Cadence Mineral Regulatory News (KDNC)

Cadence Minerals Plc

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

Heads of Terms Signed to Earn In up to 30% of a Significant DFS Ready Lithium Project

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to announce that it has entered into a conditional Heads of Terms with Premier African Minerals Limited (Premier) to earn up to 30% directly into the Zulu Lithium and Tantalum Project ("Zulu" or "Zulu Project") in Zimbabwe by investing up to US$5.1M. This investment will fully fund the Definitive Feasibility Study ("DFS") of the Zulu Project, which in November 2017 reported a scoping study with a lithium concentrate net present value ("NPV") of US$127M and a lithium carbonate NPV of US$718M.

PROJECT HIGHLIGHTS

· Scoping Study reported target annual production of 84,000 tonnes of spodumene concentrate and 32,500 tonnes of petalite with gross revenues of US$ 1 billion

· Pre‐tax Net Present Value ("NPV") of US$127 million (10% discount rate) and Internal Rate of Return ("IRR") of 86%

· Mineral Resource Estimate of 20 million tonnes ("Mt") at 1.06% Lithium Oxide ("Li2O") containing 526,000 tonnes of Lithium Carbonate Equivalent ("LCE")

· Initial Capital Cost of US$64 million, direct operating cost of US$486 per tonne of concentrate

· Initial 15+ year mine life at an average strip ratio of 5.5:1

· Significant potential for additional mineralisation with a 120 to 160 Mt exploration target over the Zulu Project

INVESTMENT HIGHLIGHTS

· Up to US$5.1 million investment into Zulu Project to earn 30% through a five stage investment programme against project deliverables - fully funding DFS

· On completion of the fifth stage of the investment

§ Cadence will be granted a right of first refusal to increase its stake to 49% of the project

§ Cadence will be awarded exclusive marketing rights on the sale of all mineral products

· Cadence will have the right on the completion of the first stage of investment to appoint one director to both the board of Zulu and the board of Premier. On completion of the fifth stage Cadence will have a right to appoint a further board member to the board of Zulu

· A technical committee will oversee the management of the DFS, consisting of five persons. Cadence and Premier will be entitled to each appoint two members of the technical committee and will jointly appoint a project manager

· Investment subject to due diligence by Cadence and exclusivity agreed for a period of 60 days

Kiran Morzaria, Chief Executive Officer, added:

"The Zulu Lithium Project is well advanced, with significant mineral resources, robust scoping study economics and ample room for expansion given the size of the exploration targets."

"By coupling Premier's local relationships and country expertise and Cadence's experience in lithium project development both parties will be able to unlock value, rapidly advance this project with the aim of developing Zulu into a significant producer to supply the expanding lithium market."

"Securing the right to earn into this asset dovetails well into Cadence's strategy. That is to invest in assets with shorter development timelines, meaning earlier cashflow, and invest directly into the project, taking significant stakes and be part of the management team."

Proposed Transaction

On 26 June 2018, Cadence & Premier African Minerals (together the "Parties") entered into a conditional Heads of Terms. The intention is to replace these Heads of Terms with a binding Investment Agreement ("Investment Agreement"). Cadence has agreed to acquire up to 30 per cent of the issued share capital of Zulu Lithium Mauritius Limited ("MauCo"), a company wholly-owned by Premier by investing up to US$5,100,000 to fund the DFS of the Zulu Lithium Project. MauCo wholly-owns Zulu Lithium (Private) Limited, a company registered in Zimbabwe owns the Zulu Project and operated at a financial break-even per its latest published accounts.

The investment will be payable in 5 instalments and each instalment will become convertible into ordinary shares of MauCo following each disbursement of proceeds in accordance with the Project Development Budget as set our below:

The Parties agree that the Investment will be applied in accordance with a project development budget. Any overruns of will be apportioned pro rata to each Party's respective interest in MauCo providing such overruns could not have been reasonably planned for. Any variation in the project development budget will require written approval by Cadence and Premier.

The Investment is subject to standard anti-dilution and down-round protection. In particular, if any Party fails to pay its full share of any amount due under the project development budget by the due date, MauCo shall as soon as possible give notice of such default to all the Parties. The non-defaulting Parties shall within 15 business days, following the date of service of the default notice on the defaulting Party contribute to the amount in default pro rata to its percentage interest in MauCo (the "Default Contribution"). If the default continues for more than 45 days from the date of service of a default notice then the non-defaulting Parties will be entitled to convert its Default Contribution into shares in the capital of MauCo at a price per share at which the Investment Shares were valued.

In addition, if at any time for a period of 24 months after completion of the DFS any new shares in the capital of MauCo (of any class) are issued by MauCo which would result in Cadence's shareholding in MauCo being diluted by at least 15% at a price at least 15% below the price the Investment Shares were issued ("Down Round Price"), MauCo shall immediately issue to Cadence such number of new shares necessary to price the completed Investment at the Down Round Price.

A technical committee will be established to oversee the management of the DFS, consisting of five persons. Cadence and Premier will be entitled to each appoint two members of the technical committee and the Parties will jointly appoint a project manager.

The Parties have acknowledged that at the date of the Heads of Terms an aggregate amount of US$4,064,374.88 has been advanced by Premier to MauCo ("Premier Loan") and the Parties have agreed that the Premier Loan and any interest due under the Premier Loan will be offset on a pro rata basis against the Investment Amounts paid by Cadence to MauCo.

Following the payment of the stage Investment Amount of US$1.5 million, Cadence may appoint one director to serve on the boards of Premier, MauCo and/or Zulu and following the payment of stage 5 Investment Amount, Cadence may appoint a second director to serve on the boards of MauCo and/or Zulu.

The Parties have further agreed that Cadence will, following the payment of the stage 5 Investment Amount:

(i) be awarded exclusive rights on commercial terms to the marketing and sale of all mineral products for the benefit of MauCo ("Marketing Rights"); and

(ii) be granted an irrevocable right of first refusal ("ROFR Investment") to subscribe for such number of shares in the share capital of MauCo equating to an additional 19% of the issued and fully diluted share capital of MauCo on terms no worse than those offered to MauCo by another potential investor.

Completion of the Proposed Transaction is conditional on the following matters:

(i) All relevant shareholder approvals being obtained;

(ii) Cadence's satisfaction with the final form of the Investment Agreement, completion of due diligence and the Project Development Budget;

(iii) the Parties agreeing, signing and exchanging the Investment Agreement that incorporates all the terms of the Proposed Transaction; and

(iv) there being no material adverse change in the business, operations, assets, position (financial, trading or otherwise), profits or prospects of MauCo or Zulu between the date of this letter and completion of the Investment Agreement.

Cadence can therefore not guarantee that the transaction will proceed. Cadence may at any time following completion of the Investment Agreement: (i) on the occurrence of a force majeure event; or (ii) if test work and drilling at the Zulu Project result in unsatisfactory results, elect to terminate the Investment Agreement. Should Cadence elect to terminate the Investment Agreement then Cadence will forfeit the Marketing Rights.

Premier has granted Cadence an initial period of exclusivity from the date of signature of the Heads of Terms for a period of 60 days during which period Cadence shall complete sufficient due diligence so as to be able to convert the outline terms in this term sheet into a definitive agreement.

H&P Advisory Ltd is acting as financial advisors to Cadence Minerals.

Project Details and Scoping Study

The Zulu Project is located 80km from Bulawayo in Zimbabwe. The project is generally regarded as potentially the largest undeveloped lithium bearing pegmatite in Zimbabwe. Zulu comprises 14 mineral claims covering a surface area of 3.5 km2 which are prospective for lithium and tantalum mineralisation.

The Zulu Project has substantial resources. Following a successful 2,500 metres diamond drilling programme between September 2016 and February 2017, Premier published a Maiden SAMREC compliant Inferred Mineral Resource Estimate of 20.1 million tonnes grading 1.06% Li2O and 51 ppm Ta2O5 using a cut-off grade of 0.5% Li2O on the Main Zone. The Mineral Resource Estimate contains 526,000 tonnes LCE and 1,025 tonnes of Tantalum Pentoxide. The Mineral Resource Estimate covers only 35% of Zulu's known 3.5km surface strike length. This Mineral Resource Estimate as the deposit remains open at depth and along strike. The exploration target for the Zulu Lithium Project is between 120-160 million tonnes.

The scoping study identifies a target production of 84,000 tonnes of spodumene concentrate and 32,500 tonners of petalite concentrate per year for an initial 15 year life of mine to be the most appropriate option. The significant exploration potential already identified close to the existing resource base, together with the fact that mineralisation is open at depth and on strike, and the new zones identified, indicate significant potential for a substantial increase in life of mine and production targets.

The Scoping Study assessment of a pre-tax NPV10 value of US$127M is based on prices of US$800/t spodumene and US$400/t petalite concentrate prices respectively. The results of the Scoping Study are set out in Table 1 below.

Table 1 - Zulu Project Scoping Study Results (concentrate sale option)

Note 1: The NPVs are shown for the gross value of the Zulu Project.

Note 2: All NPV values extracted from the Scoping Study have been rounded to the nearest whole million.

Note 3: Source-Scoping Study

In addition to considering the sale of spodumene and petalite concentrates, a secondary option of selling lithium carbonate was evaluated. This option entails the transportation of spodumene and petalite concentrates from the mine to a lithium carbonate plant in Bulawayo. The operating costs were estimated at US$2,100 per tonne of lithium carbonate and capital costs were estimated at US$130 million for the plant. The results of this option are set out in the table 2 below.

Table 2 - Economic summary Lithium Carbonate Option

Note 1: The NPVs are shown for the grass value of the Zulu Project.

Note 2: The initial capital cast for the Lithium Carbonate Option includes the capital cost for the Concentrate Sales Option.

Note 3: All NPV values from Scoping Study have been rounded to the nearest whole million.

Note 4: Source-Scoping Study

The full Scoping Study is available at: https://www.premierafricanminerals.com/component/rsfiles/download?path=Technical%2BReports%252F2017%2BZulu%2BLithium%2BProject%2BScoping%2BStudy%2B-%2BBara%2BConsulting.pdf

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

or further information, please contact.

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

Hannam & Partners LLP +44 (0) 207 907 8500

(Financial Advisors & Joint Broker)

Neil Passmore

Ingo Hofmaier

Square1 Consulting +44 (0) 207 929 5599

David Bick

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

About Cadence Minerals:

Cadence is dedicated to smart investments for a greener world. The planet needs rechargeable batteries on a global scale - upcoming supersized passenger vehicles, lorries and buses - require lithium and other technology minerals to power their cells. Cadence is helping find these minerals in new places and extracting them in new ways, which will meet the demand of this burgeoning market. With over £30 million vested in key assets globally, Cadence is helping us reach tomorrow, today.

Cadence invests across the globe, principally in lithium mining projects. Its primary strategy is taking significant economic stakes in upstream exploration and development assets within strategic metals. We identify assets that have strategic cost advantages that are not replicable, with the aim of achieving lower quartile production costs. The combination of this approach and seeking value opportunities allows us to identify projects capable of achieving high rates of return.

The Cadence board has a blend of mining, commodity investing, fund management and deal structuring knowledge and experience, that is supported by access to key marketing, political and industry contacts. These resources are leveraged not only in our investment decisions but also in continuing support of our investments, whether it be increasing market awareness of an asset, or advising on product mix or path to production. Cadence Mineral's goal is to assist management to rapidly develop the project up the value curve and deliver excellent returns on its investments.

About Premier African Minerals Limited:

Premier African Minerals Limited (AIM: PREM) is a multi-commodity mining and natural resource development company focused on Southern Africa with its RHA project in Zimbabwe.

Premier has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe, encompassing brownfield projects with near-term production potential to grass-roots exploration. In addition, the Company holds 5,010,333 shares in Circum Minerals Limited ("Circum"), the owners of the Danakil Potash Project in Ethiopia, which has the potential to be a world class asset. Premier also has an interest in Arc Minerals that has a number of mineral assets in Europe and Africa.

Forward Looking Statements:

Certain statements in this announcement are or may be deemed to be forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'' ''could'' "should" ''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward looking statements.