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DJ Cadence Minerals PLC Results for the Year Ended 31 December 2019

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RNS Number : 1468R

Cadence Minerals PLC

26 June 2020

Cadence Minerals Plc

("Cadence Minerals", "Cadence" or "the Company")

Results for the year ended 31 December 2019

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to announce its final results for the year ended 31 December 2019. A copy of the full results will be made available on the Company's website from today at https://www.cadenceminerals.com/

- Ends -

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

For further information:

 
 Cadence Minerals plc                   +44 (0) 207 440 0647 
 Andrew Suckling 
 Kiran Morzaria 
 
 WH Ireland Limited (NOMAD & Broker)    +44 (0) 207 220 1666 
 James Joyce 
 James Sinclair-Ford 
 
 Novum Securities Limited (Joint 
  Broker)                               +44 (0) 207 399 9400 
 Jon Belliss 
 

Chairman's Statement

For the year ended 31 December 2019

___________________________________________________________________________________

First and foremost our thoughts are with families and friends, shareholders and investors during this shape-shifting pandemic. The Board and I hope all have found comfort and safety, well being and support during these extraordinary and unprecedented times.

There is no doubt that such turbulent conditions have created major disruptions and dislocations. However the Board has been well prepared and ready. I thank my fellow Board members for this dynamism and effort. Cadence Minerals ("Cadence" or the "Company") staff and management have been used to working remotely and via phone/ video conference and quickly adapted to this new challenge.

The Board has continued its driven agenda to proceed with the support for portfolio companies whilst at the same time progress with the main target of the Amapá iron ore project in Brazil.

To this effect and to highlight a few of the achievement by our portfolio companies I would like, with the Board to offer congratulations to MacArthur Minerals on the successful conclusion of its convertible note, the life of mine Off -take agreement with Glencore and the successful listing on the Australian Stock Exchange. These are noticeable achievements for the company and combined with the ongoing successful drilling campaigns at Lake Giles bodes well.

Further European Metal Holdings successfully concluded a lengthy negotiation with the Czech utility company CEZ. This will allow EMH to complete many of its strategic goals and to become one of Europe's largest and lowest cost lithium producers.

Hastings Technology are JV partner in the Yangibana Rare Earths project also concluded and completed a negotiation with the German based Schaffler Group that will enable the company to pursue its targets.

The Board hope that the next few years will witness a significant harvest as projects progress to operation and revenue, and previously identified opportunities realise higher valuations. All management companies of the portfolio companies within Cadence are wished the best of success.

The recent economic contraction has been severe and turbulent. However our investments have always been based on long-term assumptions and not the idiosyncrasies of the market. There is significant hope that recently announced global stimulus measures will lead to a re opening and recovery sooner than later. This will contribute to a significant appreciation in the company's portfolio and therefore revenue and shareholder return.

Cadence's focus on iron ore opportunities appears particularly timely. The stimulus measures specifically relate to infrastructure which benefits Steel demand which by derivative benefits Iron Ore consumption. Argus publications have reported April and May 2020 China steel production higher than that in 2019 and have predicted that China will produce over 1 billion tons of Steel in 2020. This will require more Iron Ore globally and should support the long term Iron Ore price.

China have announced over $140 billion in provincial bonds with increasing government incentives in real estate and infrastructure, which account for over fifty percent of Chinese domestic Steel demand. It is clear that steel production and therefore Iron Ore demand is at the front and center of global stimulus policy.

A rapid global supply response to higher iron ore prices and steel demand has some serious headwinds and constraints. The tragic events at Vales Brumadinho operations and the higher capital costs of new projects represent such challenges. Economic and political struggles combined with higher governance and regulation means operational consistency and good fortune is required to continue to supply the insatiable Steel demand.

Cadence has focused enormous efforts on the Amapá iron ore project. It is immensely pleasing for the board that significant milestones and hurdles were recently achieved, all whilst the global economy was on " pause" Cadence and its partners, lawyers and consultants all maintained dialogue and pressure to focus on the process to achieve significant results. This will initially result in the movement of of iron ore currently stockpiled and ultimately in the rehabilitation of the Amapá system. As the opportunity progresses the Board is cognizant of the need for sustainability at all levels of the opportunity. The performance and Governance metrics that will be required to re habilitate the mine; port and rail will be stringent and strict.

Cadence has proven its ability to be flexible, opportunistic and survive and thrive. The Board feels the underlying conditions are developing to optimise the portfolio.

I would like to personally thank all Cadence's management, fellow board members, staff ,consultants, partners and of course all Shareholders for their support and confidence in the Company.

Andrew Suckling

Non Executive Chairman

25 June 2020

CADENCE MINERALS PLC

Strategic Report

For the year ended 31 December 2019

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Chief Executive Officer's Review

Cadence's investment portfolio has advanced significantly over the year. The focus of our efforts has been the advancement of the Amapá iron ore project and we have spent most of our human and investment capital there.

In addition, given the capital constraints we continue to see within the equity and debt markets our view is that early stage exploration assets will have a difficult time raising sufficient capital to progress up the development curve, therefore we have sought to retain, where possible, the investments which have the highest probability of attracting capital and entering production and disposed or ceased further investment of those that do not.

This has meant that our portfolio in now focused on assets that are at the scoping study to pre-construction stage of development. Along with the relatively advanced nature of these projects we believe that they have the right cost structure and scale to deliver a substantial return to Cadence.

As mentioned above most of our efforts has been focused on the Amapá iron ore project in Brazil ("Amapá Project"). The terms of our investment were finalised in June 2019, which meant Cadence could earn in up to 27% (for US$ 6 million) in the project. In addition to the above we have a first right of refusal to increase our percentage up to 49%.

Prior to its sale in 2012 Anglo American valued its 70% stake in the Amapá Project at US$866 million (100% 1.2 billion) and after impairment at US$462m in its 2012 Annual Report (100% US$600m) and during its operation the mine generated an annual operating profit of up to U$171 million (100%).

During the remaining of the year along with our partners we progressed the development of the asset through the legal process and achieved some significant milestones and importantly subsequent to the year end the owner of the Amapá Project was granted authority to commence shipment of iron ore stockpiles situated at the wholly-owned port in Santana, Amapá, Brazil.

As we have mentioned on numerous occasions, the opportunity to be able to invest in such a project is rare within in our industry and we believe this project provides us with a potentially transformative asset for Cadence. The Amapá project gives the Company the potential for an exceptional return on investment in the run-up to full production and an opportunity to become a significant shareholder in a mid-tier iron ore producer.

Elsewhere in our investment portfolio, of note was the progress made by European Metals Holdings, which completed its preliminary feasibility study that through process optimisations and the production of lithium hydroxide saw an increase in NPV to in excess of USD 1 billion dollars. Most importantly, it shows a globally competitive cost of $3,435/t per tonne of lithium hydroxide. In addition and subsequent to the year end European Metals Holdings secured and completed an investment from CEZ a.s. of EUR 29.1 million for a 51% equity interest in Geomet, the Company's Czech subsidiary and holder of the Cinovec licenses

Strategy

Cadences' strategy has continued to evolve and as stated above, given the current dearth of capital of early exploration projects, the Company has focused on assets that are in the more advanced stages of development, which are therefore more likely to reach production and deliver returns to Cadence. Even so the risk associated with investing in any resource projects at these stages is still relatively high as assets are more sensitive to external risks, such as financing and regulatory. Therefore, and to mitigate these risks, our goal from the outset is to obtain a deep fundamental understanding of the asset, its potential economics, operating and legal environment and its management team.

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By doing so, we can eliminate many of the potential investments that we review during the year and fund projects that we believe will deliver value to our shareholders. We look to fund projects via earning in, at solely our option, and if possible, look to incentivise our joint venture partners via equity in Cadence against deliverables that will add value. Importantly we also take an active approach to our investments by being part of the management team and enshrining our minority shareholder protections in joint venture agreements.

Outlook

At the time of writing all our major investments are progressing well . We will continue to review our investments in our investee companies, with regular meetings with management. Assuming we can complete our investment in the Amapá Project, the coming year will be focused on developing this asset, which if successful has the potential to deliver substantial value to Cadence.

Market Review

Lithium

During 2019 approximately 315,000 tonnes of lithium carbonate equivalend was consumed, up from 261,000 tonnes consumed in 2018. This increase were mainly driven by the increasing sales of electric vehicles in USA and Europe. Nonetheless during 2019, battery-grade lithium prices in China softened throughout the year to US$8,750per tonne by year end, this was due to the oversupply of spodumene concentrates form expansions or new operations in Australia.

This reduction in pricing has resulted in significant reductions in supply from the high costs Australian spodumene producers. Therefore with the higher cost producers, in part, exiting the market the current consesnsus indicate higher prices in the medium to long term and in November 2019, Canaccord estimated battery-grade lithium carbonate at US$13,000 per tonne by 2026 with long-term price of US$15,000. The evidence this year only further supports our investments in European Metals Holdings and our Joint Venture with Bacanora Minerals both of which are developing fully intergrated lithium projects that produce final EV grade lithium products at a much lower cost than low-grade intermediate concentrate.

In terms of the primary terminal market of the lithium products China produced 1.2 million EV's and Tesla produced circa 365,000vehicles in 2019. The German automotive manufacturers led by Volkswagen continue to aim for 50% EV production by 2025. Advances in battery and automotive design to make mass-market EVs cost competitive are now on the near horizon, which could be the tipping point for the lithium market. Market commentators are forecasting lithium carbonate equivalent demand of approximately 1 million tonnes per annum by 2025, this equates to more than 20 new mines with an average capacity of 25,000tonnes per annum to be commissioned within the next 5 years to meet demand.

Iron Ore

The iron ore market has experienced dramatic events in the last year. The tragedy caused by the failure of the Brumadinho tailings dam has led to extensive closures of production in Brazil which are likley to continue for the foreseeable future. In addition, earlier this year Australia experienced a cyclone that resulted in a reduction of iron ore exports of approximately 14 million tons in the first quarter of 2019 and caused a meaningful reduction in supply of benchmark iron ore product.

The crackdown by the Chinese government on th level of pollution resulting from domestic steel production plant has caused a change in the purchasing behaviour ofthe iron ore market's biggest consumer.This has led to a substantial increase in prices of high quality iron ore products, with high iron content itself (improving yield in a steel plant) and lower impurity levels, requiring less coking coal and having a significantly reduced environmental impact.The scale of the price premiums being paid for these high quality iron ore products has significantly exceeded market expectations. This underlines the importance of projects with ores capable of producing premium products like the Amapá Project.

Investment Review

Amapa Iron Ore Project ("Amapá Project")

In June this year Cadence entered into a binding investment agreement to invest in and acquire up to a 27% interest in the former Anglo American plc ("Anglo American") and Cliffs Natural Resources ("Cliffs") Amapá iron ore mine, beneficiation plant, railway and private port owned by DEV Mineração S.A. ("DEV") ("The Agreement"). The Agreement also gave Cadence a first right of refusal to increase its stake to 49%. Further details of The Agreement can be found in later sections of this investment review.

The Amapá Project is a large-scale iron open pit ore mine with associated rail, port and beneficiation facilities which commenced operations in December 2007. Production increased to 4.8 Mt and 6.1 Mt of iron ore concentrate product in 2011 and 2012 respectively. Before its sale in 2012 Anglo American valued its 70% stake in the Amapá Project at US $462m ( 100% US $600m).

To acquire its 27% interest Cadence will invest US$ 6 million over two stages in a joint venture company ("JV"). The first stage is for 20% of the JV the consideration for which is US$2.5 million. The second stage of investment is for a further 7% of JV for a consideration of US$3.5 million. The investments are wholly contingnet on DEV delivering several key preconditions.

For the first stage of investment the primary precondtions were the creditor approval of the judicial restructuring plan ("JRP"), the reinstatement of the the railway licenses and reaching a settlement agreement with the secured bank creditors ("Bank Creditors"). DEV working alongside Cadence and its joint venture partner Indo Sino Pty. Ltd. ("Indo Sino") managed to satisfy the first two preconditions in August and December 2019 respectively. A settelment with the Bank Creditors is the key precondition that still remains outstanding. Negotiations are still ongoing with the Bank Creditors and we hope to achieve a settlement as quickly as possible.

Once this precondition has been met, Cadence will release its monies held in escrow (US$2.5 m) at which point Cadence will become a 20% shareholder in the Amapá Project via our joint venture company which will own 99.9% of DEV.

The second tranche of investment, increasing Cadence's interest to 27% for US$3.5 million, is contingent on the DEV getting all the key environmental and operational licenses reinstated.

Subsequent to the year end and while negotiaitons with the Banks Creditors have been ongoing DEV filed a petition, which amongst other requests, asked for permission to start the export of US$10 million of iron ore (net of costs) from the 1.39 million tonnes held in stockpile at the DEV's port in Santana, Amapá, Brazil. This was granted in April 2020. at the time of writing transport of the the material from DEV's port to the public port has begun and DEV expects to be able to start shipping in early Q3 2020.

The net proceeds of the sale of the iron ore, are to be used to pay historic small and employee creditors (US$2.5 m). Thereafter funds will be used to begin recommissioning studies on the asset including plant, railway and port and to start maintenance and monitoring of the current tailing dam facilities ( US$ 6 m). Lastly the remaining ( US$ 1.5 m) will be used to provide ongoing working capital and a payment held in escorw until a settlement is reached with the Bank Creditors.

DEV also filed a further petition, its primary request was that the Commercial Court of São Paulo ("Court") remove the secured bank creditors liens ("Bank Liens") over DEV and its assets. The Court has asked the Bank Creditors to reach an ageement with DEV, Cadence and Indo Sino or enforce its security. In the absence of an agreement the Court may rule on the removal or annulment of the Bank Liens and consider the Bank Creditors as unsecured.

The Amapá Project and Current Planned Development

As part of its due diligence and assessment Cadence has carried out multiple site visits and commissioned SRK Consulting to provide it with a high-level review of the Amapá Project. This review was based on a site visit, historical analysis and the review of technical independent engineers reports published 2013 and 2015. It should be noted that this review provides a basis for a preliminary assessment of the project and its potential but further, more detailed reviews and analysis would be required to provide a Pre-Feasibility or Feasibility Study level report. This would include amongst other things, providing a current Mineral Resource Estimate and/or Ore Reserves, updated capital and operating costs and an independent assessment of key economic drivers and returns.

The Amapá Project consists of an open pit iron ore mine, railway and port facility and is located in Amapá State, northeast Brazil. The Amapá mine site, forming part of the Amapá Project, is located near the towns of Pedra Branca do Amapári, and Serra do Navio, approximately 200km northwest of Macapa.

In 2012 the operation produced 6.1 Mt of iron ore concentrate and reported operating profits from their 70% ownership in the Amapá Project of US$120 million (100% - US$171 million). Before its sale in 2012, Anglo American valued its 70% stake at US$462m in its 2012 Annual Report (100% - US$600m).

-- During its operation, the mine generated an annual operating profit of up to U$171 million (100%)

-- The total historic mineral resource contains an estimated 348 million tonnes ("Mt") of ore @ 38.9% iron content ("Fe")

   --    The ore is beneficiated to 65% Fe Pellet Feed and 62% Fe Spiral Concentrate 

-- Based on available historic mine plans and an independent consultant review it is expected that at full production the Amapá Project has a mine life of 14 years and at full capacity is targeting to produce up to 5.3 Mt of Iron Ore per annum

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The Amapá Project has minerals rights over 5,556 hectares comprising three separate mining licenses and an exploration permit. The historic Mineral Resource contained within the licenses is of some 348 Mt at 38.9% Fe.

It should be noted that the Minerals Resource was assessed by Anglo American as at the 31 December 2012 (Annual Report 2012, Anglo American, p.198) and was prepared under the Australasian Code for Reporting of Exploration Resources and Ore Reserves 2004 edition ("JORC"). Given the passage of time and the depletion of this resource bewtween 2012 and 2013 this assessment is not valid under JORC. Further work and assessment would need to be undertaken to assess and update any current Mineral Resource or Ore Reserve.

Based on available historic mine plans and the independent engineers review DEV's current mine plan envisages a mine life of 14 years. Management estimate prior to the start of mining the Amapá Project will also ship the iron ore stockpiles held at the dock which is estimated to start early in Q3 2020 year and continue for upto two years . The mine is open pit and has a planned strip ratio of 0.9:1.

The beneficiation plant consists of a crushing circuit followed by screening, flotation, thickener and filtering to produce 65% Fe Pellet Feed in addition the plant produces a 62% Fe Spiral Concentrate. The current mine plan would mean that the Amapá Project would produce at steady state production an estimated 4.4 Mt of 65% Fe and 0.9 Mt of 62% Fe per annum.

As part of the JRP approved by creditor in August 2019, DEV submitted a operational and financial plan, that DEV intends to implement to bring the the Amapá Project back into production.

The information, assumptions and financial model, were prepared for the JRP only and are based on historical analysis of the costs and the review of two technical independent engineers reports published 2013 and 2015. It should be noted that this review provides a basis for a preliminary assessment.

The key stages of the current redevelopment strategy are summarised below:

Recommissioning Studies

-- DEV will start the relevant resource, engineering studies required for banking finance of the project.

-- It is anticipated that this will commend in the third quarter of 2020 with completion in the third or fourth quarter of 2021.

-- The commissioning of these studies will commence only after the commencement of the shipment of iron ore from the stockpile owned by DEV.

Reinvestment of Iron Ore Stockpile Sales.

-- It is anticpated that DEV will begin shipping of the iron ore at stockpilen in early Q3 2020 and will take upto to 2 years to ship. This will initially be US$10 million of iron ore (net of costs).

-- --An independent survey of these stockpiles indicates some 1.39 Mt (+/- 10%) of iron ore in three stockpiles with an average Fe grade of 62.12% (+/ 10%)

-- These funds are intend be reinvested in the capital development of the Amapá Project, however they could also be used in part as part of a settlement package with the Bank Creditors.

Capital Investment

-- --DEV's estimates of capital costs, which are based on 2013 engineering studies, is anticipated to be a total of US$168 million. This sum includes all the capital investment required to bring the mine, rail and port into full production.

-- The above capital investment will occur after the completion of the recommissioning studies and raising additional capital.

-- The reconstruction is estimated to take approximately 18 months, which based on current estimates would mean the start of full operations in the first or second quarter of 2022.

Operational Plan

-- Based on available historical mine plans and the independent engineers review DEV's current mine plan envisages a mine life of 14 years.

-- As mentioned above before the start of mining, the Amapá Project will also ship the iron ore stockpiles held at the dock in earrly Q3 2020 continue for upto 24 months.

-- --The mine is open pit and has a planned strip ratio of 0.9:1. The beneficiation plant consists of a crushing circuit followed by screening, flotation, thickener and filtering to produce a 65% Fe Pellet Feed and a 62% Fe Spiral Concentrate.

-- --The current mine plan would mean that the Amapá Project would produce at steady-state production an estimated 4.4 Mt of 65% Fe and 0.9 Mt of 62% Fe per annum. Currently steady-state production is expected to be reached in 2024.

-- The intention is that these products would then be transported from the mine to the railhead by on-highway trucks along an unpaved road, a road haul distance of 13km. From the railhead, the products would then be transported 180km by rail to the port facility at Santana.

-- The products would then be stockpiled at the port facility and mechanically loaded onto "Handymax" vessels which navigate the Amazon River out to sea and then transhipped onto larger "Capesize" vessels before the products are sold to the market. The products produced by the Amapá Project are well known in the market, especially in China where most of the historical production was sold.

Cadence is updating the operation and financial plan as part of a commisioned scoping study, which may mean a variation to the the above plan. As part of it scoping study Cadence will also update the financial plan that was previously presented in the JRP.

Details of the Agreement with Indo Sino

The Agreement with Indo Sino is to invest in and acquire up to a 27% of a joint venture company Pedra Branca Alliance Pte. Ltd. ("JV Co"). On approval of the JRP and satisfaction of the preconditions and the transfer of equity of DEV to the JV Co the JV Co will own 99.9% of the Amapá Project. Should Indo Sino seek further investors or an investment in the JV Co the agreement also provides Cadence with a first right of refusal to increase its stake to 49% in the JV Co.

To acquire its 27% interest Cadence will invest US$ 6 million over two stages in JV Co. The first stage is for 20% of the JV Co the consideration for which is US$2.5 million. These funds are already held in escrow awaitng the completion of the conditions precedent. If the frist conditions precendent are not met and the JRP is not succesful, the monies held in escrow monies will be returned to Cadence. The second stage of investment is for a further 7% of JV Co for a consideration of US$3.5 million. If Cadence is unable to complete the second stage of the investment or not exercise its right of first refusal under the terms of the Agreement, Indo Sino will have a twelve-month option to buy the shares in JV Co held by Cadence for 1.5 (1 1/2 ) times the price paid by Cadence for such shares.

Cadence's investments are conditional on several material pre-conditions. For the first stage of investment the remaining pre-condition remains the settlement with the Bank Creditors, and for stage two is Cadence's investment is contingent on all the key environmental and operational licenses reinstated. Shoul the first stage of investment

On completion of Cadence's investment (not including the first right of refusal) our joint venture partner Indo Sino will own 73% of JV Co. The Agreement also contains security and default clauses which if triggered causes an upwards adjustment mechanism to allow Cadence to either receive cash from JV Co or receive additional shares in JV Co. In the latter case Cadence's shareholding in the JV Co will not go above 49.9%.

On completion of the US$ 6 million investment Cadence will have the right to appoint two members to a five-member board with the remaining three comprising of one member jointly appointed by Cadence and Indo Sino and two appointed by Indo Sino.

European Metals Holdings Limited ("European Metals")

Cadence has has held an investment in European Metals since June 2015. As of year end, Cadence held approximately 18.01% in the Cinovec deposit in the Czech Republic through a direct holding in the share capital of European Metals that owns 100 per cent of the exploration rights to the Cinovec lithium/tin deposit.

Cinovec hosts a globally significant hard rock lithium deposit with a total Indicated Mineral Resource of 372.4Mt at 0.45% Li2O and 0.04% Sn and an Inferred Mineral Resource of 323.5Mt at 0.39% Li2O and 0.04% Sn containing a combined 7.18 million tonnes Lithium Carbonate Equivalent and 263kt of tin reported 28 November 2017. An initial Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported 4 July 2017 has been declared to cover the first 20 years mining at an output of 22,500tpa of lithium carbonate reported 11 July 2018.

Summary of Activities

It has been a significant year for European Metals both from the perspective of project and corporate development.

In project development terms it was a a significant year. In June 2019 European Metals completed an updated Preliminary Feasibility Study ("PFS"), conducted by specialist independent consultants.

The PFS indicated a return post tax NPV of USD1.108B and an IRR of 28.8% and confirmed that the Cinovec project is a potential low operating cost, producer of battery grade lithium hydroxide or battery grade lithium carbonate as markets demand. It confirmed the deposit is amenable to bulk underground mining. Metallurgical test-work has produced both battery grade lithium hydroxide and battery grade lithium carbonate in addition to high-grade tin concentrate at excellent recoveries. Cinovec is centrally located for European end-users and is well serviced by infrastructure, with a sealed road adjacent to the deposit, rail lines located 5 km north and 8 km south of the deposit and an active 22 kV transmission line running to the historic mine. As the deposit lies in an active mining region, it has strong community support.

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In terms of corporate development, the most significant was the partnership with CEZ Group, one of Europe's largest power utilities. Headquartered in the Czech Republic, CEZ is an established, integrated energy group with operations in a number of Central and Southeastern European countries and Turkey. CEZ's core business is the generation, distribution, trade in, and sales of electricity and heat, trade in and sales of natural gas, and coal extraction. CEZ Group has 31,400 employees and annual revenue of approximately AUD 12 billion. The largest shareholder of its parent company, CEZ a. s., is the Ministry of Finance of the Czech Republic with a stake of approximately 70%. The shares of CEZ a.s. are traded on the Prague and Warsaw stock exchanges and included in the PX and WIGCEE exchange indices. As one of the leading Central European power companies, CEZ intends to develop energy storage projects in the Czech Republic and in Central Europe which include energy storage and charging infrastructure and electricity supply, for users of electric vehicles.

This partnership was completed subsequent to the year end and the terms are summarised below.

-- Pursuant to the Exclusivity and Framework Agreement, CEZ has subscribed through SDAS for such number of Geomet Shares as will result in SDAS holding Geomet Shares comprising fifty-one per cent (51%) of the ownership interests and voting rights in Geomet, attached with the right to receive fifty-one per cent (51%) of dividends, liquidation balance and other proceeds payable by Geomet to Geomet Shareholders following completion of the subscription.

-- The amount paid by CEZ to Geomet under the option is in total approximately EUR34.06m, equivalent (at the time of signing) to approximately GBP29.15m. This compares to EMH's market valuation (at the time of signing) of approximately GBP32.88m (EUR38.42m). The amounts in GBP and AUD included above have been calculated using an average exchange rate for EUR/GBP and EUR/AUD respectively as at 18 November 2019.

Macarthur Minerals Limited ("Macarthur")

Macarthur is an iron ore development, gold and lithium exploration company and is listed on the TSX Venture Exchange (TSX-V: MMS) and Australian Stock Exchange (ASX: MIO). Macarthur is focused on bringing to production its 100% owned Western Australia iron ore projects. The Lake Giles Iron Project includes the 80 million tonne Ularring hematite resource (approved for development) and the 710 million tonne Moonshine magnetite resource. As of year end, Cadence held approximately 7.21% of Macarthur.

Macarthur has secured a binding Life-of-Mine Off-Take Agreement with Glencore International A.G. and is focused on commercialising its iron ore projects utilising mining, processing and logistics infrastructure in the region and is progressing towards completing a bankable feasibility study.

Macarthur also has established multiple project areas in the Pilbara, Western Australia for conglomerate gold, hard rock greenstone gold, hard rock lithium and nickel. Macarthur Minerals also has significant lithium brine placer claims in the Railroad Valley, Nevada, USA.

Summary of Principle Activities

During the year Macarthur has progressed well across its key assets, some of which are highlighted below.

-- Macarthur completed a US$6 million institutional convertible note offer to fund the production of a Bankable Feasibility Study on the Company's iron ore projects. Glencore Internation A.G participated in the convertible note.

-- Macarthur signed a binding Life-Of-MineOff-Take Agreement with Glencore International A.G for the Lake Giles Iron Ore Project.

-- The Lake Giles Iron Project, Feasibility Study (FS), is well underway with the infill drilling program completed in December 2019.

-- Macarthur entered into a binding agreement with Arrow Minerals Limited (Arrow) to acquire the rights to a substantial package of land covering approximately 4,950 ha adjacent to the Moonshine Magnetite deposit. The tenure will be used for constructing supporting infrastructure including the, processing plant, camp, airstrip, waste rocks dumps and a tailings storage facility. The deal with Arrow also paves the way forward to obtain access to tenure to construct a private haul road from the project through to the open access Perth to Kalgoorlie railway owned by Arc Infrastructure.

-- A drilling program was completed at the Hillside project in the Pilbara region of Western Australia to test potential supergene and hypogene mineralisation above and below the water table along the majority of a 14-kilometre Gossan line where previous rock chip sampling identified anomalous copper. This program also tested outcropping quartz vein mineralisation identified through prospecting activities.

-- Filing of the Preliminary Economic Assessment NI43-101 Technical Report, for a combined hematite and magnetite project (the Lakes Giles Iron Project).This re-evaluationresulted in:oa reduction in the operational costs for the hematite product;orationalisation and reduction inCapital Cost fordevelopmentof a combined magnetite and hematite project;andorevised logistics transport solutions and costs

-- Engineering firm Engenium commissioned to revise NI 43-101compliant technical reportand refine operating and capital costs of thehematite and magnetite projects

-- Repositioning of Macarthur's portfolio of highly prospective lithium and goldprojects in the Pilbara region of Western Australia through an earn-in Joint Venture Agreement with Australian listed exploration company Fe Limited (ASX: FEL)

Sonora Lithium Project

Cadence, holds an interest in the Sonora Lithium Project via a 30% stake in the joint venture interests in each of Mexalit S.A. de CV ("Mexalit") and Megalit S.A. de CV ("Megalit"). Mexalit forms part of the Sonora Lithium Project.The remainder of Mexalit and Sonora Lithium Project is owned by Bacanora Lithium Plc ("Bacanora") which is a London-listed lithium asset developer and explorer (AIM: BCN).

The Sonora Lithium Project consists of ten contiguous concessions covering 97,389 hectares. Two of the concessions (La Ventana, La Ventana 1) are owned 100% by Bacanora through its wholly-owned subsidiary Minera Sonora Borax S.A de C.V. ("MSB"). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned by, Mexilit S.A. de C.V. ("Mexilit") (which is owned 70% by Bacanora and 30% by Cadence). These concessions are located approximately 190 kilometres northeast of the city of Hermosillo, in Sonora State, Mexico. They are roughly 170 kilometres south of the border with Arizona, USA. The San Gabriel and Buenavista concessions are owned by Minera Megalit S.A. de C.V. ("Megalit") (which is owned 70% by Bacanora and 30% by Cadence). The asset has Measured plus Indicated Mineral Resource estimate of over 5 million tonnes ('Mt') (comprising 1.9 Mt of Measured Resources and 3.1Mt of Indicated Resources) of lithium carbonate equivalent ('LCE') and an additional Inferred Mineral Resource of 3.7 Mt of LCE, Sonora is regarded as one of the world's larger known clay lithium deposits.

A feasibility study report was publisehd in Janury2018, which confirmed the positive economics and favourable operating costs of a 35,000 tonnes per annum battery grade lithium carbonate operation. The feasibility study report estimates a pre-tax project Net Present Value of US$1.253 billion at an 8% discount rate and an Internal Rate of Return of 26.1%, and Life of Mine operating costs of US$3,910/t of lithium carbonate.The full report can be found here:

https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf

It should be noted that under the published feasibility study the concession owned by Mexalit will be mined starting in year 9 of the mine plan cease at the end of the mine like in year 19.

Summary of Principle Activities

Bacanora progressed in securing the financing package for project construction which included;

-- Investment and Offtake Agreement with Ganfeng LithiumCo., Ltd. ("Ganfeng"), Ganfeng acquired 29.99% of Bacanora and 22.5% of Sonora Lithium Ltd("SLL"), the holding company for the Sonora Lithium Project. This investment did not dilute our position in Mexalit.

   --      they continued to work to complete the front-end engineering design throughout the period. 
   --      In November 2019, Bacanora raised GBP7.7 million via a placing of ordinary shares 

-- Bacanora retains its US$150 million conditional senior debt facility with RK Mine Finance, signed in July 2018,to finance the development of the Sonora Lithium Project. US$125 million remains to be drawn.

In addition Bacanora continued with the front end engineering design during the year.

Yangibana Project, Australia

Cadence owns 30% of the Yangibana, Yangibana North, Gossan, Hook, Kanes Gossan and Lions Ear Rare Earth Deposits, which form part of the Yangibana Rare Earth Deposit ("Yangibana Project"). Hastings Technology Metals owns the remaining 70% ("Hastings"). The updated resource ore statement can be found on the Yangibana Mineral Resource & Ore Reserve statement from 4th November 2019

http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2953668.

The exploration costs until the commencement of the BFS are borne solely by Hastings (70% owners and operator).

Summary of Principle Activities

Hastings has continued to make steady progress on the development of the the Yangibana Project. In November 2017 Hastings reported the successful completion of a Definitive Feasibility Study (DFS) for the Yangibana Project based on the production of Mixed Rare Earths Carbonate (MREC) rich in Neodymium (Nd) and Praseodymium (Pr), critical materials used in the manufacture of permanent magnets. As summary of the DFS can be found here:

http://hastingstechmetals.com/wp-content/uploads/2018/01/Hastings_DFS_Executive_Summary_Nov_2017_NEW.pdf

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The current mine plan anticipates production to start from our joint venture areas (Yangibana and Yangibana North) in year 5 and continue to the end of mine life. In the twelve months following completion of the DFS, Hastings confirmed capital requirements, completed flotations pilotplant studies, and testing hydrometallurgical equipment for suitable duty capacity.

Hastings then completed a 100kg/hr pilot processing circuit test, operating 24 hours per day continuously over 8 days at ALS Metallurgy in Balcatta, Western Australia. The flowsheet consisted of milling, rougher flotation, regrind and cleaner flotation stages. The flotation circuit selectively concentrated the rare earths-bearing mineral monazite into a final product whilst discarding 95% of the original rock waste mass. Flotation process design was reconfirmed, as the performance output of the pilot plant improved over the course of the 8 days.

On the back of the updated resource a new mining reserve estimate was undertaken by a Mining Consultancy Group (Snowden) based on Measured and Indicated Mineral Resources at each of Bald Hill, Fraser's, Auer, Auer North, Yangibana (Cadence 30%), Yangibana West and Yangibana North (Cadence 30%) deposits. The updated reserve estimate remains surface mining focussed

Ore Reserves tonnages from the new estimate increased by 34% to 10.35 million tonnes at 1.22%TREO including 0.43%Nd2O3+Pr6O11. The updated Ore Reserve extends mine life by 3 years, supporting a +10 year operational life for the Project.

Since the DFS the project NPV has decreased by 4% to $447 million due to capital cost increases as a result of the board mandated decision to source, where possible, only Tier 1 process plant equipment suppliers with the capabilities to provide unrivalled equipment performance guarantees and field support and backup including increasing its probable ore reserves by 34%, reviewing their capex requirements which was revised upwards ro AU$ 427 million.

Lithium Technologies Pty Ltd & Lithium Suppliers Pty Ltd ("LT" & "LS)

In December 2017 Cadence Minerals announced that it had executed binding investment agreements to acquire up to 100% of six prospective hard rock lithium assets in Argentina via LT & LS.

Although these projects are promising and our joint venture partners were able to identify several high prirority areas for exploration, we are still awaiting approval of the finalised exploration permits. Therefore we agreed to vary the binding agreement to acquire three prospective assets in Australia that are in regions with proven high-grade lithium mineralisation.

The acquisition covered three projects - Picasso (Western Australia - WA), Litchfield (Northern Territories - NT) and Alcoota (NT) all of which are in regions with proven lithium mineralisation and supportive mining infrastructure.

The variation resulted in LT & LS acquiring between them 100% of Synergy Prospecting Ltd ("Synergy"), which owns the three lithium projects in Australia. As two of Synergy's assets are granted, Cadence agreed to move forward with increasing is ownership in LT & LS from 4% to 31.5% via:

-- Issuing 373,544,298 million Cadence shares to the founding shareholders of LT & LS valued at GBP400,000 (based on 14-day VWAP of GBP0.0107) to acquire a further 20% stake, which is in line with the terms of the original agreements; and

-- Invest GBP300,000 to earn an incremental 7.5% stake, with the funds earmarked to commence developing Synergy's lithium assets in Australia.

The result of the variation would mean no change to the GBP consideration to be paid for of LS and LT, however additional shares would be issued as a result of the change in the share price in Cadence between November 2017 and March 2019.

As of the date of this document, Cadence owns 25.875% of LT & LS and consequently of the Australian and Argentinian lithium prospects.

During the year our joint venture partners carried out initial exploration work including mapping and chip sampling. Although these results were encouraging, we to focused our investment in the Amapá Project which is of a lower risk profile than the LT and LS investment.

Other Investments

As stated within our strategy earlier in the Annual Report & Accounts, Cadence has focused its investments on assets that are in the more advanced stages of development. This was driven by Cadence's assessment that early exploration project will in general find it difficult to source capital in the medium to long term, and therefore are not very likley to deliver the retunrs we would expect. As such we have either during the reportign period or soon after disposed of our equity holdings in Auroch Minerals Ltd and Clancy Exploration Limited. These funds were utlised either to fund the the Amapá Project, pay down our loan note or for working capital purposes. In addition given the above, we also did not renew our exploration license for our Greenland Rare Earth Project, as retaining them would involve a considerable commitment in license fees over the coming years.

FINANCIAL REVIEW

Total comprehensive loss for the year attributable to equity holders was GBP2.04m loss (2018: GBP11.92m). This decrease in loss from the previous year of approximately GBP9.88m is mainly due to the movement in realised and unrealised profits and losses of approximately GBP9.73m relating to our share investment portfolio (available for resale assets) held during the period.

Diluted loss per share was 2.466p (2018 : 14.469p).

The net assets of the Group at the end of period was GBP15.40 million (2018: GBP14.40 million). This increase of approximately GBP1m was mainly driven by the reduction in value of available for resale assets during the period.

Kiran Morzaria

Chief Executive Officer

25 June 2020

PRINCIPAL RISKS AND UNCERTAINTIES

Cadence continuously monitors its risk exposures and reports its review to the Board. The Board reviews these risks and focuses on ensuring effective systems of internal financial and non-financial controls are in place and maintained.

Key risk areas

The high-risk areas surrounding our existing business is tabulated below; the key areas are Strategic, Operational and Financial.

 
 Risk                            Mitigation                        Magnitude and likelihood 
 Strategic risks 
                                --------------------------------  ------------------------- 
 Exposure to political           Through our interaction           Magnitude- High 
  risk, as an invetment           with our investee companies       Likelihood - Medium 
  company Cadence is exposed      and if applicable as 
  to this risk via our            part of the the management 
  investee companies whom         teams in the investee 
  have projects around            companies, the Company 
  the worldaround the             is kept abreast of expected 
  world. Given the wide           potential changes and 
  wide variety locations          takes an active role 
  and juristictions, Cadence      in making appropriate 
  could be exposed to             representations and 
  significantly different         if required, with its 
  regulatory of fiscal            publically listed investments, 
  environments which could        dispose of these assets 
  affect the ability of           to mitigate any losses. 
  Cadence to deliver to 
  its Strategy. 
                                --------------------------------  ------------------------- 
 Operational risks 
                                --------------------------------  ------------------------- 
 Permitting risk, through        The investee has to               Magnitude- High 
  its investee companies,         date been successful              Likelihood - High 
  Cadence is indirectly           in obtaining the required 
  exposed to planning,            permits to operate. 
  environmental, licensing        Therefore, Cadence considers 
  and other permitting            that such risks are 
  risks associated with           partially mitigated 
  the investee operations         through investee compliance 
  particularly with regards       with regulations, proactive 
  to mine construction            engagement with regulators, 
  and commisioning.               communities and the 
                                  expertise and experience 
                                  of the management teams. 
                                --------------------------------  ------------------------- 
 Development and exploration     Prior and while invested          Magnitude- High 
  risk, Cadence investee          Cadence to obtains a              Likelihood - High 
  companies could fail            deep fundamental understanding 
  develop or locate assets        of the asset, its potential 
  that have the potential         economics, operating 
  to deliver commercially,        and legal environment 
  e.g. lack of capital,           and its management team. 
  technical constriants,          By doing so, Cadence 
  or a drilling programme         can either suggest potential 
  fials to identify sufficent     changes.to the investee 
  volume or concentration         development, and in 
  of the targeted commodity.      the case of public listed 
                                  investment dispose of 
                                  the investment to mitigate 
                                  any losses. 
                                --------------------------------  ------------------------- 
 Risk                            Mitigation                        Magnitude and likelihood 
                                --------------------------------  ------------------------- 
 Operational risks (continued) 
                                --------------------------------  ------------------------- 
 Commodity Price Risk,           Given the stage of development    Magnitude- High 
  exposure to market price        of Cadence investments,           Likelihood - High 
  risk through variations         e.g. pre productions 

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  in the wholesale price          Cadence does not activley 
  of the commodities that         hedge against this risk, 
  our investee companies          with its publically 
  are exposed to. This            listed investments Cadence 
  may effect their ability        can dispose of these 
  to develop the asset            assets to mitigate any 
  in particular sourcing          losses. 
  financing to bring the 
  projects into production. 
                                --------------------------------  ------------------------- 
 Loss of key staff               Provide and maintain              Magnitude- High 
                                  competitive remuneration          Likelihood - Low 
                                  packages to attract 
                                  the right calibre of 
                                  staff. Build a strong 
                                  and unified team 
                                --------------------------------  ------------------------- 
 Financial risks 
                                --------------------------------  ------------------------- 
 Liquidity risk , exposure       The Board regularly               Magnitude- High 
  through its operations          reviews Cadence's cash            Likelihood - Medium 
  to liquidity risks.             flow forecast and the 
                                  availability or adequacy 
                                  of its current facilities 
                                  to meet Cadence's cash 
                                  flow requirements 
                                --------------------------------  ------------------------- 
 

Report of the Directors

For the year ended 31 December 2019

___________________________________________________________________________________

The Directors present their annual report together with the audited consolidated financial statements of the Group and the Company for the Year Ended 31 December 2019.

Principal activity

The principal activity of the Group and the Company is that of the identification, investment and development of Lithium and rare earth assets. The Group is also exploring other mining related opportunities.

Domicile and principal place of business

Cadence Minerals plc is domiciled in the United Kingdom, which is also its principal place of business.

Business review

The results of the Group are shown on page 31. The directors do not recommend the payment of a dividend.

A review of the performance of the Group and its future prospects is included in the Chairman's Statement and the Strategic Report on pages 1 to 11.

Key Performance Indicators

Due to the current status of the Group, the Board has not identified any performance indicators as key.

Principal risks and uncertainties

Information of the principal risks and uncertainties facing the Group is included in the Principal Risks and Uncertainties section of the Strategic Report.

Financial risk management objectives and policies

The Group's principal financial instruments are available for sale assets, trade receivables, trade payables, loans and cash at bank. The main purpose of these financial instruments are to fund the Group's operations.

It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group's financial instruments are liquidity risk and interest rate risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of equity and its cash resources. Further details of this are provided in the principal accounting policies, headed 'going concern' and note 18 to the financial statements.

Interest rate risk

The Group only has borrowings at fixed coupon rates and therefore minimal interest rate risk, as this is deemed its only material exposure thereto. The Group seeks the highest rate of interest receivable on its cash deposits whilst minimising risk.

Market risk

The Group is subject to market risk in relation to its investments in listed Companies held as available for sale assets.

Directors

The membership of the Board is set out below. All directors served throughout the period unless otherwise stated.

 
Andrew Suckling 
Kiran Morzaria 
Don Strang 
Adrian Fairbourn 
 

Substantial shareholdings

Interests in excess of 3% of the issued share capital of the Company which had been notified as at 31 December 2019 were as follows:

 
                                               Ordinary shares   Percentage 
                                                          held   of capital 
                                                        Number            % 
 Hargreaves Lansdown (Nominees) Limited 
  Des:15942                                         11,033,315           10.5 
 Barclays Direct Investing Nominees Limited 
 Des: CLIENT1                                        9,248,430            8.8 
 Hargreaves Lansdown (Nominees) Limited 
  Des:VRA                                            6,962,975            6.6 
 Interactive Investor Services Nominees 
  Limited Des:SMKTNOMS                               6,912,190            6.5 
 Interactive Investor Services Nominees 
  Limited Des:SMKTISAS                               5,772,627            5.5 
 HSDL Nominees Limited Des:MAXI                      4,438,924            4.2 
 Hargreaves Lansdown (Nominees) Limited 
  Des:HLNOM                                          4,317,820            4.1 
 Hargreaves Lansdown (Nominees) Limited 
  Des:HLNOM                                          3,517,675            3.3 
 HSBC Global Custody Nominee (UK) Limited 
  Des: 941346                                        3,278,699            3.1 
 
 

Payment to suppliers

It is the Group's policy to agree appropriate terms and conditions for its transactions with suppliers by means ranging from standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms and conditions, provided that the supplier meets those terms and conditions. The Group does not have a standard or code dealing specifically with the payment of suppliers.

Trade payables at the year end all relate to sundry administrative overheads and disclosure of the number of days purchases represented by year end payables is therefore not meaningful.

Events after the Reporting Period

Events after the Reporting Period are outlined in Note 21 to the Financial Statements.

Going concern

The Directors have prepared cash flow forecasts for the period ending 30 June 2021 which take account of the current cost and operational structure of the Group.

The cost structure of the Group comprises a high proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be quickly reduced to enable the Group to operate within its available funding.

These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

Directors' responsibilities statement

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

   -     select suitable accounting policies and then apply them consistently; 
   -     make judgements and estimates that are reasonable and prudent; 

- state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as each of the Directors are aware:

   --    there is no relevant audit information of which the Group's auditors are unaware; and 

-- the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Auditors

Chapman Davis LLP, offer themselves for re-appointment as auditor in accordance with Section 489 of the Companies Act 2006.

ON BEHALF OF THE BOARD

Kiran Morzaria

Director

Date: 25 June 2020

CADENCE MINERALS PLC

Corporate Governance

For the year ended 31 December 2019

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___________________________________________________________________________________

Intrduction to governance

The Directors recognise that good corporate governance is a key foundation for the long-term success of the Company. As the Company is listed on the AIM market of the London Stock Exchange and is subject to the continuing requirements of the AIM Rules. The Board has therefore adopted the principles set out in the Corporate Governance Code for small and midsized companies published by the Quoted Companies Alliance ("QCA Code"). The principles are listed below with an explanation of how the Company applies each principle, and the reasons for any aspect of non-compliance.

While building a strong governance framework we also try to ensure that we take a proportionate approach and that our processes remain fit for purpose as well as embedded within the culture of our organisation. We continue to evolve our approach and make ongoing improvements as part of building a successful and sustainable company.

The Board

The Board comprises of a non-executive Chairman, one non-executive director and two executive directors.

Board Members

 
                                                   Audit Committee     Remuneration 
   Board Member         Board Title                 Title               Committee Title 
   Andrew Suckling      Non-Executive Chairman     Member              Member 
                     -------------------------  ------------------  ------------------- 
   Adrian Fairbourn     Non-Executive Director     Chairman            Chairman 
                     -------------------------  ------------------  ------------------- 
                        Chief Executive 
   Kiran Morzaria        Officer 
                     -------------------------  ------------------  ------------------- 
   Donald Strang        Finance Director 
                     -------------------------  ------------------  ------------------- 
 

The Board is responsible for formulating, reviewing and approving the Company's strategy, financial activities and operating performance. Day-to-day management is devolved to the executive directors, who are charged with consulting the Board on all significant financial and operational matters. The Board retains ultimate accountability for governance and is responsible for monitoring the activities of the executive team.

The roles of Chairman and Chief Executive Officer are split in accordance with best practice. The Chairman has the responsibility of ensuring that the Board discharges its responsibilities. The Chairman is responsible for the leadership and effective working of the Board, for setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information. No one individual has unfettered powers of decision.

The two Executive Directors are comprised of a Chief Executive Officer ("CEO") and Finance Director. The CEO has the overall responsibility for creating, planning, implementing, and integrating the strategic direction of the Company. This includes responsibility for all components and departments of a business. The CEO to ensures that the organisation's leadership maintains constant awareness of both the external and internal competitive landscape, opportunities for expansion, customer base, markets, new industry developments and standards.

The non-executive directors are not considered independent under the Financial Reporting Council's Corporate Governance Code (April 2016) ("FRC Code") as they both have options in the Company. However, the board considers that both non-executives are independent of management under all other measures and able to exercise independence of judgement.

The Committees

Audit Committee

The audit committee consists of two non-executive members of the board and meet at least twice a year.

The principal duties and responsibilities of the Audit Committee include:

-- Overseeing the Group's financial reporting disclosure process; this includes the choice of appropriate accounting policies

   --      Monitor the Group's internal financial controls and assess their adequacy 

-- Review key estimates, judgements and assumptions applied by management in preparing published financial statements

   --      Assess annually the auditor's independence and objectivity 

-- Make recommendations in relation to the appointment, re-appointment and removal of the company's external auditor

Remuneration committee

The remuneration committee consists of two non-executive members of the board and meet at least once a year.

The principal duties and responsibilities of the Remuneration Committee include:

   --      Setting the remuneration policy for all Executive Directors 
   --      Recommending and monitoring the level and structure of remuneration for senior management 

-- Approving the design of, and determining targets for, performance related pay schemes operated by the company and approve the total annual payments made under such schemes

-- Reviewing the design of all share incentive plans for approval by the board and shareholders

-- None of the Committee members have any personal financial interest (other than as shareholders and option holders), conflicts of interest arising from cross-directorships or day-to-day involvement in the running of the business. No director plays a part in any financial decision about his or her own remuneration.

Principle and Approach of the Board

Cadence is committed to achieve and maintain high standards of governance. As such, the Board has chosen to adopt the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies 2018 ("the QCA Code"). Detailed below is how the Board applies the 10 principles of Corporate Governance, which form part of the QCA code.

 
   Principle         Application                     Compliance 
   Establish         The board must be               Cadence is a unique early investment 
    a strategy        able to express a               strategy & development firm, within 
    and business      shared view of the              the mineral resource sector. We 
    model which       company's purpose,              identify undervalued assets, with 
    promote           business model and              irreplaceable strategic advantages. 
    long-term         strategy. It should             We invest in them and help turn 
    value for         go beyond the simple            them into powerhouses. Lithium 
    shareholders      description of products         and other technology minerals 
                      and corporate structures        must get to market in order to 
                      and set out how the             achieve the global green revolution. 
                      company intends to              We uncover new ways and places 
                      deliver shareholder             to extract and process these minerals, 
                      value in the medium             so that burgeoning demand is met; 
                      to long-term.                   and our tomorrow is better. 
                      It should demonstrate           A more detailed description of 
                      that the delivery               its Strategy and Business Model 
                      of long-term growth             is available in the Company's 
                      is underpinned by               Annual Report and Accounts and 
                      a clear set of values           on the Company's website. 
                      aimed at protecting             Please refer to the Company's 
                      the company from                Annual Report and Accounts and 
                      unnecessary risk                on the Company's website for further 
                      and securing its                details on the principal risks 
                      long-term future.               and uncertainties which the Company 
                                                      faces. 
                                                      It seeks to share this vision 
                                                      and details of the implementation 
                                                      of its strategy through internal 
                                                      dialogue with employees as well 
                                                      as external communications by 
                                                      way of public announcements and 
                                                      dissemination of information through 
                                                      this website and the annual report 
                                                      and accounts 
                  ------------------------------  -------------------------------------------- 
   Seek to           Directors must develop          The Board is committed to maintaining 
    understand        a good understanding            an open dialogue with shareholders. 
    and meet          of the needs and                Communication with shareholders 
    shareholder       expectations of all             and is coordinated by the CEO. 
    needs and         elements of the company's       Throughout the year, the Board 
    expectations      shareholder base.               maintains a regular dialogue with 
                      The board must manage           investors, providing them with 
                      shareholders' expectations      such information on the Company's 
                      and should seek to              progress as is permitted within 
                      understand the motivations      the guidelines of the AIM rules, 
                      behind shareholder              MAR and requirements of the relevant 
                      voting decisions.               legislation. We also use these 
                                                      communications to obtain feedback 

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                                                      from shareholders and to assess 
                                                      the effectiveness of our communications. 
                                                      Based on this feedback the Board 
                                                      has determined that this engagement 
                                                      has been, to date, successful. 
                                                      The Board believes that the Annual 
                                                      Report and Accounts, and the Interim 
                                                      Report published at the half-year 
                                                      which can be found on the Company's 
                                                      website, play an important part 
                                                      in presenting all shareholders 
                                                      with an assessment of the Group's 
                                                      position and prospects. All reports 
                                                      and press releases are published 
                                                      under the "Investors" tab of the 
                                                      Group's website. 
                  ------------------------------  -------------------------------------------- 
 
 
   Principle               Application                       Compliance 
   Take into                 Long-term success                 The Board recognises its prime 
    account                   relies upon good                  responsibility under UK corporate 
    wider stakeholder         relations with a                  law is to promote the success 
    and social                range of different                of the Company for the benefit 
    responsibilities          stakeholder groups                of its members as a whole. 
    and their                 both internal (workforce)         The Board also understands that 
    implications              and external (suppliers,          it has a responsibility towards 
    for long-term             customers, regulators             employees, partners, customers, 
    success                   and others). The                  suppliers and to the community 
                              board needs to identify           and environment it operates in 
                              the company's stakeholders        as a whole. 
                              and understand their              Communication with and feedback 
                              needs, interests                  from these various groups is achieved 
                              and expectations.                 in a variety of ways. The executive 
                              Where matters that                directors hold investor roadshows 
                              relate to the company's           once a year and quarterly webcast, 
                              impact on society,                at which feedback from shareholders 
                              the communities within            is sought. 
                              which it operates,                Regular dialogue is maintained 
                              or the environment                with employees through monthly 
                              have the potential                updates and quarterly briefings 
                              to affect the company's           given by the executive directors. 
                              ability to deliver                The nature of the Cadence's business 
                              shareholder value                 as an investment company means 
                              over the medium to                that although it has no direct 
                              long-term, then those             effect on the working environments 
                              matters must be integrated        and communities of the companies 
                              into the company's                it invests in, it nonetheless 
                              strategy and business             liaises with the management of 
                              model. Feedback is                its investee companies to understand 
                              an essential part                 their approach to stakeholder 
                              of all control mechanisms.        engagement and their policies, 
                              Systems need to be                which will form part of its investment 
                              in place to solicit,              criteria. 
                              consider and act 
                              on feedback from 
                              all stakeholder groups. 
                          --------------------------------  -------------------------------------------- 
   Embed effective           The board needs to                The Board has an established Audit 
    risk management,          ensure that the company's         Committee, a summary of it roles 
    considering               risk management framework         a responsibilities is available 
    both opportunities        identifies and addresses          on the corporate governance webpage. 
    and threats,              all relevant risks                The Committee is specifically 
    throughout                in order to execute               charged with ensuring that Cadence 
    the organisation          and deliver strategy;             as a whole has the appropriate 
                              companies need to                 policies and processes in place 
                              consider their extended           to identify the risks which the 
                              business, including               Company is exposed to and to proactively 
                              the company's supply              mitigate those risks as appropriate. 
                              chain, from key suppliers         The Company maintains a register 
                              to end-customer.                  of risks and publishes an overview 
                              Setting strategy                  of significant risks and uncertainties 
                              includes determining              in its Annual Report. 
                              the extent of exposure            Please refer to the Company's 
                              to the identified                 Annual Report and Accounts for 
                              risks that the company            further details on the principal 
                              is able to bear and               risks and uncertainties which 
                              willing to take (risk             the Company faces. 
                              tolerance and risk                The Company receives regular feedback 
                              appetite).                        from its external auditors on 
                                                                the state of its internal controls. 
                                                                The Board maintains a register 
                                                                of risks and publishes an annual 
                                                                summary of the significant risks 
                                                                and uncertainties in the Annual 
                                                                Report. 
                          --------------------------------  -------------------------------------------- 
 
 
 
   Principle                   Application                        Compliance 
   Maintain                      The board members                  The Board is comprised of a non-executive 
    the board                     have a collective                  Chairman a non-executive director 
    as a well-functioning,        responsibility and                 and two executive directors. 
    balanced                      legal obligation                   The CEO is engaged to work a minimum 
    team led                      to promote the interests           of a 39 hour week and is an employee 
    by the chair                  of the company and                 of the Company. The Finance Directors 
                                  are collectively                   is employed part-time for a minimum 
                                  responsible for defining           of 28 hours a week. The board 
                                  corporate governance               deemed that given the stage and 
                                  arrangements. Ultimate             development of the Company, it 
                                  responsibility for                 would be more cost efficient to 
                                  the quality of, and                employee a full-time accountant 
                                  approach to, corporate             which along with the finance director 
                                  governance lies with               ensure that Company's financial 
                                  the chair of the                   systems are robust. compliant 
                                  board. The board                   and support current activities 
                                  (and any committees)               and future growth. 
                                  should be provided                 The service agreements of the 
                                  with high-quality                  non-executive directors anticipate 
                                  information in a                   that the non-executive Chairman 
                                  timely manner to                   should spend 3 working days per 

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                                  facilitate proper                  month and the non-executive director 
                                  assessment of the                  2 working days per month. All 
                                  matters requiring                  directors dedicate such time as 
                                  a decision or insight.             required to effectively perform 
                                                                     their roles. 
                                  The board should                   The roles of the Chairman and 
                                  have an appropriate                CEO are clearly separated. The 
                                  balance between executive          directors ensure the skills required 
                                  and non-executive                  to undertake their roles are kept 
                                  directors and should               current through training and consultation 
                                  have at least two                  with subject matter experts as 
                                  independent non-executive          required. 
                                  directors. Independence            The CEO is responsible for the 
                                  is a board judgement.              operational management of the 
                                  The board should                   business of Cadence and for the 
                                  be supported by committees         implementation of strategy and 
                                  (e.g. audit, remuneration,         policies as agreed by the Board. 
                                  nomination) that                   The non-executive Chairman is 
                                  have the necessary                 responsible for the leadership 
                                  skills and knowledge               and effective working of the Board, 
                                  to discharge their                 for setting the Board agenda, 
                                  duties and responsibilities        and ensuring that Directors receive 
                                  effectively. Directors             accurate, timely and clear information. 
                                  must commit the time               The non-executive directors are 
                                  necessary to fulfil                not considered independent under 
                                  their roles.                       the FRC Code as they hold options 
                                                                     in the Company. However, the board 
                                                                     considers that the non-executive 
                                                                     directors are independent of management 
                                                                     under all other measures and are 
                                                                     able to exercise independence 
                                                                     of judgement. Whilst conflicts 
                                                                     of interest are fully disclosed 
                                                                     and understood, as appropriate 
                                                                     non-executive directors exercise 
                                                                     independence of judgement. No 
                                                                     director is involved in discussions 
                                                                     or decisions where he has a conflict 
                                                                     of interest. 
                                                                     The Board is supported by an Audit 
                                                                     Committee and a Remuneration Committee. 
                                                                     Cadence intends that the Board 
                                                                     endeavours to hold full board 
                                                                     meetings at least 3 times each 
                                                                     year. The attendance of Board 
                                                                     members for meetings during the 
                                                                     current financial year is as follows: 
                                                                     -- Andrew Suckling 3 of 3 
                                                                     -- Adrian Fairbourn 3 of 3 
                                                                     -- Kiran Morzaria 3 of 3 
                                                                     -- Donald Strang 3 of 3 
                              ---------------------------------  --------------------------------------------- 
 
 
 
   Principle              Application                        Compliance 
   Ensure that              The board must have                Directors who have been appointed 
    between                  an appropriate balance             to the Company have been chosen 
    them the                 of sector, financial               because of the skills and experience 
    directors                and public markets                 they offer. The Board continually 
    have the                 skills and experience,             strives to ensure that it has 
    necessary                as well as an appropriate          the right balance of knowledge, 
    up-to-date               balance of personal                skills, experience and contacts 
    experience,              qualities and capabilities.        across the sectors in which it 
    skills and               The board should                   operates. This is evaluated in 
    capabilities             understand and challenge           line with Cadence's business model 
                             its own diversity,                 as it changes. 
                             including gender                   It is of primary importance that 
                             balance, as part                   the Board's knowledge is kept 
                             of its composition.                to up to date in a rapidly changing 
                             The board should                   mining and metals marketplace. 
                             not be dominated                   This is achieved by maintaining 
                             by one person or                   a broad network of contacts across 
                             a group of people.                 the industry and ensuring regular 
                             Strong personal bonds              dialogue is held and feedback 
                             can be important                   obtained by both the executive 
                             but can also divide                and non-executive directors as 
                             a board. As companies              appropriate. 
                             evolve, the mix of                 As necessary directors receive 
                             skills and experience              externally provided refresher 
                             required on the board              and update training specific to 
                             will change, and                   their individual roles. 
                             board composition                  The Company Secretary advises 
                             will need to evolve                the Board members on their legal 
                             to reflect this change.            and corporate responsibilities 
                                                                and matters of corporate governance. 
                                                                Biographical details of each 
                                                                of the Directors are given on 
                                                                the 'Who We Are' page of this 
                                                                website HERE . Going forward the 
                                                                Directors biographical details 
                                                                will be included in the Annual 
                                                                Report and Accounts. 
                         ---------------------------------  --------------------------------------------- 
   Evaluate                 The board should                   On the 28 September 2018, Cadence 
    board performance        regularly review                   adopted the QCA Code. Prior to 
    based on                 the effectiveness                  this point given the nature and 
    clear and                of its performance                 the development of the company 
    relevant                 as a unit, as well                 it did not set Key Performance 
    objectives,              as that of its committees          Indicators. 
    seeking                  and the individual                 The Company now measures its performance, 
    continuous               directors. The board               and therefore inherently the performance 
    improvement              performance review                 of the Board as a unit, against 
                             may be carried out                 Key Performance Indicators. The 
                             internally or, ideally,            primary KPI is absolute equity 
                             externally facilitated             return on investments. Details 

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                             from time to time.                 intend to be disclosed in the 
                                                                Annual Report Accounts going forward. 
                             The review should                  The performance of the executive 
                             identify development               directors is monitored and regularly 
                             or mentoring needs                 reviewed by the non-executive 
                             of individual directors            directors. Such review considers 
                             or the wider senior                both the KPIs outlined above and 
                             management team.                   measures such as an annual staff 
                             It is healthy for                  satisfaction survey. Going forward, 
                             membership of the                  the Board intends to introduce 
                             board to be periodically           qualitative performance measurements 
                             refreshed. Succession              for the executive directors to 
                             planning is a vital                ensure that the right degree of 
                             task for boards.                   focus is applied to the strategic 
                             No member of the                   direction as well as the current 
                             board should become                financial performance of the business. 
                             indispensable.                     The Board periodically considers 
                                                                the need to refresh its membership. 
                         ---------------------------------  --------------------------------------------- 
 
 
 
   Principle        Application                        Compliance 
   Promote            The board should                   Cadence has a strong ethical culture, 
    a corporate        embody and promote                 which is promoted by the actions 
    culture            a corporate culture                of the board and executive team. 
    that is            that is based on                   These include the following key 
    based on           sound ethical values               policies which govern its ethical 
    ethical            and behaviours and                 culture. 
    values and         use it as an asset                 -- Equal opportunities policy 
    behaviours         and a source of competitive        -- Dignity at work policy 
                       advantage.                         -- Code of conduct 
                       The policy set by                  -- Whistleblowing policy 
                       the board should                   -- Health and safety policy 
                       be visible in the                  -- Email and internet policy 
                       actions and decisions              -- Social media policy 
                       of the chief executive             The Group has an anti-bribery 
                       and the rest of the                policy and has implemented adequate 
                       management team.                   procedures described by the Bribery 
                       Corporate values                   Act 2010. The Group reports on 
                       should guide the                   its compliance to the board on 
                       objectives and strategy            an annual basis. 
                       of the company.                    The Group has undertaken a review 
                       The culture should                 of its requirements under the 
                       be visible in every                General Data Protection Regulation, 
                       aspect of the business,            implementing appropriate policies, 
                       including recruitment,             procedures and training to ensure 
                       nominations, training              it is compliant. 
                       and engagement. The 
                       performance and reward 
                       system should endorse 
                       the desired ethical 
                       behaviours across 
                       all levels of the 
                       company. The corporate 
                       culture should be 
                       recognisable throughout 
                       the disclosures in 
                       the annual report, 
                       website and any other 
                       statements issued 
                       by the company. 
                   ---------------------------------  ---------------------------------------- 
 
 
 
   Principle                 Application                      Compliance 
   Maintain                    The company should               Details of the Company's corporate 
    governance                  maintain governance              governance arrangements are provided 
    structures                  structures and processes         within this Corporate Governance 
    and processes               in line with its                 section of this website. The Board 
    that are                    corporate culture                considers the appropriateness 
    fit for                     and appropriate to               of these arrangements against 
    purpose                     its:                             the size and complexity of the 
    and support                 -- size and complexity;          Company as it evolves over time. 
    good decision-making        and                              The Chairman leads the Board and 
    by the board                -- capacity, appetite            is responsible for ensuring its 
                                and tolerance for                effectiveness in all aspects of 
                                risk.                            its role. The Chairman promotes 
                                The governance structures        a culture of openness and debate, 
                                should evolve over               in particular by ensuring the 
                                time in parallel                 non-executive directors provide 
                                with its objectives,             constructive challenge to the 
                                strategy and business            executive directors. 
                                model to reflect                 The matters reserved for the board 
                                the development of               are: 
                                the company.                     -- Definition of the strategic 
                                                                 goals for the Company, sets corporate 
                                                                 objectives to enable the goals 
                                                                 to be met, and measures performance 
                                                                 against those objectives; 
                                                                 -- Ensuring that the necessary 
                                                                 financial and human resources 
                                                                 are in place to both meet its 
                                                                 obligations to all stakeholders 
                                                                 and to provide a platform for 
                                                                 profitable growth; 
                                                                 -- Recommending any interim and 
                                                                 final dividends; 
                                                                 -- Approving all mergers and acquisitions 
                                                                 and all capital expenditure greater 
                                                                 than GBP100,000; 
                                                                 -- Receiving recommendations from 
                                                                 the Audit Committee in relation 
                                                                 to the reporting requirements 
                                                                 and the appropriate accounting 
                                                                 policies for the Company, the 
                                                                 appointment of auditors and their 
                                                                 remuneration, and the identification 
                                                                 and management of risk; 
                                                                 -- Receives recommendations from 
                                                                 the Appointments Committee concerning 
                                                                 the appointment of executive directors, 
                                                                 and from the Remuneration Committee 
                                                                 concerning the remuneration of 
                                                                 the executive directors; 
                                                                 -- Determines the fees paid to 
                                                                 the non-executive directors. 
                                                                 The CEO has the overall responsibility 
                                                                 for creating, planning, implementing, 
                                                                 and integrating the strategic 

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                                                                 direction of the Company. This 
                                                                 includes responsibility for all 
                                                                 components and departments of 
                                                                 a business. The CEO to ensures 
                                                                 that the organisation's leadership 
                                                                 maintains constant awareness of 
                                                                 both the external and internal 
                                                                 competitive landscape, opportunities 
                                                                 for expansion, customer base, 
                                                                 markets, new industry developments 
                                                                 and standards. 
                                                                 The Finance Director works alongside 
                                                                 the CEO and has overall control 
                                                                 and responsibility for all financial 
                                                                 aspects of company strategy. The 
                                                                 Finance Director takes overall 
                                                                 responsibility of the Company's 
                                                                 accounting function and ensures 
                                                                 that Company's financial systems 
                                                                 are robust, compliant and support 
                                                                 current activities and future 
                                                                 growth. The Finance Director will 
                                                                 coordinate corporate finance and 
                                                                 manage company policies regarding 
                                                                 capital requirements, debt, taxation, 
                                                                 equity and acquisitions as appropriate. 
                            -------------------------------  --------------------------------------------- 
 
 
 
   Principle              Application                       Compliance 
                                                              The Board is supported by two 
                                                               committees being the Audit Committee 
                                                               and Remuneration Committee. The 
                                                               Audit Committee advises the Board 
                                                               on the reporting requirements 
                                                               and the appropriate accounting 
                                                               policies for the Company, the 
                                                               appointment of auditors and their 
                                                               remuneration, and the identification 
                                                               and management of risk. The Remuneration 
                                                               Committee advises the Board on 
                                                               all matters pertaining to the 
                                                               remuneration of the executive 
                                                               directors; 
                         --------------------------------  --------------------------------------------- 
   Communicate              A healthy dialogue                The Company encourages two-way 
    how the                  should exist between              communication with both its institutional 
    company                  the board and all                 and private investors and responds 
    is governed              of its stakeholders,              quickly to all significant queries 
    and is performing        including shareholders,           received. 
    by maintaining           to enable all interested          The "Investors" tab of this website 
    a dialogue               parties to come to                section of this website contains 
    with shareholders        informed decisions                all required regulatory information 
    and other                about the company.                together with other information 
    relevant                 In particular, appropriate        which shareholders may find useful. 
    stakeholders             communication and                 The AGM is an important forum 
                             reporting structures              for shareholder engagement, and 
                             should exist between              the directors are always available 
                             the board and all                 immediately after the AGM to listen 
                             constituent parts                 to the views of any shareholders 
                             of its shareholder                in attendance and to provide them 
                             base. This will assist:           with an update on the business. 
                             -- the communication              All votes at the most recent AGM 
                             of shareholders'                  held on 20 September 2019 were 
                             views to the board;               passed. The proxy votes were in 
                             and                               excess of 85% in favour of all 
                             -- the shareholders'              resolutions. 
                             understanding of                  Currently there is no Remuneration 
                             the unique circumstances          or Audit Committee report provided 
                             and constraints faced             in the Annual report but the Board 
                             by the company.                   will consider the provision of 
                             It should be clear                this in the next Annual report 
                             where these communication         together with other information 
                             practices are described           which shareholders may find useful. 
                             (annual report or 
                             website). 
                         --------------------------------  --------------------------------------------- 
 
 

Internal Controls

The Directors acknowledge their responsibility for the Group's systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Company and to ensure the reliability of financial information for both internal use and external publication. While they are aware that no system can provide absolute assurance against material misstatement or loss, in light of increased activity and further development of the Company, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.

Risk Management

The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by Senior Management to forecasts. Project milestones and timelines are reviewed regularly.

Business Risk

The Board regularly evaluates and reviews any business risks when reviewing project timelines. The types of risks reviewed include:

   --      regulatory and compliance obligations 
   --      occupational health, safety and environmental requirements 
   --      legal risks relating to contracts, licences and agreements 
   --      insurance risks 
   --      political risks where appropriate. 

Insurance

The Group maintains insurance in respect of its Directors and Officers against liabilities in relation to the Company.

Treasury Policy

The Group finances its operations through equity and holds its cash as a liquid resource to fund the obligations of the Group. Decisions regarding the management of these assets are approved by the Board.

Securities Trading

The Board has adopted a Share Dealing Code that applies to Directors, Senior Management and any employee who is in possession of 'inside information'. All such persons are prohibited from trading in the Company's securities if they are in possession of 'inside information'. Subject to this condition and trading prohibitions applying to certain periods, trading can occur provided the individual has received the appropriate prescribed clearance.

CADENCE MINERALS PLC

Report on remuneration

For the year ended 31 December 2019

___________________________________________________________________________________

Directors' remuneration

The Board recognises that Directors' remuneration is of legitimate concern to the shareholders. The Group operates within a competitive environment, performance depends on the individual contributions of the Directors and employees and it believes in rewarding vision and innovation.

Policy on executive Directors' remuneration

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The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retain Directors of the calibre necessary to maintain the Group's position and to reward them for enhancing shareholder value and return. It aims to provide sufficient levels of remuneration to do this, but to avoid paying more than is necessary. The remuneration will also reflect the Directors' responsibilities and contain incentives to deliver the Group's objectives.

The remuneration of the Directors was as follows:

 
                     A Fairbourn               A Suckling                K Morzaria                 D Strang                   Total 
                         GBP                       GBP                       GBP                       GBP                      GBP 
 Short-term 
  employment 
  benefits: 
 
 Year to 
 31 December 
 2019 
 
 Salary and 
  fees                          48,000                   100,000                   150,000                   120,000                  418,000 
 
 Share based 
  payments 
  (1)                              142                       327                       327                       327                    1,123 
 
 Total                          48,142                   100,327                   150,327                   120,327                  419,123 
              ========================  ========================  ========================  ========================  ======================= 
 
 Year to 
 31 December 
 2018 
 
 Salary and 
  fees                          52,250                   112,500                   127,500                   127,500                  419,750 
 
 Share based 
  payments 
  (1)                              850                     1,962                     1,962                     1,962                    6,736 
 
 Total                          53,100                   114,462                   129,462                   129,462                  426,486 
              ========================  ========================  ========================  ========================  ======================= 
 

Share based payments represent a Black and Scholes valuation of the incentive options granted to the directors during 2017. Options are used to incentivise directors and are a non-cash form of remuneration.

At 31 December 2019 the following amounts were outstanding in fees to directors; GBP66,919 (2018: GBP115,500).

Pensions

The Company only operates a basic pension scheme for its directors and employees as required by UK legislation.

Benefits in kind

No benefits in kind were paid during the year to 31 December 2019 or the year ended 31 December 2018.

Bonuses

No amounts were payable for bonuses in respect of the Year ended 31 December 2019 or the year ended 31 December 2018.

Notice periods

Andrew Suckling, Kiran Morzaria, Don Strang and Adrian Fairbourn, each have a 12 month rolling notice period.

Share option incentives

At 31 December 2019 the following options were held by the Directors:

 
                 Date of grant   Exercise   Number of options 
                                    price 
 
 K Morzaria        21 May 2014        48p             600,000 
                                                      600,000 
                                           ------------------ 
 
                   13 December 
 A Fairbourn              2012         6p             200,000 
 A Fairbourn       21 May 2014        48p             400,000 
                                                      600,000 
                                           ------------------ 
 
 D Strang          21 May 2014        48p             600,000 
                                                      600,000 
                                           ------------------ 
 

All options are exercisable between 18 months and ten years from the date of grant.

The high and low share price for the year were 38p and 6.625p respectively (year ended 31 December 2018: 37p and 11.8p). The share price at 31 December 2019 was 6.75p (31 December 2018: 11.8p) Historical share prices and option prices have been adjusted to reflect the share consolidation.

independent AUDITORS REPORT TO THE MEMBERS OF

CADENCE MINERALS PLC

_____________________________________________________________________________________________

OPINION

We have audited the financial statements of Cadence Minerals Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion:

-- the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2019 and of the Group's losses for the year then ended;

-- the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

-- the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-- the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.

We have determined the matters described below to be the key audit matters to be communicated in our report.

CARRYING VALUE OF INVESTMENTS IN ASSOCIATES

The Group's Investment in Associate assets ('Associates') represents one of the most significant asset on its statement of financial position totalling GBP12.6m as at 31 December 2019, which includes listed and unlisted investments.

The carrying value of associates represents significant assets of the Group and Parent Company, and assessing whether facts or circumstances exist to suggest that impairment indicators were present, and if present, whether the carrying amount of these asset may exceed its recoverable amount was considered key to the audit. This assessment involves significant judgement applied by management to the Group and Parent Company's listed and unlisted assoicate investments.

We considered it necessary to assess whether facts and circumstances existed to suggest that impairment indicators were present, and if present, whether the carrying amount of these assets may exceed its recoverable amount.

How the Matter was addressed in the Audit

The procedures included, but were not limited to, assessing and evaluating management's assessment of whether any impairment indicators have been identified across the Group and Parent Company's associate assets, the indicators being:

-- Expiring, or imminently expiring, rights to licences or assets held by the investee Companies.

-- A lack of flow of information in regards to the investee companies exploration activities and/or production, trading or strategic advancement.

-- Discontinuation of, or a plan to discontinue, exploration activities in the areas, or cessation or delays in trading of interest by the Investee Companies.

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-- Sufficient data exists to suggest carrying value of exploration and evaluation assets is unlikely to be recovered in full through successful development or sale by the Investee Companies.

   --    Updates on trading activities by Investee Companies. 

-- Review available share prices of the listed investments and available research reports, both during the year and after the year end.

We also reviewed Stock Exchange RNS announcements and Board meeting minutes for the year and subsequent to year end to identify any indicators of impairment.

We also assessed the related disclosures included in the financial statements.

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. Based on professional judgement, we determined overall materiality for the financial statements as a whole to be GBP230,000, based on a 1.25% percentage consideration of the Group's total assets .

OTHER INFORMATION

The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion, based on the work undertaken in the course of the audit:

-- the information given in the Strategic Report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-- the Strategic Report and the Directors' report have been prepared in accordance with applicable legal requirements.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

-- adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

-- the Parent Company financial statements are not in agreement with the accounting records and returns; or

   --    certain disclosures of Directors' remuneration specified by law are not made; or 
   --    we have not received all the information and explanations we require for our audit. 

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or Parent Company or to cease operations, or have no realistic alternative but to do so.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

USE OF OUR REPORT

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Rowan Palmer

(Senior Statutory Auditor)

For and on behalf of Chapman Davis LLP, Statutory Auditor

London

Chapman Davis LLP is a limited liability partnership registered in England and Wales (with registered number OC306037).

25 June 2020

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

 
                                                  Year ended    Year ended 
                                          Note   31 December   31 December 
                                                        2019          2018 
                                                     GBP'000       GBP'000 
 
 Income 
 Unrealised profit/(loss) on available 
  for sale assets                            9           420       (7,440) 
 Realised loss on available for 
  sale assets                                9          (97)       (1,967) 
 Other income                                1            10           140 
                                                ------------  ------------ 
                                                         333       (9,267) 
 
 Share based payments                                    (1)           (7) 
 Impairment of intangibles                   6         (446)             - 
 Other administrative expenses                       (1,399)       (1,454) 
                                                ------------  ------------ 
 Total administrative expenses                       (1,846)       (1,461) 
 
 Operating loss                              1       (1,513)      (10,728) 
 
 Share of associates losses                  8         (262)         (555) 
 Finance cost                                3         (381)         (377) 
 Foreign exchange losses                               (115)         (105) 
 
 Loss before taxation                                (2,271)      (11,765) 
 
 Taxation                                    4             -             - 
 
 Loss attributable to the equity 
  holders of the Company                             (2,271)      (11,765) 
                                                ------------  ------------ 
 
 Other comprehensive income 
 Foreign exchange                                        232         (150) 
 
 Other comprehensive income for 
  the period, net of tax                                 232         (150) 
                                                ------------  ------------ 
 
 Total comprehensive loss for the 
  year, attributable to the equity 
  holders of the company                             (2,039)      (11,915) 
                                                ============  ============ 
 
 (Loss)/Profit per ordinary share 
 Basic loss per share (pence)                5       (2.544)      (14.985) 
                                                ============  ============ 
 Diluted loss per share (pence)              5       (2.466)      (14.469) 
                                                ============  ============ 
 

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Financial Posititon

As at 31 December 2019

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June 26, 2020 02:00 ET (06:00 GMT)

DJ Cadence Minerals PLC Results for the Year Ended -14-

___________________________________________________________________________________

 
                                                        31 December                     31 December 
                                                               2019                            2018 
 ASSETS                          Note                       GBP'000                         GBP'000 
 
 Non-current 
 Intangible assets                  6                         2,266                           2,172 
 Investment in associate            8                        12,636                          12,483 
                                                             14,902                          14,655 
                                       ----------------------------  ------------------------------ 
 Current 
 Trade and other receivables       10                           246                             315 
 Available for resale asset         9                         1,121                           2,895 
 Cash and cash equivalents                                    2,496                             468 
 Total current assets                                         3,863                           3,678 
 
 Total assets                                                18,765                          18,333 
                                       ----------------------------  ------------------------------ 
 
 LIABILITIES 
 
 Current 
 Trade and other payables          11                           343                             223 
 Borrowings                        12                         2,982                           3,706 
 Total current liabilities                                    3,325                           3,929 
                                       ----------------------------  ------------------------------ 
 
 Total liabilities                                            3,325                           3,929 
                                       ----------------------------  ------------------------------ 
 
 EQUITY 
 Issued share capital              13                         1,471                           1,202 
 Share premium                                               30,357                          27,552 
 Share based premium reserve                                  1,383                           1,392 
 Equity loan and exchange 
  reserve                                                         7                           (225) 
 Retained earnings                                         (17,778)                        (15,517) 
 
 
 Equity attributable                                         15,440                          14,404 
 to equity holders of the 
  Company 
 
 Total equity and liabilities                                18,765                          18,333 
                                       ============================  ============================== 
 

The consolidated financial statements were approved by the Board on 25 June 2020, and signed on their behalf by;

Kiran Morzaria Don Strang

Director Director

Company number 05234262

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Company Statement of Financial Position

As at 31 December 2019

___________________________________________________________________________________

 
                                                               31 December                            31 December 
                                                                      2019                                   2018 
 ASSETS                          Note                              GBP'000                                GBP'000 
 
 Non-current 
 Intangible assets                                                     759                                    325 
 Investment in associates           8                                9,937                                  9,794 
 Investment in subsidiaries         7                                  906                                    906 
                                                                    11,602                                 11,025 
                                       -----------------------------------  ------------------------------------- 
 Current 
 Trade and other receivables       10                                4,129                                  4,515 
 Available for resale asset         9                                1,121                                  2,895 
 Cash and cash equivalents                                           2,496                                    468 
 Total current assets                                                7,746                                  7,878 
 
 Total assets                                                       19,348                                 18,903 
                                       -----------------------------------  ------------------------------------- 
 
 LIABILITIES 
 
 Current 
 Trade and other payables          11                                  343                                    223 
 Borrowings                        12                                2,982                                  3,706 
 Total current liabilities                                           3,325                                  3,929 
                                       -----------------------------------  ------------------------------------- 
 
 Total liabilities                                                   3,325                                  3,929 
                                       -----------------------------------  ------------------------------------- 
 
 EQUITY 
 Issued share capital              13                                1,471                                  1,202 
 Share premium                                                      30,357                                 27,552 
 Share based premium reserve                                         1,383                                  1,392 
 Equity loan and exchange 
  reserve                                                              139                                  (116) 
 Retained earnings                                                (17,327)                               (15,056) 
 
 Equity attributable                                                16,023                                 14,974 
 to equity holders of the 
  Company 
 
 Total equity and liabilities                                       19,348                                 18,903 
                                       ===================================  ===================================== 
 

The Company financial statements were approved by the Board on 25 June 2020, and signed on their behalf by;

Kiran Morzaria Don Strang

Director Director

Company number 05234262

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Changes in Equity

As at 31 December 2019

___________________________________________________________________________________

 
                            Share            Share              Share      Equity            Retained             Total 
                          capital          premium              based        loan            earnings            equity 
                                                              payment   component 
                                                             reserves         and 
                                                                         exchange 
                                                                          reserve 
                          GBP'000          GBP'000            GBP'000     GBP'000             GBP'000           GBP'000 
 
 Balance at 31 
  December 2017             1,202           27,552              3,178         337             (5,545)            26,724 
 Share based 
  payments                      -                -                  7           -                   -                 7 
 Transfer on 
  lapse 
  of warrants                   -                -            (1,793)           -               1,793                 - 
 On issue of 
  loan 
  notes                         -                -                  -       (412)                   -             (412) 
 Transactions 
  with 
  owners                        -                -            (1,786)       (412)               1,793             (405) 
                  ---------------  ---------------  -----------------  ----------  ------------------  ---------------- 
 Foreign 
  exchange                      -                -                  -       (150)                   -             (150) 
 Profit for the 
  period                        -                -                  -           -            (11,765)          (11,765) 
 Total 
  comprehensive 
  profit for the 
  period                        -                -                  -       (150)            (11,765)          (11,915) 
                  ---------------  ---------------  -----------------  ----------  ------------------  ---------------- 
 Balance at 31 
  December 2018             1,202           27,552              1,392       (225)            (15,517)            14,404 
                  ===============  ===============  =================  ==========  ==================  ================ 
 Share based 
  payments                      -                -                  1           -                   -                 1 
 Transfer on 
  lapse 
  of options                    -                -               (10)           -                  10                 - 

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DJ Cadence Minerals PLC Results for the Year Ended -15-

 Share issue                  269            3,031                  -           -                   -             3,300 
 Share issue 
  costs                                      (226)                  -           -                   -             (226) 
 Transactions 
  with 
  owners                      269            2,805   (9)                -                          10             3,075 
                  ---------------  ---------------  -----------------  ----------  ------------------  ---------------- 
 Foreign 
 exchange                       -                -                  -           -                   -                 - 
 Loss for the 
  period                        -                -                  -         232             (2,271)           (2,039) 
                                                                       ----------  ------------------  ---------------- 
 Total 
  comprehensive 
  loss for the 
  period                        -                -                  -         232             (2,271)           (2,039) 
                  ---------------  ---------------  -----------------  ----------  ------------------  ---------------- 
 Balance at 31 
  December 2019             1,471           30,357              1,383           7            (17,778)            15,440 
                  ===============  ===============  =================  ==========  ==================  ================ 
 

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Company Statement of Changes in Equity

As at 31 December 2019

___________________________________________________________________________________

 
                              Share            Share              Share          Equity          Retained      Total 
                            capital          premium              based            loan          earnings     equity 
                                                                payment    and exchange 
                                                               reserves         reserve 
                            GBP'000          GBP'000            GBP'000         GBP'000           GBP'000    GBP'000 
 
 Balance at 31 
  December 
  2017                        1,202           27,552              3,178             406           (5,092)     27,246 
 Share based 
  payments                        -                -                  7               -                 -          7 
 Warrants issued                  -                -            (1,793)               -             1,793          - 
 Transfer on 
  exercise 
  of options                      -                -                  -           (412)                 -      (412) 
 Transactions with 
  owners                          -                -            (1,786)           (412)             1,793      (405) 
                    ---------------  ---------------  -----------------  --------------  ----------------  --------- 
 Foreign exchange                 -                -                  -           (110)                 -      (110) 
 Profit for the 
  period                          -                -                  -               -          (11,757)   (11,757) 
 Total 
  comprehensive 
  profit for the 
  period                          -                -                  -           (110)          (11,757)   (11,867) 
                    ---------------  ---------------  -----------------  --------------  ----------------  --------- 
 Balance at 31 
  December 
  2018                        1,202           27,552              1,392           (116)          (15,056)     14,974 
                    ===============  ===============  =================  ==============  ================  ========= 
 Share based 
  payments                        -                -                  1               -                 -          1 
 Transfer on lapse 
  of warrants                     -                -               (10)               -                10          - 
 Share issue                    269            2,805                  -               -                 -      3,074 
 Transactions with 
  owners                        269            2,805                (9)               -                10      3,075 
                    ---------------  ---------------  -----------------  --------------  ----------------  --------- 
 Foreign exchange                 -                -                  -             255                 -        255 
 Loss for the 
  period                          -                -                  -               -           (2,281)    (2,281) 
                                                                         --------------  ----------------  --------- 
 Total 
  comprehensive 
  loss for the 
  period                          -                -                  -             255           (2,281)    (2,026) 
                    ---------------  ---------------  -----------------  --------------  ----------------  --------- 
 Balance at 31 
  December 
  2019                        1,471           30,357              1,383             139          (17,327)     16,023 
                    ===============  ===============  =================  ==============  ================  ========= 
 

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

___________________________________________________________________________________

 
                                             Year ended    Year ended 
                                            31 December   31 December 
                                                   2019          2018 
                                                GBP'000       GBP'000 
 Cash flow from operating activities 
 Continuing operations 
 Operating loss                                 (1,513)      (10,728) 
 Net realised/unrealised loss/(profit) 
  on AFSA                                         (323)         9,407 
 Impairment of intangible assets                    446             - 
 Equity settled share-based payments                  1             7 
 Decrease in trade and other 
  receivables                                        69           407 
 Increase/(decrease) in trade 
  and other payables                                120          (39) 
 Net cash outflow from operating 
  activities from continuing operations         (1,200)         (946) 
                                           ------------  ------------ 
 
 Cash flows from investing activities 
 Investment in exploration costs                  (664)         (325) 
 Payments for investments in 
  associates                                       (75)          (50) 
 Receipts from investments in 
  associates                                        160             - 
 Payments for investments in 
  AFS assets                                          -         (523) 
 Receipts on sale of AFS assets                   2,097         1,755 
 Net cash inflow from investing 
  activities                                      1,518           857 
                                           ------------  ------------ 
 
 Cash flows from financing activities 
 Proceeds from issue of share 
  capital                                         2,900             - 
 Share issue costs                                (226)             - 
 Net borrowings                                   (583)       (1,103) 
 Finance cost                                     (381)         (377) 
 Net cash inflow/(outflow) from 
  financing activities                            1,710       (1,480) 
                                           ------------  ------------ 
 
 Net change in cash and cash 
  equivalents                                     2,028       (1,569) 
 
 Cash and cash equivalents at 
  beginning of period                               468         2,037 
 
 Cash and cash equivalents at 
  end of period                                   2,496           468 
                                           ============  ============ 
 

There was a non-cash consideration of GBP400,000 settled through the issue of shares in respect of investments in associates.

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Company Statement of Cash Flows

For the year ended 31 December 2019

___________________________________________________________________________________

 
                                             Year ended    Year ended 
                                            31 December   31 December 
                                                   2019          2018 
                                                GBP'000       GBP'000 
 Cash flow from operating activities 
 Continuing operations 
 Operating (loss)/profit                        (1,514)      (10,727) 
 Loss/(profit) on AFSA                            (323)         9,407 
 Impairment of intangible assets                    129             - 
 Equity settled share-based payments                  1             7 
 Decrease in trade and other 
  receivables                                       386           406 
 Increase/(decrease) in trade 
  and other payables                                120          (39) 
 Net cash outflow from operating 
  activities from continuing operations         (1,201)         (946) 
                                           ------------  ------------ 
 
 Cash flows from investing activities 
 Payments for investments in 
  associates                                       (75)          (50) 
 Receipts from investments in 
  associates                                        160             - 
 Payments for intangibles                         (663)         (325) 
 Payments for investments in 
  AFS assets                                          0         (523) 

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DJ Cadence Minerals PLC Results for the Year Ended -16-

 Receipts on sale of AFS assets                   2,097         1,755 
 Net cash inflow from investing 
  activities                                      1,519           857 
                                           ------------  ------------ 
 
 Cash flows from financing activities 
 Proceeds from issue of share 
  capital                                         2,900             - 
 Share issue costs                                (226)             - 
 Net borrowings                                   (583)       (1,103) 
 Finance cost                                     (381)         (377) 
 Net cash inflow/(outflow) from 
  financing activities                            1,710       (1,480) 
                                           ------------  ------------ 
 
 Net change in cash and cash 
  equivalents                                     2,028       (1,569) 
 
 Cash and cash equivalents at 
  beginning of period                               468         2,037 
 
 Cash and cash equivalents at 
  end of period                                   2,496           468 
                                           ============  ============ 
 

There was a non-cash consideration of GBP400,000 settled through the issue of shares in respect of investments in associates.

The accompanying principal accounting policies and notes form an integral part of these financial statements.

CADENCE MINERALS PLC

PRINCIPAL ACCOUNTING POLICIES

For the year ended 31 December 2019

___________________________________________________________________________________

GENERAL INFORMATION

Cadence Minerals plc is a company incorporated in the United Kingdom. The Company's shares are listed on the AIM market of the London Stock Exchange, and on the NEX Exchange Growth Market as operated by NEX Exchange Limited ("NEX").

The Financial Statements are for the year ended 31 December 2019 and have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards as adopted by the EU ("adopted IFRS"). These Financial Statements (the "Financial Statements") have been prepared and approved by the Directors on 25 June 2020 and signed on their behalf by Donald Strang and Kiran Morzaria.

The accounting policies have been applied consistently throughout the preparation of these Financial Statements, and the financial report is presented in Pound Sterling (GBP) and all values are rounded to the nearest thousand pounds (GBP'000) unless otherwise stated.

INVESTING POLICY

The Company's investing policy, which was approved at a General Meeting on 29 November 2010, is to acquire a diverse portfolio of direct and indirect interests in exploration and producing rare earth minerals and/or other metals projects and assets ('Investing Policy'). In light of the nature of the assets and projects that will be the focus of the Investing Policy, the Company will consider investment opportunities anywhere in the world.

The Directors have considerable investment experience, both in structuring and executing deals and in raising funds. Further details of the Directors' expertise are set out on the Company website. The Directors will use this experience to identify and investigate investment opportunities, and to negotiate acquisitions. Wherever necessary, the Company will engage suitably qualified technical personnel to carry out specialist due diligence prior to making an acquisition or an investment. For the acquisitions that they expect the Company to make, the Directors may adopt earn-out structures with specific performance targets being set for the sellers of the businesses acquired and with suitable metrics applied.

The Company may invest by way of outright acquisition or by the acquisition of assets - including the intellectual property - of a relevant business, partnership or joint venture arrangement. Such investments may result in the Company acquiring the whole or part of a company or project (which, in the case of an investment in a company, may be private or listed on a stock exchange, and which may be pre-revenue), and such investments may constitute a minority stake in the company or project in question. The Company's investments may take the form of equity, joint venture, debt, convertible documents, licence rights, or other financial instruments such as the Directors deem appropriate.

The Company may be both an active and a passive investor depending on the nature of the individual investments in its portfolio. Although the Company intends to be a long-term investor, the Directors will place no minimum or maximum limit on the length of time that any investment may be held.

There is no limit on the number of projects into which the Company may invest, or on the proportion of the Company's gross assets that any investment may represent at any time, and the Company will consider possible opportunities anywhere in the world.

The Directors may offer new ordinary shares in the capital of the Company by way of consideration as well as cash, thereby helping to preserve the Company's cash for working capital and as a reserve against unforeseen contingencies including, by way of example and without limit, delays in collecting accounts receivable, unexpected changes in the economic environment and unforeseen operational problems. The Company may, in appropriate circumstances, issue debt securities or otherwise borrow money to complete an investment. There are no borrowing limits in the Articles of Association of the Company. The Directors do not intend to acquire any cross-holdings in other corporate entities that have an interest in the ordinary shares.

GOING CONCERN

The Directors have prepared cash flow forecasts for the period ending 30 June 2021 which take account of the current cost and operational structure of the Group.

The cost structure of the Group comprises a high proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be quickly reduced to enable the Group to operate within its available funding.

These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

It is the prime responsibility of the Board to ensure the Group and Company remains a going concern. At 31 December 2019 the Company had cash and cash equivalents of GBP2,496,000, available for sale assets of GBP1,121,000 and borrowings of GBP2,967,000, of which $300,000 has been converted since the year end. The Group has minimal contractual expenditure commitments and the Board considers the present funds sufficient to maintain the working capital of the Company for a period of at least 12 months from the date of signing the Annual Report and Financial Statements. For these reasons the Directors adopt the going concern basis in the preparation of the Financial Statements.

STATEMENT OF COMPLIANCE WITH IFRS

The Group and the Company's financial statements have been prepared under the historical cost convention and the financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Group and Company are set out below.

BASIS OF CONSOLIDATION

The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up to the balance sheet date. Subsidiaries are entities over which the Company has the power to control, directly or indirectly, the financial and operating policies so as to obtain benefits from their activities. The Company obtains and exercises control through voting rights. Subsidiaries are fully consolidated from the date at which control is transferred to the Company. They are deconsolidated from the date that control ceases.

Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the acquisition method. The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated balance sheet at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Acquisition costs are written off as incurred.

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DJ Cadence Minerals PLC Results for the Year Ended -17-

Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group's share in the associate is not recognised separately and is included in the amount recognised as investment in associate. The carrying amount of the investment in associates is increased or decreased to recognise the Group's share of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group's interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

REVENUE

Other income represents the total value, excluding VAT of income receivable from professional services. Income is recognised as the services are provided. IFRS 15 'Revenue from Contracts with Customers' has been adopted. To determine whether to recognise revenue, the Group follows a 5-step process:

1 Identifying the contract with a customer

2 Identifying the performance obligations

3 Determining the transaction price

4 Allocating the transaction price to the performance obligations

5 Recognising revenue when/as performance obligation(s) are satisfied.

The realised and unrealised gains and losses on Available For Sale Assets which are quoted investments are taken into income, less any related costs of purchase or sale.

TAXATION

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the period. All changes to current tax assets or liabilities are recognised as a component of tax expense in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

FINANCIAL ASSETS

The Group's financial assets include cash, other receivables and available for sale assets. Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified

into the following categories:

-- amortised cost

-- fair value through profit or loss (FVTPL)

-- fair value through other comprehensive income (FVOCI).

In the periods presented the corporation does not have any financial assets categorised as FVOCI.

The classification is determined by both:

-- the entity's business model for managing the financial asset

-- the contractual cash flow characteristics of the financial asset.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Subsequent measurement of financial assets

Financial assets at amortised cost

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

-- they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

-- the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements would apply.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Impairment of financial assets

The Group considers trade and other receivables individually in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

AVAILABLE-FOR-SALE FINANCIAL ASSETS

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group's available-for-sale financial assets include listed and unlisted securities. These available-for-sale financial assets are measured at fair value. Gains and losses are recognised in the statement of comprehensive income as revenue. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance income. Reversals of impairment losses are recognised in other comprehensive income.

INTANGIBLE ASSETS - LICENCES

Licences are recognised as an intangible asset at historical cost and are carried at cost less accumulated amortisation and accumulated impairment losses. The licences have a finite life and no residual value and are amortised over the life of the licence.

EXPLORATION OF MINERAL RESOURCES

Acquired intangible assets, which consist of mining rights, are valued at cost less accumulated amortisation.

The Group applies the full cost method of accounting for exploration and evaluation costs, having regard to the requirements of IFRS 6 'Exploration for and Evaluation of Mineral Resources'. All costs associated with mining development and investment are capitalised on a project by project basis pending determination of the feasibility of the project. Such expenditure comprises appropriate technical and administrative expenses but not general overheads.

Such exploration and evaluation costs are capitalised provided that the Group's rights to tenure are current and one of the following conditions is met:

(i) such costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively by its sale; or

(ii) the activities have not reached a stage which permits a reasonable assessment of whether or not economically recoverable resources exist; or

   (iii)    active and significant operations in relation to the area are continuing. 

When an area of interest is abandoned or the directors decide that it is not commercial, any exploration and evaluation costs previously capitalised in respect of that area are written off to profit or loss.

Amortisation does not take place until production commences in these areas. Once production commences, amortisation is calculated on the unit of production method, over the remaining life of the mine. Impairment assessments are carried out regularly by the directors. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include the point at which a determination is made as to whether or not commercial reserves exist.

The asset's residual value and useful lives are reviewed and adjusted if appropriate, at each reporting date. An assets' carrying value is written down immediately to its recoverable value if the assets carrying amount is greater than its listed recoverable amount.

CASH AND CASH EQUIVALENTS

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DJ Cadence Minerals PLC Results for the Year Ended -18-

Cash and cash equivalents comprise cash at bank and in hand, bank deposits repayable on demand, and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, less advances from banks repayable within three months from the date of advance if the advance forms part of the Group's cash management.

GOODWILL

Goodwill representing the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is capitalised and reviewed annually for impairment. Goodwill is carried at cost less accumulated impairment losses. Negative goodwill is recognised immediately after acquisition in profit or loss.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

IMPAIRMENT TESTING OF GOODWILL AND OTHER INTANGIBLE ASSETS

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which management monitors the related cash flows.

Goodwill, other individual assets or cash-generating units that include goodwill and other intangible assets with an indefinite useful life are tested for impairment at least annually.

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use. Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cash generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

EQUITY

Share capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The share based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options.

The equity loan and exchange reserve represents the equity component of the issued convertible loan notes, and currency translation movements in foreign exchange.

Retained earnings include all current and prior period results as disclosed in the income statement.

OPERATING LEASES

The Group has no leases expiring after more thanone year. Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

FOREIGN CURRENCIES

The financial statements are presented in Sterling, which is also the functional currency of the parent Company.

In the individual financial statements of the consolidated entities, foreign currency transactions are translated into the functional currency of the individual entity 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 of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are recognised in profit or loss.

In the consolidated financial statements, the financial statements of subsidiaries, originally presented in a functional currency, have been translated into Sterling. Assets and liabilities have been translated into Sterling at the exchange rates ruling at the balance sheet date. Profit and losses have been translated at an average monthly rate for the period. Any differences arising from this procedure are taken to the foreign exchange reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities to the foreign entity and translated into Sterling at the closing rates.

SHARE BASED PAYMENTS

The Group issues equity-settled share-based payments to certain employees (including directors). Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Group's estimate of the shares that will eventually vest.

Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates.

No adjustment is made to the expense or share issue cost recognised in prior periods if fewer share options are, ultimately exercised than originally estimated. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of shares issued are allocated to share capital with any excess being recorded as share premium.

FINANCIAL LIABILITIES

The Group's financial liabilities include trade and other payables. Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument.

All financial liabilities are recognised initially at fair value, net of direct issue costs, and are subsequently recorded at amortised cost using the effective interest method with interest related charges recognised as an expense in the income statement.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Significant judgments and estimates

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenditure during the reported period. The estimates and associated judgments are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

-- The estimates and underlying judgments are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

-- In the preparation of these consolidated financial statements, estimates and judgments have been made by management concerning calculating the fair values of the assets acquired on business combinations, and the assumptions used in the calculation of the fair value of the share options. Actual amounts could differ from those estimates.

-- Management has made the following estimates that have the most significant effect on the amounts recognised in the financial statements.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

Impairment of goodwill

The basis of review of the carrying value of goodwill is as detailed in note 6. The carrying value of goodwill is GBP574,000 at the balance sheet date. Management do not consider that any reasonably foreseeable changes in the key assumptions would result in an impairment. Further details of management's assessment of the goodwill for impairment are included in note 6.

Business combinations

On initial recognition, the assets and liabilities of the acquired business and the consideration paid for them are included in the consolidated financial statements at their fair values. In measuring fair value, management uses estimates of future cash flows. Any subsequent change in these estimates would affect the amount of goodwill if the change qualifies as a measurement period adjustment. Any other change would be recognised in the income statement in the subsequent period.

Share-based payments

The Group measures the cost of the equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The charge for the period ended 31 December 2019 of GBP1,000 (2018: GBP7,000) is determined using a Black-Scholes Valuation model, using the assumptions detailed in note 14.

Treatment of exploration and evaluation costs

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IFRS 6 "Exploration for and Evaluation of Mineral Resources" requires an entity to consistently apply a policy to account for expenditure on exploration and evaluation of a mineral resource. The directors have set out their policy in respect of the treatment of these costs in the accounting policies. Amounts capitalised in the year to 31 December 2019 were GBP2,679,000 (2018: GBP325,000). Additionally GBP446,000 of costs previously capitalised have been impaired in the year to 31 December 2019 (2018: GBPNil).

ADOPTION OF NEW OR AMENDED IFRS

New standards, amendments and interpretations adopted by the Company

No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current year by/to the Company, as standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2019 are not material to the Company.

New standards, amendments and interpretations not yet adopted

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements, were in issue but not yet effective for the year presented:

- IFRS 17 Insurance Contracts (effective date 1 January 2021).

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

Sources of Estimation and Key Judgements

The preparation of the Financial Statements requires the Company to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Directors base their estimates on historic experience and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

CADENCE MINERALS PLC

notes to the financial statements

For the year ended 31 December 2019

   1.     PROFIT BEFORE TAXATION AND SEGMENTAL INFORMATION 

Profit before taxation - continuing operations

The loss before taxation is attributable to the principal activities of the Group.

The loss before taxation is stated after charging:

 
                                                           Year ended       Year ended 
                                                          31 December      31 December 
                                                                 2019             2018 
                                                              GBP'000          GBP'000 
 
 
 Share based payment charge                                         1                7 
 Impairment of intangibles                                        446                - 
 Directors fees and consulting (see 
  note 2)                                                         418              420 
 Operating lease rentals: land and 
  buildings                                                       211              204 
 Fees payable to the Company's auditor 
  for the audit of the financial statements                        18               18 
 Fees payable to the Company's auditor 
  and its associates for other services: 
                Other services relating to taxation                 -                - 
                 compliance 
                                                      ===============  =============== 
 

Segmental information

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group's only reportable operating segment during the period is the investment in and development of lithium and rare earth assets.

Subject to further acquisitions the Group expects to further review its segmental information during the forthcoming financial year.

The Group generated revenues from external customers totalling GBP10,000 (2018: GBP140,000) during the period.

In respect of the total assets, GBP727,000 (2018: GBP783,000) arise in the UK, and GBPNil (2018: GBP317,000) arise in Greenland, GBP3,631,000 arise in Mexico (2018: GBP5,553,000), GBP10,064,000 (2018: GBP10,808,000) arise in Australia, GBP2,775,000 (2018: GBP100,000) arise in Brazil, GBP575,000 (2018: GBP225,000) arise in Argentina and GBP993,000 arise in Canada (2018: GBP547,000).

   2.     EMPLOYEE REMUNERATION 

Employee benefits expense

The expense recognised for employee benefits, including Directors' emoluments, is analysed below:

 
                                                   Year ended                   Year ended 
                                                  31 December                  31 December 
                                                         2019                         2018 
                                                      GBP'000                      GBP'000 
 
 Wages, salaries and consulting 
  fees                                                    478                          456 
 Employers NI                                              30                           21 
 Share based payments                                       1                            7 
                                                          509                          484 
                                  ---------------------------  --------------------------- 
 

The average number of employees (including directors) employed by the Group during the period was:

 
              2019   2018 
               No.    No. 
 
 Directors       4      4 
 Other           1      1 
                 5      5 
             -----  ----- 
 

Included within the above are amounts in respect of Directors, who are considered to be the key management personnel, as follows:

 
                                                              Group 
                                                    Year ended                       Year ended 
                                                   31 December                      31 December 
                                                          2019                             2018 
                                                       GBP'000                          GBP'000 
 Wages, salaries and consulting 
  fees                                                     418                              420 
 Share based payments                                        1                                7 
                                                           419                              427 
                                  ----------------------------  ------------------------------- 
 

Details of Directors' emoluments are included in the Report on Remuneration on pages 25 to 26.

   3.     FINANCE COSTS 
 
                                     Year ended                       Year ended 
                                    31 December                      31 December 
                                           2019                             2018 
                                        GBP'000                          GBP'000 
 
 Loan interest                              220                              220 
 Finance Fees                               161                              157 
                                            381                              377 
                 ==============================  =============================== 
 
   4.     TAXATION 

The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:

 
                                          Year ended           Year ended 
                                         31 December   2019   31 December   2018 
                                                2019                 2018 
                                             GBP'000      %       GBP'000      % 
 
 (Loss)/profit before taxation               (2,271)             (11,765) 
 
 
 (Loss)/profit multiplied by standard 
  rate                                         (431)     19       (2,235)     19 
 of corporation tax in the UK 
 
 Effect of: 
 Offset against losses/deferred 
  tax asset not recognised                       296                2,123 
 Expenses not deductible for tax 
  purposes                                       135                  112 
 Total tax charge for year                         -                    - 
                                        ============         ============ 
 

The Group has tax losses in the UK, subject to Her Majesty's Revenue and Customs approval, available for offset against future operating profits. The Group has not recognised any deferred tax asset in respect of these losses, due to there being insufficient certainty regarding its recovery.

   5.     LOSS PER SHARE 

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The calculation of the basic (loss)/profit per share is calculated by dividing the consolidated profit attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 
                                                           Year ended                    Year ended 
                                                          31 December                   31 December 
                                                                 2019                          2018 
                                                              GBP'000                       GBP'000 
 (Loss)/profit attributable to owners 
  of the Company                                              (2,271)                      (11,765) 
                                          ---------------------------  ---------------------------- 
 
                                                                 2019                          2018 
                                                               Number                        Number 
 Weighted average number of shares 
  for calculating basic (loss)/profit 
  per share                                                89,273,886                    78,514,403 
                                          ---------------------------  ---------------------------- 
 Share options and warrants exercisable                     2,800,000                     2,800,000 
 Weighted average number of shares 
  for calculating diluted (loss) profit 
  per share                                                92,073,886                    81,314,403 
                                          ---------------------------  ---------------------------- 
 
                                                                 2019                          2018 
                                                                Pence                         Pence 
 Basic (loss)/profit per share                                (2.544)                      (14.985) 
 Diluted (loss)/profit per share                              (2.466)                      (14.469) 
                                          ---------------------------  ---------------------------- 
 

The impact of the share options are considered anti-dilutive when the group's result for a period is a loss. The prior year has been adjusted for the share consolidation.

   6.     INTANGIBLE ASSETS 

Group Intangible Assets

 
                                  Exploration 
                                        costs             Goodwill             Licences                    Total 
                                      GBP'000              GBP'000              GBP'000                  GBP'000 
 
 Cost 
 At 1 January 2018                      1,549                  638                  174                    2,361 
 Additions                                325                    -                    -                      325 
 Exchange Difference                        -                 (40)                    -                     (40) 
                         --------------------  -------------------  -------------------  ----------------------- 
 At 31 December 2018                    1,874                  598                  174                    2,646 
 Additions                                664                    -                    -                      664 
 Reclassified as 
  investment 
  in associates                         (100)                    -                    -                    (100) 
 Exchange Difference                        -                 (24)                    -                     (24) 
 At 31 December 2019                    2,438                  574                  174                    3,186 
                         --------------------  -------------------  -------------------  ----------------------- 
 
 Amortisation and 
 impairment 
 At 1 January 2018                      (300)                    -                (174)                    (474) 
 Amortisation charge 
  in the year                               -                    -                    -                        - 
 At 31 December 2018                    (300)                    -                (174)                    (474) 
 Amortisation charge 
  in the year                               -                    -                    -                        - 
 Impairment                             (446)                    -                    -                    (446) 
                                                                                         ----------------------- 
 At 31 December 2019                    (746)                    -                (174)                    (920) 
                         --------------------  -------------------  -------------------  ----------------------- 
 
 Net book value at 31 
  December 2019                         1,692                  574                    -                    2,266 
                         --------------------  -------------------  -------------------  ----------------------- 
 Net book value at 31 
  December 2018                         1,574                  598                    -                    2,172 
                         --------------------  -------------------  -------------------  ----------------------- 
 Net book value at 1 
  January 2018                          1,249                  638                    -                    1,887 
                         --------------------  -------------------  -------------------  ----------------------- 
 

In the year to 31 December 2019 GBP1,000 (2018: GBPNil) was invested in Exploration costs by REM Mexico Ltd and GBPnil (2018: GBPNil) invested in Exploration costs by Rare Earth Resources Ltd. The Exploration costs in Rare Earth Resources Ltd were impaired by GBP317,000 in the year (2018 GBPNil). During 2019, GBP663,000 was invested in exploration costs by the parent company (2018: GBP325,000). GBP100,000 of Exploration costs paid for the pre-exploration licences for Lithium Supplies PTY Ltd and Lithium Technologies PTY Ltd in 2018 were reclassified as Investment in Associate as disclosed further in Note 8. The remainder of the Exploration costs capitalised in respect of Argentina of GBP129,000 were fully impaired in the year.

   6.     INTANGIBLE ASSETS CONTINUED 

Company only Intangible Assets

 
                                               Exploration 
                                                     costs                 Licences                   Total 
                                                   GBP'000                  GBP'000                 GBP'000 
 Cost 
 At 1 January 2018                                       -                       33                      33 
 Additions                                             325                        -                     325 
 At 31 December 2018                                   325                       33                     358 
 Additions                                             663                        -                     663 
 Reclassified as investment 
  in associates                                      (100)                        -                   (100) 
 At 31 December 2019                                   888                       33                     921 
                                 -------------------------  -----------------------  ---------------------- 
 
 Amortisation and impairment 
 At 1 January 2018                                       -                     (33)                    (33) 
 Amortisation charge in                                  - 
  the year                                                                        -                       - 
 At 31 December 2018                                     -                     (33)                    (33) 
 Impairment in the year                              (129)                        -                   (129) 
 At 31 December 2019                                 (129)                     (33)                   (162) 
                                 -------------------------  -----------------------  ---------------------- 
 
 Net book value at 31 December 
  2019                                                 759                        -                     759 
                                 -------------------------  -----------------------  ---------------------- 
 Net book value at 31 December 
  2018                                                   -                        -                     325 
                                 -------------------------  -----------------------  ---------------------- 
 Net book value at 1 January                             -                        -                       - 
  2018 
                                 -------------------------  -----------------------  ---------------------- 
 
   7.     INVESTMENTS IN SUBSIDIARIES - COMPANY 
 
                                                           Investment 
                                                             in group 
                                                         undertakings 
                                                              GBP'000 
 Cost and carrying value 
 At 31 December 2019 and 31 December 2018                         906 
                                            ========================= 
 
 
 Subsidiary             Proportion of     Nature of   Country of 
                         ordinary share    business    incorporation 
                         capital held 
 
 Mojito Resources Ltd   100%              Mining      British Virgin 
                                                       Islands 
 REM Mexico Limited     100%              Mining      UK 
 Rare Earth Resources   100%              Mining      UK 
  Limited 
 

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All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertaking held directly by the parent company do not differ from the proportion of the ordinary shares held. The following companies are taking an exception from the audit of the financial statements as per S479A of the Companies Act; REM Mexico Ltd (08022329), Rare Earth Resources Ltd (08390571).

   8.     INVESTMENT IN ASSOCIATES 

Group

 
                                                            31 December              31 December 
                                                                   2019                     2018 
                                                                GBP'000                  GBP'000 
 
 Changes in equity accounted 
  investment 
 Carrying value at beginning 
  of year                                                        12,483                   12,988 
 Equity purchases                                                   475                       50 
 Reclassified from exploration 
  costs                                                             100                        - 
 Equity sales                                                     (160)                        - 
 Share of retained (losses) attributable 
  to the group                                                    (262)                    (555) 
 Investment carrying value as 
  at year end                                                    12,636                   12,483 
                                            ---------------------------  ----------------------- 
 

The Group's two Mexican associate companies have a reporting date of 30 June. These shares are not publicly listed on a stock exchange and hence published results are not available. Therefore the fair value of the Group's investment equates to the carrying book value of GBP2,699,000 (31 December 2018: GBP2,689,000).

EMH is listed on the ASX and on AIM. The market value of the shareholding at 31 December 2019 was GBP4,211,000 (2018: GBP4,495,000), with a carrying value of GBP9,362,000 (2018: GBP9,794,000). During the year ended 31 December 2019 the company sold 730,000 CDIs in European Metal Holdings Inc (2018: acquired 250,000).

During the year GBP100,000 of Exploration costs paid for the pre-exploration licences for Lithium Supplies PTY Ltd and Lithium Technologies PTY Ltd in 2018 were reclassified as Investment in Associate. Additionally the Group paid GBP400,000 in shares and GBP75,000 in cash during the year, and in total has acquired a 25.875% interest in both Lithium Supplies PTY Ltd and Lithium Technologies PTY Ltd.

No accounts for 2019 are available at the time of signing these accounts for Lithium Supplies PTY Ltd and Lithium Technologies PTY Ltd. Any share of losses attributable to the Group and Company have not been account for.

The Group's share of results of its associates, which are unlisted, and their aggregated assets and liabilities, are as follows:

 
                  Country                                                                 % interest 
 Name              of incorporation    Assets    Liabilities   Revenues   Profit/(Loss)    held 
                                         As at 31 December       Year to 31 December 
                                                2019                     2019 
                                       GBP'000     GBP'000     GBP'000       GBP'000 
 
 Mexilit 
  S.A. de 
  C.V.            Mexico                 1,752         1,389          -              32          30% 
 Minera 
  Megalit 
  S.A. de 
  C.V.            Mexico                   438           272          -               -          30% 
 European 
  Metals 
  Holding 
  Ltd (1)         BVI                    6,516           119        262         (1,446)      18.820% 
 Lithium 
  Technologies 
  PTY Ltd         Australia                N/A           N/A        N/A             N/A      25.875% 
 Lithium 
  Supplies 
  PTY Ltd         Australia                N/A           N/A        N/A             N/A      25.875% 
 
   8.     INVESTMENT IN ASSOCIATES CONTINUED 

Company

 
                                   31 December                   31 December 
                                    2019                          2018 
                                                       GBP'000                        GBP'000 
 
 Changes in equity accounted 
  investment 
 Carrying value at beginning 
  of year                                                9,794                         10,292 
 Equity purchases                                          475                             50 
 Reclassified from exploration 
  costs                                                    100                              - 
 Equity sales                                            (160)                              - 
 Share of retained (losses) 
  attributable to the group                              (272)                          (548) 
 Investment carrying value 
  as at year end                                         9,937                          9,794 
                                  ----------------------------  ----------------------------- 
 
   9.     AVAILABLE FOR SALE INVESTMENTS 
 
 Available for sale assets                      31 December           31 December 
                                                       2019                  2018 
                                                    GBP'000               GBP'000 
 Current Assets - Listed Investments 
 Valuation at 1 January                               2,895                13,534 
 Additions at cost                                        -                   523 
 Disposal proceeds                                  (2,097)               (1,755) 
 Realised loss on disposal                             (97)               (1,967) 
 Change in fair value recognised in 
  income statement                                      420               (7,440) 
 Valuation at 31 December                             1,121                 2,895 
                                       --------------------  -------------------- 
 

During the year ended 31 December 2019 the company disposed of a variety of its shareholdings, including its reamining holding in Bacanora Minerals Limited.

Available-for-sale assets comprise investments in listed securities which are traded on stock markets throughout the world, and are held by the Group as a mix of strategic and short term investments.

10. TRADE AND OTHER RECEIVABLES

 
                                           Group                            Company 
                                 31 December   31 December         31 December         31 December 
                                        2019          2018                2019                2018 
                                     GBP'000       GBP'000             GBP'000             GBP'000 
 
 Current 
 Trade receivables                         -            43                   -                  43 
 Other receivables                       118           154                 118                 154 
 Amounts owed by subsidiaries              -             -               3,883               4,200 
 Prepayments and accrued 
  income                                 128           118                 128                 118 
                                         246           315               4,129               4,515 
                                ============  ============  ==================  ================== 
 

There is no impairment of receivables and no amounts are past due at 31 December 2019 or 31 December 2018.

The fair value of these financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.

11. TRADE AND OTHER PAYABLES

 
                                             Group                                     Company 
                                    31 December          31 December           31 December          31 December 
                                           2019                 2018                  2019                 2018 
                                        GBP'000              GBP'000               GBP'000              GBP'000 
 
 Trade payables                             232                   78                   232                   78 
 Tax and social security                     45                    -                    45                    - 
 Other payables                               5                    -                     5                    - 
 Accruals and deferred 
  income                                     61                  145                    61                  145 
                                            343                  223                   343                  223 
                           ====================  ===================  ====================  =================== 
 

The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.

12. BORROWINGS

 
                                             31 December                   31 December 
                                                    2019                          2018 
                                                 GBP'000                       GBP'000 
 Current liabilities 
 Loan Notes                                        2,973                         3,672 
 Interest accrued                                      9                            34 
                                                   2,982                         3,706 
                       =================================  ============================ 
 

On 1 November 2017 the Company announced that the outstanding balance owed in loans of $6,130,034 at that date was restructured into two loans as follows:

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Loan 1 for $2,365,017 had an interest rate of 10%, a principle and interest rate repayment holiday until January 2018, after which the principle and interest would be paid via equal instalments over a nine-month period. The loan notes were convertible at any time during this period at 0.473 pence, being a 46% premium to the closing mid-market price as at 31 October 2017.

Loan 2 for $3,765,017 carried zero interest rate and the principle was due to be repaid in September 2018. The loan notes were convertible at any time during this period at 0.364 pence, being a 12% premium to the closing mid-market price as at 31 October 2017.

Both Convertible Loans were secured by a pledge over the assets of the Company.

Loan Note 1 was initially recognised as a liability of GBP1,591,000 (USD$2,150,000) and an equity element of GBP159,000 (USD$215,000). Loan Note 2 was initially recognised as a liability of GBP2,523,000 (USD$3,423,000) and an equity element of GBP253,000 (USD$342,000).

During the year ended 31 December 2018, Loan Note 1 was repaid in full and new loans were entered into in September 2018 totalling GBP3,713,000 (USD$4,875,000) to repay Loan Note 2 and future interest payments. The new loans carry an interest rate of 12% and had a principle repayment holiday until 1 January 2019. After which the loans will be repaid via 12 equal monthly instalments with both the principle and interest being fully repaid by 1 December 2019. The loans are secured over the Company's assets. The loan notes are only convertible should the Group default on repayments, in which case the lendor can opt to convert the outstanding balance at 85% of the WWAV for the 15 working days prior to the conversion.

During the year ended 31 December 2019, GBP2,089,000 (USD$2,677,000) was repaid including interest of GBP146,000 (USD$186,000) and foreign exhange of (GBP1,000) was recognised, leaving a balance of GBP1,762,000 (USD$2,229,000). On 15 July 2019, the Company announced it had completed the restructure of two of the three outstanding loan notes with the same consortium of institutional lenders. The two new loan notes repaid US$1.19 million of the Amortising Loan Note and have been restructured as a convertible loan note with an exercise price of 0.12 pence (12 pence post share consolidation) and will attract an effective annual interest rate of 7.9% ("Convertible Loan Note").

12. BORROWINGS CONTINUED

Cadence would initially only pay the interest on the Convertible Loan Note until the 1 January 2020, after which 50% of the outstanding balance will be paid back over 8 months (1 August 2020). The outstanding 50% will be paid back on 1 September 2020.

In addition, and to, in part, fund the working capital requirements of the Amapá Project, Cadence drew down a further US$ 1.25 million of the Convertible Loan Note under the same terms. After this draw down the outstanding balance on the Convertible Loan Note was US$2.44 million. The note is secured over the Company's assets.

On 19 July 2019, the Company also agreed to resructure the remaining loan note as a convertible loan note with an exercise price of 0.12 pence, amended to 12p post the share consolidation, ("Convertible Loan Note"). The new loan note repaid $1,041,000 of the Amortising Loan Note and a futher $500,000 was drawn down. Additionally on 26 November 2019 a further $200,000 was drawn down.

Of the new loan notes, GBP235,000 (USD$289,000) interest and finance charges were charged in the period, GBP429,000 (USD$499,000) was repaid and (GBP139,000) foreign exchange was recognised.

13. SHARE CAPITAL

 
                                                                31 December                   31 December 
                                                                       2019                          2018 
                                                                    GBP'000                       GBP'000 
 
 Allotted, issued and fully paid 
 173,619,050 deferred shares of 
  0.24p                                                                 417                           417 
 105,461,968 ordinary shares of 
  1p (31 December 2018: 7,851,440,338 
  ordinary shares of 0.01p)                                           1,054                           785 
                                                                      1,471                         1,202 
                                        ===================================  ============================ 
 
 
                                          Ordinary shares 
                                                           No.                       GBP'000 
 Allotted and issued 
 At 1 January 2018 and 31 December 
  2018                                           7,851,440,338                           785 
 Issue of shares during the year                 2,694,756,406                           269 
 Share consolidation                          (10,440,734,776)                             - 
 At 31 December 2019                               105,461,968                         1,054 
                                     =========================  ============================ 
 

On 26 March 2019, 866,666,663 shares were issued for gross proceeds of GBP1,300,000. On 17 April 2019, 373,544,298 shares were issued in respection of the acquisition of the interests in Lithium Technology PTY Ltd and Lithium Supplies PTY Ltd. On 27 June 2019, 1,454,545,445 shares were issued for gross proceeds of GBP1,600,000.

During the year ended 31 December 2018, no shares were issued.

The deferred shares have no voting rights and are not eligible for dividends.

There were no warrants outanding at 31 December 2019 or 31 December 2018.

14. SHARE BASED PAYMENTS

Share Options

The Group operates share option schemes for certain employees (including directors). Options are exercisable at the option price agreed at the date of grant. The options are settled in equity once exercised. The expected life of the options varies between 1 and 6 years. All options issued in the prior years vested immediately, with no vesting requirements. . The options which were issued during the year ended 31 December 2017 have vesting conditions attached thereto, and these are detailed on the subsequent disclosures within this note. No options were issued during the years ended 31 December 2019 or 31 December 2018.

Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the period are as follows:

 
                                      31 December 2019         31 December 2018 
                                      Number           WAEP       Number    WAEP 
                                                        GBP                  GBP 
 Outstanding at the beginning 
  of the year                      5,125,706          0.437    5,125,706   0.457 
 Lapsed                          (2,325,706)              -            -       - 
 Outstanding at the end 
  of the year                      2,800,000          0.434    5,125,706   0.437 
                                ============  =============  ===========  ====== 
 Exercisable at year end           2,800,000                   2,800,000 
 

The share options outstanding at the end of the period have a weighted average remaining contractual life of 0.97 years (31 December 2018: 1.15 years) and have the following exercise prices and fair values at the date of grant:

 
 First exercise         Grant date     Exercise   Fair       31 December   31 December 
  date (when                            price      value            2019          2018 
  vesting conditions 
  are met) 
                                            GBP        GBP        Number        Number 
 
 28 January             28 January 
  2013                   2010              0.06     0.0004       100,000       100,000 
 13 December            13 December 
  2012                   2012              0.06    0.00055       200,000       200,000 
                        28 June 
 28 June 2013            2013              0.06   0.000371       100,000       100,000 
 21 May 2014            21 May 2014        0.48   0.004711     2,000,000     2,000,000 
 23 May 2014            23 May 2014        0.58   0.005574       400,000       400,000 
                        29 August 
 1 March 2019            2017                 0    0.00415             -       288,859 
                        29 August 
 1 March 2019            2017                 0    0.00415             -       393,269 
                        29 August 
 1 March 2019            2017                 0    0.00415             -     1,643,578 
                                                               2,800,000     5,125,706 
                                                            ============  ============ 
 

At 31 December 2019 2,800,000 options were exercisable (31 December 2018: 2,800,000).

All option numbers and prices have been adjusted for the share consolidation.

14. SHARE BASED PAYMENTS CONTINUED

For those options and warrants granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were calculated using the Black-Scholes model. The inputs into the model for share based payments recognised in the current and prior year were as follows:

 
                  Risk free   Share price   Expected    Share price 
                   rate        volatility    life        at date 
                                                         of grant 
 29 August 2017         n/a           n/a   18 months      GBP0.415 
 

Expected volatility was determined by calculating the historical volatility of the Company's share price for 12 months prior to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The options granted on 29 August 2017, had a zero exercise price and therefore the value was the share price at the time of issue of 41.5p, irrespective of the interest rate and volatility.

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DJ Cadence Minerals PLC Results for the Year Ended -23-

All of the options are exercisable 18 months after the grant date provided that the share price has met a certain price. Should the share price not be achieved the options will lapse.

 
288,859 options only vest if VWAP is greater or equal 
 to 92p on vesting date 
393,269 options only vest if VWAP is greater or equal to 182p on vesting date 
1,643,578 options only vest if VWAP is greater or equal to 218p on vesting date 
 

All share prices have been adjusted for the share consolidation.

Additionally the option holder must have made market purchases of ordinary shares equal to a total of one third of the Option Holders's annual salary or participated in a Company share purchase programme for a period of at least six months prior to the grant date.

It has been assumed that the likelihood on the options of the three sets of options vesting is 60%, 20% and 10% respectively, and the share option has been calculated accordingly.

Of the 2,325,706 options issued during the year ended 31 December 2017, 2,236,321 were replacement options for the 3,000,000 options issued in July 2016, which were cancelled at the time the new options were issued. The charge in respect of these would have been GBP163,000, but as GBP716,000 had already been charged in respect of the 2016 options no charge has been made. The remaining 89,385 new options issued during the year ended 31 December 2017, carry a charge of GBP10,000 which has been spread over the 18 month vesting period.

All share prices and volumes have been adjusted for the share consolidation.

The Group therefore recognised total expenses of GBP1,000 (year ended 31 December 2018: GBP7,000) relating to equity-settled share-based payment transactions during the period.

15. CONTINGENT LIABILITIES

There were no contingent liabilities at 31 December 2019 or 31 December 2018.

16. CAPITAL COMMITMENTS

There were no capital commitments at 31 December 2019 or 31 December 2018.

   17.    lease COMMITMENTS 

There were the following commitments under non-cancellable operating leases.

 
                           31 December   31 December 
                                  2019          2018 
                               GBP'000       GBP'000 
 Amounts due within one 
  year                              66           168 
 Amounts due within two 
  to five years                      -           251 
                                    66           419 
                          ============  ============ 
 

The Company has taken advantage of the break clause in the lease which ends on the 20(th) July 2020.

18. FINANCIAL INSTRUMENTS

The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The Board is responsible for co-ordinating the Group's risk management and focuses on actively securing the Group's short to medium term cash flows. Long term financial investments are managed to generate lasting returns.

The Group has purchased shares in Companies which are listed on public trading exchanges such as the LSE, TSX and ASX, and these shares are held as an available-for-sale asset. The most significant risks to which the Group is exposed are described below:

   a              Credit risk 

The Group's credit risk will be primarily attributable to its trade receivables. At 31 December 2019, the Group had minimal trade receivables and therefore minimal risk arises.

Generally, the Group's maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below:

 
                                                     31 December 2019                                        31 December 2018 
                             AFS              Loans       Derivative          Statement        AFS              Loans       Derivative           Statement 
                        (carried    and receivables        financial       of Financial   (carried    and receivables        financial        of financial 
                         at fair                              assets           position         at                              assets            position 
                           value                                                  total       fair                                                   total 
                                                                                            value) 
                         GBP'000            GBP'000          GBP'000            GBP'000    GBP'000            GBP'000          GBP'000             GBP'000 
 
  Available-for-sale 
           financial 
               asset       1,121                  -                -              1,121      2,895                  -                -               2,895 
               Other 
           long term 
           financial 
              assets       1,121                  -                -              1,121      2,895                  -                -               2,895 
                      ----------  -----------------  ---------------  -----------------  ---------  -----------------  ---------------  ------------------ 
               Trade 
         receivables           -                  0                -                  -          -                 43                -                  43 
               Other 
         receivables           -                118                -                118          -                154                -                 154 
         Prepayments 
         and accrued 
              income           -                128                -                128          -                118                -                 118 
            Cash and 
    cash equivalents           -              2,496                -              2,496          -                468                -                 468 
               Total       1,121              2,742                -              3,863      2,895                783                -               3,678 
                      ==========  =================  ===============  =================  =========  =================  ===============  ================== 
 
 

18. FINANCIAL INSTRUMENTS CONTINUED

Financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgement, and considers factors specific to the investment.

Investments

The Group's investment in shares in Listed Companies are included as an available-for-sale asset has been classified as Level 1, as market prices are available and the market is considered an active, liquid market.

The credit risk on liquid funds is limited because the Group only places deposits with leading financial institutions in the United Kingdom.

   b              Liquidity risk 

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Directors prepare rolling cash flow forecasts and seek to raise additional equity funding whenever a shortfall in funding is forecast. Details of the going concern basis of preparing the financial statements are included in the principal accounting policies.

   c              Market risk 

The amount and quality of minerals available and the related costs of extraction and production represent a significant risk to the group. The group is exposed to fluctuating commodity prices in respect of the underlying assets. The Group seeks to manage this risk by carrying out appropriate due diligence in respect of the projects in which it invests.

The Group is exposed to the volatility of the stock markets around the world, on which it holds shares in various listed entities, and the fluctuation of share prices of these underlying companies. The Group manages this risk through constant monitoring of its investments share prices and news information, but does not hedge against these investments.

   d    Interest rate risk 

The Group only has borrowings at fixed coupon rates and therefore minimal interest rate risk, as this is deemed its only material exposure thereto.

   e    Foreign exchange risk 

The Group has borrowings of GBP2,982,000 which are denominated is US dollars. These loans leave the Group exposed to a foreign currency risk. The Board is considering whether arrangements should be made to mitigate this risk. The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.

18. FINANCIAL INSTRUMENTS CONTINUED

   f               Financial liabilities 

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DJ Cadence Minerals PLC Results for the Year Ended -24-

The group's financial liabilities are classified as follows:

 
                              31 December 2019                          31 December 2018 
                           Other     Liabilities     Total           Other   Liabilities      Total 
                       financial      not within                 financial    not within 
                     liabilities       the scope               liabilities     the scope 
                    at amortised          of IAS              at amortised        of IAS 
                            cost              39                      cost            39 
                         GBP'000         GBP'000   GBP'000         GBP'000       GBP'000    GBP'000 
 
  Trade payables             232               -       232              78             -         78 
        Accruals 
    and deferred 
          income               -              61        61               -           145        145 
  Other payables              50               -        50               -             -          - 
      Borrowings           2,982               -     2,982           3,706             -      3,706 
           Total           3,264              61     3,325           3,784           145      3,929 
                  ==============  ==============  ========  ==============  ============  ========= 
 

Maturity of financial liabilities

All financial liabilities at 31 December 2019 and 31 December 2018 mature in less than one year.

Borrowing facilities for the period ended 31 December 2019

The Group has committed borrowing facilities at 31 December 2019 of GBP2,967,000 (31 December 2018: GBP3,706,000). See Note 12 for details.

   g              Capital risk management 

The Group's objectives when managing capital are:

- to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for the shareholders;

   -     to support the Group's stability and growth; and 
   -     to provide capital for the purpose of strengthening the Group's risk management capability. 

The Group actively and regularly reviews and manages its capital structure, to ensure an optimal capital structure, and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

19. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

 
                                               Short-term 
                                               borrowings                    Total 
 
 1 January 2019                                     3,706                    3,706 
                                 ------------------------  ----------------------- 
 Cash-flows: 
 - Proceeds                                         1,715                    1,715 
 - Interest charged                                   220                      220 
 - Realised foreign exchange                          (2)                      (2) 
 - Repayments                                     (2,518)                  (2,518) 
                                 ------------------------  ----------------------- 
 Non-cash: 
 - Unrealised Foreign exchange 
  movement                                          (139)                    (139) 
 31 December 2019                                   2,982                    2,982 
                                 ========================  ======================= 
 
 
                                               Short-term 
                                               borrowings                    Total 
 
 1 January 2018                                     4,182                    4,182 
                                 ------------------------  ----------------------- 
 Cash-flows: 
 - Proceeds                                         3,713                    3,713 
 - Interest charged                                   220                      220 
 - Realised foreign exchange                           97                       97 
 - Repayments                                     (5,034)                  (5,034) 
                                 ------------------------  ----------------------- 
 Non-cash: 
 - Transfer from equity                               412                      412 
 - Unrealised Foreign exchange 
  movement                                            116                      116 
 31 December 2018                                   3,706                    3,706 
                                 ========================  ======================= 
 

20. RELATED PARTY TRANSACTIONS

There are no related party transactions to disclose.

Key Management Personnel are considered to be the Company Directors only, and their fees and remuneration are disclosed in the Directors Remuneration on pages 23 to 24, and within Note 2 to the financial statements.

21. EVENTS AFTER THE END OF THE REPORTING PERIOD

On 1 May 2020, the Company announced that it had placed a total of 10,749,998 new Ordinary Shares at 6p each raising GBP525,000 before expenses. The Company also announced that it had converted $300,000 of its Convertible Loan Notes into 3,995,000 new Ordinary Shares at 6p each.

On 5 June 2020, the Company announced that it converted approximatel GBP220,000 of its Convertible Loan Notes into 1,835,706 new Ordinary Shares at 12p each.

On 8 June 2020, the Company announced that it had placed a total of 7,222,219 new Ordinary Shares at 9p each raising GBP650,000 before expenses. The Company now has 129,264,891 Ordinary Shares in issue. There are no shares held in treasury. The total voting rights in the Company is therefore 129,264,891 and Shareholders may use this figure as the denominator by which they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.

After the reporting date, there has been a significant fall in global stock markets as a result a number of the Company's investments have been impacted by COVID-19. Under IFRS these are non-adjusting events in respect of the year-end 31 December 2019. Although the full extent and timing of the impact of these events is not yet known, the Company expects it may experience delays in returns generated as a result of COVID-19. Consequently, the financial reporting impact will need to be considered in 2020 and could impact areas such as the carrying value of our Available for Sale Investments.

22. ULTIMATE CONTROLLING PARTY

In the opinion of the directors there is no controlling party.

23. PROFIT AND LOSS ACCOUNT OF THE PARENT COMPANY

As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been separately presented in these accounts. The parent company loss for the year was GBP2,281,000 (2018: GBP11,757,000).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR SEAFAIESSEFM

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June 26, 2020 02:00 ET (06:00 GMT)