Zinnwald Lithium : Unaudited Interim Condensed Consolidated Financial Statements For The Six Months Ended 30 June 2023

Company Registration No: 10829496 (England and Wales)

ZINNWALD LITHIUM PLC

UNAUDITED INTERIM CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

ZINNWALD LITHIUM PLC

CONTENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

	Page
Chairman's Statement	1 - 2
Strategic Report	3 - 9
Directors' Report	10
Corporate Governance Statement	11
Interim Condensed Consolidated Statement of Comprehensive Income	12
Interim Condensed Consolidated Statement of Financial Position	13
Interim Condensed Consolidated Statement of Changes in Equity	14
Interim Condensed Consolidated Statement of Cash Flows	15
Notes to the Interim Condensed Consolidated Financial Statements	16 - 23

ZINNWALD LITHIUM PLC

CHAIRMAN'S STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2023

Chairman's Statement

As a key transition metal required to deliver on net zero commitments, it is widely recognised that lithium production needs to increase significantly and that supply chains must be brought closer to their end markets. This is particularly relevant in the EU, which has already both relaxed State Aid rules for energy transition materials and proposed the new Critical Raw Materials Act ("CRMA"), which includes targets for domestic capacities for extraction and processing of at least 10% and 40% respectively. New UK/EU Rules of Origin are also being phased in from 2024 that will see tariffs of up to 10% being applied to manufacturers that fail to demonstrate that 50-60% of battery materials originate from the EU.

Against this background, Zinnwald Lithium's integrated lithium hydroxide ("LiOH") project (the "Project"), located central to Germany's automotive and chemical industries, is positioned to be a key supplier of lithium to the European battery industry.

As the macro environment moves in Zinnwald's favour, it is imperative that at a micro-level we fully capitalise on the opportunities opening up for us and position ourselves to do so. Accordingly, in March this year we secured £18.75 million via a fundraise at a 26% premium to the closing share price on the date of the fundraise announcement and welcomed global critical materials company AMG Critical Materials N.V ("AMG") as a cornerstone investor. Shortly thereafter we welcomed AMG Lithium GmbH's Chief Executive Officer, Dr. Stefan Scherer, to Zinnwald's Board.

With funds in place, we have been able to accelerate our efforts to advance the Project towards completing a bankable feasibility study ("BFS") by early in the first half of 2024. Since completing the fundraise, we have significantly increased our drilling activity, utilising up to six drill rigs and completing 45 drill holes totalling 14,800 metres since the beginning of April to the date of this report. The total number of metres drilled since the beginning of the in-fill drill campaign now stands at 25,300m over 77 holes.

The aim of the drilling programme is to increase drillhole and data density in parts of the deposit to further optimise the geological model to support BFS level mine planning, metallurgical and geotechnical engineering workstreams. In addition, it will generate further geological and geometallurgical data to support potential inclusion of the mineralised Albite Granite ("Greisenised Granite" or "Type 2") lithology to upgrade the existing Mineral Resource Estimate ("MRE") as the lithium demand and price have radically increased since the last MRE was conducted. The Albite Granite contains disseminated zinnwaldite mineralisation that can be laterally and vertically extensive, reaching up to 80m (vertical) thickness in places.

Thus far, intersections in Albite Granite lithology continue to yield consistent and extensive mineralised intervals supporting the Company's strategy of planning for high productivity mining methods and higher lithium output. We anticipate completing the drill campaign at the core Zinnwald license area within the coming weeks, and, once all assays are received and reviewed, publishing the new MRE in Q4 2023.

Alongside the drill campaign, we are undertaking extensive testwork with regard to the process flow sheet. A representative bulk sample of "new ore feed" has been sent for confirmatory metallurgical testwork and piloting to Metso in Finland. A pilot test trial will be conducted in late summer / early autumn 2023 to affirm insights from bench scale testing and provide further input for the upcoming engineering processes.

While the priority for the Company remains advancing the core Zinnwald Project, it does control an extensive license area adjacent to the core Zinnwald Mining License. Work done on the Falkenhain license areas continues to confirm the prospectivity of this area which could support further scale and upside for the Project going forward. In addition, during July the Company was granted the Bärenstein exploration license area, which lies adjacent to and directly to the north-east of the Company's Altenberg-DL licence and almost completely encloses the Falkenhain license. Following further exploration work on these license areas, there is the potential to increase the resource base and lifetime of the planned mine and mineral processing facilities related to the Project. Furthermore, the Company continues to investigate the broader Bärenstein area as a location for future mining and processing operations. To hold the mineral rights for these areas has therefore been a priority to maintain planning flexibility as well as legal certainty.

In terms of the lithium market, news headlines in the half of 2023 saw much commentary around the significant decline in the spot market price for lithium products into China from peaks of circa $80,000 per tonne at the end of 2022 to a low of just over $30,000 per tonne in April 2023 with a recovery to circa $40,000 in August. It should be emphasised that the spot market in general is a small portion of the overall global market, and this specific index is often more volatile in relation to what is happening elsewhere. Indeed, in August 2023, SQM (the world's largest supplier of battery grade lithium products) reported its H1 2023 results that showed an average price of circa $41,000 per tonne. SQM specifically noted that they see a "positive dynamic in lithium market supported by strong EV sales volumes in different markets and expect the global lithium demand growth to reach at least 20% this year.

• Other major producers, such as Albermarle and Livent, have forecast improving prices for the second half of 2023 as destocking comes to an end and the structural undersupply issues continue.

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ZINNWALD LITHIUM PLC

CHAIRMAN'S STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2023

It is important to note that Zinnwald used a long-term price of $22,500 per tonne in its Preliminary Economic Assessment ("PEA"), which the Company continues to believe is a sensible, conservative long-term price for the Project.

In terms of financial markets, share prices of junior mining companies have been under considerable pressure in recent months, as investors have grappled with risks of significant inflationary pressures, and an economic downturn exacerbated by the continuing conflict in Ukraine and the resulting energy crisis. As such, we are fortunate to have put the Company on a sound financial footing with the fundraise in March, and to be able to move forward rapidly with the next phase of the Project development. We are confident that the inherent strengths of our Project will, ultimately, be reflected in our market value as we continue to deliver against our plan.

Financials

The Company continues to maintain its extremely disciplined approach to expenditure and cash management and as such is well funded through completion of the BFS and into the follow-on detailed engineering work in 2024, with cash of €18.9m as at the date of this report.

Outlook

Looking ahead, we have an extremely active work schedule. The Company's near-term priorities are the completion of the in-fill and hydrogeological drill campaigns at the Zinnwald Project, detailed mine planning and testwork programmes related to mineral and chemical processing.

The PEA demonstrated a robust project with very attractive economics and the team is working hard to advance this to the next stages of an updated MRE in 2023 and on to the BFS in early 2024. The additional work completed supports the potential to increase the scale of the Project and is being explored further as part of the next phase.

We look forward to updating the market on progress on all of these fronts as we continue our various work programmes.

Jeremy Martin

Non-Executive Chairman

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ZINNWALD LITHIUM PLC

STRATEGIC REPORT

FOR THE SIX MONTHS ENDED 30 JUNE 2023

1. Highlights

Six months to 30 June 2023

• Fundraise of £18.75m completed in March 2023 cornerstoned by AMG Critical Minerals N.V.
• 44 drill holes completed over 14,000 metres in the period
• Intersections into the Albite Granites yielding consistent and extensive mineralised intervals
• Representative bulk sample sent to Metso and UVR-FIA for pilot scale testwork
• Completion of sale of Erris Zinc Ltd to Ocean Partners

Post period end to 23 August 2023

• Further 17 drill holes completed over 5,800 metres bringing the total to 25,300 metres over 77 holes
• Granting of the Bärenstein exploration license

2. Operational Review

The first half of 2023 saw Zinnwald Lithium Plc (the "Company") and its wholly owned subsidiary, Zinnwald Lithium GmbH ("ZL GmbH" and together the "Group") accelerate its development strategy for its integrated Zinnwald Lithium Project (the "Project"). During the six months to 30 June, the Company's priorities were the in-fill drill campaigns at the Zinnwald Project as well as detailed mine planning and testwork programmes related to mineral and chemical processing.

2.1. Six months to 30 June 2023

Fund Raise

On 29 March 2023, the Company completed a £18.75m fundraise at a 26% premium to its share price at close on 22 March 2023. This raise was cornerstoned by AMG, existing significant shareholders, and new German institutional investors. These funds have enabled the Company to accelerate its various workstreams and will finance it beyond completion of the BFS. As part of the investment from AMG, the Company has welcomed Dr Stefan Scherer to the Board.

The fundraise included an offering via PrimaryBid, which reflects the Company's ongoing commitment to enabling its retail shareholders to participate. The Board appreciates that this process can inherently only be done at very short notice and with a small window of opportunity to act and will continue to explore any alternate avenues that might enable a wider participation.

Infill and Resource Delineation Drill Programme

The successful fundraise completed at the end of March 2023 enabled the Company to significantly accelerate its resource delineation drilling activities. During the six months to 30 June, it completed 14,100m of diamond core drilling across 44 drill holes. This brought the total metres drilled to 19,500 metres across 60 drill holes at the Zinnwald Mining license during this drill campaign. Since the end of the reporting period, an additional 5,800 metres across 17 holes of drilling have been completed.

The objectives of the programme are to:

• Increase drillhole and data density in parts of the deposit to further optimise the geological model to support BFS level mine planning, metallurgical and geotechnical engineering workstreams;
• Generate additional geological and geometallurgical data to support inclusion of the mineralised Albite Granite (Type 2) lithology in order to upgrade the existing Mineral Resource Estimate ("MRE");
• Improve resolution of the extents of the Type 1 (high grade Greisen mineralisation); and
• Improve confidence in available existing historical drillhole data.

Following completion of the drilling programme, anticipated during Q3 2023, the results will be used to update the geological and mineralisation models with the objective of producing an updated MRE later in 2023. SRK Consulting (UK) ("SRK") has been commissioned to complete the MRE.

The Albite Granite (previously called the "Greisenised Granite" or "Type 2") is recognised as a mineralised alteration halo surrounding the higher-grade Greisen type mineralisation ("Type 1"). Here the Albite Granite contains disseminated zinnwaldite mineralisation that can be laterally and vertically extensive, reaching up to 80m (vertical) thickness in places. In the 2019 NI43-101 Technical report, the potential in-situ mineral inventory of Albite Granite was estimated at 214 Mt at a Li grade of 0.37 % Li2O (1,700 ppm Li). One of the objectives of the ongoing drilling programme is to better delineate and quantify this style of mineralisation for possible inclusion in the updated MRE.

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