Kendrick Resources Regulatory News (KEN)

28 April 2023

Kendrick Resources Plc

("Kendrick" or the "Company")

Final Results for period to 31 December 2022

Kendrick Resources Plc (LSE: KEN), a mineral exploration and development company with vanadium, nickel and copper projects in Scandinavia is pleased to report  ts full year results for the year ended 31 December 2022.

The Annual Report and Financial Statements for the year ended 31 December 2022 will shortly be available on the Company's website at https://www.kendrickresources.com. A copy of the Annual Report and Financial Statements will also be uploaded to the National Storage Mechanism where it will be available for viewing at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Please note that page references in the text below refer to the page numbers in the Annual Report and Financial Statements.

This announcement contains inside information for the purposes of Article 7 of Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market Abuse (Amendment) (EU Exit) regulations (SI 2019/310).

Further information on the Norwegian projects can be found on the Company's website at: https://www.kendrickresources.com/nickel/

Financial highlights:

· £1.04m loss before tax (2021: £325K)

· Approximately £1.818m cash at bank at the period end (Dec 2021: £17k).

· The loss per share of 0.68 pence (2021: loss 2.90 pence) has been calculated on the basis of the loss of £1,043,466 (2021: loss £325,000) and on 153,882,205 (2021: 11,190,363) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 29 December 2022.

· The net asset value as at period end was £5.57m (29 December 2021 (£236k))

CHAIRMAN'S STATEMENT

Dear Shareholder

Kendrick Resources (the Company) despite strong global headwinds has made significant progress during the period under review and post reporting period.

Our main task post Admission to the Main Market of the London Stock Exchange ("Admission") was to assemble all of the reports and raw data generated by others during the history of the projects. This systematic data review often reduces the need for some expenditure and often one encounters work, which whilst relevant at the time, under new conditions could assume new relevance. This was the case in all of our projects and the Company has entered 2023 with many more opportunities, than immediately after Admission.

A review of our portfolio led to a potential contribution reranking, and it is evident that our nickel positions have short term opportunities and thus we carried out a full review of our nickel projects in Norway. The results of this review were that all of our nickel projects, without exception, present significant opportunity for extension, leading to resource increase and short-term mining potential.

The ownership of nickel sulphide licences can be considered a premium asset in a world of reducing sulphide availability against metallurgically very complex and financially challenging laterite projects. Our position is enhanced by a nickel price which is some three times higher than when the last serious nickel exploration occurred in our project area. We have carried out a drilling programme and by the time of this Chairman's report is disseminated, the results will be in the public domain.

Our vanadium activities in Sweden, were subjected to review and soil and grab sampling programmes were carried out and the prognosis is that the area, which now includes an additional two licences, may also be highly prospective for copper and graphite along with the known vanadium resource. The work carried out has given us high confidence that our proposed Spring drilling programme has the potential to double the current known resource of 44 million tonnes.

During the period under review, samples were sent to metallurgical laboratories in the UK, with a view to assessing whether the concentrate quality can be maintained, whilst increasing the actual recovery of the product. The results of this work to date, have been very encouraging and a full report should be available for market dissemination during the second quarter of 2023.

Vanadium Redox Flow Batteries continue to gain importance in the battery storage world, no loss of capacity over time, longer lifespan, cost effective and versatile, they offer a compelling alternative for static battery storage. Vanadium use in steel manufacturing is also increasing due to global implementation of new standards.

It is considered that the Airijoki Project in Northern Sweden, located in a well-established mining district that includes the largest underground iron ore mine in the World, justifies intense focus if the Company wishes to be a serious player in the rapidly emerging battery storage arena. The vanadium projects in central Sweden, whilst continuing to have potential, will not be so actively pursued for now mainly due to their relatively early stage of development when compared to the known resources at Airijoki.

Our activities in Finland have been of a more desktop review in nature, with the objective being the identification of targets and rationalisation of existing information.

We have assembled a team of professionals who have the country and commodity experience to fast track our projects and consequently, since listing we have reduced our dependency on local consultants and to a large degree are independent in our project management.

We feel as we advance our project base, Kendrick will assume a position where its full market potential is realised. The projects, commodities and position in Scandinavia are unique and should gain the necessary recognition as the demand for new age metals advances as predicted. We have made few attempts to seek new acquisitions, since our current project base is considered to be of high quality, with the potential to significantly enhance shareholder value. In this regard, we have examined a number of opportunities consistent with our mission and I have little doubt that our presence in the region will give us advantage over others, as global commodity needs increase.

I would like to thank my fellow directors and team for their diligent work, in reviewing a massive data base, formulating a mid-term plan and implementing the initial components of the plant. We look forward to 2023 to be a year of positive advancement, which will reposition Kendrick in the eyes of the trade and investment market.

Results for the year

The Company reported a loss before taxation for the year of £1,043,000 (2021: £325,000) mainly due to administrative costs of £418,000 (2021: 289,000), including professional, consulting and directors' fees. And Listing related costs of £607,000 (2021:Nil). Net assets at 29 December 2022 amounted to £5,567,000 (2021: Net liabilities £236,000) including exploration and evaluation assets of £3,933,000 (2021: Nil) and cash of £1,818,000 (2021: 17,000).

AGM and Resolutions

The resolutions for the forthcoming Annual General Meeting will be contained in a separate Notice which will be made available to shareholders and on the website www.kendrickresources.com. The Directors will recommend shareholders to vote in favour of all the resolutions and a form of proxy will be dispatched to all shareholders for this purpose.

Colin Bird

Chairman

28 April 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 29 December 2022

GROUP STATEMENT OF FINANCIAL POSITION

As at 29 December 2022

Company No. 02401127

COMPANY STATEMENT OF FINANCIAL POSITION

The loss for the year for the Company was £1,043,466.

GROUP STATEMENT OF CASH FLOW

for the year ended 29 December 2022

COMPANY STATEMENT OF CASH FLOW

for the year ended 29 December 2022

GROUP STATEMENT OF CHANGES IN EQUITY

Year ended 29 December 2022

Reserves Description and purpose

Share capital - amount subscribed for share capital at nominal value

Share premium - amounts subscribed for share capital in excess of nominal value

Merger reserve - amount arising from the issue of shares for non-cash consideration

Accumulated losses - cumulative net gains and losses recognised in the consolidated income statement

COMPANY STATEMENT OF CHANGES IN EQUITY

Year ended 29 December 2022

Reserves Description and purpose

Share capital - amount subscribed for share capital at nominal value

Share premium - amounts subscribed for share capital in excess of nominal value

Merger reserve - amount arising from the issue of shares for non-cash consideration

Accumulated losses - cumulative net gains and losses recognised in the consolidated income statement

NOTES TO THE FINANCIAL STATEMENTS

GENERAL INFORMATION

1. Kendrick Resources PLC (the 'Company' or "Kendrick") is incorporated and domiciled in the United Kingdom. The address of the registered office is 7/8 Kendrick Mews, London SW7 3HG.

The Company's period being reported on in these accounts is for the year to 29 December 2022. The comparative period is for the year to 29 December 2021.

2. ADOPTION OF NEW AND REVISED STANDARDS

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and, in some cases, have not yet been adopted by the UK.

The directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Company in future periods.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements have been prepared in accordance with UK-adopted international accounting standards ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRSs.

The principal accounting policies adopted are set out below.

The financial statements are presented in Pounds Sterling ("£").

Going concern

The operational requirements of the Company comprise maintaining a Head Office in the UK with a Board of one executive Director and three non-executive Directors, and one consultant for, amongst other things, determining and implementing strategy and managing operations.

The company currently has no income and meets its working capital requirements through raising development finance. In common with many businesses engaged in exploration and evaluation activities prior to production and sale of minerals the company will require additional funds and/or funding facilities in order to fully develop its business plan.

Ultimately the viability of the company is dependent on future liquidity in the exploration period and this, in turn, depends on the company's ability to raise funds to provide additional working capital to finance its ongoing activities. Management has successfully raised money in the past, but there is no guarantee that adequate funds will be available when needed in the future.

As at 29 December 2022, the company had net assets of £5.57m and cash and cash equivalents of £1.82 million, which will enable the Company to carry out its planned exploration activities on its newly acquired projects. An operating loss is expected in the year subsequent to the date of these accounts and as a result the Company will need to raise funding to provide additional working capital to finance its ongoing activities. 

Based on its current reserves and the Board's assessment that the Company will be able to raise additional funds, as and when required, to meet its working capital and capital expenditure requirements, the Board have concluded that they have a reasonable expectation that the Group can continue in operational existence for the foreseeable future and at least for a period of 12 months from the date of approval of these financial statements.

 For these reasons the financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As there can be no guarantee that the required future funding can be raised in the necessary timeframe, a material uncertainty exists that may cast significant doubt on the Company's future ability to continue as a going concern.

This financial report does not include any adjustments relating to the recoverability and classification of recorded assets amounts or liabilities that might be necessary should the entity not continue as a going concern.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and any recognised impairment loss.

Depreciation and amortisation is charged so as to write off the cost or valuation of assets, other than land, over their estimated useful lives, using the straight-line method, on the following bases:

Office equiptment and computers

The gain or loss arising on disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

Exploration and evaluation assets

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are transferred to development assets and amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Investment in subsidiaries

In the Company's financial statements, investment in subsidiaries are stated at cost and reviewed for impairment if there are any indications that the carrying value may not be recoverable.

Financial instruments

Recognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognised on the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument.

De-recognition of financial assets and financial liabilities

The Company derecognises a financial asset only when the contractual rights to cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for the amount it has to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. The Company derecognises financial liabilities when the Company's obligations are discharged, cancelled or expired.

Loans and receivables

Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost less any provision for impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash with three months or less remaining to maturity and are subject to an insignificant risk of changes in value.

Impairment of financial assets

The Company assesses on a forward-looking basis the expected credit losses associated with its receivables carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables, the Company applies the simplified approach permitted by IFRS 9, resulting in trade and other receivables recognised and carried at amortised cost less an allowance for any uncollectible amounts based on expected credit losses.

Trade and other payables

Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic resource will result, and that outflow can be reliably measured.

Share-based payments

The Company applies IFRS 2 Share-based Payment for all grants of equity instruments.

The Company issues equity-settled share-based payments to its employees. 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, based on the Company'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 is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The inputs to the model include: the share price at the date of grant, exercise price expected volatility, risk free rate of interest.

Share capital

Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company's ordinary shares are classified as equity instruments.

The Company considers its capital to be total equity. There have been no changes in what the Company considers to be capital since the previous period.

The Company is not subject to any externally imposed capital requirements.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all entities, which are controlled by the Company. Control is achieved when the Company:

· has the power over the investee;

· is exposed, or has rights to variable return from its involvement with the investee; and

· has the ability to use its power to affects its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

The results of subsidiaries are included in the consolidated financial statements from the effective date of acquisition to the effective date of disposal. Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting policies in line with those of the Group.

All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.

When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:

· the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

· potential voting rights held by the Company, other vote holders or other parties;

· rights arising from other contractual arrangements; and

· any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the Group's interest therein and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interest.

Transactions which result in changes in ownership, where the Group had control of the subsidiary, both before and after the transaction, are regarded as equity transactions and are recognised directly in the statement of changes in equity. The difference between the fair value of consideration paid or received and the movement in non-controlling interest for such transactions is recognised in equity attributable to the owners of the parent.

Where a subsidiary is disposed of and a non-controlling shareholding is retained, the remaining investment is measured to fair value with the adjustment to fair value recognised in profit or loss as part of the gain or loss on disposal of the controlling interest.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates. The estimates and underlying assumptions 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, on in the period of the revision and future periods if the revision affects both current and future periods.

Critical accounting estimates and judgments are those that have a significant risk of causing material adjustment and are often applied to matters or outcomes that are inherently uncertain and subject to change. As such, management cautions that future events often vary from forecasts and expectations and that estimates routinely require adjustment.

Details of the Group's significant accounting judgements and critical accounting estimates are as follows:

Impairment of Exploration and evaluation assets

The recoverable amounts of individual exploration assets have been determined based on various factors including Independent Expert Reports, the Company's exploration activities, and commodity prices. It is reasonably possible that the assumption may change which may then impact on estimates and may then require a material adjustment to the carrying value of assets including intangible assets. The Group tests annually whether exploration assets have suffered any impairment, in accordance with the accounting policy.

Recoverability of Parent company investment in subsidiary undertakings

The carrying value of the Parent company's investment is ultimately dependent on the recoverability of the underlying assets i.e. the exploration and evaluation assets which are reviewed for indicators of impairment on an annual basis as noted above. An impairment in the exploration and evaluation assets may then require an adjustment to the carrying value of the investment in the subsidiary companies.

Business Combination

In line with IFRS3, the Directors have assessed whether the Group has acquired assets of a business combination in relation to Northern X Group and the Norwegian Projects and determined that these are not business combinations.

Contingent consideration

Contingent consideration is a financial liability recorded at fair value. The amount of contingent consideration to be paid is based on the occurrence of future events, such as the achievement of expected and estimated project milestones such as a positive feasibility study or a decision to mine. Accordingly, the estimate of fair value contains uncertainties as it involves judgment about the likelihood and timing of achieving these milestones and the period in which they may be achieved as well as the discount rate used. Where a contingent consideration milestone in relation to an exploration project is uncertain and may only occur if at all in several years then the Company will disclose the contingent liability but not provide for it in the financial statements. Changes in fair value of the contingent consideration obligation result from changes to the assumptions used to estimate the probability of success for each milestone, the anticipated timing of achieving the milestones and the discount period and rate to be applied. A change in any of these assumptions could produce a different fair value, which could have a material impact on the results from operations.

Going Concern

The Director's have considered Going Concern and as per note 3 no adjustment has been made in these financial statements which are prepared on a going concern basis.

5. LOSS FOR THE YEAR

The loss for the period has been arrived at after charging / (crediting):

6. AUDITORS' REMUNERATION

The remuneration of the auditors can be analysed as follows:

7. STAFF COSTS

Included within staff costs £97,015 (2021: £60,000) relates to amounts in respect of Directors. The highest paid director's emoluments was £51,000 (2021: £60,000)

8. TAXATION

No liability to corporation tax arose for the year ended 29 December 2022 and year ended 29 December 2021, as a result of underlying losses brought forward.

Reconciliation of effective tax rate:

The standard rate of corporation tax in the UK applied during the year was 19% (2021: 19%).

At 29 December 2022, the Company are carrying forward estimated tax losses of £7.3m (2021: £6.3m) in respect of various activities over the years. No deferred tax asset was recognized in respect to these accumulated tax losses as there is insufficient evidence that it is probable that the amount will be recovered in future years.

9. LOSS PER SHARE

The use of the weighted average number of shares in issue in the period recognises the variations in the number of shares throughout the period. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share or increase the loss per share. There would be no dilutive impact were the share options to be exercised.

10. PROPERTY PLANT AND EQUIPMENT

11. CURRENT ASSET INVESTMENT

The investment represents the holding of 8,174,387 shares in Bezant Resources Plc, which were held at 29 December 2022. At the start of the year the Company held 9,221,072 shares in Galileo Resources Plc, but these were disposed during the year.

12. EXPLORATION AND EVALUATION ASSETS

* There were no Exploration and Evaluation assets as at 29 December 2021 which is why there is no comparative table for 2021. In 2021 the capitalised Nordic Projects & Related Transactions costs were GBP673,755. On the acquisition of the Northern X Group GBP457,218 of these costs were transferred to Group Exploration and Evaluation assets and GBP216,537 were included in the GBP606,575 of listing & transactions costs charged in the Income Statement

The investment in the Nordic Projects represented the amounts paid in taking up and extending the option to acquire various Scandinavian assets described below together with costs incurred in running the projects prior to the proposed acquisition including the costs associated with the proposed listing.

The Nordic Projects comprise vanadium projects in Sweden and Finland which were acquired from Pursuit and consist of competently and comprehensively well drilled tonnages of vanadium ore, estimated at approximately 160 million tonnes. 

Summary of Projects:  The projects are a portfolio of early to advanced stage exploration projects covering a combined area of 466.72 km2 in Scandinavia. The most advanced of these Projects are the Airijoki and Koitelainen vanadium projects in Sweden and Finland respectively.

However, the projects acquired include several exploration projects in the Nordic region,

namely:

* Finland - the Karhujupukka vanadium-magnetite exploration project

* Sweden - the Kramsta, Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively known as the Central Sweden Project)

The Karhujupukka project also support defined mineral resources prepared in accordance with the JORC Code (2012.) However, these remain subject to further techno-economic assessment. The remaining projects represent brownfield to greenfields exploration opportunities based on the results of historical activities, some with historical mineral estimates that remain to be updated to the requirements of the JORC Code (2012).

On 13 May 2022 the Company exercised its option to conditionally acquire the Espedalen, Hosanger, and Sigdal nickel-copper-cobalt exploration projects in Norway (the "Norwegian Projects") (the "Norwegian Projects Acquisition") from EMX Scandinavia AB (previously named Eurasian Minerals Sweden AB) ("EMX") by the issue of 20,226,757 new ordinary shares in the Company to EMX or its nominee, 50% of these shares shall be subject to a three-month voluntary escrow and the balance of 50% subject to a six-month voluntary escrow. Kendrick has also made a payment of US$81,949 to EMX. This payment was to meet a shortfall of this amount in the exploration expenditure to be incurred during the option period.

Deferred Share consideration due to EMX: On or before 27 April 2023, the Company has to issue to EMX or its nominee the number of shares which is the lower of i) 9.9% of the Company's then issued share capital and ii) the number of shares whose value based on the then 5-day VWAP equals 20,000,000 of the shares issued at closing of the acquisition (the "Established Value") divided by the 5 day VWAP at the date of issue of these shares. On 24 April 2023 the Company issued 4,144,395 new Ordinary shares at 0.875 pence each to settle this deferred consideration for £36,265, (the "EMX Deferred Share Consideration") . As the liability to pay the EMX Deferred Share Consideration arose during the period a provision of £36,265 was made for this liability with the amount being recognised an exploration and evaluation asset.

The Acquisition was conditional upon the Norwegian Directorate for Mineral Administration approving the transfer of the licences to a wholly owned subsidiary of Kendrick and this process was completed and confirmed on 12 August 2022 and the Company applied for the 20,226,757 new ordinary shares to be admitted to trading on the Standard Segment of the London Stock Exchange on 17 August 2022 (see note15).

The Norwegian Projects comprise:

o  The Espedalen Project consisting of 16 contiguous exploration permits covering a combined area of 139.89 km2 currently contains two nickel deposits

o  The Sigdal Project consisting of three exploration licences totalling 30 km2 containing a geophysical conductor associated with historical mine workings, which has only been tested with two short drill holes, returning gold grades over 10g/t with encouraging nickel and copper mineralisation

The Hosanger Project consisting of a coherent tenure package of four exploration licences covering 40 km2 and contains the historical Litland nickel mine

Further commitments under Norwegian Projects Acquisition

· beginning on 13 May 2025 and ceasing on the date upon which the Company commissions a Pre-Feasibility Study on any one of the Projects: the Company has committed to one thousand meter drilling for each Project ("Drilling Commitment"); and

· upon attainment of each development milestone ((milestone 1) being the completion of an economic assessment of mineral potential and (milestone 2) the completion of a feasibility study), the Company shall pay EMX the sum of USD$500,000. If milestone 1 is not met but milestone 2 is met then an aggregate of USD$1,000,000, will become due ("Milestone Payments")

Royalty Agreement: At the closing of the Norwegian Projects Acquisition the Company entered into a royalty agreement under which a 3% net smelter royalty is payable to EMX on commercial production from any of the three Norwegian Projects ("Production Royalty"). A 1% interest in this royalty may be bought back in stages for a total cash consideration of US$1,000,000 on or before the fifth anniversary of the closing of the Acquisition.

No provision has been made in these accounts for the further commitments under the Norwegian Projects Acquisition above in relation to;

a) the Drilling Commitment as the Company's Projects are in the exploration phase and therefore it is in the normal course to on an ongoing basis to review projects and continue work on projects that remain prospective and it can take several years to get to the stage of commissioning a Pre-Feasibility study therefore there is no certainty as to the period over which the Drilling Commitment would have to be met and whether or not it would be met by the Company's ongoing exploration activities on the Norwegian Projects;

b) Milestone Payments as the Norwegian Projects are in the exploration phase and therefore it is not certain that an economic assessment of mineral potential or a feasibility study will be completed in the next few years, or if at all; or

c) Production Royalty as the Norwegian Projects are in the exploration phase and therefore it is not certain that they will become mines producing ore on which a royalty is due in the next several years, or if at all

13. ACQUISITIONS

Acquisition of Northern X Group

On 6 May 2022 the Company completed the acquisition of;

(a) 100% of Northern X Finland Oy ("Northern X Finland"), which owns in Finland the Koitelainen vanadium projects which hosts a defined Mineral Resource as defined by the JORC Code (2012) and the Karhujupukka vanadium-magnetite exploration project ("Finnish Projects"); and

(b) 100% of Northern X Scandinavia AB ("Northern X Scandinavia") which owns in Sweden the Airijoki and vanadium project (the "Airijoki Project") which hosts a defined Mineral Resource as defined by the JORC Code (2012) and the Kramsta, Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively known as the "Central Sweden Projects") (the Airijoki Project and the Central Sweden Projects are collectively the "Swedish Projects")

Collectively the Northern X Group

The acquisition price was as follows:

As part of the purchase agreement with Pursuit there will be additional deferred contingent consideration based on two accretive value milestones being achieved;

a) Milestone One which triggers a A$250,000 (approx. £136,000) payment in cash, is the completion by the Company (or any successor or assignee) of a Feasibility Study, as defined by the JORC Code (2012), on any individual project area in the Nordic Projects, demonstrating an internal rate of return of not less than 25%; and

b) Milestone Two which triggers a A$500,000 (approx. £272,000) payment in cash is a decision to mine being made by the Company (or any successor or assignee) in respect of any project area in the Nordic Projects.

No provision has been made in these accounts for the additional deferred contingent consideration referred to above as the Company's Projects are in the exploration phase and therefore it is not certain that a Feasibility Study will be completed or a decision to mine be made in the next few years, or if at all.

Acquisition of Caledonian Minerals AS

On 13 May 2022 to facilitate the smooth transfer of the Norwegian Project Licences to the Company after the exercise of the EMX Option the Company acquired Caledonian Minerals AS for £6,186 a Norwegian company established by EMX as a clean special purpose vehicle on 8 November 2021 which at the date of acquisition had not carried out any business and had no assets or liabilities.

14. INVESTMENT IN SUBSIDIARIES

There were no subsidiaries as at 29 December 2021 which is why there is no comparative table for 2021. In 2021 the capitalised Nordic Projects & Related Transactions costs were GBP673,755. On the acquisition of the Northern X Group GBP428,332 of these costs were transferred to the Company's investment in and loans to subsidiaries and on the acquisition of the Norwegian Assets GBP28,886 was transferred to the Company's exploration and evaluation asset in relation to the Norwegian projects

To facilitate the smooth transfer of the Project Licences the Company has per note 13 for £6,186 acquired Caledonian Minerals AS a Norwegian company established by EMX as a clean special purpose vehicle on13 May 2022 which at that date had not carried out any business and had no assets of liabilities. 

Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid less impairment.

The Company conducted an impairment review and is satisfied that the carrying value of £3,285,999 is reasonable and no impairment is necessary. (2021- Nil).

Principal Subsidiaries

15. TRADE AND OTHER RECEIVABLES

The fair value of trade and other receivables is not significantly different from the carrying value and none of the balances are past due.

16. TRADE AND OTHER PAYABLES

17. SHARE CAPITAL AND SHARE PREMIUM