Attention: Shareholder

LETTER TO SHAREHOLDERS

Dear Fellow Shareholder of Global Lithium Resources,

Since my last Letter on 11 September 2024, we have made some progress. The two Directors whose resignation I was calling for have stepped down and we have agreed to the resolution seeking support for my election to the Board being included in the Annual General Meeting at 4:00pm (AWST) on 20 November, 2024 at The Westin Perth, 480 Hay Street, Perth.

A NEW BOARD WITH

 A FOCUS ON 

OUTCOMES

While the size of the Board has been reduced there remains much to be done. Changing the composition of the Board is key to ensuring that new energy and a laser-like focus on delivering outcomes for shareholders is part of setting a new course for our Company. Independent analysts have supported the push by shareholders to nominate new Directors to the Board, seeing it as an important step “to recalibrate the company’s strategy”. I am of the view that the Board must:

1.    drive the delivery of milestone outcomes and move towards production, instead of continuing to focus on further exploration;

2.    be more agile and able to ensure information released to market is fully detailed; and

3.    focus on increasing shareholder value and securing investor confidence in future outcomes.

THE EVIDENCE FOR 

CHANGE

A fall in the lithium price should not be used as an excuse for the extremely poor performance of this Company. Before instigating my request for shareholders to vote on my appointment to the Board,

I conducted a thorough review of Global Lithium’s performance from their recent announcements and conclude that the Board was asleep at the wheel. Projects and outcomes promised in July were not being delivered and, at a time when other mining companies were focused on cost cutting and reducing the size of their Boards in response to changing market conditions, it remained business as usual at Global Lithium.

Cutting Costs

Since I started asking questions and pushing for change, the Board has started to cut costs. At a corporate level this has meant allowing senior management to work less days. In my view, when a company is in a crisis, cost cutting should be about working hard to get through tough times and reducing salaries, not working less.

As a Director, I would demand more effort, that projects be delivered, management work hard and that salaries are reduced until such time as conditions improve and they can be increased. If bonuses are good enough in the good times, cut backs and working hard to get through the tough times should also be expected.

I know what it takes to grow a company and manage through the down times, to manage large construction projects and drive them to completion. As a Director, I understand that the role is different, but as a fellow shareholder I will also be very focused on results for all shareholders.

“Pausing” the Definitive Feasibility Study

In the face of a fall in the lithium price the current Board has adopted a strategy that will, in my view, have serious consequences for the long-term viability of this company.

The Board elected to undertake cost cutting measures by putting an immediate pause on several components of work in relation to the Definitive Feasibility Study (“DFS”) for the Company’s 100% owned flag ship operation, the Manna Lithium Project. This is despite being told in July that studies would be completed by the end of 2024.

We need to continue to focus on our lithium projects and undertake the necessary studies into the Capital Expenditure (Capex) and Operational expenses (Opex) of the project which will be used for determining the Project’s viability. You cannot stop and start projects at will. I am concerned that we have spent a lot of money and time on the DFS and other studies and their benefit will be lost.

Yes, we want to cut costs on those matters that are not critical to shareholder return, but commodity prices are cyclical so to abandon all the work that has been completed on the Manna Project demands an explanation and shareholders have not been given one.

Strategic Shift to Copper and Gold?

The Board has also announced that Global Lithium will focus on being an exploration company. They are committing the company’s valuable cash resources to the evaluation of multi-commodity exploration opportunities on current tenure. Significant copper/gold exploration opportunities on the Marble Bar acreage are currently being considered for farm-out or drilling.

This in my view is an overreaction. Global Lithium has only $21m in cash which is not sufficient to make such a strategic change.

What we need to do

It is absolutely essential that the company shift its focus back to developing the existing resources instead of further exploration activities. We must start delivering outcomes and this starts with pressing forward on delivering the following:

1.    A Native Title Mining Agreement;

2.    A Mining Licence; and

3.    A Definitive Feasibility Study.

If we wait until the market turns around, it will be too late as others will have used the time to meet the inevitable increase in demand. We must be ahead of the curve not always chasing to catch up.

A BOARD UNDER 

PRESSURE

From the moment I began to engage with the Company and its Chairman about joining the Board, their approach has been litigious.

A bias towards litigation and legal fees

In response to my request to requisition a Meeting they immediately tried to delay the process by applying to the Supreme Court for orders to combine the requisitioned meeting with the AGM, ostensibly to save costs. I had thought that this information should be in the hands of the

shareholders as soon as possible, and that they should decide whether fresh non-executive directors would benefit the company. Instead the company refused my offer to pay the $17,840 Meeting fee quoted by the Board and chose to fight for a delay of the requisitioned meeting.

The latest quarterly cashflow summary records that over $1m was spent on administration and corporate costs, including restructuring and legal advice costs related to the Sec 249D process.

It remains unclear to me why the Chairman elected to spend significant sums of shareholder’s money on legal fees rather than talking with me directly. Shareholders are entitled to ask exactly how much of their money was spent on unnecessary legal costs at a time when cash preservation is supposed to be the Board’s priority.

Whatever it takes…

The Board has also intimated that my wish to become a Director carries with it some risk to the Company. In the ASX Announcement on 22 October they suggested the delay to the Meeting was needed to give it time to “examine potential corporate governance issues relating to the rights of all shareholders under the Corporations Act and the Foreign Acquisitions and Takeovers Act”.

What they are implying is that because I am originally from China I am in a position to breach these laws, despite the evidence to the contrary, namely:

—   I am an Australian citizen and started my business, Sincerity Developments, here in 2009;

—   I am the third largest shareholder in the company; and

—   I have supported the company for more than 2 years and the Board has frequently contacted me to ask my opinion on how business performance could be improved.

Further evidence of this Board’s reckless financial management can be found in the last quarterly cashflow report. They spent $5.3m in that time leaving a cash balance of only $21.5m compared to around $62m at the beginning of FY24. This is far too much for an exploration company to spend in three months without clear justification. It suggests that the Company will need to return to the market within the year if nothing changes and it continues to focus solely on exploration.

The Board is investing a lot of time and money to undermine me and prevent my appointment to the Board. I suspect it is because they know I will ask the hard questions and insist that Board and management lead by example in cutting costs.

The DFS has been paused since 10 September. I will challenge their decision not to complete the DFS. If mining proved to be totally unfeasible because the price for Lithium Carbonate is too low, then I want to know and you, the shareholders, also have the right to be informed.

Like you, I invested in this company based on the clear position of information released to the market by the Company, both about its deposits and that it was moving towards production. We would all like the company to successfully develop into production but without the benefit of a DFS, that is critical to future investment decisions, we stand to lose momentum.

WHAT I CAN BRING 

TO THE BOARD

Sincerity is the third largest shareholder in Global Lithium and has a large stake its success. I have a close relationship with the local Indigenous Groups that is built on mutual respect. I will use my connections to develop Native Title Agreements with the Kakarra Part B Native Title claim group.

I know how to move our company into the construction and mining phase. I am experienced and capable. I expect outcomes and I work tirelessly to produce them. I have done this in my own businesses, and I can do it for Global Lithium Resources.

I have a bachelor’s degree in information technology from the University of Shanghai. I have successfully built and maintained a profitable building company in Australia at a time when many builders have gone bankrupt.

Unlike the current Board, I know what it means to be efficient, effective and how to deliver results. My focus and priorities will be on

—   ensuring we spend every dollar wisely;

—   increasing shareholder value and restoring investor confidence;

—   delivering project milestones.

We cannot afford to waste more time and money. We need a Director who can bring a different perspective, and who will act without fear based on the best information available. I will ensure full transparency on decision making so that you, as a fellow shareholder, can make fully informed decisions regarding your investment.

HOW I INTEND TO 

VOTE

While the pre-filled proxy form only includes a vote for my election, several shareholders have asked me how I intend to vote. The following summary is provided for those who are interested in my guidance on how to approach voting on each resolution.

Resolution 1: Adoption of the Remuneration Report

Vote: AGAINST

I am voting AGAINST the Adoption of the Remuneration Report partly because

I consider that there is more to be done to reduce the Company’s corporate costs but also to draw a line in the sand. If the company receives more than 25% of votes against this non-binding resolution it will record its first strike which puts the Board on notice that shareholders are not happy and need to see change.

Resolution 2: Election of Director Matthew Allen

Vote: AGAINST

My vote AGAINST Matt Allen is related to my concern about costs. His role as Executive Director for Finance is completely unnecessary for an exploration and development company at this stage, causing unnecessary financial and staffing expenses.

Resolution 3: Appointment of Director – Liaoliang Zhu

Vote: FOR

Reasons as outlined in this letter.

Resolution 4: Appointment of Director – Dr Dianmin Chen

Vote: FOR

Dr Chen is a founding Director of Global Lithium and a mining engineer with more than 35 years’ experience in the mining and metals industry. He has been actively involved in the Manna DFS.

Resolution 5: Approval to reduce the maximum number of Directors to 3

Vote: OPEN

In relation to my resolution to reduce the maximum number of Directors to three, my intention was for this to support the lowering of overall personnel costs for an interim period only, not a permanent restriction.

Resolution 6: Approval to issue Incentive Performance Rights to Director – Ron Mitchell

Vote: AGAINST

Resolution 7: Approval to issue Incentive Options to Director – Ron Mitchell

Vote: AGAINST

Resolution 8: Approval of grant of potential termination benefits to Executive Chairman – Ron Mitchell

Vote: AGAINST

Resolutions 6-7-8 are all personal benefits for the Chairman. Given the company’s poor performance and 81% fall in stock price since the beginning of 2024, it’s shameless for him to request increases in his personal benefits.

Resolution 9: Appointment of Director – Dr Xiaoxuan (David) Sun

Vote: OPEN

While I am familiar with the other candidates up for election, I feel I am not qualified to advise shareholders on how to vote for Dr Sun, so leave this to your discretion.

STAYING IN TOUCH

We have a number of ways in which shareholders can get in touch with us or stay up to date with what we are doing.

Sincerity Information Line for Global Lithium Shareholders

As of Monday 4 November, a shareholder information line and online chat facility will be open from 9:00am to 7:00pm AEDT, Monday to Friday, for shareholders to get in contact if there are any questions, concerns or issues regarding how to vote.

—   1300 648 874 (calls within Australia)

— +61 2 8355 1000 (calls outside Australia)

—   access the online chat facility at: chat1.shareholdersfirst.com.au or via this QR code

Facebook

Search: ‘Global Lithium Shareholder Activism Campaign’. Our Facebook page will keep you connected to our latest news.

Microsite

Dedicated Microsite for Global Lithium shareholders – www.votewithsincerity.com.au

This includes relevant documents relating to our campaign, including:

—   Letters to Shareholders

—   The pre-filled proxy form for download

—   Video interviews

—   Our facebook page link

CONCLUSION

The next two weeks will be an important time for Global Lithium Resources shareholders as they decide how their Company will be managed and the direction it will take. If we stay with the current Board there will be no meaningful attempt to reduce corporate costs and the Company’s valuable cash resources will be gambled on exploring for gold while its most valuable asset, the Manna Lithium Project, is mothballed until the lithium price recovers.

Change is desperately needed if the value already embedded in the Manna Project is to be preserved and further investment made to position the Company for the next phase of the cycle. I look forward to your support in making that change happen.

Yours sincerely,

Liaoliang (Leon) Zhu

Sincerity Development Pty Ltd Signature of Sole Director/Secretary Liaoliang Zhu