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EUROPEAN LITHIUM – DGWA UPDATE

European Lithium (FRA: PF8, VSE: ELI, NEX: EUR, ASX: EUR) has reported on the optimization of its financing structure in its press release titled ‘European Lithium Signs Binding Agreement for A$10 M Funding Facility’.

Specifically, the existing and known back-up convertible note facility with Magna was replaced by a comparable facility with Winance Investment LLC (“Winance”).

Essentially, both facilities work similarly but offer very different terms with Magna receiving the shares at a 15% discount and Winance at 8%.

Further, Winance was recommended to European Lithium as a responsible financer by potential future industrial partners.

Without any revenues, exploration companies have to raise capital on a regular basis before commencing production. This is known to all investors and represents the greatest challenge to companies on the way to production.

Less than 10% of exploration companies advance as far as European Lithium (completed positive PFS, DFS in progress), mostly due to a lack of financingpossibilities as the majority of projects no longer meet the requirements of today’scapital markets.

In order to ensure the advancement of an exploration company, its management continuously strives to have the required capital at its disposal and to further provide the appropriate reserves.

In recent years, European Lithium has always had sufficient funds and intends to ensure an adequate cash position for future operations.

In light of the above, the company is currently raising capital (nearly A$2 million to date) and has advanced discussions with institutional investors. In addition, the company is in close contact with several banks and is preparing to apply to relevant funding programmes in Austria. It has also announced its participation in a syndicate as part of the BMWi funding programme.

Until the receipt of funds from the aforementioned activities, the company has access to the funds from the previous Manga financing as well as the new Winance facility.

Both Magna and Winance set the highest standards for the quality and soundness of the projects they finance; this includes a very extensive due diligence. In contrast to equity investors who can wait out weak share prices if necessary, Magna and Winance depend on a certain market interest in the stocks. This is defacto a capital raising as well, combined with Winance’s (or Magna’s, respectively)confidence in the project as well as the confidence of the investors in the market.

So far, all shares sold by Magna have easily been absorbed by the market, and based on current developments this is not expected to change in the future. Notably, this provides an opportunity for smaller shareholders to indirectly participate in this capital raising without having to complete any administrative steps.

To summarize, Winance’s commitment (and previously Magna’s) not only is a clearstatement to the quality of European Lithium’s Wolfsberg lithium project but alsoprovides flexibility to the company to make the current strategically important decisions prudently and without any external pressure.