Lake Uranium Project by paying $0.1 million cash and issuing 0.9 million shares
29-Jun-12 Announced terms of agreement with Alberta Limited for acquisition of Whiskey Gap Property
28-May-12 Completed initial public offering by offering 2.2 million shares for gross proceeds of $550,000
19-Sep-11 Entered an agreement with Bua Capital and Jason Walsh for drilling operations
19-Sep-11 Released technical report for Whiskey Gap Uranium Project
Source: Company filings
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Industry Overview
Over the past two decades, new applications of lithium have been found, resulting in the transformation of the lithium industry.
Currently, lithium is produced from two sources, lithium enriched brines and lithium bearing minerals. Despite multiple
applications and uses, growing demand from the Electric Vehicles (“EV”) and Energy Storage Solutions (“ESS”) market is
expected to continue to significantly drive the demand and pricing for lithium chemicals.
We now present a detailed description of the lithium industry’s dynamics and its future direction.
Lithium prices could stabilize in 2017 & beyond
As seen in Exhibit 15, since 2014, the prices of lithium carbonate has increased rapidly. The primary reason for the price rise is
the demand-supply imbalance. There is a high demand for lithium globally due to its newly discovered applications in the EV
and ESS markets. Further, demand for lithium from traditional markets (electronics, ceramics, medical, glass, etc.) has
remained constant. The supply side of the market has been late to respond to this rising demand and existing brine operators
have not been able to not ramp up production quickly.
However, the rise in prices and unmet demand has led to the entry of new players. Large projects around the globe with
capacities greater than 20 tons per annum are expected to come online by 2016, which could lead to supply-demand
rebalancing in 2017. This should lead to lithium prices stabilizing over the next three years.
Exhibit 15: Promising lithium market dynamics should benefit Zadar
-
5,000
10,000
15,000
20,000
25,000
-
100,000
200,000
300,000
400,000
500,000
600,000
2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F
Prices (
US
$ p
er
ton)
Dem
and &
Supply
(in
tons)
Global supply Global demand Lithium carbonate - 99.5% prices Lithium hydroxide prices Lithium carbonate - 98.5% prices
Source: Deutsche Bank Market Research
Falling lithium-ion energy costs could lead lithium-ion batteries becoming mass market devices
The costs of production and operating a lithium-ion battery have fallen by approximately 75% since 2010. As of May 2016, the
average lithium-ion energy cell costs stood at US$225 per kWh as compared to US$900 per kWh in 2010. Further, the energy
costs for an automotive system as well as stationary energy systems have also fallen. This is largely due to development of new
manufacturing facilities, unlocking of economies of scale and technological innovation. As per Deutsche Bank’s Lithium 101
Market Research, the costs are expected to fall further to US$150 per kWh by 2020. Such cost reduction has opened up
completely new avenues for lithium-ion applications and has made existing applications cheaper. Exhibit 16 presents the fall of
lithium-ion battery costs since 2010.
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Zadar Ventures Limited
Exhibit 16: Falling lithium-ion battery costs should open up new applications
-
500
1,000
1,500
2,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
US
$ pe
r kW
h
Energy Cell Automotive System Stationary Energy System
Source: Company website
Exponential growth in demand from the Electric Vehicle and Energy Storage Systems market
Increasing economies of use and the availability of cheaper batteries have made it possible for the automobile industry to
develop and market Electric Vehicles (EVs). The pioneer in this space has been Tesla, but the catalyst for rising demand has
been the Chinese subsidies for both passenger and commercial EVs. Currently, Hybrid Electric Vehicles (HEVs) and Plug-In
Hybrids Vehicles (PHEVs) dominate the EV space. Full electric vehicles accounted for only 0.6% of the global automobile sales
in 2015. The sales for all types of EVs are expected to grow to 16 million vehicles by 2025 with full electric vehicles accounting
for 3% of global sales. Such demand from the EV industry should drive consumption from the 2015 levels of 25 kilotons to 205
kilotons in 2025, resulting in a CAGR growth of 23% over the period. Exhibit 17 presents Deutsche Bank’s forecast of sales of
vehicles of various categories.
Exhibit 17: Estimated increase in EV sales should drive lithium demand
-
20
40
60
80
100
-
2
4
6
8
10
2015 2020 2025
Die
sel &
Gasolio
ne v
ehic
le s
ale
s (
in m
illio
ns)
HE
V, P
EV
& F
ull
EV
sale
s (
in
mill
ions)
Hybrid Plug-in Hybrid Full EV Diesel Gasoline
Source: Deutsche Bank Market Research
Energy Storage is also expected to drive demand for lithium in the near future. Currently, the ESS market is at an inflection
point. Low cost of lithium-ion batteries has now made energy storage applications economically feasible. Further, the rapid
growth in solar capacity addition is creating new demand for efficient and low cost energy storage solutions. Exhibit 18 presents
the global solar capacity addition. Deutsche Bank estimates the lithium battery consumption to reach 48GWh by 2025, resulting
in a 54% CAGR growth and accounting for almost 97% of the battery use in energy storage. Such growth is expected to drive
the battery industry lithium demand from virtually zero to 34 kilotons by 2025.
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Zadar Ventures Limited
Exhibit 18: Solar capacity addition should drive demand for energy storage systems
0
50
100
150
200
250
300
350
400
0
10
20
30
40
50
60
70
80
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E
To
tal G
lob
al C
ap
acity (
GW
)
An
nu
al C
ap
acity A
dd
itio
n (
GW
)
Annual Capacity Addition Low Scenario Capacity Addition High Scenario Capacity Addition Total Global Capacity
Source: Global Market Outlook for Photovoltaics 2015-2019, EPIA and RBMG Research
Further, traditional markets mentioned earlier are expected to continue to grow and increase the lithium demanded in the near
future. Traditional markets are expected to grow at 3.6% per annum over the next decade and should increase the lithium
consumption from 155 kilotons in 2015 to 222 kilotons in 2025. Such favorable prospects from various end markets should aid in
development and growth of lithium companies.
New entrants and production by existing producers - a response to rising demand
Lithium is not a rare element but its market is still underdeveloped. However, the supply side of the market is not fragmented or
lacking capital. Five of the largest global producers of lithium control 46% of the global reserves and four of the largest
producers control 83% of the global supply. Despite having access to financial and owning mineral resources, the producers
have not actively responded to meet rapidly rising demand. 50% of the global lithium supply comes from the capital intensive
brine operations that have not been able to ramp up production to meet the rising demand. As mentioned earlier, the current
global demand for lithium outstrips global supply. However, this phenomenon is expected to reverse in the near future with
global supply exceeding demand as new mining operations are expected to come online by 2018 and existing producers ramp
up production to meet demand.
Exhibit 19: Supply of lithium to be driven primarily new operations
171000
16000
3300013000
1000017000
18000 278000
0
50000
100000
150000
200000
250000
300000
2015 Salar deOlaroz
Mt. Marion Mt. Cattlin La Negra Chineseproduction
Existingproducers
2018
Lithiu
m p
roduction (
in t
ons)
Source: Deutsche Bank Market Research
Uranium Industry Dynamics
Demand for uranium is a function of nuclear energy generation along with operating factors and fuel management at reactors.
There has been a stable increase in nuclear power generation due to the commission of new nuclear plants. Globally there exist
substantial uranium resources to meet this demand, but its extraction and supply has not been adequate to meet demand.
Supply of uranium is a combination of uranium prices, uranium resources, its processing and regulations.
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Zadar Ventures Limited
Increasing dependence on nuclear energy should continue to drive demand for uranium
Use of nuclear fuels as an energy source has played a major part in the development of nuclear technology. Nuclear energy is
considered to be a clean energy source and its contribution to energy generation is expected to grow. As of January 1, 2016,
there were 439 nuclear reactors operating in 30 countries. These reactors have the combined capacity to generate 382.5
Gigawatts of electricity and supply over 11% of the global electricity need. Further, as of January 1, 2016, there were 66 new
nuclear reactors under construction in 14 countries. The principal countries investing in nuclear energy are China, India, Russia,
the US, UAE and South Korea.
Exhibit 20: Construction of new nuclear plants
Country Numbers
China 24
Russia 8
India 6
United States 5
South Korea 4
UAE 4 Source: World Nuclear Association
As per Ux Consulting’s Uranium Market Outlook - Q4 2015, global nuclear energy capacities are estimated to increase by 44%
to 511 Gigawatts in 2030 from 377 Gigawatts in 2015. Majority of this growth in capacities is expected to come from China
(64%) followed by India, Korea and Russia (collectively accounting for 24%). This growth in nuclear capacities is expected to
drive the uranium demand to 133.5 thousand tons by 2030 from 89.5 thousand tons in 2015. Such demand for uranium is
expected to be beneficial for Zadar’s uranium mine prospects.
Estimated increase in supply will not be adequate to meet rising demand
As per Ux Consulting, uranium production increased marginally in 2015 to 75.6 thousand tons from 72.5 thousand tons in 2014.
However, this increase was largely due to ramp up of production at the Cigar Lake mine, the largest high-grade uranium mine.
Factoring out the Cigar Lake production, global supply declined by roughly 2.6 thousand tons representing a 3.6% decline in
2015 as compared to 2014. However, production in Kazakhstan, Russia and Australia remained relatively stable. Ux Consulting
has estimated that the global supply will increase by 11.5% from 75.6 thousand tons in 2015 to 84.3 thousand tons by 2025.
However, this increase in supply is not adequate to meet the rising demand and the demand-supply imbalance is expected to
continue in the future. As seen in Exhibit 21, in the past, there has always existed a supply deficit.
Exhibit 21: Uranium supply not adequate to meet demand
0%
20%
40%
60%
80%
100%
0
20000
40000
60000
80000
100000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Su
pp
ly a
s a
% o
f D
em
an
d
Ura
niu
m S
up
ply
(i
n to
ns)
Uranium Supply Supply as a % of Demand
Source: World Nuclear Association
Supply-demand imbalance could lead to a short-term spike in prices
As seen in Exhibit 22, uranium prices peaked in 2007, before crashing to US$40 per pound. However, in early 2010, uranium
prices witnessed a short-term recovery before crashing again in 2011 to US$40 per pound. This was largely due to the negative
sentiment surrounding nuclear energy after the Fukushima accident in Japan in 2011. Since the incident Japan’s nuclear
program has completely taken offline.
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Zadar Ventures Limited
Despite a demand supply imbalance, the prices of uranium have not increased. Further, uranium price per pound has broken
the US$40 resistance. However, this downward price trend is expected to reverse despite Japan’s nuclear program closure.
This price rise is expected to be driven by falling uranium stockpiles and increasing nuclear capacity addition around the globe.
A revival in uranium prices is expected to benefit Zadar.
Exhibit 22: Uranium prices has been trading at levels of US$40 per pound since the Fukushima accident in 2011
0
40
80
120
160
U.S
. $ p
er
pound
UxC Uranium U3O8 Swap Futures End of Day Settlement Price
Source: www.indexmundi.com
Canada estimated to be the fastest growing market in a highly oligopolistic market
In 2015, the top four producers accounted for 62% of the global uranium production. Further, nine of the top producers
accounted for 88% of the global uranium supply. Uranium mining is also highly geographically concentrated with Kazakhstan,
Canada and Australia supplying approximately 70% of the world uranium. However, competition in the uranium exploration and
development is very high. Exploration for uranium is taking place globally, but capital expenditures are the highest in Canada
and Africa. The Athabasca Basin in Canada is host to high-grade uranium deposits. Exploration at the Athabasca Basin is
generally divided, with the Eastern part consisting of rich infrastructure associated with existing uranium mining operations. In
contrast, the Western part of the basin does not have good infrastructure facilities despite several recent uranium discoveries.
However, this is expected to change, as several infrastructure projects have been planned by the Canadian government. The
Company’s uranium projects, which are primarily located in the Western part of the basin should benefit from such development.
SWOT Analysis
Strengths Location advantage and good mineral prospects
Zadar’s lithium and uranium claims are strategically located with access to several intermodal facilities. Further, the Company’s
projects in Nevada and Athabasca Basin are located in the world’s most welcoming mining jurisdictions. The Company’s lithium
projects are located near the Tesla Gigafactory, offering the potential for prospective lithium supply agreement with Tesla. The
lithium projects are located in Clayton Valley, which is known for its lithium brine resources. Neighboring projects in Clayton
Valley have shown feasibility in lithium pumping and extraction. This supports feasibility of the lithium projects. Further, the
Company’s uranium projects are located in Athabasca Basin, which is also known for its high-grade uranium resources and
favorable government regulations.
Specialty minerals with numerous applications
Lithium and uranium are globally important specialty minerals, which are currently experiencing a severe worldwide demand-
supply imbalance. New applications for these minerals are being discovered, which could add to the current demand-supply
imbalance. Further, traditional demand for these minerals is also expected to grow in the future. The Company’s product
diversification offers it the opportunity to serve these markets and diversify commodity risk. Zadar has the potential be a key
player in lithium markets.
Weaknesses Negative operating cash flow
Since inception, the Company has not generated any revenues and has been generating negative cash flows from operations.
To meet its operating and capital expenditure requirements, Zadar has raised funds through equity issuance. This is expected to
continue in the future, as there is no visible timeline for commercialization. Further, fund raising is a factor of equity market
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Zadar Ventures Limited
fundamentals and the ability of the management to successfully close equity placements. Negative operating cash flows and
dependence on equity funding also affects the Company’s going concern ability.
Inactive exploration in projects due to unattractive end markets
Exploration and development expenditures at Zadar’s uranium projects have been controlled. During the year 2015, the
Company gave up its interest in the Bullrun uranium and the Patterson North Eastern uranium projects. Further, during the
same year, the Company’s interest in two other uranium projects lapsed. All exploration and development at the remaining
uranium projects have been stopped due to unattractive end markets economics, specifically low uranium market prices. The
Company is also expecting an improvement in the infrastructure facilities provided by the authorities, before undertaking any
further expenditure at the Riverlake, Passfield and West Caswell projects.
Opportunities Growing Lithium End Markets
Over the last decade, lithium consumption has grown significantly due to increased demand for batteries. There currently exists
a large supply deficit in the market, which has led to a surge in lithium prices. This phenomenon is anticipated to continue in the
2017 and beyond. Demand from lithium’s traditional markets such as ceramics, glass, lubricating greases, and others are also
expected to increase. Such favorable prospects from various end markets should aid in development and growth of lithium
companies.
EVs – Innovation in Automobile Space
Growing concerns regarding greenhouse gas emissions has led to an increase in demand for environment friendly vehicles.
Subsequently, automakers across the globe have launched or are planning to launch EVs. Further, recent announcements by
Tesla and its competitors such as BYD have led to higher expectations of further growth in the EV market. As mentioned above,
Deutsche Bank forecasts the lithium battery consumption to reach 48GWh by 2025, a 54% CAGR growth from 2015. Such
growth is expected to drive the battery industry lithium demand from virtually zero to 34 kilotons by 2025.
Uranium Project and large uranium supply deficit
Athabasca basin is known for its high-grade uranium deposit. The Cigar Mine, in the Athabasca Basin, is well known for its high-
grade uranium deposit in the world. The Company’s projects are located near this mineral rich area. Growing addition of nuclear
plants across the globe is expected to be the driving factor for uranium demand and prices. As mentioned earlier, the global
nuclear energy capacities are estimated to increase by 44% to 511 Gigawatts by 2030 from 377 Gigawatts in 2015. This should
expand the current demand-supply disparity and consequently result in rising in long-term uranium prices.
Potential for a supply agreement with Tesla
Tesla Motors, which is setting up its Gigafactory near the Company’s lithium project, is estimated to demand large quantities of
lithium for its EVs. Further, the recent supply agreement between Tesla and Pure Energy for lithium has triggered expectations
among peer industries. The Company’s strategic location and prospective high-grade lithium reserves should offer the
opportunity to be on Tesla’s supplier list.
Threats Competition
Zadar Ventures is in the mineral resource industry, which is in highly competitive in nature. The Company competes with other
lithium and uranium producers across the world on factors such as price, quality, size of mineral claims and partners for joint
ownership. Further, falling commodity prices due to increased competition or excess supply in the market, may affect the values
of the Company’s potential reserves. Additionally, the Company is yet to commence full-fledged exploration activities, which
raises the risk of losing out to competitors with better financial resources, operations and technology.
Regulations
Exploration activities of the Company are subject to various laws and regulations. Zadar has to abide by policies governing
development, production, imports, exports, taxes and royalties, waste disposal, occupational health, environmental protection
and safety. The Company is also required to apply for certain approvals or licenses for development of mineral properties. Cost
of exploration activities for Zadar may increase if they fail to receive the necessary approvals and licenses. The Company’s
compliance cost may also increase if there are changes in regulations or delay in acquiring permits.
Changes in technology in the lithium industry
The Company needs to employ the latest technology to efficiently produce high-grade quality lithium. Currently, the main focus
of researchers is to extend the battery life or limit the quantity of lithium for attaining high power. Further, researchers are finding
ways to use aluminum along with lithium to make batteries, which has four times the capacity of lithium-ion. Such research in
technology may risk lithium demand. Nevertheless, market experts estimate that this technological advancement is highly
unlikely near term.
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Zadar Ventures Limited
Financial Performance
We now discuss the financial performance of Zadar Ventures. We begin by analyzing the Company’s cash burn followed by the
financial statements of the Company.
Exhibit 23 presents the cash burn analysis of Zadar Ventures. The Company’s average cash burn stood at $35,000 per month.
As of April 30, 2016, the Company’s cash reserve stood at $404,654. The Company has not generated positive cash flow from
operations and incurs expenses relating to project exploration and development. At the end of April 30, 2016, excluding current
liabilities of $434,315, the Company had cash reserves for a survival period of two months. Further, in April 2016, the Company
raised $600,000 through a non-brokered private placement and in May 2016, raised another $700,000. The capital raised
through private placement will be utilized for exploration and development of the Clayton Valley lithium projects and for working
capital needs. Taking into account the current average burn rate and existing cash levels, Zadar Ventures must continue to
regularly raise capital to meet its working capital and capital expenditure needs.
Exhibit 23: Cash burn analysis (in $ ‘000s)
Period/ Amount ( in '000) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 AVG
Net operating cash flow (44) (104) (17) (8) (14) (99) (9) (67) (342) (78)
Net investing cash flow (41) (43) - - - - (6) (3) (152) (27)
Net financing cash flow 101 112 - - - 118 7 179 789 145
Cash position (quarter end)
61 27 10 2 1 7 0 98 404 57
Burn Rate per month (29) (49) (6) (3) (5) (33) (5) (23) (165) (35)
Survival period (in months)
2.1 0.6 1.8 0.9 0.1 0.2 0.0 4.2 2.4 1.3
Source: RBMG Research
Exhibit 24 displays Zadar's Income Statements for the three months ended April 30, 2016 and April 30, 2015. During the period,
the Company did not generate any revenues from sale of products. During the three months ended April 30, 2016, the Company
reported a net loss of $627,804 as compared to a net loss of $205,744 in the same period in 2015. The increase in losses was
mainly attributable to expenses related stock based compensation and consulting fees as compared to previous period in 2015.
Exhibit 24: Income Statements for the quarters ended April 30, 2016 and 2015 (in $)
Particulars 30-Apr-16 30-Apr-15 Y-o-Y (%)
Administrative expenses
Accounting and audit 5,000 8,000 -38%
Bank charges and interest 649 44 NM
Consulting 313,216 - NM
Legal -
Listing and filing fees 15,239 6,379 139%
Management fees 20,500 4,500 356%
Office and sundry 21,211 14,441 47%
Promotion 54,323 1,336 NM
Stock based compensation 216,389
NM
646,527 34,700 NM
Unrealized loss on investment 23,269 (171,044) -114%
Foreign exchange loss (4,546)
NM
Net loss and comprehensive loss (627,804) (205,744) 205%
Basic and diluted loss per share (0.01) (0.01)
Basic and diluted weighted average shares 36,314,257 26,352,300
Source: Company filings
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Zadar Ventures Limited
Exhibit 25 shows Zadar's Balance Sheets as of April 30, 2016 and July 31, 2015. As on April 30, 2016, the Company’s cash and
cash equivalents stood at $404,654, a significant increase as compared to July 31, 2015. The rise was due to the closure of a
private placement in April 2016. Zadar’s investment reduced by 54% due to fair value adjustments during the nine months
ended April 30, 2016. Total current liabilities increased by 19% during the nine months ended April 30, 2016 as compared to
July 31, 2015.
Exhibit 25: Balance Sheets as of January 31, 2016 and July 31, 2015 (in $)
Particulars 30-Apr-16 31-Jul-15 Y-o-Y (%)
ASSETS
Current
Cash 404,654 7,495 NM
Investment 80,654 175,827 -54%
Goods and services tax recoverable
45,430 36,685 24%
Due from related parties 31,665 29,206 8%
Prepaid expenses 3,000 3,000 0%
$565,403 $252,213
Exploration advances 6,154 6,154
Exploration and evaluation assets
279,982 40,000 NM
Total assets $851,539 $298,367 185%
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities
363,450 252,579 44%
Due to related parties 70,865 112,721 -37%
Total Current liabilities 434,315 365,300 19%
Shareholders' equity
Share capital 5,714,878 4,488,483 27%
Subscriptions received in advance
- 20,100 -100%
Subscriptions receivable (141,240) (31,840) 344%
Contributed surplus 410,098 193,709 112%
Deficit (5,566,512) (4,737,385)
417,224 (66,933)
Total liabilities and shareholders' equity
851,539 298,367 185%
Source: Company filings
Exhibit 26 presents Zadar Ventures’ Cash Flow Statements for the nine months ended April 30, 2016 and April 30, 2015. For the
nine months ended April 30, 2016, the Company’s operating cash outflows significantly increased to $417,898 as compared to
the outflow in during the same period in 2015. This was primarily attributable to a significant decline in net income between the
two periods. Net cash used in investing activities stood at $159,982 for the period ended April 30, 2016, due to expenditures
related to exploration and evaluation. During nine months ended April 30, 2016, the Company issued common shares worth
$1.01 million through private placement.
20
Zadar Ventures Limited
Exhibit 26: Cash Flow Statements for the six months ended January 31, 2016 and January 31, 2015 (in $)
Particulars As at Apr 30, 2016 As at Apr 30, 2015 Y-o-Y (%)
Operating activities
Net income (loss) for the year ($829,127) ($359,802) 130%
Adjustments: NM
Unrealized loss on investment 95,173 234,280 -59%
Stock based compensation 216,389
Changes in non-cash working capital
Goods and services tax recoverable
(8,745)
(4,886) NM
Advances to related parties
(2,459) 16,416 NM
Prepaid expenses 0 1,870 NM
Accounts payable and accrued liabilities 110,871 73,659 51%
Net cash used in operating activities
(417,898)
(38,463) NM
Investing activities
Exploration and evaluation expenditure
(159,982) 0 NM
Net cash used in investing activities
(159,982) 0
Financing activities
Proceeds from issuance of common stock, net of issue costs 1,016,895 0
Advances (to) from related parties
(41,856) 12,000
Net cash used in investing activities 975,039 12,000
Net change in cash and cash equivalents for the period 397,159 -26,463 -1601%
Cash and cash equivalents, at the beginning of the period 7,495 27,016 -72%
Cash and cash equivalents, at the end of the period 404,654 553 NM
Source: Company filings
21
Zadar Ventures Limited
Key Risk Factors
Negative operating cash flow and uncertainty in projects
As mentioned earlier, Zadar Ventures is in the exploration and development stage of operations; as a result it has not generated
any revenues and has negative cash flows from operations. The Company may continue to generate negative cash flow in the
near future due to the uncertainty and risk involved developing its project. The Company is yet to announce any economic and
feasibility study which raises concerns regarding their position in completing existing project and bidding for new deals.
Uncertainty in commercialization of projects
Zadar is in the process of exploration activity and has no proven history of performance, earnings or success. There is no
guarantee that the Company will be able to achieve profitable results. There is no visibility regarding the commercialization of
the projects. The Company has still not undertaken feasibility studies for any of the projects. Exploration and development of
mineral resources involves a high degree of risk. Further, there is no assurance that its exploration and development activities
will result in discoveries that could be commercially feasible.
Regulatory risk
Zadar Ventures is subject to numerous government regulation and environmental laws. The Company has to abide by
regulations related to waste management, water discharge management, and disposal of hazardous materials and protection of
natural resource. Failure to comply with such regulations could lead to delays the project completion and increase compliance
costs affecting Zadar’s profitability.
Risks related to nature of business
Global economic conditions and the mining industry have high correlation, which could affect marketability and profitability of the
Company’s products. Sharp rise in lithium demand is due to robust demand from countries. However, there is high degree of
uncertainty involved in determining the timeline of increased demand. Currently, mining companies across the world are
operating at low capacity utilization due to global economic slowdown. However, recovery in global economic scenario could
help mining companies to enhance production.
Foreign currency fluctuations
The Company’s functional currency is Canadian dollar. However, Zadar owns investments denominated in British pounds and is
subject to exchange rate fluctuation of the Canadian dollar versus the British pound. Further, the Company’s lithium projects are
located in the United States, which also raises concerns relating to foreign currency fluctuations. Additionally, the prices of the
Company’s key products, lithium and uranium, are determined by US dollar. Hence, any exchange rate fluctuation between US
dollar and Canadian dollar could also lead to foreign exchange gains or losses.
Risks related to capital requirements
As mentioned earlier, the Company does not generate revenues from its operational activities. Since the Company has limited
capital resources, it relies upon the sale of equity and/or debt securities for capital requirements relating to exploration and
development activities, acquisitions, and administration expenses. In the near future, Zadar will continue dilute its equity or issue
debt.
Shareholding Pattern
As of May 2016, the Company had 65.45 million shares outstanding, excluding warrants and options. Zadar’s insiders control
approximately 20% of the total shares outstanding. Exhibit 27 displays the Company’s capitalization structure.
Exhibit 27: Share capitalization
Particulars (in millions)
Common Shares Outstanding 65.45
Warrants @ $0.05 18.4
Future property payments 4.0
Source: Zadar Ventures Investor Presentation
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Zadar Ventures Limited
Profile of Directors and Management
Paul D. Gray (P. Geo.), President
Paul D. Gray, P.Geo is the President at Zadar Ventures with a Bachelor of Science (Honors) degree from Dalhousie University
and is a member with the Association of Professional Engineers and Geoscientists of British Columbia. Over the past 20 years
he has worked extensively as an exploration geologist in the Mineral Exploration Industry in Canada, the United States, Asia
and Central and South America, concentrating on uranium, base and precious metals exploration and development. Since 2007,
in particular, he has worked in the uranium exploration and development space focused on uranium production in the Colorado
Plateau district, and exploration within the Athabasca Basin and in South America.
Mark Tommasi, Chairman
Mr. Mark Tommasi is the Chairman of the Company, having over 20 years of experience in corporate development, finance,
board and committee activities and marketing. He is a former investment advisor, has served as a senior officer, director and
financier of numerous public and private companies both in the United States and Canada.
John Roozendaal, Director
Mr. John Roozendaal is a director at Zadar Ventures holding Bachelor of Science in Geology and has 22 years of experience in
the mining industry. He is founder and President of VMS Ventures Inc. (VMS.V) and was directly involved in the discovery of the
high-grade Reed Copper Mine now under construction in Manitoba. He is also a Director of North American Nickel Ventures
(NAN.V), which is exploring a large prospective nickel belt in southwest Greenland. He has immense experience with corporate
governance, finance and the development of public companies.
Geoff Watson, Chief Financial Officer
Mr. Geoff Watson is Chief Financial Officer of the company. For the past 30 years, he has been involved in various aspects of
the securities industry, including 22 years in the brokerage community, during which time he was involved with retail and
institutional client management, and the financing of numerous public companies. Most recently, he has been involved in the
corporate communication and development of North American public companies.
Yana Bobrovskaya, Director
Ms. Yana Bobrovskaya is a director of Zadar Ventures, having over 10 years of international business experience and has been
on the board of several public companies assisting in the raising of venture capital and day to day operations.
Jason Dussault, Advisory Board
Mr. Jason Dussault serves on the advisory board of the company. He was the founder and the first Chief Executive Officer of
Pure Energy. He led Pure Energy’s initial capital raise, reverse takeover and phase one exploration program. His experience in
the lithium sector is value addition to Zadar and his long-standing relationship with GeoXplorer (the operator of Pure Energy) will
help streamline the company’s upcoming exploration programs.
Jeremy Brett M.Sc. (P.Geo), Advisory Board
Mr. Jeremy Brett serves on the advisory board of the company. He is a senior consulting geophysicist with MPH Consulting and
has strong geological and management background with over 22 years of experience in mineral exploration. He has designed,
supervised, quality assured and interpreted ground and airborne geophysical surveys for uranium and many other commodities.
His specialty is in the imaging, synthesis and interpretation of geophysical data and its direct integration with ore deposit models
and structural/tectonic frameworks, for target identification and testing.
Thomas Feehan, MSc. (Hydrogeology), MBA, Advisory Board
Mr. Thomas Feehan is a senior level hydro geologist with over 20 years of professional experience who has worked extensively
in Nevada and Latin America throughout his career. His specialties involve the design and implementation of drilling and
sampling for lithium brine exploration and development projects.
23
Zadar Ventures Limited
Sources
Company Website
Company Press Release & Presentations
SEDAR Filings
Deutsche Bank Market Research
International Energy Agency
Ux Consulting
Global Market Outlook for Photovoltaics 2015-2019, EPIA
World Nuclear Association
www.indexmundi.com
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