CORE LITHIUM LTD — Interim / Quarterly Report 2021

Mar 9, 2021

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Interim Consolidated Financial Statements for the half-year ended 31 December 2020

1

Contents

Directors’ Report	3
Auditor’s Independence Declaration	6
Financial Report
Statement of Profit or Loss and Other	7
Comprehensive Income
Statement of Financial Position	8
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the Consolidated Financial	11
Statements
Directors’ Declaration	18
Independent Auditor’s Review Report	19

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These Financial Statements cover Core Lithium Ltd (“Core” or the “Company”) as a Group consisting of Core Lithium Ltd and its subsidiaries, collectively referred to as the “Group”. The financial report is presented in the Australian currency.

Core is a company limited by shares, incorporated, and domiciled in Australia. Its registered office and principal place of business is:

Core Lithium Ltd ACN 146 287 809 Level 1, 366 King William Street ADELAIDE South Australia 5000

2

Directors’ Report

The Directors of Core Lithium Ltd present their Report together with the financial statements of the consolidated entity, being Core Lithium (“Core” or “the Company”) and its controlled entities (“the Group”) for the half year ended 31 December 2020 and the Independent Review Report thereon.

DIRECTORS

The following persons were directors of Core throughout the period.

• Gregory English

• Stephen Biggins

• Heath Hellewell

• Malcolm McComas

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

Core is well positioned to be Australia’s next lithium producer, developing the Finniss Lithium Project (“the Project”) which is one of Australia’s most capital efficient and lowest cost hard rock spodumene lithium projects located near Darwin Port in the Northern Territory, Australia.

Lithium is the core element in batteries used to power electric vehicles, and the Project boasts world-class, high-grade and high-quality lithium suitable for use in this projected high growth market and other renewable energy sources.

The Project lies within 25km of port, power station, gas, rail and one hour by sealed road to workforce accommodated in Darwin and importantly to Darwin Port - Australia’s nearest port to Asia. The Company’s other project areas are focused on targets within prospective geological terrains for lithium, precious and base metals and uranium in Northern Territory and South Australia.

In the half year to 31 December 2020, Core continued to build strategic relationships with potential offtake partners and project financiers and invest in exploration and project development activities at its 100%-owned Finniss Lithium Project in the Bynoe Pegmatite Field region in the Northern Territory.

During the period, Core commenced a lithium resource infill and expansion program to further define and grow Mineral Resources and project mine life with the aim of releasing an updated and optimised Definitive Feasibility Study (“DFS”) in Q2 2021.

Discussions and negotiations with the Northern Territory government resulted in the signing of a non-binding indicative term sheet with the Local Jobs Fund for a $5 million concessional Finance Facility to contribute to the lower start-up capital funding needs.

Core has also advanced high-grade gold and silver projects in NT. The Company has discovered multiple new gold prospects with visible gold, gold nuggets and +100g/t[1] gold assays within months of starting gold exploration. A short RAB drilling program commenced during the period.

The consolidated net loss of the Group, for the six months to 31 December 2020 was $914,980 (2019: $1,653,624).

In January 2021, Core received and accepted the Northern Territory Government’s offer of a Mineral Lease (ML 32346) for the BP33 deposit for a term of 25 years.

In February 2021, Core successfully raised $40.5 million in additional capital through the Placement of 162 million shares to new high-quality institutional investors. For every two new Placement shares, the Group has also issued one unlisted attaching option (approximately 81 million options), with an exercise price of $0.45 and a two-year expiry.

1 Core confirms that it is not aware of any new information or data that materially affects the results included in this announcement as “Gold grades over 100gt Au and visible gold - Bynoe Project” on 28 September 2020.

3

Directors’ Report

REVIEW OF OPERATIONS AND FINANCIAL RESULTS (continued)

In March 2021, Core, through its newly created 100% owned subsidiary Bynoe Lithium Pty Ltd ( Bynoe ) entered into a call option with Outback Metals Proprietary Limited ( Outback ) and Victory Polymetallic Pty Limited ( Victory ) (collectively the Grantors ) to potentially acquire six granted mining leases (ML29912, ML29914, ML29985, ML31654, MLN 813 and MLN 1148) ( Mineral Titles ) containing over 30 lithium pegmatite targets adjacent to the Project near Darwin in the Northern Territory ( Call Option Deed ).

Bynoe has until 31 December 2021 to exercise its call option and may extend that date by three months until 31 March 2022 and a further three months until 30 June 2022, subject to paying $250,000 to the Grantors for each extension ( Call Option Period). During the Call Option period:

• Bynoe is granted an exclusive irrevocable licence and right to access and conduct exploration and land access assessment activities on the Mineral Titles at its own cost and risk. the Grantors are restricted from relinquishing, forfeiting, surrendering, or cancelling ground or rights under, or otherwise dealing with, the Mineral Titles; and

• title to the Mineral Titles remains with the Grantors.

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Australia New Zealand Resources Corporation Pty Ltd ( Landowner ) owns the land underlying two of the Mineral Titles (ML 29985 and MLN 1148) and is also a party to the Call Option Deed and agrees to enter into a Covenant (described below) on exercise of the Call Option. Bynoe must pay $25,000 per annum to the Landowners as compensation and is to provide an additional $50,000 on signing the Call Option Deed in the form of cash or a bank guarantee as a security deposit for rehabilitation liabilities. If Bynoe (or its nominee) exercises and completes the call option transaction, the $50,000 will be returned or netted off the purchase price. The Landowner cannot deal with the underlying freehold during the Call Option period unless the third party taking an interest agrees to be bound by the terms of the Call Option including the requirement to enter into the Covenant. Bynoe can withdraw from the arrangement at any time. The Call Option will terminate at the end of the Call Option Period if it has not been exercised.

If Bynoe exercises the option, subject to securing the appropriate authorisations, it must pay:

• (a) $5,000,000 to the Grantors, with $1,500,000 to be paid in cash and the balance of $3,500,000 to be paid in cash or CXO shares, at Core’s discretion (subject to any shareholder approval otherwise the balance of consideration will be cash). Any shares will be subject to a 4 month and 14-day escrow period.

• (b) Contingent consideration will also be payable of $500,000 to the Grantors, ($150,000 in cash and $350,000 in cash or CXO shares, at Core’s discretion (subject to any required shareholder approval)) for each 1mt JORC resource Bynoe discovers, capped at an aggregate amount of $5,000,000. Any shares will be subject to a 3 month and 14-day escrow period.

Completion is conditional on Bynoe securing Ministerial approval within 6 months after the call option exercise date. If Ministerial approval is not obtained, then Bynoe can elect to terminate and the consideration will not become payable.

If the call option is exercised, the Landowners must enter into a Covenant in Gross (Covenant) with Bynoe which runs with and binds that part of the land which underlies the two Mineral Titles, ML 29985 and MLN 1148. The Covenant is to be registered.

4

Directors’ Report

REVIEW OF OPERATIONS AND FINANCIAL RESULTS (continued)

Under the terms of the Covenant, the Landowners agree to give Bynoe a right of first refusal to purchase the underlying land if the Landowner intends to sell the land, and otherwise undertakes to ensure any third-party purchaser is bound by the Covenant. Under the covenant Bynoe agrees to pay compensation to the Landowner in full and final satisfaction for any damage, disturbance, and loss of access to the land including as compensation under the Mineral Titles Act:

• (a) $500 per hectare per annum to the Landowner, for any part of the Landowner's underlying land that is subject to the Mineral Titles. Bynoe must pay this annual compensation until the Mine Development Date (being the date Bynoe secures authorisations to develop and operate a mine on either or both affected Mineral Titles and reaching a final investment decision; or it purchases the underlying land from the Landowner). No compensation will be payable if Bynoe does not undertake Mining Activities on the affected Mineral Titles in any 12-month period.

A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 (Cth) is included on page 6 of this financial report and forms part of this Directors’ Report.

Signed in accordance with a resolution of the Directors.

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Stephen Biggins Managing Director Signed this 10[th] day of March 2021 Adelaide, South Australia

• (b) $1,900,000 (Indexed using Darwin CPI) to the Landowner, on the Mine Development Date.

Core guarantees the financial obligations of Bynoe under the Call Option Deed and the Covenant.

Upon execution, Core paid $500,000 for the option to acquire the Mineral Titles and issued a Bank Guarantee for $50,000 as security for the rehabilitation obligations in relation to any exploration on the mineral titles during the period up to completion under the Call Option Deed.

5

Auditor’s Independence Declaration

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6

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the half year ended 31 December 2020

Notes	31 December 31 December
	2020 2019
	$ $
Interest income Grant income 3 Employee benefits expense Exploration expense Impairment expense Depreciation expense Share based payment (expense) Other expenses Loss before tax Income tax benefit / (loss) Loss for the period from continuing operations attributable to owners of the parent Other comprehensive income attributable to owners of the parent Total comprehensive loss for the period attributable to owners of the parent Earnings per share from continuing operations Basic Loss - cents per share 4 There are no dilutive securities on issue.	25,393 38,413 249,006 40,000 (498,637) (510,157) (38,429) (12,817) - - (63,562) (72,455) (74,423) (237,500) (514,328) (899,108)
	(914,980) (1,653,624) - -
	(914,980) (1,653,624) - -
	(914,980) (1,653,624)
	(0.09) (0.21)

.

7

STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

	31 December 30 June
Notes	2020 2020
	$ $
ASSETS Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Exploration and evaluation expenditure 5 Plant and equipment Other assets Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables Employee provisions Total current liabilities Non-current liabilities Trade and other payables Employee provisions Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 6 Reserves 7 Accumulated losses TOTAL EQUITY	4,530,041 8,709,771 44,145 37,683 83,373 22,623
	4,657,559 8,770,077
	29,665,567 26,380,721 166,829 219,042 527,128 421,036
	30,359,524 27,020,799
	35,017,083 35,790,876
	854,741 2,080,228 103,497 100,904
	958,238 2,181,132
	- 9,777 50,539 32,107
	50,539 41,884
	1,008,777 2,223,016
	34,008,306 33,567,860
	51,251,237 49,856,210 704,766 746,536 (17,947,697) (17,034,886)
	34,008,306 33,567,860

This statement should be read in conjunction with the notes to the financial statements.

8

STATEMENT OF CHANGES IN EQUITY

For the half year ended 31 December 2020

2020	SHARE OPTION/RIGHTS ACCUMULATED TOTAL
	CAPITAL RESERVE LOSSES EQUITY
	$ $ $ $
Balance at 1 July 2020 Share placement Transaction costs Performance rights and options issued to officers, employees and contractors at fair value Fair value of performance rights and options that lapsed Exercise of options (exercise price & transfer of cost of instruments exercised) Exercise of performance rights at fair value Transactions with owners Comprehensive income: Total profit or loss for the reporting year Total other comprehensive income for the reporting year Balance 31 December 2020	49,856,210 746,536 (17,034,886) 33,567,860 1,061,533 - - 1,061,533 (60,529) - - (60,529) - 77,306 - 77,306 - (5,053) 2,169 (2,884) 368,153 (88,153) - 280,000 25,870 (25,870) - -
	1,395,027 (41,770) 2,169 1,355,426
	- - (914,980) (914,980) - - - -
	51,251,237 704,766 (17,947,697) 34,008,306
2019	SHARE OPTION/RIGHTS ACCUMULATED TOTAL
	CAPITAL RESERVE LOSSES EQUITY
	$ $ $ $
Balance at 1 July 2019 Share placement Shares issued as remuneration for services rendered by external parties Transaction costs Performance rights and options issued to officers, employees and contractors at fair value Fair value of performance rights and options that lapsed Exercise of performance rights at fair value Transactions with owners Comprehensive income: Total profit or loss for the reporting year Total other comprehensive income for the reporting year Balance 31 December 2019	42,184,370 487,339 (12,808,643) 29,863,066 350,000 - - 350,000 120,000 - - 120,000 (24,892) - - (24,892) - 217,500 - 217,500 - (81,966) 81,966 - 38,681 (38,681) - -
	483,789 96,853 81,966 662,608
	- - (1,653,624) (1,653,624) - - - -
	42,668,159 584,192 (14,380,301) 28,872,050

This statement should be read in conjunction with the notes to the financial statements.

9

STATEMENT OF CASH FLOWS

For the half year ended 31 December 2020

	31 December 31 December
	2020 2019
	$ $
Operating activities Interest received Payments to suppliers and employees Proceeds from grant funding Net cash used in operating activities Investing activities Payments for plant and equipment Proceeds from royalty sale Payments for capitalised exploration expenditure Net cash (used in) / from investing activities Financing activities Proceeds from issue of share capital Proceeds from exercise of options Payment of transaction costs Payments of lease liabilities Net cash from financing activities Net change in Cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period	25,393 45,189 (1,265,144) (1,623,437) 231,006 40,000
	(1,008,745) (1,538,248)
	(4,238) (10,096) - 6,875,000 (4,374,366) (3,965,818)
	(4,378,604) 2,899,086
	1,061,557 350,000 280,000 - (77,578) (39,392) (56,360) (58,211)
	1,207,619 252,397
	(4,179,730) 1,613,235
	8,709,771 2,387,665
	4,530,041 4,000,900

This statement should be read in conjunction with the notes to the financial statements.

10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a) Nature of operations

Core’s principal activities are developing lithium and diversified metals projects through exploration in world class mining provinces within Northern Territory and South Australia.

b) General information and basis of preparation

The interim consolidated financial statements (the interim financial statements) of the Group are for the six months ended 31 December 2020 and are presented in Australian dollars ($), which is the functional currency of the parent company. These general purpose interim financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 (Cth) and AASB 134 - Interim Financial Reporting . They do not include all the information required in annual financial statements in accordance with AIFRS and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2020 and any public announcements made by the Group during the half-year in accordance with the continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001 (Cth). The Company is a for profit entity for the purposes of preparing its financial statements.

The interim financial statements have been approved and authorised for issue by the board of directors on 10 March 2021.

c) Critical accounting estimates and judgements

The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends of economic data, obtained both externally and within the Group.

• i) Key estimates - impairment

The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

ii) Key judgements - exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on several factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale or joint venture.

Factors that could impact the future recoverability include the level of Ore Reserves and Mineral Resources, future technological changes, which could impact the cost of mining, future legislative changes, and changes to commodity prices and exchange rates.

To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made.

In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the relevant reporting period in which this determination is made.

• iii) Key judgements and estimates - Share-based payment transactions

The Group measures the cost of equity-settled transactions with key management personnel and other parties by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by the Board of Directors with reference to quoted market prices or using the Black-Scholes valuation method or a valuation methodology approximating Monte Carlo simulation as appropriate taking into account the terms and conditions upon which the equity instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

d) Significant accounting policies

The accounting policies applied by the Group in the consolidated interim report are the same as those applied by the Group in its consolidated financial report as at year ended 30 June 2020. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

e) Adoption of the new and revised accounting standards

There are no new and revised accounting standards issued or issued but not yet effective which are expected to have a material impact on the financial statements.

11

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

2 OPERATING SEGMENTS

The Directors have considered the requirements of AASB 8 - Operating Segments and the internal reports that are reviewed by the Chief Operating Decision Maker (the Board) in allocating resources have concluded that at this time there are no separately identifiable segments.

3 GRANT INCOME

Grant income accounts for Federal Government grant income and support for various industry support initiatives and incentives.

4 EARNINGS PER SHARE

The weighted average number of shares for the purpose of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:

	6 Months to	6 Months to
	December	December
	2020	2019
Weighted average number of shares used in basic earnings per share	988,458,166	788,876,175
Weighted average number of securities used in diluted earnings per share	988,458,166	788,876,175
Loss per share – basic and diluted (cents)	(0.09)	(0.21)

There were 38,773,810 Options (2019: 44,273,810) and 22,466,666 (2019: 29,850,000) Performance Rights outstanding at the end of the period that have not been taken into account in calculating diluted EPS due to their effect being anti-dilutive.

12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

5 EXPLORATION AND EVALUATION EXPENDITURE

	31 December 30 June
	2020 2020
	$ $
Opening balance Expenditure on exploration during the period Government co-funding Fair value of exploration licence and mineral lease acquired2 Fair value of contingent consideration to Liontown Resources Ltd4 Sale of future royalty on Finniss Lithium Project3 Impairment of capitalised exploration1 Closing balance	26,380,721 27,321,225 3,324,846 5,504,258 (40,000) - - 100,000 - 1,500,000 - (6,875,000) - (1,169,762)
	29,665,567 26,380,721

During the current period, the Group focused exploration efforts on an infill and extension lithium drilling program to further define and grow Mineral Resources and project mine life with the aim of releasing an updated and optimised Definitive Feasibility Study for the Finniss Lithium Project in 2021.

• 1 The impairment of capitalised exploration in the year ended 30 June 2020 represents the write down of tenements that have been relinquished during that period. In accordance with AASB 6 - Exploration for and Evaluation of Mineral Resources, there has been no indicators of impairment identified in the current period.

• 2 During the prior period, the Group issued 1,269,905 shares for the right to acquire an ancillary mineral lease within EL 31133 which is adjacent to the existing mining leases held at the Finnis Lithium Project. In addition, the Group issued 1,317,792 shares upon completion of an agreement to acquire Exploration Licence EL26848 (Walanbanba) in the Northern Territory. The fair value of the shares issued has been reflected above.

• 3 During the prior period the Group received a payment in advance of $6.875 million from Lithium Royalty Corp (LRC) for the right to receive 2.115% of gross revenue from the sale of products from the Finniss Lithium Project. Under this royalty agreement there is an additional $1.25million of funding that is conditional on the Group announcing a 15 million tonne JORC Mineral Resource for the Finniss Lithium Project and the achieving continuous operation of the processing plant for more than 14 consecutive days (Stage 2). The royalty rate on receipt of initial proceeds under Stage 1 is 2.115% and increases to 2.50% upon achievement of the Stage 2 milestone and payment of the balance of the purchase price by LRC. The Finniss Lithium Project assets are held as security over the royalty funding received in advance.

4 In June 2020, the Group announced a JORC Mineral Resource totaling 5Mt within the Bynoe Project Area. This triggered Core’s obligation to pay Liontown Resources Ltd (ASX: LTR, “Liontown”) $1,500,000 in cash or shares (at Core’s election and subject to shareholder approval) in accordance with the sale agreement entered into in September 2017. This obligation was settled in full via a cash payment to Liontown in July 2020.

13

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

6 ISSUED CAPITAL

31 December 2020	Number of Shares $
a) Issued and paid-up capital Fully paid ordinary shares b) Movements in fully paid shares Opening balance as at 1 July 2020 Share placement Exercise of quoted options (exercise price & transfer of cost of instruments exercised) Exercise of unquoted rights (at fair value) Transaction costs Balance as at 31 December 2020	997,830,321 51,251,237
	997,830,321 51,251,237
	969,692,791 49,856,210 23,187,530 1,061,533 3,500,000 368,153 1,450,000 25,870 - (60,529)
	997,830,321 51,251,237
30 June 2020	Number of Shares $
a) Issued and paid-up capital Fully paid ordinary shares b) Movements in fully paid shares Opening balance as at 1 July 2019 Share purchase plan Share placements Shares issued as consideration for Exploration Licence and Mineral Ancillary Lease Shares issued as consideration for services rendered Exercise of unquoted performance rights (at fair value) Transaction costs Balance as at 30 June 2020	969,692,791 49,856,210
	969,692,791 49,856,210
	778,191,657 42,184,370 48,807,821 2,074,332 137,110,460 5,805,320 2,587,697 100,000 392,156 20,000 2,603,000 38,681 - (366,493)
	969,692,791 49,856,210

14

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

7 RESERVES

Nature and purpose of reserves

The share option reserve and performance rights reserve are used to recognise the fair value of all options and performance rights.

Movements in the period

Share based payments are in line with the Group’s remuneration policy, details of which are outlined in the 30 June 2020 Annual Report. Movements in the share option reserve and performance rights reserve are illustrated below:

Option Reserve	Number of Options Dollars ($)
	6 Months to Year Ended 6 Months to Year Ended
	31 December 30 June 31 December 30 June
	2020 2020 2020 2020
Opening balance at beginning of period Issued to Key Management Personnel, and employees as remuneration1 Issued to consultants as remuneration Exercised Lapsed Balance at end of period	42,273,810 20,000,000 615,941 343,365 - 21,000,000 (2,169) 274,961 - 3,273,810 - 39,399 (3,500,000) - (88,153) - - (2,000,000) - (41,784)
	38,773,810 42,273,810 525,619 615,941

1 The amount expensed includes options issued in previous financial periods with the expense recognised evenly over the vesting period and current assessment of likelihood of achieving vesting conditions attached to these existing options.

During the six months to 31 December 2020 the Group did not issue any unquoted options. There were 3,500,000 unquoted options exercised by brokers which were exercisable for 8.0 cents.

During the year ended 30 June 2020 the Group issued 1,000,000 unquoted options to employees as remuneration, subject to a Key Performance Indicator (KPI) vesting condition, are exercisable at 6.0 cents and expire on 31 December 2023. Furthermore, the Group issued 3,273,810 unquoted options to consultants as remuneration for services provided during the period, are exercisable at 5.3 cents and expire on 30 September 2022. A further 20,000,000 unquoted options issued to directors, following shareholder approval, which are exercisable at 6.0 cents and expire on 30 June 2023. Finally, 2,000,000 unquoted options issued to directors, employees and contractors were forfeited and lapsed as KPI conditions were not met.

15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

7 RESERVES (continued)

Movements in the period (continued)

Performance Rights Reserve	Number of Rights Dollars ($)
	6 Months to Year Ended 6 Months to Year Ended
	31 December 30 June 31 December 30 June
	2020 2020 2020 2020
Opening balance at beginning of period Issued to Key Management Personnel, consultants, and employees as remuneration1 Exercised Lapsed2 Balance at end of period	27,550,000 9,665,000 130,595 143,974 500,000 28,100,000 77,306 183,865 (1,450,000) (2,603,000) (25,870) (38,681) (4,133,334) (7,612,000) (2,884) (158,563)
	22,466,666 27,550,000 179,147 130,595

• 1 The amount expensed includes performance rights issued in previous financial periods with the expense recognised evenly over the vesting period and current assessment of likelihood of achieving vesting conditions attached to these existing performance rights.

• 2 This includes 4,133,334 performance rights where vesting conditions were not met as at 30 June 2020, however had not yet formally lapsed. These performance rights had been reassessed and written back to $nil at 30 June 2020. The options formally lapsed on 24 July 2020.

During the six months to 31 December 2020 the Group issued 500,000 performance rights to employees a remuneration. The performance rights have no exercise price and fair value of 4.7 cents with various KPI based performance conditions and expire in various periods ranging from 31 March 2024 to 30 June 2024. During the period 1,450,000 performance rights issued to employees were exercised upon KPI performance conditions being met and 4,133,334 performance rights issued to directors, employees and contracts were forfeited as KPI conditions were not met.

During the year ended 30 June 2020, the Group issued 28,100,000 performance rights to employees a remuneration. The performance rights have no exercise price and range in fair value from 1.70 cents to 2.89 cents with various KPI based performance conditions. Unquoted performance rights were issued to contractors as remuneration. These performance rights have an exercise price of nil and expire in various periods ranging from one month from issue to 30 June 2023. During the prior period 2,603,000 performance rights issued to employees and contractors were exercised upon KPI performance conditions being met and 7,612,000 performance rights issued to directors, employees and contractors were forfeited as KPI conditions were not met.

8 EVENTS ARISING SINCE THE END OF THE REPORTING PERIOD

In January 2021, Core received and accepted the NT Government’s offer of a Mineral Lease (ML 32346) for the BP33 deposit for a term of 25 years.

Furthermore, during January, February and March2021, the following instruments were exercised:

• Exercise of 500,000 unquoted options with an exercise price of 8 cents and expiry of 31 January 2021.

• Exercise of 4,000,000 unquoted options with an exercise price of 6 cents and expiry of 30 June 2022.

• Exercise of 3,273,810 unquoted options with an exercise price of 5.3 cents and expiry of 30 September 2022.

• Exercise of 6,000,000 unquoted options with an exercise price of 8.0 cents and expiry of 5 September 2022.

• Exercise of 100,000 unquoted performance rights where performance hurdles were met.

In February 2021, Core raised $40.5 million in additional capital through the placement of 162,007,000 shares and 81,003,467 unquoted options (45 cent exercise price and 2-year expiry) to new institutional investors, primarily located in North America, Europe and Australia.

16

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the period ended 31 December 2020

8 EVENTS ARISING SINCE THE END OF THE REPORTING PERIOD (continued)

In March 2021, Core, through its newly created 100% owned subsidiary Bynoe Lithium Pty Ltd ( Bynoe ) entered into a call option with Outback Metals Proprietary Limited ( Outback ) and Victory Polymetallic Pty Limited ( Victory ) (collectively the Grantors ) to potentially acquire six granted mining leases (ML29912, ML29914, ML29985, ML31654, MLN 813 and MLN 1148) ( Mineral Titles ) containing over 30 lithium pegmatite targets adjacent to the Project near Darwin in the Northern Territory ( Call Option Deed ). Bynoe has until 31 December 2021 to exercise its call option and may extend that date by three months until 31 March 2022 and a further three months until 30 June 2022, subject to paying $250,000 to the Grantors for each extension ( Call Option Period). During the Call Option period:

• Bynoe is granted an exclusive irrevocable licence and right to access and conduct exploration and land access assessment activities on the Mineral Titles at its own cost and risk. the Grantors are restricted from relinquishing, forfeiting, surrendering, or cancelling ground or rights under, or otherwise dealing with, the Mineral Titles; and

• title to the Mineral Titles remains with the Grantors.

Australia New Zealand Resources Corporation Pty Ltd ( Landowner ) owns the land underlying two of the Mineral Titles (ML 29985 and MLN 1148) and is also a party to the Call Option Deed and agrees to enter into a Covenant (described below) on exercise of the Call Option. Bynoe must pay $25,000 per annum to the Landowners as compensation and is to provide an additional $50,000 on signing the Call Option Deed in the form of cash or a bank guarantee as a security deposit for rehabilitation liabilities. If Bynoe (or its nominee) exercises and completes the call option transaction, the $50,000 will be returned or netted off the purchase price. The Landowner cannot deal with the underlying freehold during the Call Option period unless the third party taking an interest agrees to be bound by the terms of the Call Option including the requirement to enter into the Covenant. Bynoe can withdraw from the arrangement at any time. The Call Option will terminate at the end of the Call Option Period if it has not been exercised. If Bynoe exercises the option, subject to securing the appropriate authorisations, it must pay:

• (a) $5,000,000 to the Grantors, with $1,500,000 to be paid in cash and the balance of $3,500,000 to be paid in cash or CXO shares, at Core’s discretion (subject to any shareholder approval otherwise the balance of consideration will be cash). Any shares will be subject to a 4 month and 14-day escrow period.

• (b) Contingent consideration will also be payable of $500,000 to the Grantors, ($150,000 in cash and $350,000 in cash or CXO shares, at Core’s discretion (subject to any required shareholder approval)) for each 1mt JORC resource Bynoe discovers, capped at an aggregate amount of $5,000,000. Any shares will be subject to a 3 month and 14-day escrow period.

Completion is conditional on Bynoe securing Ministerial approval within 6 months after the call option exercise date. If Ministerial approval is not obtained, then Bynoe can elect to terminate and the consideration will not become payable. If the call option is exercised, the Landowners must enter into a Covenant in Gross (Covenant) with Bynoe which runs with and binds that part of the land which underlies the two Mineral Titles, ML 29985 and MLN 1148. The Covenant is to be registered. Under the terms of the Covenant, the Landowners agree to give Bynoe a right of first refusal to purchase the underlying land if the Landowner intends to sell the land, and otherwise undertakes to ensure any third-party purchaser is bound by the Covenant. Under the covenant Bynoe agrees to pay compensation to the Landowner in full and final satisfaction for any damage, disturbance, and loss of access to the land including as compensation under the Mineral Titles Act:

• (a) $500 per hectare per annum to the Landowner, for any part of the Landowner's underlying land that is subject to the Mineral Titles. Bynoe must pay this annual compensation until the Mine Development Date (being the date Bynoe secures authorisations to develop and operate a mine on either or both affected Mineral Titles and reaching a final investment decision; or it purchases the underlying land from the Landowner). No compensation will be payable if Bynoe does not undertake Mining Activities on the affected Mineral Titles in any 12-month period.

• (b) $1,900,000 (Indexed using Darwin CPI) to the Landowner, on the Mine Development Date.

Core guarantees the financial obligations of Bynoe under the Call Option Deed and the Covenant.

Upon execution, Core paid $500,000 for the option to acquire the Mineral Titles and issued a Bank Guarantee for $50,000 as security for the rehabilitation obligations in relation to any exploration on the mineral titles during the period up to completion under the Call Option Deed.

No other matters or circumstances have arisen since the end of the period which significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent period.

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Directors’ Declaration

In the opinion of the Directors of Core Lithium Ltd:

• a) the consolidated financial statements and notes of Core Lithium Ltd are in accordance with the Corporations Act 2001 (Cth), including:

• i) giving a true and fair view of its financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

• ii) complying with Australian Accounting Standard 134 Interim Financial Reporting; and

• b) there are reasonable grounds to believe that Core Lithium Ltd will be able to pay its debts when they become due and payable.

Signed in accordance with a resolution of the Directors:

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Stephen Biggins

Managing Director

Signed this 10[th] day of March 2021 in Adelaide, South Australia

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Independent Auditor’s Review Report

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