Announcement PDF A N N UA L R E P O R T 2 0 2 3 CO R PO R ATE D I R EC TO RY DIRECTORS Chris Ellison Non-Executive Chairman James Croser Managing Director Nader El Sayed Non-Executive Director Tim Manners Non-Executive Director Steve Kovac Non-Executive Director AUDITORS KPMG 235 St Georges Terrace Perth WA 6000 SOLICITORS Thomson Geer Level 29, Central Park 152-158 St Georges Terrace Perth WA 6000 Joshua Thurlow Non-Executive Director SECURITIES EXCHANGE LISTING COMPANY SECRETARY ASX Code: DLI Peter Gilford REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS Suite 4, 6 Centro Avenue Subiaco WA 6008 Tel: +61 8 6109 0104 SHARE REGISTRY Computershare Investor Services Pty Limited Level 17, 221 St Georges Terrace Perth WA 6000 Australian Telephone: 1300 850 505 International Telephone: +61 3 9415 4000 www.computershare.com.au Delta Lithium Limited securities are listed on the Australian Securities Exchange (ASX) WEBSITE AND CORPORATE GOVERNANCE STATEMENT www.deltalithium.com.au E-MAIL info@deltalithium.com.au CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES CO NTE NTS PAG E Corporate Directory IFC Chairman’s Letter 2 Review of Operations 4 Mt Ida 5 Yinnetharra 9 Eureka Gold Project 11 Earaheedy Basin project 12 Corporate 12 Directors' Report 22 Auditor’s Independence Declaration 50 Consolidated Financial Statements 51 Consolidated Statement of Profit or Loss and Other Comprehensive Income 51 Consolidated Statement of Financial Position 52 Consolidated Statement of Changes in Equity 53 Consolidated Statement of Cash Flows 54 Notes to the Consolidated Financial Statements 55 Directors’ Declaration 101 Independent Auditor’s Report to Members 102 Shareholder Information 107 DELTA LITHIUM 11 ANNUALREPORT REPORT2023 2023 ANNUAL CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES C H A I R M A N ’ S LE T TE R I am pleased to present my first letter to shareholders as Non-Executive Chairman of Delta Lithium. I would like to start by acknowledging my predecessor, David Flanagan, who recently stepped down as Executive Chairman. With David’s departure, Delta Director James Croser has agreed to serve in an interim executive capacity while a comprehensive search for a Managing Director is undertaken. I am pleased to present my first letter to shareholders as Non-Executive Chairman of Delta Lithium. Mineral Resources Limited (MinRes) recently became the largest shareholder of Delta with a 17.44% interest because we believe in the enormous potential of this company and its assets. I founded MinRes in 1992 and, as Managing Director, I today lead an ASX 50 company with extensive operations in lithium, iron ore, energy and mining services across Western Australia. As announced in September 2023, my colleague Joshua Thurlow, Chief Executive of MinRes’ Lithium division, has also joined the Delta Board as NonExecutive Director. Together, we bring a track record of successfully operating two of the world’s largest hard rock lithium mines, at Wodgina in the Pilbara and Mt Marion in the Goldfields of Western Australia. We have joined the Delta Board because we believe this company will play an important role in producing the lithium that is needed for the clean energy transition. FY23 was a transformational year for Delta as it changed its name from Red Dirt Metals, reflecting the shift in focus to the Mt Ida Lithium Project in DELTA LITHIUM 2 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES C H A I R M A N ’ S LE T TE R (CO NT ’ D) the Goldfields region and the Yinnetharra Lithium Project in the Gascoyne region. co-operation with VinES Energy Solutions Joint Stock Company. The Delta exploration team delivered a maiden Mineral Resource Estimate of 12.7Mt @ 1.2% Li2O at Mt Ida in October 2022 and significant progress has since been made on approvals, technical work and drilling to support project development. VinES is part of Vingroup, one of Vietnam’s leading private conglomerates, and specialises in research and development and the manufacturing of advanced batteries for mobility and energy applications. In September 2022, Delta acquired the highly prospective Yinnetharra project, which has the potential to develop into a world-class asset. An extensive drill campaign is ongoing, with rapid progress being made toward a Maiden Resource Estimate. Over the coming year, the Delta Board will look for opportunities to leverage its broadened skills and experience – including those from MinRes – to unlock the full potential of Mt Ida and Yinnetharra. MinRes brings an enormous level of expertise across exploration, approvals, mine optimisation, supply chain logistics, project design and construction and process engineering, as well as product marketing and export pathways. The Company is in a strong financial position, having completed a well-supported $55 million capital raise in December 2022, followed by a $46.4 million strategic placement to Idemitsu Australia in June 2023. I’m looking forward to bringing that expertise to the table to get maximum value for all Delta shareholders. Idemitsu Australia is a wholly owned subsidiary of Idemitsu Kosan Co Ltd, a Japanese conglomerate with a market capitalisation of ~$9 billion which has been an active investor in the Australian resource sector since 1978. As we transition Mt Ida to production and continue to define Yinnetharra, I want to thank Delta shareholders for their support. As part of this strategic placement, Delta and Idemitsu Australia agreed to a strategic cooperation agreement to explore and leverage Idemitsu’s financial and technical capabilities and key Japanese and international relationships to maximise the value of Mt Ida and Yinnetharra. Chris Ellison Non-Executive Chairman The Company has met with a wide range of potential customers across the global lithium supply chain throughout the year, in addition to the conclusion of a non-binding Memorandum of Understanding for product offtake and broader DELTA LITHIUM 3 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S 84.3M A maiden JORC Mineral Resource Estimate of 12.7Mt @ 1.2% Li2O at the Mt Ida Project was announced in October 2022, and work for much of this past year has subsequently focused on approvals, progressing technical work and further extensive drilling to support development of this resource, ultimately into a producer of lithium concentrate. 266,529 In addition, a second lithium exploration project, the Yinnetharra Project in the Gascoyne Region of WA, was acquired in September 2022. Drilling commenced in early November 2022 and is ongoing, producing many exciting results, with the project shaping up to be something of significance. $ CASH BALANCE FOR FY23 METRES DRILLED ACROSS OUR PROJECTS 170km 2 TENURE AT THE MT IDA PROJECT 520km 2 TENURE AT THE YINNETHARRA PROJECT FIGURE 1: LOCATION OF THE COMPANY’S PROJECTS DELTA LITHIUM 4 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) MT IDA The Mt Ida Project is located approximately 100km west of Menzies in the Goldfields region of Western Australia. The Mt Ida Project is located on granted Mining Leases, adjacent to infrastructure. In September 2021, the Company acquired a 100% interest in Mt Ida Gold Pty Ltd, the holder of the Mt Ida Gold Project comprising 29 tenements and located approximately 100km north-west of Menzies in the WA Goldfields. The release of a Maiden Mineral Resource estimate for lithium in September 2022 was the catalyst to start work on various elements of project development for Mt Ida. The Company’s key objective for Mt Ida is to export lithium concentrates (the Concentrate Project) as soon as possible. Li2O Resource Category Tonnes (Mt) Grade (Li2O%) Indicated 3.3 Inferred 9.3 12.7 Total Cut-off grade (Li2O%) 0.55 Ta2O5 Li2O (Kt) Grade (Ta2O5 ppm) 1.4 46 246 1.1 102 193 1.2 148 207 TABLE 1: MINERAL RESOURCE ESTIMATE DETAILS FOR THE MT IDA LITHIUM PROJECT (published in September 2022) FIGURE 2: LOCATION OF THE MT IDA LITHIUM PROJECT DELTA LITHIUM 5 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) PROJECT DEVELOPMENT The Company has recognised that alongside the development pathway for the Concentrate Project, an opportunity exists to commence early works and create an opportunity for the export of a Direct Shipping Ore (“DSO”) product (the Early Works/ DSO Project). The benefit of two (2) granted mining leases in combination with the shorter development timeline of a DSO lithium project strongly supports an accelerated path to production. ⊲ ⊲ ⊲ In executing the Early Works/DSO Project strategy, a number of work packages required for the Concentrate Project will be completed ahead of time. Incremental capital investment and a phased development approach that establishes a supply chain for DSO from mine to market, ahead of Concentrate Project FID (Final Investment Decision), provides a significant opportunity to de-risk and accelerate execution of the Concentrate Project. ⊲ ⊲ Multiple work streams commenced in 2023 on both the Concentrate Project and the Eary Works/ DSO Project, and have been progressed to enable commencement of mining by December 2023, all of which will benefit the longer-term Mt Ida Lithium Concentrate Project: ⊲ ⊲ ⊲ ⊲ ⊲ Works/DSO, while also providing valuable water supply information for the longer-term Concentrate Project Early works/DSO Project planning commenced and progressing in terms of definition, budgeting and tenders Consultants appointed for geotechnical, metallurgy, hydrogeology and mine planning related to development of the Concentrate Project Early stage mine planning work completed for both Early Works/DSO and the Concentrate Project. In particular, this mine planning work is being used to guide site general layouts, along with infill drilling, and planning for a more significant metallurgical testwork program Product logistics (road transport) desktop study completed Cooperation Agreement signed with the Midwest Port Authority for DSO and concentrate shipments. Completion of all relevant baseline studies and mine planning work to support key submissions relevant to achieve approval to commence mining Preparation and lodging of Mining Proposal and Native Vegetation Clearing Permit (NVCP) NVCP approval in May 2023 Mt Ida Road Diversion; proposed re-alignment endorsed by the Shire of Menzies, heritage and flora and fauna surveys completed, NVCP submitted, 50% design completed, and necessary approval in progress with Department of Planning, Lands and Heritage (DPLH) Water exploration program completed for Early DELTA LITHIUM 6 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES 202,346m OF DRILLING HAS BEEN COMPLETED BY DELTA LITHIUM AT THE MT IDA PROJECT. EXPLORATION AND INFILL DRILLING water bore drilling. Diamond Drilling has targeted resource infill and extension, exploration drilling, metallurgical drilling and engineering/geotechnical drilling. Since acquiring the project in September 2021, 202,346m of drilling has been completed by the Company at the Mt Ida Project. The main focus with drilling at Mt Ida has been to support the development of the lithium resource with a particular emphasis on infill resource drilling to increase the confidence and categorisation of the 2022 Mineral Resource Estimate (MRE). Reverse Circulation (RC), diamond drilling (DD) and Aircore (AC) drilling have been undertaken in the reporting period. AC drilling has targeted regional exploration along strike of lithium (Li) resources at Sparrow, Timoni and Sister Sam. RC drilling has targeted Li exploration, Li resource infill drilling and Assay highlights from the Mt Ida Project during the year include: HoleID From To Length Li2O % Ta2O5 ppm Fe2O3 % IDRD077W2 387.5 437.0 49.5 1.4 183.0 0.5 IDRD178 357.3 401.8 44.5 1.2 203.0 0.3 IDRD162 276.8 318.0 41.2 1.8 383.0 1.0 IDRD077 398.3 433.2 34.9 1.3 143.0 0.4 IDRD033 318.5 349.0 30.5 1.8 182.0 0.7 IDRD031 183.1 205.3 22.8 1.8 190.0 1.5 IDRD229W1 703.2 731.3 28.0 1.3 116.0 1.1 IDRD077W1 430.4 457.5 27.2 1.2 141.0 1.3 IDRD245 848.0 874.9 26.9 1.3 107.0 0.8 IDRCD204W1 367.0 392.6 25.5 1.3 187.0 0.6 IDRD141 488.2 512.3 24.1 1.8 284.0 0.4 IDRD036N2 675.4 696.3 20.9 1.4 96.0 0.5 TABLE 2: MT IDA PROJECT ASSAY RESULTS DELTA LITHIUM 7 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) FIGURE 3: PLAN VIEW OF CENTRAL MT IDA AREA WITH RESOURCE OUTLINES AND SIGNIFICANT DRILL INTERCEPTS FOR LITHIUM DELTA LITHIUM 8 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) YINNETHARRA Delta started drilling at the project in early November 2022, and to date has drilled 64,183m in 212 holes, with targeted drilling ongoing. In September 2022 the Company acquired Electrostate Pty Limited, the ultimate holder of the Yinnetharra Project. The Yinnetharra Project covers ~520km2 in the central Gascoyne region proximal to established infrastructure in that area. The project is highly prospective for Lithium mineralisation. Several quality mineralised pegmatites have been defined at the Malinda Prospect with drilling rapidly progressing towards a Maiden Resource Estimate. High grade Li mineralisation has been discovered outcropping at the Jamesons Prospect, with drilling scheduled to commence in early Q2 2024. At the time of acquisition 32 drill holes had been completed at the Yinnetharra Project, targeting lithium mineralisation at the Malinda Prospect with some exciting early intercepts. FIGURE 4: YINNETHARRA LITHIUM PROJECT LOCATION DELTA LITHIUM 9 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) FIGURE 5: MALINDA PROSPECT PLAN SHOWING MINERALISED PEGMATITES PROJECTED TO SURFACE. Assay highlights from the Yinnetharra Project for the year include: HoleID From To Length Li2O % Ta2O5 ppm Fe2O3 % YNRD005 94.0 149.6 55.6 1.1 48.0 0.7 YRRD082 66.0 109.0 43.0 1.2 63.0 4.2 YRRD095 254.0 290.0 36.0 1.1 84.0 6.0 YNEX004 5.0 40.0 35.2 1.0 51.0 1.6 YRRD118 218.0 251.0 33.0 1.9 87.0 3.0 YRRD071 291.0 321.0 30.0 1.2 128.0 3.9 YRRD120 203.0 232.0 29.0 1.5 79.0 6.6 YRRD003 121.0 150.0 29.0 1.4 58.0 1.0 YNEX003 121.0 149.9 28.9 1.1 54.0 0.8 YNRD025 71.0 92.0 21.0 1.1 52.0 0.9 YRRD011 28.0 48.0 20.0 1.3 54.0 0.8 YRRD114 190.0 209.0 19.0 1.6 76.0 0.9 TABLE 3: YINNETHARRA PROJECT ASSAY RESULTS DELTA LITHIUM 10 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) EUREKA GOLD PROJECT The Eureka Gold Project is located roughly 50km north of Kalgoorlie. Access is via the Goldfields Highway from Kalgoorlie then via a 2km unsealed road. Eureka is a gold asset on granted Mining Leases with strong potential for walk-up drill targets. The strike and depth potential of the Eureka gold mineralisation has not been fully tested, and hosts potential for additional shallow mineralisation in a strongly endowed mineral terrain. FIGURE 6: EUREKA GOLD PROJECT LOCATION The Eureka Project has a JORC Mineral Resource Estimate of: Resource Category Indicated Inferred All Resources Cut-off Grade Tonnes (t) Grade (g/t Au) Contained Metal (Oz Au) 0.3 0.5 1,437,000 1,269,000 1.4 1.5 65,000 62,000 0.8 983,000 1.8 56,000 1.0 811,000 2.0 52,000 0.3 1,341,000 1.2 52,000 0.5 1,183,000 1.3 50,000 0.8 887,000 1.5 43,000 1.0 666,000 1.7 37,000 0.3 2,778,000 1.3 116,000 0.5 2,452,000 1.4 112,000 0.8 1,870,000 1.7 100,000 1.0 1,477,000 1.9 88,000 TABLE 4: EUREKA PROJECT ASSAY RESULTS Exploration rehabilitation work was undertaken at Eureka in the reporting period. The current focus of the Company has been with the Mt Ida Project and the Yinnetharra Project. The Eureka Project continues to meet minimum expenditure requirements. DELTA LITHIUM 11 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) FIGURE 7: EARAHEEDY LOCATION MAP EARAHEEDY BASIN PROJECT CORPORATE FINANCING The Company owns an exploration licence covering 930km2 adjacent to the Rumble Resources Ltd Chinook zinc-lead discovery at their Earaheedy Project. In December 2022, the Company received firm commitments for a $55 million capital raising at $0.50 per share. The Placement comprised two tranches: No significant exploration work was undertaken by the Company in the reporting period. ⊲ REIDS RIDGE - WARRIEDAR PROJECT AREA ⊲ During the year, the Company completed the divestment of its Warriedar Gold Project to Anova Metals Limited (ASX:AWV) which comprises of 7 tenements over a combined area of (6711 Hectares) 68km2. The Company has executed a binding agreement for the consideration of 100 million Anova shares (ASX:AMV), which has a value of $0.8M at 30 June 2023. DELTA LITHIUM Tranche 1: completed in December 2022 to raise $41.5 million via the issue of 83 million new shares utilising the Company’s existing placement capacity under ASX Listing Rule 7.1 and 7.1A. Tranche 2: completed in January 2023 to raise $13.5 million via the issue of 27 million new shares, following shareholder approval received at a General Meeting held on 16 January 2023. The Company welcomed the support of new and existing shareholders as part of the $55 million placement. New shareholders included Idemitsu Australia, a subsidiary of Idemitsu Kosan Co Ltd. Existing shareholders Waratah Capital Advisors Ltd increased it's holding from 10.15% to 12.10%. 12 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) On 14 June 2023, the Company completed a $46.4 million strategic placement to Idemitsu Australia, issuing 65,636,000 new shares in the Company at an issue price of $0.7075 per share. The placement was conducted at a 7.5% premium to the 10 day VWAP and an 8% premium to the most recent closing price. out below is an overview of the more significant business risks facing Delta and the approach taken to managing those risks. The factors identified below are not necessarily listed in order of importance and are not intended as an exhaustive list of all the risks and uncertainties associated with Delta. FUTURE REQUIREMENTS FOR FUNDING During the year, $2,743,260 was received for the exercise of 10,973,040 unlisted $0.25 options. A further $84,583 was received for the exercise of 338,333 options that were converted to shares post year end. The Company’s funding requirements depend on numerous factors including the Company’s future exploration, project evaluation, project development and work programs. Additional funding may be raised (for example) through debt or equity funding. If required funding is not available, including because appropriate commercial terms cannot be negotiated, this may limit the capacity of the Company to execute on its business strategy and exploration programs. DIVESTMENT OF WARRIEDAR PROJECT On 21 September 2022, the Company completed the divestment of its Warriedar Gold Project to Anova Metals Limited (ASX: AWV) to concentrate expenditure and resources on advancing the Mt Ida and Yinnetharra Projects. Additional equity funding, if available, may be dilutive to Shareholders and at lower prices than the current market price. Debt funding, if available, may involve restrictions on financing and operating activities and be subject to risks relating to movements in interest rates. As consideration for the sale, the Company was issued with 100 million AWV shares subject to a 6 month escrow. Anova also has an obligation to pay a milestone payment of $100,000 in the event of definition of a JORC compliant Mineral Resource estimate at Warriedar in excess of 150koz gold (calculated at a 0.8 g/t lower cut-off grade) prior to 3 July 2025. An increase in interest rates will make it more expensive for the Company to fund its operations and may constrain the ability to execute on business strategies and exploration programs. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. CHANGE OF COMPANY NAME To align the Company name with the Company’s lithium focussed strategy, the Board, subject to shareholder approval, resolved to change the name of the Company from Red Dirt Metals Limited to Delta Lithium Limited. The name change was approved by shareholders at a General Meeting held on 27 April 2023. NEGATIVE CASHFLOWS FROM OPERATIONS The Company has no recent history of earnings and does not have any producing mining operations. The Company has experienced losses from exploration activities and expects to continue to incur losses. No assurance can be given that the Company will be able to economically exploit any mineral deposit or enter into production. The Company’s ASX ticker changed from RDT to DLI from May 2023. BUSINESS RISKS ASSOCIATED WITH THE COMPANY The Company's’ risk management framework is embedded within existing processes and is aligned to the Group’s strategic business objectives. Set DELTA LITHIUM The Company expects to continue to incur losses from exploration, studies and development activities in the foreseeable future. 13 ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) TENURE, ACCESS AND GRANT OF APPLICATIONS The actual quality and characteristics of mineral deposits cannot be known until mining takes place and will almost always differ from the assumptions used to develop resources. Further, Ore Reserves are valued based on future costs and future prices and, consequently, any actual Ore Reserves and Mineral Resources may differ from those estimated, which may result in either a positive or negative effect on operations. The Company's activities are dependent upon the maintenance (including renewal) of the tenements in which the Company has or acquires an interest. Maintenance of the Company's tenements is dependent on, among other things, the Company's ability to meet the license conditions imposed by relevant authorities including compliance with the Company's work program requirements, which in turn, is dependent on the Company being sufficiently funded to meet those expenditure requirements. There are risks that tenements will not be renewed, or may be forfeited during their term if there is noncompliance with legal or regulatory requirements. Should the Company encounter mineralisation or formations different from those predicted by past drilling, sampling and similar examinations (or should any other material assumptions prove to be inaccurate), any Ore Reserve and Mineral Resource estimates may have to be adjusted and mining plans may have to be altered in a way which could adversely affect the Company's operations. DRILLING RISKS The Company’s future drilling operations may be curtailed, delayed or cancelled due to a number of factors including lack of funding, weather conditions, mechanical difficulties, shortage or delays in the delivery of rigs and/or other equipment and compliance with Heritage and governmental requirements. While drilling may yield some resources there can be no guarantee that the discovery will be sufficiently productive to justify commercial development or cover operating costs. NATIVE TITLE The Native Title Act 1993 (Cth) (Native Title Act) recognises and protects the rights and interests in Australia of Aboriginal and Torres Strait Islander people in land and waters, according to their traditional laws and customs. There is significant uncertainty associated with Native Title in Australia and this may impact on the Company’s operations and future plans. The Company must also comply with Aboriginal heritage legislation requirements, which require certain due diligence investigations to be undertaken ahead of the commencement of exploration and mining. This due diligence may include, in certain circumstances, the conduct of Aboriginal heritage surveys. The risks may also include the following: RESOURCE AND RESERVE ESTIMATES Ore Reserve and Mineral Resource estimates are expressions of judgment based on drilling results, past experience with mining properties, knowledge, experience, industry practice and many other factors. As such, Ore Reserve and Mineral Resource are inherently imprecise and rely to some extent on interpretations made. Despite employing qualified professionals to prepare Ore Reserve and Mineral Resource estimates, such estimates may nevertheless prove to be inaccurate. ⊲ Estimates which are valid when made may change substantially when new information becomes available. Mineral Resource and Ore Reserve estimation is an interpretive process based on available data and interpretations and thus, as noted above, estimations may be inaccurate. DELTA LITHIUM ⊲ 14 the Company may have to seek consent or permits to access the land the subject of an Aboriginal heritage or land right claim. There is no guarantee that any such consent or permits will be granted; the Company may have to comply with restrictions or conditions on accessing land the subject of an Aboriginal heritage or land right claim. This may result in the Company facing ANNUAL REPORT 2023 CONTENTS PAGE CHAIRMAN’S LETTER REVIEW OF OPERATIONS DIRECTORS' REPORT FINANCIAL STATEMENTS FINANCIAL STATEMENTS NOTES R E V I E W O F O PE R ATI O N S (CO NT’ D) ⊲ unplanned expenditure or delays. Failure to comply with any conditions on the permits may result in the Company losing its title to its tenements or forfeiting its permits; and in the event the Company discovers evidence of Aboriginal heritage on land accessed by the Company, the Company must comply with regulations. There can be no guarantee that any new project acquisition or investment will eventuate from these pursuits, or that any acquisitions will result in a return for Shareholders. Such acquisitions may result in use of the Company's cash resources and/ or the issuance of equity securities, which will dilute shareholdings. CYBER SECURITY PROJECT DELIVERY RISK The potential for malicious cyber security attacks resulting in the misuse and release of sensitive information poses an ongoing and real risk to the operations of the company. Delta continues to progress its Information and Communications Technology Strategy (“ICT”), of which one initiative includes the continual review of our cyber security and ICT maturity. Gaps and vulnerabilities are addressed on an ongoing basis. The execution and delivery of projects involves judgment regarding the planning, development and operation of complex operating facilities and equipment that may occur over extended time periods. As a result, the Group’s operations, cash flows and liquidity could be affected if the Company miscalculates the resources or time needed to complete a project, if it fails to meet contractual obligations, or if it encounters delays or unspecified conditions. The Company maintains a strict project monitoring regime, proactive management and decision making to mitigate project delivery risks. OTHER MATERIAL RISKS Other material risks that could affect the Company include: LABOUR COSTS AND AVAILABILITY ⊲ Labour represents a significant portion of operating expenditure and exploration activities. In order to realise business objectives, the Group needs to be able to continue to attract and retain skilled employees. Consequently, the Group is exposed to increased labour costs in markets where the demand for labour is strong. The group manages labour costs through various remuneration schemes that include short and long-term incentives to employees to align with shareholder value accretion and mitigate against the impact of rising labour costs. ⊲ ⊲ ⊲ ⊲ ⊲ ⊲ NEW PROJECTS AND ACQUISITIONS ⊲ ⊲ The Company may make acquisitions in the future as part of future growth plans. In this regard, the Directors will use their expertise and experience in the resources sector to assess the value of potential projects that have characteristics that the Directors consider are likely to provide returns to Shareholders. DELTA LITHIUM 15 Changing government regulation including tax, occupational health and safety, and changes in policy and spending; Loss of reputation through poor pro