Cloudbreak Regulatory News (CDL)

15 November 2023

Cloudbreak Discovery Plc

('Cloudbreak', or 'the Company')

Company Update

Cloudbreak Discovery Plc, (LSE: CDL), a natural resources project generator in the mining and energy sectors is pleased to provide the following corporate update.

Following the resignation of Kyler Hardy as Chairman and CEO and the appointment of Andrew Male as Interim CEO, the Board has, over the past few months, undertaken an analysis and review of the Company's investments, assets and operations and legacy matters relating to its former management. Upon completion of this review, the Board has agreed to a number of matters with former management and have entered into the agreements described below (collectively, the "Settlement Agreements").

Under the terms of the Settlement Agreements, former management and their related consulting companies Cronin Capital Ltd ("CCL"). and Cronin Services Ltd ("CSL") (together "the Cronin Parties"), have agreed to enter into the following agreements with the Company.

1. Purchase and Assignment of Debt Agreement ("Debt Agreement").

The Company has an existing liability in its books of £907,710 ("Cloudbreak Debt") to the Cronin Parties in relation to outstanding management charges incurred over the past [two] years. Under the terms of this Debt Agreement all outstanding amounts owed to the Cronin Parties are being purchased and assigned to investors. The investors have agreed to pay the Cronin Parties £136,156.50 in consideration for the assignment. The investors have also agreed with the Company that they will subsequently convert the Cloudbreak Debt into ordinary shares in the Company following the Annual General Meeting on 24 November 2023.

Two of the investors participating in the Debt Agreement are Andrew Male, interim CEO and Director, and Paul Gurney, Director.

2. Share Purchase Agreement ("SPA").

CCL and CSL own 91,626,928 and 21,090,400 ordinary shares in Cloudbreak, respectively, giving a total of 112,717,328 ordinary shares. Under the terms of the SPA, CCL and CSL will sell 100% of their shares in Cloudbreak, in the second of a two-stage process.

Stage 1:

The Galleon 2023 Ltd., ("Galleon") a company unconnected to Cloudbreak, has agreed to purchase the following assets from Cloudbreak. The assets (collectively, the "Legacy Assets") being acquired include the following:

· 100% of the shares of Kudu Resources Ltd. and all of its holdings;

· The Foggy Mountain Property in the Toodoggone region of British Columbia;

· The Le Blache Royalty Agreement stipulating a 2% Net Smelter Royalty;

· 1,700,000 shares of Buscando Resources Corp.; and

· 950,000 shares of Temas Resources Corp.

The Legacy Assets are being transferred from Cloudbreak to Galleon for an aggregate consideration of £102,000. During the analysis and review of the Cloudbreak assets, the Board agreed that the Legacy Assets were not core to the Company's business strategy and given the Cronin Parties' historic involvement in the Legacy Assets, it was resolved to dispose of the Legacy Assets. Paul Gurney and Emma Priestley, the independent directors of Cloudbreak have also agreed to the transactional value of these Legacy Assets as being fair and reasonable.

Stage 2:

Galleon has agreed with the Cronin Parties that it will transfer the Legacy Assets to the Cronin Parties plus an additional £207,000 in cash and in turn will receive all 112,717,328 ordinary shares in Cloudbreak owned by CCL and CSL. Cloudbreak currently has 607,678,805 ordinary shares issued and outstanding and this acquisition of Cloudbreak shares will result in Galleon becoming an 18.5% shareholder of Cloudbreak.

Pursuant to a lock-in agreement ("Lock-In Agreement") Galleon has agreed with Cloudbreak that it will not dispose of its shareholding in the Company for a 12-month period following the date of the Lock-in Agreement, unless Galleon and Cloudbreak mutually agree to change the terms of the Lock-In Agreement or to provide consent to any disposal. 

It is contemplated that all of the Settlement Agreements will have a Closing Date of 21 November 2023.

Cloudbreak will upon closing provide shareholders with a comprehensive update on all assets, opportunities and capital structure.

Andrew Male, Interim CEO, commented; "We are happy to have agreed to these arrangements and agreements with the Cronin Parties and former management and we look forward to updating our shareholders in the near future. We thank all shareholders for their patience during this time and look forward to re-engaging in the near future."

The participation of Andrew Male and Paul Gurney in the Debt Agreement represents a Material Related Party transaction. Emma Priestley, the sole independent director for the purposes of this transaction, has approved the transaction as being fair and reasonable from the perspective of Cloudbreak and its shareholders.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

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About Cloudbreak Discovery PLC

Cloudbreak Discovery PLC is a leading natural resource project generator and royalty business. Cloudbreak is focused on energy royalty acquisitions with the aim of bringing near-term cashflow and driving shareholder value. Its primary operating jurisdiction is the United States, but the Company also deploys its project generation model in the international energy sector to acquire minority interests in projects of merit.

Through its wholly owned but independently operated subsidiary, Cloudbreak Exploration Inc., the Company will develop its array of mineral assets, whilst continuing to generate new projects with a particular focus on commodities key to the energy transition.

Cloudbreak's generative model across the energy and mineral sector enables a multi-asset approach to investing and exploration. Diversification within the natural resource sector and amongst resource classes is key to withstanding the cycles of investing.