Cadence Mineral Regulatory News (KDNC)

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:

Chairman's Statement

For the year ended 31 December 2019

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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.

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

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 ½) 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.

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 €34.06m, equivalent (at the time of signing) to approximately £29.15m. This compares to EMH's market valuation (at the time of signing) of approximately £32.88m (€38.42m). 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 £7.7 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

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 £400,000 (based on 14-day VWAP of £0.0107) to acquire a further 20% stake, which is in line with the terms of the original agreements; and

· Invest £300,000 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 £ 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 £2.04m loss (2018: £11.92m). This decrease in loss from the previous year of approximately £9.88m is mainly due to the movement in realised and unrealised profits and losses of approximately £9.73m 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 £15.40 million (2018: £14.40 million). This increase of approximately £1m 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.

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.

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:

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

___________________________________________________________________________________

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

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.

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

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:

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; £66,919 (2018: £115,500).

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.

BonusesNo 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:

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 OFCADENCE 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 £12.6m 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.

• 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 £230,000, 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

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

___________________________________________________________________________________

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

Kiran Morzaria Don StrangDirector 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

___________________________________________________________________________________

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

Kiran Morzaria Don StrangDirector 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

___________________________________________________________________________________

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

___________________________________________________________________________________

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

___________________________________________________________________________________

There was a non-cash consideration of £400,000 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

___________________________________________________________________________________

There was a non-cash consideration of £400,000 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 (£) and all values are rounded to the nearest thousand pounds (£'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 £2,496,000, available for sale assets of £1,121,000 and borrowings of £2,967,000, 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.

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

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 £574,000 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 £1,000 (2018: £7,000) is determined using a Black-Scholes Valuation model, using the assumptions detailed in note 14.

Treatment of exploration and evaluation costs

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 £2,679,000 (2018: £325,000). Additionally £446,000 of costs previously capitalised have been impaired in the year to 31 December 2019 (2018: £Nil).

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

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:

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 £10,000 (2018: £140,000) during the period.

In respect of the total assets, £727,000 (2018: £783,000) arise in the UK, and £Nil (2018: £317,000) arise in Greenland, £3,631,000 arise in Mexico (2018: £5,553,000), £10,064,000 (2018: £10,808,000) arise in Australia, £2,775,000 (2018: £100,000) arise in Brazil, £575,000 (2018: £225,000) arise in Argentina and £993,000 arise in Canada (2018: £547,000).

2. EMPLOYEE REMUNERATION 

Employee benefits expense

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

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

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

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

3. FINANCE COSTS 

4. TAXATION

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

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

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.

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

In the year to 31 December 2019 £1,000 (2018: £Nil) was invested in Exploration costs by REM Mexico Ltd and £nil (2018: £Nil) invested in Exploration costs by Rare Earth Resources Ltd. The Exploration costs in Rare Earth Resources Ltd were impaired by £317,000 in the year (2018 £Nil). During 2019, £663,000 was invested in exploration costs by the parent company (2018: £325,000). £100,000 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 £129,000 were fully impaired in the year.

6. INTANGIBLE ASSETS CONTINUED

Company only Intangible Assets

7. INVESTMENTS IN SUBSIDIARIES - COMPANY

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