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Lithic Metals and Energy Limited

('Lithic' or the Company')

Interim results for the 6 months ended 30 September 2008

Lithic (AIM code: LMY), the AIM-quoted African nickel and uranium exploration company, today announces its interim results for the six months ended 30th September 2008.

MANAGING DIRECTORS' REPORT

I have pleasure in presenting the unaudited accounts of Lithic for the six months ended 30 September 2008. During this period, Lithic has established its exploration activities across its Zambia, Togo and Mozambique assets, making significant progress on all fronts.

Significant Events

• Commencement of Zambian uranium joint venture with Zambezi Resources Limited in April.

• Completion of 36,000 line km programmes of airborne radiometric surveys of Zambian uranium JV licences.

• Discovery of over 40 high priority uranium targets on Zambian properties.

• Commencement of exploration activities on Togo properties.

• Completion of airborne geophysical surveys over majority of Togo licences.

• Discovery of broad areas of greater than 1% nickel mineralisation on Mt Haito licence, Togo.

• Successful negotiation for 100% interest in Mavita nickel project, Mozambique from BHP Billiton.

• Completion of VTEM survey over Mavita nickel project.

In Togo, the Company has completed the initial evaluation of its licences through the undertaking of comprehensive geophysical surveys, data acquisition and review and field activities.

This work has lead to the discovery of significant nickel saprolite mineralisation at the Kpoté project, where nickel values greater than 1% are now confirmed in test pitting over an area exceeding 1600m x 650m. Geophysical data, field mapping and extensional test pitting indicate potential to significantly extend the known area of nickel mineralisation through additional exploration.

In Zambia, extensive geophysical surveys over a large proportion of our uranium joint venture licences have identified over 40 high priority uranium anomalies. Field evaluation of these targets has commenced, with the results from the majority of field samples submitted for analysis still pending.

On the Mavita licence in Mozambique, the Company negotiated out of clawback and offtake provisions in the Memorandum of Understanding with BHP Billiton and now holds the licences 100% unencumbered. The Company has just completed a detailed VTEM geophysical survey over the identified ultramafic lithology in the search for nickel sulphides. 

Current Positioning

The current turbulent market conditions and significant decline in all commodity prices has, in the directors' opinion, resulted in a rapid sentiment shift against junior exploration companies. It is globally recognised that poor market conditions will make access to ongoing funding for junior explorers extremely difficult in the short term at least, prompting the Company's board of directors to initiate a comprehensive review of operations and forward expenditure, with a view of ensuring effective long term management and allocation of its capital resources.

As a result, the Company has moved decisively to stabilise its investment portfolio, significantly reducing its exploration expenditure across all assets. Corporate focus has now shifted to preserving cash resources, and concentrating on the identification of natural resource opportunities capable of generating significant returns for shareholders.

Financial Information

The Company and it subsidiaries report a loss for the half year ended 30 September 2008 of £305,977 (compared to a loss of £588,212 for the six months ended 30 September 2007).

No dividend was paid or declared during the period.

The basic loss and diluted loss per share for the period was £0.01.

For more information please contact:

Jim Kerr	David Youngman/ Katy Mitchell	Laurence Reed
Lithic Metals & Energy Ltd	WH Ireland	Threadneedle Communications
Tel: +61 (0) 428 948 552	Tel: +44 (0) 161 832 2174	Tel: +44 (0) 20 7936 9696

Consolidated Statement of Comprehensive Income 

For the six months ended 30 September 2008

	Note	Unaudited  six months ended		Unaudited six months ended		Audited  year  ended
		September 2008		September 2007		March  2008
		£		£		£
Total revenue Other expenses	2 2	222,982 (528,959)		33,791 (622,003)		150,380 (987,075)
Deficit before income tax		(305,977)		(588,212)		(836,695)
Income tax expense		-		-		-
Deficit after tax for the half-year		(305,977)		(588,212)		(836,695)
Other comprehensive income:
Exchange differences on translation of foreign entities		158,570		(19,533)		(11,856)
Income tax effect		-		-		-
Total other comprehensive income		158,570		(19,533)		(11,856)
TOTAL COMPREHENSIVE INCOME/(DEFICIT) - attributable to owners		(147,407)		(607,745)		(848,551)
Earnings per share:
- Basic and diluted deficit per share	3	(0.01)		(0.01)		(0.01)

Consolidated Statement of Cash Flows

for the six months ended 30 September 2008

	Unaudited  six months ended			Unaudited  six months ended		Audited  Year  ended
	September 2008			September 2007		March  2008
	£			£		£
Cash flows from operating activities Payments to suppliers and employees Interest received Management fee received	(534,578) 99,690 122,893		(194,118) 33,791 -			(487,249) 150,380 -
Net cash utilised by operating activities	(311,995)		(160,327)			(336,869)
Cash flows from investing activities Payments for mineral exploration activities Purchase of RRCC Limited Payments for business development projects Payments for property, plant and equipment	(541,301) - (886,213) (156,662)		(60,441) - (33,647) (4,983)			(325,495) (114,318) (205,742) (131,149)
Net cash utilised by investing activities	(1,584,176)		(99,071)			(776,704)
Cash flows from financing activities Proceeds from issue of shares  Share issue costs	- -		1,992,500 -			6,000,000 (226,524)
Net cash generated from financing activities	-		1,992,500			5,773,476
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period	(1,896,171) 4,920,809		1,733,102 260,906			4,659,903 260,906
Cash and cash equivalents at end of the year - (Note 6)	3,024,639		1,994,008			4,920,809

Consolidated Statement of Financial Position

at 30 September 2008

	Note	Unaudited		Unaudited		Audited
		September 2008		September 2007		March 2008
		£		£		£
ASSETS
Non-current assets Property, plant and equipment Mineral properties Other assets	4 5	288,824 3,724,883 1,126,067		16,119 1,551,136 33,637		124,882 3,083,930 204,839
Total non current assets		5,139,774		1,600,892		3,413,651
Current assets Trade and other receivables Prepayments  Cash and cash equivalents	6	130,620 133,321 3,024,638		15,903 7,609 1,994,008		52,725 46,681 4,920,809
Total current assets		3,288,579		2,017,520		5,020,215
Total assets		8,428,353		3,618,412		8,433,866
EQUITY AND LIABILITIES
Current liabilities Trade and other payables Provisions		317,000 36,370		94,055 4,930		283,934 19,213
Total current liabilities		353,370		98,985		303,147
Total liabilities		353,370		98,985		303,147
Equity Issued capital Share premium account Options and Warrants Reserve Foreign currency translation reserve Accumulated deficit	8 8 9 9 9	1,522,972 7,838,278 272,492 113,251 (1,672,010)		753,741 3,826,533 109,699 (52,996) (1,117,550)		1,522,972 7,838,278 180,821 (45,319) (1,366,033)
Total equity		8,074,983		3,519,427		8,130,719
Total equity and liabilities		8,428,353		3,618,412		8,433,866

Statement of Changes in Equity

for the six months ended 30 September 2008

	Unaudited  September 2008
	£
Issued Capital
Opening balance as at 1 April 2008	1,522,972
Issued during the period	-
Closing balance as at 30 September 2008	1,522,972
Share Premium Reserve
Opening balance as at 1 April 2008	7,838,278
Premium on shares issued during the period	-
Closing balance as at 30 September 2008	7,838,278
Options & Warrants Reserve
Opening balance as at 1 April 2008	180,821
Recognition of share-based payments	91,671
Closing balance as at 30 September 2008	272,492
Accumulated Deficit
Opening balance as at 1 April 2008	(1,366,033)
Deficit for the period	(305,977)
Closing balance as at 30 September 2008	(1,672,010)
Foreign Currency Translation Reserve
Opening balance as at 1 April 2008	(45,319)
Exchange differences arising on translation of foreign operations	158,570
Closing balance as at 30 September 2008	113,251
Total of shareholders equity at 30 September 2008	8,074,983

Notes to the Annual Financial Statements

1. Key accounting policies

Lithic Metals and Energy Limited (hereafter 'Lithic' or the 'Company') is a company registered and domiciled in Bermuda whose principal activities comprise minerals exploration and development for the benefit of shareholders.

The Company's registered office is:

Canon's Court
22 Victoria Street

Hamilton HM 12
Bermuda

The financial statements incorporate the principal accounting policies set out below. Accounting policies of the subsidiaries are consistent with those of the holding company.

Statement of compliance

The Group financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB.

Basis of preparation

The Group financial statements are prepared on the historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Pounds Sterling, unless otherwise noted.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of Lithic and its subsidiaries (hereafter the 'Group' or 'Consolidated Entity') as at 30 September 2008, and the results of its subsidiaries for the six month period then ended. Subsidiaries are those entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than fifty percent of the voting rights so as to obtain benefits from its activities. The existing and effect of potential voting rights which are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Minority interests (when relevant) in the results are shown separately in the consolidated income statement and balance sheet respectively.

The Group financial statements incorporate the assets, liabilities and results of operations of the Company and its subsidiaries acquired and disposed of during a financial period. These assets, liabilities and results are included from the effective dates of acquisition to the effective dates of disposal. Where necessary, the accounting policies of subsidiaries are changed to ensure the consistency with the policies adopted by the Group.

Mineral exploration expenditure

Exploration and evaluation costs incurred by the Group are accumulated separately for each area of interest. Such costs comprise net direct costs and an appropriate portion of related overhead costs, but do not include general overheads or administrative costs that do not have a specific association with a particular area of interest. Exploration and evaluation costs are carried forward to the extent that:

a) such costs are expected to be recouped through the successful development and utilisation of the area of interest, or alternatively by its sale; or

b) exploration and evaluation activities in the area of interest have not reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.

In the event that an area of interest is abandoned or if the Directors consider the costs incurred exceed the area of interest's recoverable amount, accumulated costs carried forward are written off in the year in which that assessment is made.

Exploration and evaluation costs are not carried forward in respect of any area of interest unless the Group's right of tenure to the property is current. Depletion is not charged on areas of interest under development until commercial production commences, at which time it will be recorded using a units of production basis which will be based on the mineral mined at each area of interest relative to the estimated resource relating of that area of interest.

Revenue recognition

Interest revenue is recorded on a time proportion basis, based on the effective yield of the asset. The effective yield of the asset is the rate of interest required to discount the stream of future cash receipts, expected over the life of the financial asset, to equate to its net carrying amount.

Foreign currency

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in Pounds Sterling which is the functional currency of Lithic Metals and Energy Limited and is the presentation currency for its consolidated financial statements.

Foreign currency translations are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Translation differences on non-monetary items, such as equities held at fair value through the profit and loss, are reported as part of the fair value gain or loss. 

The results and financial position of the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: 

• Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.;

• Income and expenses for each income statement are translated at average rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, in which case income and expenses are translated at the dates of the transactions); and

• All resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and borrowings are taken to shareholders equity. When a foreign operation is sold or borrowings repaid, a proportionate share of such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Earnings per share and dilutive earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other finance charges associated with diluted potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

2. Reconciliation of Loss

The deficit before income tax was after the following income and expenses:

	Unaudited six months ended  September 2008	Audited  six months ended September 2007	Audited  year ended  March 2007
	£	£	£
Interest income	99,690	33,791	150,380
Management fee received	122,893	-	-
Profit on asset write-off	399	-	-
Total revenue	222,982	33,791	150,380
Auditors' remuneration
- audit services	(5,800)	1,425	(18,313)
Depreciation	(7,934)	(740)	(3,434)
Directors' fees	(39,327)	(18,750)	(43,908)
Exploration expenditure written off	-	(352,897)	(352,753)
Foreign exchange losses	(73,617)	(2,529)	(16,016)
Other costs	(175,405)	(138,301)	(232,220)
Personnel costs - defined contribution plan	(13,159)	-	(1,967)
Personnel costs - salaries	(122,046)	(72,515)	(209,646)
Share-based payments	(91,671)	(37,696)	(108,818)
Total expenses	(528,959)	(622,003)	(987,075)
Deficit for period	(305,977)	(588,212)	(836,695)

  

3. Loss Per Share

The calculation of the loss and diluted loss per share is based on the deficit for the financial period of £305,977 (2007 - £588,212) and the weighted number of average ordinary shares of 152,297,197 (2007 - 63,570,841). No warrants or options have been taken into account for the diluted loss per share as the impact of these instruments is non-dilutive.

Shares	Unaudited six months ended  September 2008	Unaudited  six months ended  September 2007	Audited year ended March 2008
Basic weighted average number of ordinary shares on issue	152,297,197	63,570,841	95,550,665
	£	£	£
Basic loss per share	(0.01)	(0.01)	(0.01)
The diluted loss per share is the same as the basic loss per share as the effect of the share options is non-dilutive.

4. Mineral Interests

a)  Reconciliation

	Unaudited six months ended  September 2008	Unaudited  six months ended September 2007	Audited  year ended   March 2008
	£	£	£
Opening balance	3,083,930	1,856,849	1,856,849
Exploration costs capitalised for the period	566,858	65,094	350,271
Purchase of exploration licences	-	-	1,236,371
Exploration costs written off	-	(352,897)	(352,753)
Foreign exchange movements	74,095	(17,910)	(6,808)
As at 30 September 2008	3,724,883	1,551,136	3,083,930

b)  Exploration expenditure per project

	Unaudited six months ended   September 2008	Unaudited  six months ended  September 2007	Audited  year ended   March 2008
	£	£	£
Group exploration projects
Mitaba	1,578,636	1,411,557	1,488,897
Haito	606,473	-	384,445
Pagala	445,716	-	339,386
Niamtougou	419,738	-	328,423
Kara	331,839	-	317,669
Mavita	342,481	139,579	225,110
As at 30 September 2008	3,724,883	1,551,136	3,083,930

  

5. Other assets

	Unaudited six months ended   September 2008	Unaudited  six months ended  September 2007	Audited  year ended   March 2008
	£	£	£
Opening balance	204,839	-	-
Investment in uranium JV farm-in projects for the year	921,228	33,637	204,839
Business development costs	1,126,067	33,637	204,839

Lithic is farming into a uranium Joint Venture with Zambezi Resources Limited. The costs associated with this farm-in are capitalised to business development projects and forms part of acquisition costs once the farm-in is earned. In the event that Lithic decides not to proceed with the Joint Venture, all costs capitalised to the Joint Venture will be expensed.

6. Cash and cash equivalents

	Unaudited six months ended   September 2008	Unaudited  six months ended  September 2007	Audited  year ended   March 2008
	£	£	£
Cash on hand and at bank	311,307	166,970	239,909
Cash on term deposits	2,713,331	1,827,038	4,680,900
Total cash and cash equivalents	3,024,638	1,994,008	4,920,809

7. Investment in Subsidiaries

At 30 September 2008, the Company had interests in the following subsidiaries:

Company	Country of Incorporation	Holding Company	Class of Share Capital Held	% Held	Nature of Business	Investment Cost
						£
MR Nickel (Bermuda) Limited	Bermuda	Lithic Metals and Energy Limited	Ordinary	100	Exploration	7,500
MR Nickel Limited	Zambia	MR Nickel (Bermuda) Limited	Ordinary	100	Exploration	12
Zambezi Niquel Mozambique Limitada	Mozambique	MR Nickel (Bermuda) Limited	Ordinary	100	Exploration	420
RRCC Limited (BVI)	British Virgin Islands	Lithic Metals and Energy Limited	Ordinary	100	Exploration	1,246,566
Regent Resources Capital Corporation SAU	Togo	RRCC (BVI) Limited	Ordinary	100	Exploration	10,195

Loans by the Company to its subsidiaries are at call, interest free with no agreed fixed terms of repayment. The Company has undertaken not to recall the loans within 12 months from the date of this report unless the respective subsidiaries are in a financial position to do so. The balance owing by subsidiaries at 30 September 2008 was £1,568,694.

8. Issued Capital

The Company has 302 million authorised ordinary par value shares at £0.01 each.

	Number of Shares	Issued Capital	Share Premium
	£	£	£
Issued and fully paid
Balance at 1 April 2007	35,374,120	353,741	2,234,033
May 2007 placement issue	40,000,000	400,000	1,600,000
Capital raising costs			(7,500)
Balance at 30 September 2007	75,374,120	753,741	3,826,533
November 2007 placement issue	61,538,462	615,385	3,384,615
Issued for RRCC Ltd acquisition	15,384,615	153,846	846,154
Capital raising costs		-	(219,024)
Balance at 30 September 2008	152,297,197	1,522,972	7,838,278

Notes

a. There were 10,900,000 share options outstanding at the beginning of the period.

b. 2,000,000 share options were issued during the period.

c. No options were exercised during the period.

d. No options expired or were forfeited during the period.

e. The total of share options outstanding at the end of the period was 12,900,000.

f. The weighted average price of the share options outstanding at the end of the period was £0.11. 

9. Reserves

	Share premium reserve	Accumulated deficit	Foreign currency translation reserve	Options and warrants reserve
	£	£	£	£
As at 1 April 2008	7,838,278	(1,366,033)	(45,319)	180,821
Movements during the period	-	(305,977)	158,570	91,671
As at 30 September 2008	7,838,278	(1,672,010)	113,251	272,492

• The share premium reserve reflects the amounts received for the issuance of shares in excess of the par value of the share.

• The accumulated deficit represents the Group's operational losses since incorporation.

• The foreign currency translation reserve represents the foreign exchange movements on the translation of all foreign entities controlled by the Group. 

• The options and warrants reserve represents the value of all share based payments made to directors, staff and other persons as measured by the Black Scholes valuation model. The respective amounts are transferred out of the reserve and into share capital and share premium accounts as and when the options and warrants are exercised.

10. Commitments

On 21 May 2007 the Group entered into a joint venture 'Heads of Agreement' with Zambezi Resources Limited (hereafter 'ZRL') and signed the farm-in Joint Venture agreement on 28 April 2008 in which Lithic has the right to explore for uranium on certain of ZRL's mining licences. In terms of the agreement Lithic is required to contribute in aggregate US$5 million, over a period of 2.5 years, for a 51% equity participation in both Oryx Resources Limited and Sothern African Resources Limited. To achieve the 51% holding, Lithic must still contribute US$2,954,093 in aggregate, to the respective companies.

The Group had no contingent liabilities at 30 September 2008.

  

11. Post-balance Sheet Events 

On 16 October 2008 Dr Geoffrey Ian Johnson resigned as a Director of the Company following his relocation to Adelaide.

12. Related Party Transactions

The Group leased office premises and shared certain administrative overheads with Zambezi Resources Limited and during the period made payments of £233,480 to the Company. At period end the Group had an outstanding obligation of £43,120 payable to Zambezi Resources Limited. 

On 28 October 2008 Zambezi Resources Limited sold its shareholding of 26,633,621 ordinary shares in the Company in volatile market conditions. In order to stabilise the Company's shareholding and its Zambian investments, these shares were acquired at short notice by Lithic directors and management. At the date hereof the Company announced the restructuring of this transaction as a buyback of the shares acquired by directors and management by the Company following the lapse of the close period dealing restrictions.

13. General

Detailed financial statements for the 6 months ended 30 September 2008 can be viewed on the Company's web-site at www.lithicme.com.

Authorised on behalf of the Board.

                

James Kerr	Julian Ford
Director	Director
Date: 31 December 2008	Date: 31 December 2008

ENDIR WUGCUPUPRGPU