CADENCE MINERALS PLC
ANNUAL REPORT
FOR THE YEAR ENDED
31 DECEMBER 2019
Company No 05234262
CADENCE MINERALS PLC
COMPANY INFORMATION
For the year ended 31 December 2019
___________________________________________________________________________________
Company registration number:
05234262
Registered office:
Directors:
Suite 3B Princes House
38 Jermyn Street
London
SW1Y 6DN
Andrew Suckling (Non-Executive Chairman)
Kiran Morzaria (Chief Executive Officer)
Don Strang (Executive Finance Director)
Adrian Fairbourn (Non-executive Director)
Secretary:
Don Strang
Nominated adviser and
Nominated broker:
Registrars:
Bankers:
Solicitors:
Auditors:
W. H. Ireland Limited
24 Martin Lane
London
EC4R 0DR
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands
B63 3DA
Barclays Bank Plc
1 Churchill Place
London
E14 5HP
Hill Dickinson LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Chapman Davis LLP
Registered Auditor
Chartered Accountants
2 Chapel Court
London
SE1 1HH
CADENCE MINERALS PLC
CONTENTS
For the year ended 31 December 2019
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Chairman's Statement ........................................................................................................................................ 1
Strategic Report................................................................................................................................................. 3
Report of the Directors .................................................................................................................................... 15
Corporate Governance .................................................................................................................................... 17
Report on remuneration................................................................................................................................... 27
Independent Auditors report to the members of Cadence Minerals PLC ........................................................ 33
Consolidated Statement of Comprehensive Income........................................................................................ 31
Consolidated and Company Statement of Financial Posititon ........................................................................ 35
Consolidated and Company Statement of Changes in Equity ......................................................................... 38
Consolidated and Company Statement of Cash Flows .................................................................................... 38
Principal Accountung Policies ........................................................................................................................ 40
Notes to the Financial Statements ................................................................................................................... 47
Forward-looking Statement
This annual report contains ‘forward-looking information’, which may include, but is not limited to, statements with respect to the future
financial and operating performance of Cadence Minerals, its subsidiaries, investment assets and affiliated companies, the estimation of mineral
resources, the realisation of mineral resource estimates, costs of production, capital and exploration expenditures, costs and timing of the
development of new deposits, requirements for additional capital, governmental regulation of mining operations and exploration operations,
timing and receipt of approvals, licenses, environmental risks, title disputes or claims.
Often, but not always, forward-looking statements can be identified by the use of words such as ‘plans’, ‘expects’, ‘is expected’, ‘budget’,
‘scheduled’, ‘estimates’, ‘forecasts’, ‘intends’, ‘anticipates’ or ‘believes’, or variations (including negative variations) of such words and
phrases, or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will’ be taken, occur or be achieved. Forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements
of Cadence and/or its subsidiaries, investment assets and/or its affiliated companies to be materially different from any future results,
performance, or achievements expressed or implied by the forward-looking statements.
Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current
exploration activities; conclusions of economic evaluations and studies; fluctuations in the value of UK Pounds Sterling relative to the United
States Dollar, and other foreign currencies; changes in project parameters as plans continue to be refined; future prices of products; possible
variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other
risks of the mining industry; political instability, adverse weather conditions, insurrection or war; delays in obtaining governmental approvals
or financing or in the completion of development or construction activities.
Although Cadence has attempted to identify important factors that could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may well be other factors that cause actions, events or results to differ from those currently
anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date of this annual report and Cadence disclaims any obligation to update any
forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that
forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.
Nothing in this annual report should be construed as a profit forecast.
CADENCE MINERALS PLC
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.
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CADENCE MINERALS PLC
CHAIRMAN'S STATEMENT
For the year ended 31 December 2019
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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
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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 as. 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.
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CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
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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.
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CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
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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.
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CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
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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.
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CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
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•
•
·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.
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CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
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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.
Page 8
CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 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.
Page 9
CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
___________________________________________________________________________________
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:
Page 10
CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
___________________________________________________________________________________
•
•
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
Page 11
CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
___________________________________________________________________________________
PRINCIPAL RISKS AND UNCERTAINTIES
Cadence continuously monitors its risk exposures and reports its review to the Board. The Board reviews these risks
and focuses on ensuring effective systems of internal financial and non-financial controls are in place and maintained.
Key risk areas
The high-risk areas surrounding our existing business is tabulated below; the key areas are Strategic, Operational and
Financial.
Risk
Mitigation
Magnitude and likelihood
Strategic risks
Exposure to political risk, as an
invetment company Cadence is
exposed to this risk via our investee
companies whom have projects
around the worldaround the world.
Given the wide wide variety locations
and juristictions, Cadence could be
exposed to significantly different
regulatory of fiscal environments
which could affect the ability of
Cadence to deliver to its Strategy.
Through our interaction with our
investee companies and if applicable
as part of the the management teams
in the investee companies, the
Company is kept abreast of expected
potential changes and takes an active
role in making appropriate
representations and if required, with
its publically listed investments,
dispose of these assets to mitigate any
losses.
Magnitude- High
Likelihood - Medium
Operational risks
Permitting risk, through its investee
companies, Cadence is indirectly
exposed to planning, environmental,
licensing and other permitting risks
associated with the investee
operations particularly with regards
to mine construction and
commisioning.
Development and exploration risk,
Cadence investee companies could
fail develop or locate assets that have
the potential to deliver commercially,
e.g. lack of capital, technical
constriants, or a drilling programme
fials to identify sufficent volume or
concentration of the targeted
commodity.
Magnitude- High
Likelihood – High
Magnitude- High
Likelihood – High
The investee has to date been
successful in obtaining the required
permits to operate. Therefore,
Cadence considers that such risks are
partially mitigated through investee
compliance with regulations,
proactive engagement with
regulators, communities and the
expertise and experience of the
management teams.
Prior and while invested Cadence to
obtains a deep fundamental
understanding of the asset, its
potential economics, operating and
legal environment and its
management team. By doing so,
Cadence can either suggest potential
changes.to the investee development,
and in the case of public listed
investment dispose of the investment
to mitigate any losses.
Page 12
CADENCE MINERALS PLC
STRATEGIC REPORT
For the year ended 31 December 2019
___________________________________________________________________________________
Risk
Mitigation
Magnitude and likelihood
Operational risks (continued)
Commodity Price Risk, exposure to
market price risk through variations
in the wholesale price of the
commodities that our investee
companies are exposed to. This may
effect their ability to develop the
asset in particular sourcing financing
to bring the projects into production.
Loss of key staff
Financial risks
Liquidity risk, exposure through its
operations to liquidity risks.
Given the stage of development of
Cadence investments, e.g. pre
productions Cadence does not
activley hedge against this risk, with
its publically listed investments
Cadence can dispose of these assets
to mitigate any losses.
Magnitude- High
Likelihood – High
Provide and maintain competitive
remuneration packages to attract the
right calibre of staff. Build a strong
and unified team
Magnitude- High
Likelihood – Low
The Board regularly reviews
Cadence’s cash flow forecast and the
availability or adequacy of its current
facilities to meet Cadence’s cash flow
requirements
Magnitude- High
Likelihood - Medium
Page 13
CADENCE MINERALS PLC
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.
Page 14
CADENCE MINERALS PLC
REPORT OF THE DIRECTORS
For the year ended 31 December 2019
___________________________________________________________________________________
Directors
The membership of the Board is set out below. All directors served throughout the period unless otherwise stated.
Andrew Suckling
Kiran Morzaria
Don Strang
Adrian Fairbourn
Substantial shareholdings
Interests in excess of 3% of the issued share capital of the Company which had been notified as at 31 December
2019 were as follows:
Hargreaves Lansdown (Nominees) Limited Des:15942
Barclays Direct Investing Nominees Limited Des: CLIENT1
Hargreaves Lansdown (Nominees) Limited Des:VRA
Interactive Investor Services Nominees Limited Des:SMKTNOMS
Interactive Investor Services Nominees Limited Des:SMKTISAS
HSDL Nominees Limited Des:MAXI
Hargreaves Lansdown (Nominees) Limited Des:HLNOM
Hargreaves Lansdown (Nominees) Limited Des:HLNOM
HSBC Global Custody Nominee (UK) Limited Des: 941346
Ordinary shares held
Number
11,033,315
Percentage of
capital
%
10.5
9,248,430
6,962,975
6,912,190
5,772,627
4,438,924
4,317,820
3,517,675
3,278,699
8.8
6.6
6.5
5.5
4.2
4.1
3.3
3.1
Payment to suppliers
It is the Group's policy to agree appropriate terms and conditions for its transactions with suppliers by means ranging
from standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms
and conditions, provided that the supplier meets those terms and conditions. The Group does not have a standard or
code dealing specifically with the payment of suppliers.
Trade payables at the year end all relate to sundry administrative overheads and disclosure of the number of days
purchases represented by year end payables is therefore not meaningful.
Events after the Reporting Period
Events after the Reporting Period are outlined in Note 21 to the Financial Statements.
Going concern
The Directors have prepared cash flow forecasts for the period ending 30 June 2021 which take account of the current
cost and operational structure of the Group.
The cost structure of the Group comprises a high proportion of discretionary spend and therefore in the event that cash
flows become constrained, costs can be quickly reduced to enable the Group to operate within its available funding.
These forecasts demonstrate that the Group has sufficient cash funds available to allow it to continue in business for
a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial
statements have been prepared on a going concern basis.
Page 15
CADENCE MINERALS PLC
REPORT OF THE DIRECTORS
For the year ended 31 December 2019
___________________________________________________________________________________
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
Page 16
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
Board Member
Board Title
Audit
Title
Committee
Remuneration
Committee Title
Andrew Suckling
Non-Executive Chairman
Member
Member
Adrian Fairbourn
Non-Executive Director
Chairman
Chairman
Kiran Morzaria
Chief Executive Officer
Donald Strang
Finance Director
The Board is responsible for formulating, reviewing and approving the Company’s strategy, financial activities and
operating performance. Day-to-day management is devolved to the executive directors, who are charged with
consulting the Board on all significant financial and operational matters. The Board retains ultimate accountability for
governance and is responsible for monitoring the activities of the executive team.
The roles of Chairman and Chief Executive Officer are split in accordance with best practice. The Chairman has the
responsibility of ensuring that the Board discharges its responsibilities. The Chairman is responsible for the leadership
and effective working of the Board, for setting the Board agenda, and ensuring that Directors receive accurate, timely
and clear information. No one individual has unfettered powers of decision.
The two Executive Directors are comprised of a Chief Executive Officer (“CEO”) and Finance Director. The CEO
has the overall responsibility for creating, planning, implementing, and integrating the strategic direction of the
Company. This includes responsibility for all components and departments of a business. The CEO to ensures that the
organisation’s leadership maintains constant awareness of both the external and internal competitive landscape,
opportunities for expansion, customer base, markets, new industry developments and standards.
The non-executive directors are not considered independent under the Financial Reporting Council’s Corporate
Governance Code (April 2016) (“FRC Code”) as they both have options in the Company. However, the board
Page 17
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 18
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Establish a
strategy and
business model
which promote
long-term value
for shareholders
The board must be able to express
a shared view of the company’s
purpose, business model and
strategy. It should go beyond the
simple description of products and
corporate structures and set out
how the company intends to
deliver shareholder value in the
medium to long-term.
It should demonstrate that the
delivery of long-term growth is
underpinned by a clear set of
values aimed at protecting the
company from unnecessary risk
and securing its long-term future.
Seek to
understand and
meet
shareholder
needs and
expectations
Directors must develop a good
understanding of the needs and
expectations of all elements of the
company’s shareholder base.
The board must manage
shareholders’ expectations and
should seek to understand the
motivations behind shareholder
voting decisions.
Cadence is a unique early investment strategy &
development firm, within the mineral resource sector. We
identify undervalued assets, with irreplaceable strategic
advantages. We invest in them and help turn them into
powerhouses. Lithium and other technology minerals must
get to market in order to achieve the global green
revolution. We uncover new ways and places to extract and
process these minerals, so that burgeoning demand is met;
and our tomorrow is better.
A more detailed description of its Strategy and Business
Model is available in the Company’s Annual Report and
Accounts and on the Company’s website.
Please refer to the Company’s Annual Report and Accounts
and on the Company’s website for further details on the
principal risks and uncertainties which the Company faces.
It seeks to share this vision and details of the
implementation of its strategy through internal dialogue
with employees as well as external communications by way
of public announcements and dissemination of information
through this website and the annual report and accounts
The Board is committed to maintaining an open dialogue
with shareholders. Communication with shareholders and
is coordinated by the CEO.
Throughout the year, the Board maintains a regular
dialogue with investors, providing them with such
information on the Company’s progress as is permitted
within the guidelines of the AIM rules, MAR and
requirements of the relevant legislation. We also use these
communications to obtain feedback from shareholders and
to assess the effectiveness of our communications. Based on
this feedback the Board has determined that this
engagement has been, to date, successful.
The Board believes that the Annual Report and Accounts,
and the Interim Report published at the half-year which can
be found on the Company’s website, play an important part
in presenting all shareholders with an assessment of the
Group’s position and prospects. All reports and press
releases are published under the “Investors” tab of the
Group’s website.
Page 19
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Take into account
wider stakeholder
and social
responsibilities
and their
implications for
long-term success
Embed effective
risk management,
considering both
opportunities and
threats,
throughout the
organisation
Long-term success relies upon good
relations with a range of different
stakeholder groups both internal
(workforce) and external (suppliers,
customers, regulators and others).
The board needs to identify the
company’s stakeholders and
understand their needs, interests and
expectations.
Where matters that relate to the
company’s impact on society, the
communities within which it
operates, or the environment have
the potential to affect the company’s
ability to deliver shareholder value
over the medium to long-term, then
those matters must be integrated
into the company’s strategy and
business model. Feedback is an
essential part of all control
mechanisms. Systems need to be in
place to solicit, consider and act on
feedback from all stakeholder
groups.
The board needs to ensure that the
company’s risk management
framework identifies and addresses
all relevant risks in order to execute
and deliver strategy; companies
need to consider their extended
business, including the company’s
supply chain, from key suppliers to
end-customer.
Setting strategy includes
determining the extent of exposure
to the identified risks that the
company is able to bear and willing
to take (risk tolerance and risk
appetite).
The Board recognises its prime responsibility under UK
corporate law is to promote the success of the Company for the
benefit of its members as a whole.
The Board also understands that it has a responsibility
towards employees, partners, customers, suppliers and to the
community and environment it operates in as a whole.
Communication with and feedback from these various groups
is achieved in a variety of ways. The executive directors hold
investor roadshows once a year and quarterly webcast, at
which feedback from shareholders is sought.
Regular dialogue is maintained with employees through
monthly updates and quarterly briefings given by the executive
directors.
The nature of the Cadence’s business as an investment
company means that although it has no direct effect on the
working environments and communities of the companies it
invests in, it nonetheless liaises with the management of its
investee companies to understand their approach to
stakeholder engagement and their policies, which will form
part of its investment criteria.
The Board has an established Audit Committee, a summary of
it roles a responsibilities is available on the corporate
governance webpage.
The Committee is specifically charged with ensuring that
Cadence as a whole has the appropriate policies and
processes in place to identify the risks which the Company is
exposed to and to proactively mitigate those risks as
appropriate.
The Company maintains a register of risks and publishes an
overview of significant risks and uncertainties in its Annual
Report.
Please refer to the Company’s Annual Report and Accounts for
further details on the principal risks and uncertainties which
the Company faces.
The Company receives regular feedback from its external
auditors on the state of its internal controls. The Board
maintains a register of risks and publishes an annual summary
of the significant risks and uncertainties in the Annual Report.
Page 20
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Maintain the
board as a well-
functioning,
balanced team
led by the chair
The board members have a
collective responsibility and legal
obligation to promote the interests
of the company and are collectively
responsible for defining corporate
governance arrangements. Ultimate
responsibility for the quality of, and
approach to, corporate governance
lies with the chair of the board. The
board (and any committees) should
be provided with high-quality
information in a timely manner to
facilitate proper assessment of the
matters requiring a decision or
insight.
The board should have an
appropriate balance between
executive and non-executive
directors and should have at least
two independent non-executive
directors. Independence is a board
judgement. The board should be
supported by committees (e.g. audit,
remuneration, nomination) that
have the necessary skills and
knowledge to discharge their duties
and responsibilities effectively.
Directors must commit the time
necessary to fulfil their roles.
The Board is comprised of a non-executive Chairman a non-
executive director and two executive directors.
The CEO is engaged to work a minimum of a 39 hour week
and is an employee of the Company. The Finance Directors is
employed part-time for a minimum of 28 hours a week. The
board deemed that given the stage and development of the
Company, it would be more cost efficient to employee a full-
time accountant which along with the finance director ensure
that Company’s financial systems are robust. compliant and
support current activities and future growth.
The service agreements of the non-executive directors
anticipate that the non-executive Chairman should spend 3
working days per month and the non-executive director 2
working days per month. All directors dedicate such time as
required to effectively perform their roles.
The roles of the Chairman and CEO are clearly separated.
The directors ensure the skills required to undertake their
roles are kept current through training and consultation with
subject matter experts as required.
The CEO is responsible for the operational management of the
business of Cadence and for the implementation of strategy
and policies as agreed by the Board. The non-executive
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.
The non-executive directors are not considered independent
under the FRC Code as they hold options in the Company.
However, the board considers that the non-executive directors
are independent of management under all other measures and
are able to exercise independence of judgement. Whilst
conflicts of interest are fully disclosed and understood, as
appropriate non-executive directors exercise independence of
judgement. No director is involved in discussions or decisions
where he has a conflict of interest.
The Board is supported by an Audit Committee and a
Remuneration Committee.
Cadence intends that the Board endeavours to hold full board
meetings at least 3 times each year. The attendance of Board
members for meetings during the current financial year is as
follows:
· Andrew Suckling 3 of 3
· Adrian Fairbourn 3 of 3
· Kiran Morzaria 3 of 3
· Donald Strang 3 of 3
Page 21
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Ensure that
between them the
directors have the
necessary up-to-
date experience,
skills and
capabilities
The board must have an appropriate
balance of sector, financial and
public markets skills and experience,
as well as an appropriate balance of
personal qualities and capabilities.
The board should understand and
challenge its own diversity,
including gender balance, as part of
its composition.
The board should not be dominated
by one person or a group of people.
Strong personal bonds can be
important but can also divide a
board. As companies evolve, the mix
of skills and experience required on
the board will change, and board
composition will need to evolve to
reflect this change.
Evaluate board
performance
based on clear
and relevant
objectives,
seeking
continuous
improvement
The board should regularly review
the effectiveness of its performance
as a unit, as well as that of its
committees and the individual
directors. The board performance
review may be carried out internally
or, ideally, externally facilitated
from time to time.
The review should identify
development or mentoring needs of
individual directors or the wider
senior management team. It is
healthy for membership of the board
to be periodically refreshed.
Succession planning is a vital task
for boards. No member of the board
should become indispensable.
Directors who have been appointed to the Company have been
chosen because of the skills and experience they offer. The
Board continually strives to ensure that it has the right balance
of knowledge, skills, experience and contacts across the
sectors in which it operates. This is evaluated in line with
Cadence’s business model as it changes.
It is of primary importance that the Board’s knowledge is kept
to up to date in a rapidly changing mining and metals
marketplace. This is achieved by maintaining a broad network
of contacts across the industry and ensuring regular dialogue
is held and feedback obtained by both the executive and non-
executive directors as appropriate.
As necessary directors receive externally provided refresher
and update training specific to their individual roles.
The Company Secretary advises the Board members on their
legal and corporate responsibilities and matters of corporate
governance.
Biographical details of each of the Directors are given on the
‘Who We Are’ page of this website HERE. Going forward the
Directors biographical details will be included in the Annual
Report and Accounts.
On the 28 September 2018, Cadence adopted the QCA Code.
Prior to this point given the nature and the development of the
company it did not set Key Performance Indicators.
The Company now measures its performance, and therefore
inherently the performance of the Board as a unit, against Key
Performance Indicators. The primary KPI is absolute equity
return on investments. Details intend to be disclosed in the
Annual Report Accounts going forward.
The performance of the executive directors is monitored and
regularly reviewed by the non-executive directors. Such review
considers both the KPIs outlined above and measures such as
an annual staff satisfaction survey. Going forward, the Board
intends to introduce qualitative performance measurements for
the executive directors to ensure that the right degree of focus
is applied to the strategic direction as well as the current
financial performance of the business.
The Board periodically considers the need to refresh its
membership.
Page 22
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Promote a
corporate
culture that is
based on ethical
values and
behaviours
The board should embody and
promote a corporate culture that
is based on sound ethical values
and behaviours and use it as an
asset and a source of competitive
advantage.
The policy set by the board should
be visible in the actions and
decisions of the chief executive
and the rest of the management
team. Corporate values should
guide the objectives and strategy
of the company.
The culture should be visible in
every aspect of the business,
including recruitment,
nominations, training and
engagement. The performance and
reward system should endorse the
desired ethical behaviours across
all levels of the company. The
corporate culture should be
recognisable throughout the
disclosures in the annual report,
website and any other statements
issued by the company.
Cadence has a strong ethical culture, which is promoted by
the actions of the board and executive team.
These include the following key policies which govern its
ethical culture.
· Equal opportunities policy
· Dignity at work policy
· Code of conduct
· Whistleblowing policy
· Health and safety policy
· Email and internet policy
· Social media policy
The Group has an anti-bribery policy and has implemented
adequate procedures described by the Bribery Act 2010.
The Group reports on its compliance to the board on an
annual basis.
The Group has undertaken a review of its requirements
under the General Data Protection Regulation,
implementing appropriate policies, procedures and
training to ensure it is compliant.
Page 23
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
Maintain
governance
structures and
processes that are
fit for purpose
and support good
decision-making
by the board
The company should maintain
governance structures and processes
in line with its corporate culture and
appropriate to its:
· size and complexity; and
· capacity, appetite and
tolerance for risk.
The governance structures should
evolve over time in parallel with its
objectives, strategy and business
model to reflect the development of
the company.
Details of the Company’s corporate governance arrangements
are provided within this Corporate Governance section of this
website. The Board considers the appropriateness of these
arrangements against the size and complexity of the Company
as it evolves over time.
The Chairman leads the Board and is responsible for ensuring
its effectiveness in all aspects of its role. The Chairman
promotes a culture of openness and debate, in particular by
ensuring the non-executive directors provide constructive
challenge to the executive directors.
The matters reserved for the board are:
· Definition of the strategic goals for the Company, sets
corporate objectives to enable the goals to be met, and
measures performance against those objectives;
· Ensuring that the necessary financial and human
resources are in place to both meet its obligations to all
stakeholders and to provide a platform for profitable growth;
· Recommending any interim and final dividends;
· Approving all mergers and acquisitions and all capital
expenditure greater than £100,000;
· Receiving recommendations from the Audit Committee
in relation to the reporting requirements and the appropriate
accounting policies for the Company, the appointment of
auditors and their remuneration, and the identification and
management of risk;
· Receives recommendations from the Appointments
Committee concerning the appointment of executive directors,
and from the Remuneration Committee concerning the
remuneration of the executive directors;
· Determines the fees paid to the non-executive directors.
The CEO has the overall responsibility for creating, planning,
implementing, and integrating the strategic direction of the
Company. This includes responsibility for all components and
departments of a business. The CEO to ensures that the
organisation’s leadership maintains constant awareness of
both the external and internal competitive landscape,
opportunities for expansion, customer base, markets, new
industry developments and standards.
The Finance Director works alongside the CEO and has
overall control and responsibility for all financial aspects of
company strategy. The Finance Director takes overall
responsibility of the Company’s accounting function and
ensures that Company’s financial systems are robust,
compliant and support current activities and future growth.
The Finance Director will coordinate corporate finance and
manage company policies regarding capital requirements,
debt, taxation, equity and acquisitions as appropriate.
Page 24
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
Principle
Application
Compliance
The Board is supported by two committees being the Audit
Committee and Remuneration Committee. The Audit
Committee advises the Board on the reporting requirements
and the appropriate accounting policies for the Company, the
appointment of auditors and their remuneration, and the
identification and management of risk. The Remuneration
Committee advises the Board on all matters pertaining to the
remuneration of the executive directors;
The Company encourages two-way communication with
both its institutional and private investors and responds
quickly to all significant queries received.
The “Investors” tab of this website section of this website
contains all required regulatory information together with
other information which shareholders may find useful.
The AGM is an important forum for shareholder
engagement, and the directors are always available
immediately after the AGM to listen to the views of any
shareholders in attendance and to provide them with an
update on the business.
All votes at the most recent AGM held on 20 September
2019 were passed. The proxy votes were in excess of 85%
in favour of all resolutions.
Currently there is no Remuneration or Audit Committee
report provided in the Annual report but the Board will
consider the provision of this in the next Annual report
together with other information which shareholders may
find useful.
Communicate
how the company
is governed and
is performing by
maintaining a
dialogue with
shareholders and
other relevant
stakeholders
A healthy dialogue should exist
between the board and all of its
stakeholders, including
shareholders, to enable all
interested parties to come to
informed decisions about the
company. In particular,
appropriate communication and
reporting structures should exist
between the board and all
constituent parts of its shareholder
base. This will assist:
· the communication of
shareholders’ views to the board;
and
· the shareholders’
understanding of the unique
circumstances and constraints
faced by the company.
It should be clear where these
communication practices are
described (annual report or
website).
Page 25
CADENCE MINERALS PLC
CORPORATE GOVERNANCE
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 26
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:
A Fairbourn
£
A Suckling
£
K Morzaria
£
D Strang
£
Total
£
Short-term
employment
benefits:
Year to 31
December
2019
Salary and
fees
Share based
payments (1)
Total
Year to 31
December
2018
Salary and
fees
Share based
payments (1)
Total
48,000
100,000
150,000
120,000
418,000
142
327
327
327
1,123
48,142
100,327
150,327
120,327
419,123
52,250
112,500
127,500
127,500
419,750
850
1,962
1,962
1,962
6,736
53,100
114,462
129,462
129,462
426,486
Share based payments represent a Black and Scholes valuation of the incentive options granted to the directors during
2017. Options are used to incentivise directors and are a non-cash form of remuneration.
At 31 December 2019 the following amounts were outstanding in fees to directors; £66,919 (2018: £115,500).
Pensions
The Company only operates a basic pension scheme for its directors and employees as required by UK legislation.
Page 27
CADENCE MINERALS PLC
REPORT ON REMUNERATION
For the year ended 31 December 2019
___________________________________________________________________________________
Benefits in kind
No benefits in kind were paid during the year to 31 December 2019 or the year ended 31 December 2018.
Bonuses
No amounts were payable for bonuses in respect of the Year ended 31 December 2019 or the year ended 31 December
2018.
Notice periods
Andrew Suckling, Kiran Morzaria, Don Strang and Adrian Fairbourn, each have a 12 month rolling notice period.
Share option incentives
At 31 December 2019 the following options were held by the Directors:
Date of grant
Exercise price
Number of options
K Morzaria
21 May 2014
A Fairbourn
A Fairbourn
13 December 2012
21 May 2014
D Strang
21 May 2014
48p
6p
48p
48p
600,000
600,000
200,000
400,000
600,000
600,000
600,000
All options are exercisable between 18 months and ten years from the date of grant.
The high and low share price for the year were 38p and 6.625p respectively (year ended 31 December 2018: 37p and
11.8p). The share price at 31 December 2019 was 6.75p (31 December 2018: 11.8p) Historical share prices and option
prices have been adjusted to reflect the share consolidation.
Page 28
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
CADENCE MINERALS PLC
_____________________________________________________________________________________________
OPINION
We have audited the financial statements of Cadence Minerals Plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income,
the consolidated and company statements of financial position, the consolidated and company statements of changes
in equity, the consolidated and company statements of cash flows and notes to the financial statements, including a
summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the company financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 31 December 2019 and of the Group’s losses for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report
to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or the parent company’s ability to continue to adopt the going concern basis
of accounting for a period of at least twelve months from the date when the financial statements are authorised for
issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified
by our audit. Our audit procedures in relation to these matters were designed in the context of our audit opinion as a
whole. They were not designed to enable us to express an opinion on these matters individually and we express no
such opinion.
Page 29
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
CADENCE MINERALS PLC
_____________________________________________________________________________________________
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 .
Page 30
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
CADENCE MINERALS PLC
_____________________________________________________________________________________________
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.
Page 31
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
CADENCE MINERALS PLC
_____________________________________________________________________________________________
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
Page 32
CADENCE MINERALS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Note
Year ended
31 December
2019
£’000
Year ended
31 December
2018
£’000
Income
Unrealised profit/(loss) on available for sale assets
Realised loss on available for sale assets
Other income
Share based payments
Impairment of intangibles
Other administrative expenses
Total administrative expenses
Operating loss
Share of associates losses
Finance cost
Foreign exchange losses
Loss before taxation
Taxation
Loss attributable to the equity holders of the
Company
Other comprehensive income
Foreign exchange
Other comprehensive income for the period, net of tax
Total comprehensive loss for the year, attributable to
the equity holders of the company
(Loss)/Profit per ordinary share
Basic loss per share (pence)
Diluted loss per share (pence)
9
9
1
6
1
8
3
4
5
5
420
(97)
10
333
(1)
(446)
(1,399)
(1,846)
(7,440)
(1,967)
140
(9,267)
(7)
-
(1,454)
(1,461)
(1,513)
(10,728)
(262)
(381)
(115)
(555)
(377)
(105)
(2,271)
(11,765)
-
-
(2,271)
(11,765)
232
232
(150)
(150)
(2,039)
(11,915)
(2.544)
(2.466)
(14.985)
(14.469)
The accompanying principal accounting policies and notes form an integral part of these financial statements.
Page 33
CADENCE MINERALS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITITON
As at 31 December 2019
___________________________________________________________________________________
ASSETS
Non-current
Intangible assets
Investment in associate
Current
Trade and other receivables
Available for resale asset
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
EQUITY
Issued share capital
Share premium
Share based premium reserve
Equity loan and exchange reserve
Retained earnings
Note
6
8
10
9
11
12
13
31 December
2019
£'000
31 December
2018
£'000
2,266
12,636
14,902
246
1,121
2,496
3,863
2,172
12,483
14,655
315
2,895
468
3,678
18,765
18,333
343
2,982
3,325
3,325
1,471
30,357
1,383
7
(17,778)
223
3,706
3,929
3,929
1,202
27,552
1,392
(225)
(15,517)
Equity attributable
to equity holders of the Company
15,440
14,404
Total equity and liabilities
18,765
18,333
The consolidated financial statements were approved by the Board on 25 June 2020, and signed on their behalf by;
Kiran Morzaria
Director
Company number 05234262
Don Strang
Director
The accompanying principal accounting policies and notes form an integral part of these financial statements.
Page 34
CADENCE MINERALS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
___________________________________________________________________________________
ASSETS
Non-current
Intangible assets
Investment in associates
Investment in subsidiaries
Current
Trade and other receivables
Available for resale asset
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES
Current
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
EQUITY
Issued share capital
Share premium
Share based premium reserve
Equity loan and exchange reserve
Retained earnings
Equity attributable
to equity holders of the Company
31 December 2019
31 December 2018
Note
£'000
£'000
8
7
10
9
11
12
13
759
9,937
906
11,602
4,129
1,121
2,496
7,746
19,348
343
2,982
3,325
3,325
1,471
30,357
1,383
139
(17,327)
16,023
325
9,794
906
11,025
4,515
2,895
468
7,878
18,903
223
3,706
3,929
3,929
1,202
27,552
1,392
(116)
(15,056)
14,974
Total equity and liabilities
19,348
18,903
The Company financial statements were approved by the Board on 25 June 2020, and signed on their behalf by;
Kiran Morzaria
Director
Don Strang
Director
Company number 05234262
The accompanying principal accounting policies and notes form an integral part of these financial statements.
Page 35
CADENCE MINERALS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2019
___________________________________________________________________________________
Share
capital
Share
premium
Share
based
payment
reserves
Equity
loan
component
and
exchange
reserve
Retained
earnings
Total
equity
£'000
£'000
£'000
£'000
£'000
£'000
1,202
27,552
3,178
337
(5,545)
26,724
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
(1,793)
-
(1,786)
-
-
-
-
-
(412)
(412)
(150)
-
1,793
7
-
-
(412)
1,793
-
(405)
(150)
-
(11,765)
(11,765)
(150)
(11,765)
(11,915)
1,202
27,552
1,392
(225)
(15,517)
14,404
-
-
269
269
-
-
-
-
-
-
3,031
(226)
1
(10)
-
-
2,805
(9)
-
-
-
-
-
-
-
-
-
-
-
-
10
-
-
10
-
1
-
3,300
(226)
3,075
-
232
(2,271)
(2,039)
232
(2,271)
(2,039)
1,471
30,357
1,383
7
(17,778)
15,440
Balance at 31 December
2017
Share based payments
Transfer on lapse of
warrants
On issue of loan notes
Transactions with
owners
Foreign exchange
Profit for the period
Total comprehensive
profit for the period
Balance at 31 December
2018
Share based payments
Transfer on lapse of
options
Share issue
Share issue costs
Transactions with
owners
Foreign exchange
Loss for the period
Total comprehensive loss
for the period
Balance at 31 December
2019
The accompanying principal accounting policies and notes form an integral part of these financial statements.
Page 36
CADENCE MINERALS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
As at 31 December 2019
___________________________________________________________________________________
Share
capital
Share
premium
Share
based
payment
reserves
Equity
loan and
exchange
reserve
Retained
earnings
Total
equity
£'000
£'000
£'000
£'000
£'000
£'000
1,202
27,552
3,178
406
(5,092)
27,246
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
(1,793)
-
-
-
1,793
7
-
-
(412)
-
(412)
(1,786)
-
(412)
(110)
1,793
-
(405)
(110)
-
-
-
(11,757)
(11,757)
(110)
(11,757)
(11,867)
1,202
27,552
1,392
(116)
(15,056)
14,974
-
-
269
269
-
-
-
-
2,805
2,805
-
-
1
(10)
-
(9)
-
-
-
-
-
-
255
-
10
-
10
-
1
-
3,074
3,075
255
-
(2,281)
(2,281)
-
-
-
255
(2,281)
(2,026)
1,471
30,357
1,383
139
(17,327)
16,023
Balance at 31 December
2017
Share based payments
Warrants issued
Transfer on exercise of
options
Transactions with owners
Foreign exchange
Profit for the period
Total comprehensive profit
for the period
Balance at 31 December
2018
Share based payments
Transfer on lapse of warrants
Share issue
Transactions with owners
Foreign exchange
Loss for the period
Total comprehensive loss
for the period
Balance at 31 December
2019
The accompanying principal accounting policies and notes form an integral part of these financial statements.
Page 37
CADENCE MINERALS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
___________________________________________________________________________________
Cash flow from operating activities
Continuing operations
Operating loss
Net realised/unrealised loss/(profit) on AFSA
Impairment of intangible assets
Equity settled share-based payments
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash outflow from operating activities from
continuing operations
Cash flows from investing activities
Investment in exploration costs
Payments for investments in associates
Receipts from investments in associates
Payments for investments in AFS assets
Receipts on sale of AFS assets
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Net borrowings
Finance cost
Net cash inflow/(outflow) from financing
activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Year ended
31 December
2019
£'000
Year ended
31 December
2018
£'000
(1,513)
(323)
446
1
69
120
(1,200)
(664)
(75)
160
-
2,097
1,518
2,900
(226)
(583)
(381)
1,710
2,028
468
2,496
(10,728)
9,407
-
7
407
(39)
(946)
(325)
(50)
-
(523)
1,755
857
-
-
(1,103)
(377)
(1,480)
(1,569)
2,037
468
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.
Page 38
CADENCE MINERALS PLC
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
___________________________________________________________________________________
Year ended
31 December
2019
£'000
Year ended
31 December
2018
£'000
Cash flow from operating activities
Continuing operations
Operating (loss)/profit
Loss/(profit) on AFSA
Impairment of intangible assets
Equity settled share-based payments
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash outflow from operating activities from
continuing operations
Cash flows from investing activities
Payments for investments in associates
Receipts from investments in associates
Payments for intangibles
Payments for investments in AFS assets
Receipts on sale of AFS assets
Net cash inflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Share issue costs
Net borrowings
Finance cost
Net cash inflow/(outflow) from financing
activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(1,514)
(323)
129
1
386
120
(1,201)
(75)
160
(663)
0
2,097
1,519
2,900
(226)
(583)
(381)
1,710
2,028
468
2,496
(10,727)
9,407
-
7
406
(39)
(946)
(50)
-
(325)
(523)
1,755
857
-
-
(1,103)
(377)
(1,480)
(1,569)
2,037
468
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.
Page 39
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.
Page 40
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 41
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 42
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 43
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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)
(ii)
such costs are expected to be recouped through successful development and exploitation of the area of interest
or alternatively by its sale; or
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.
Page 44
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 45
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 46
CADENCE MINERALS PLC
PRINCIPAL ACCOUNTING POLICIES
For the year ended 31 December 2019
___________________________________________________________________________________
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.
Page 47
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
1. PROFIT BEFORE TAXATION AND SEGMENTAL INFORMATION
Profit before taxation - continuing operations
The loss before taxation is attributable to the principal activities of the Group.
The loss before taxation is stated after charging:
Year ended 31
December 2019
£'000
Year ended 31
December 2018
£'000
1
446
418
211
18
-
7
-
420
204
18
-
Share based payment charge
Impairment of intangibles
Directors fees and consulting (see note 2)
Operating lease rentals: land and buildings
Fees payable to the Company’s auditor for the audit of the
financial statements
Fees payable to the Company’s auditor and its associates for
other services:
Other services relating to taxation compliance
Segmental information
An operating segment is a distinguishable component of the Group that engages in business activities from which it
may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s chief operating
decision maker to make decisions about the allocation of resources and assessment of performance and about which
discrete financial information is available.
The chief operating decision maker has defined that the Group’s only reportable operating segment during the period
is the investment in and development of lithium and rare earth assets.
Subject to further acquisitions the Group expects to further review its segmental information during the forthcoming
financial year.
The Group generated revenues from external customers totalling £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).
Page 48
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
2. EMPLOYEE REMUNERATION
Employee benefits expense
The expense recognised for employee benefits, including Directors’ emoluments, is analysed below:
Wages, salaries and consulting fees
Employers NI
Share based payments
Year ended
31 December
2019
£'000
Year ended
31 December
2018
£'000
478
456
30
21
1
7
509
484
The average number of employees (including directors) employed by the Group during the period was:
Directors
Other
2019
No.
4
1
5
2018
No.
4
1
5
Included within the above are amounts in respect of Directors, who are considered to be the key management
personnel, as follows:
Wages, salaries and consulting fees
Share based payments
Group
Year ended
31 December
2019
£'000
Year ended
31 December
2018
£'000
418
420
1
7
419
427
Details of Directors' emoluments are included in the Report on Remuneration on pages 25 to 26.
Page 49
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
3. FINANCE COSTS
Loan interest
Finance Fees
4. TAXATION
Year ended 31
December 2019
£'000
Year ended 31
December 2018
£'000
220
161
381
220
157
377
The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:
Year ended
31 December
2019
£'000 %
2019
Year ended
31 December
2018
£'000
2018
%
(Loss)/profit before taxation
(2,271)
(11,765)
(Loss)/profit multiplied by standard rate
of corporation tax in the UK
(431)
19
(2,235)
19
Effect of:
Offset against losses/deferred tax asset not recognised
Expenses not deductible for tax purposes
Total tax charge for year
296
135
-
2,123
112
-
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.
Page 50
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
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.
(Loss)/profit attributable to owners of the Company
Weighted average number of shares for calculating basic
(loss)/profit per share
Share options and warrants exercisable
Weighted average number of shares for calculating diluted
(loss) profit per share
Basic (loss)/profit per share
Diluted (loss)/profit per share
Year ended
31 December 2019
Year ended
31 December 2018
£’000
(2,271)
2019
Number
£’000
(11,765)
2018
Number
89,273,886
78,514,403
2,800,000
2,800,000
92,073,886
81,314,403
2019
Pence
(2.544)
(2.466)
2018
Pence
(14.985)
(14.469)
The impact of the share options are considered anti-dilutive when the group’s result for a period is a loss. The prior
year has been adjusted for the share consolidation.
Page 51
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
6. INTANGIBLE ASSETS
Group Intangible Assets
Cost
At 1 January 2018
Additions
Exchange Difference
At 31 December 2018
Additions
Reclassified as investment in
associates
Exchange Difference
At 31 December 2019
Amortisation and impairment
At 1 January 2018
Amortisation charge in the year
At 31 December 2018
Amortisation charge in the year
Impairment
At 31 December 2019
Exploration
costs
£'000
Goodwill
£'000
Licences
£'000
Total
£'000
1,549
325
-
1,874
664
638
-
(40)
598
-
174
-
-
174
-
2,361
325
(40)
2,646
664
(100)
-
2,438
-
(24)
574
-
-
174
(100)
(24)
3,186
(300)
-
(300)
-
(446)
(746)
-
-
-
-
-
-
(174)
-
(174)
-
-
(174)
(474)
-
(474)
-
(446)
(920)
Net book value at 31 December 2019
Net book value at 31 December 2018
Net book value at 1 January 2018
1,692
1,574
1,249
574
598
638
-
-
-
2,266
2,172
1,887
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.
Page 52
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
6. INTANGIBLE ASSETS CONTINUED
Company only Intangible Assets
Cost
At 1 January 2018
Additions
At 31 December 2018
Additions
Reclassified as investment in associates
At 31 December 2019
Amortisation and impairment
At 1 January 2018
Amortisation charge in the year
At 31 December 2018
Impairment in the year
At 31 December 2019
Exploration
costs
£'000
Licences
£'000
Total
£'000
-
33
33
325
-
325
325
33
358
663
(100)
888
-
-
33
663
(100)
921
-
-
-
(129)
(129)
(33)
-
(33)
-
(33)
(33)
-
(33)
(129)
(162)
Net book value at 31 December 2019
759
Net book value at 31 December 2018
Net book value at 1 January 2018
-
-
-
-
-
759
325
-
7. INVESTMENTS IN SUBSIDIARIES – COMPANY
Investment in
group
undertakings
£'000
Cost and carrying value
At 31 December 2019 and 31 December 2018
906
Subsidiary
Proportion of ordinary
share capital held
Nature of
business
Country of
incorporation
Mojito Resources Ltd
REM Mexico Limited
Rare Earth Resources Limited
100%
100%
100%
Mining
Mining
Mining
British Virgin
Islands
UK
UK
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).
Page 53
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
8. INVESTMENT IN ASSOCIATES
Group
Changes in equity accounted investment
Carrying value at beginning of year
Equity purchases
Reclassified from exploration costs
Equity sales
31 December 2019
£’000
31 December
2018
£’000
12,483
475
100
(160)
12,988
50
-
-
Share of retained (losses) attributable to the group
Investment carrying value as at year end
(262)
12,636
(555)
12,483
The Group’s two Mexican associate companies have a reporting date of 30 June. These shares are not publicly listed
on a stock exchange and hence published results are not available. Therefore the fair value of the Group’s investment
equates to the carrying book value of £2,699,000 (31 December 2018: £2,689,000).
EMH is listed on the ASX and on AIM. The market value of the shareholding at 31 December 2019 was £4,211,000
(2018: £4,495,000), with a carrying value of £9,362,000 (2018: £9,794,000). During the year ended 31 December
2019 the company sold 730,000 CDIs in European Metal Holdings Inc (2018: acquired 250,000).
During the year £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. Additionally the Group paid
£400,000 in shares and £75,000 in cash during the year, and in total has acquired a 25.875% interest in both Lithium
Supplies PTY Ltd and Lithium Technologies PTY Ltd.
No accounts for 2019 are available at the time of signing these accounts for Lithium Supplies PTY Ltd and Lithium
Technologies PTY Ltd. Any share of losses attributable to the Group and Company have not been account for.
Page 54
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
8.
INVESTMENT IN ASSOCIATES CONTINUED
The Group’s share of results of its associates, which are unlisted, and their aggregated assets and liabilities, are as
follows:
Name
Country of
incorporation Assets
Liabilities Revenues
Profit/(Loss)
% interest
held
As at 31 December 2019 Year to 31 December 2019
£’000
£’000
£’000
£’000
Mexilit S.A.
de C.V.
Minera
Megalit S.A.
de C.V.
European
Metals
Holding Ltd
(1)
Lithium
Technologies
PTY Ltd
Lithium
Supplies PTY
Ltd
Company
Mexico
1,752
1,389
Mexico
438
272
-
-
32
30%
-
30%
BVI
6,516
119
262
(1,446)
18.820%
Australia
N/A
N/A
N/A
N/A
25.875%
Australia
N/A
N/A
N/A
N/A
25.875%
31 December
2019
31 December
2018
£’000
£’000
Changes in equity accounted investment
Carrying value at beginning of year
Equity purchases
Reclassified from exploration costs
Equity sales
Share of retained (losses) attributable to the
group
Investment carrying value as at year end
9,794
475
100
(160)
10,292
50
-
-
(272)
9,937
(548)
9,794
Page 55
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
9. AVAILABLE FOR SALE INVESTMENTS
Available for sale assets
Current Assets - Listed Investments
Valuation at 1 January
Additions at cost
Disposal proceeds
Realised loss on disposal
Change in fair value recognised in income statement
Valuation at 31 December
31 December
2019
£'000
31 December
2018
£'000
2,895
-
(2,097)
(97)
420
1,121
13,534
523
(1,755)
(1,967)
(7,440)
2,895
During the year ended 31 December 2019 the company disposed of a variety of its shareholdings, including its
reamining holding in Bacanora Minerals Limited.
Available-for-sale assets comprise investments in listed securities which are traded on stock markets throughout
the world, and are held by the Group as a mix of strategic and short term investments.
10. TRADE AND OTHER RECEIVABLES
Group
31
December
2019
£'000
31 December
2018
£'000
-
118
-
128
246
43
154
-
118
315
Current
Trade receivables
Other receivables
Amounts owed by subsidiaries
Prepayments and accrued income
Company
31
December
2019
£'000
31 December
2018
£'000
43
154
-
118
3,883
4,200
128
118
4,129
4,515
There is no impairment of receivables and no amounts are past due at 31 December 2019 or 31 December 2018.
The fair value of these financial assets is not individually determined as the carrying amount is a reasonable
approximation of fair value.
Page 56
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
11. TRADE AND OTHER PAYABLES
Group
31
December
2019
£'000
31 December
2018
£'000
Company
31
December
2019
£'000
31 December
2018
£'000
Trade payables
232
78
232
78
Tax and social security
Other payables
45
5
Accruals and deferred income
61
-
45
5
-
145
61
145
-
-
343
223
343
223
The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers
the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.
12. BORROWINGS
Current liabilities
Loan Notes
Interest accrued
31 December 2019
£'000
31 December 2018
£'000
2,973
3,672
9
34
2,982
3,706
On 1 November 2017 the Company announced that the outstanding balance owed in loans of $6,130,034 at that date
was restructured into two loans as follows:
Loan 1 for $2,365,017 had an interest rate of 10%, a principle and interest rate repayment holiday until January
2018, after which the principle and interest would be paid via equal instalments over a nine-month period. The loan
notes were convertible at any time during this period at 0.473 pence, being a 46% premium to the closing mid-
market price as at 31 October 2017.
Loan 2 for $3,765,017 carried zero interest rate and the principle was due to be repaid in September 2018. The loan
notes were convertible at any time during this period at 0.364 pence, being a 12% premium to the closing mid-
market price as at 31 October 2017.
Both Convertible Loans were secured by a pledge over the assets of the Company.
Loan Note 1 was initially recognised as a liability of £1,591,000 (USD$2,150,000) and an equity element of
£159,000 (USD$215,000). Loan Note 2 was initially recognised as a liability of £2,523,000 (USD$3,423,000) and
an equity element of £253,000 (USD$342,000).
During the year ended 31 December 2018, Loan Note 1 was repaid in full and new loans were entered into in
September 2018 totalling £3,713,000 (USD$4,875,000) to repay Loan Note 2 and future interest payments. The new
loans carry an interest rate of 12% and had a principle repayment holiday until 1 January 2019. After which the
loans will be repaid via 12 equal monthly instalments with both the principle and interest being fully repaid by 1
December 2019. The loans are secured over the Company’s assets. The loan notes are only convertible should the
Group default on repayments, in which case the lendor can opt to convert the outstanding balance at 85% of the
WWAV for the 15 working days prior to the conversion.
Page 57
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
12. BORROWINGS CONTINUED
During the year ended 31 December 2019, £2,089,000 (USD$2,677,000) was repaid including interest of £146,000
(USD$186,000) and foreign exhange of (£1,000) was recognised, leaving a balance of £1,762,000 (USD$2,229,000).
On 15 July 2019, the Company announced it had completed the restructure of two of the three outstanding loan notes
with the same consortium of institutional lenders. The two new loan notes repaid US$1.19 million of the Amortising
Loan Note and have been restructured as a convertible loan note with an exercise price of 0.12 pence (12 pence post
share consolidation) and will attract an effective annual interest rate of 7.9% ("Convertible Loan Note"). Cadence
would initially only pay the interest on the Convertible Loan Note until the 1 January 2020, after which 50% of the
outstanding balance will be paid back over 8 months (1 August 2020). The outstanding 50% will be paid back on 1
September 2020.
In addition, and to, in part, fund the working capital requirements of the Amapá Project, Cadence drew down a further
US$ 1.25 million of the Convertible Loan Note under the same terms. After this draw down the outstanding balance
on the Convertible Loan Note was US$2.44 million. The note is secured over the Company's assets.
On 19 July 2019, the Company also agreed to resructure the remaining loan note as a convertible loan note with an
exercise price of 0.12 pence, amended to 12p post the share consolidation, ("Convertible Loan Note"). The new loan
note repaid $1,041,000 of the Amortising Loan Note and a futher $500,000 was drawn down. Additionally on 26
November 2019 a further $200,000 was drawn down.
Of the new loan notes, £235,000 (USD$289,000) interest and finance charges were charged in the period, £429,000
(USD$499,000) was repaid and (£139,000) foreign exchange was recognised.
13. SHARE CAPITAL
Allotted, issued and fully paid
173,619,050 deferred shares of 0.24p
105,461,968 ordinary shares of 1p (31 December
2018: 7,851,440,338 ordinary shares of 0.01p)
Allotted and issued
At 1 January 2018 and 31 December 2018
Issue of shares during the year
Share consolidation
At 31 December 2019
31 December 2019
31 December 2018
£'000
£'000
417
1,054
417
785
1,471
1,202
Ordinary shares
No.
7,851,440,338
2,694,756,406
(10,440,734,776)
105,461,968
£'000
785
269
-
1,054
On 26 March 2019, 866,666,663 shares were issued for gross proceeds of £1,300,000. On 17 April 2019, 373,544,298
shares were issued in respection of the acquisition of the interests in Lithium Technology PTY Ltd and Lithium
Supplies PTY Ltd. On 27 June 2019, 1,454,545,445 shares were issued for gross proceeds of £1,600,000.
During the year ended 31 December 2018, no shares were issued.
The deferred shares have no voting rights and are not eligible for dividends.
There were no warrants outanding at 31 December 2019 or 31 December 2018.
Page 58
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
14. SHARE BASED PAYMENTS
Share Options
The Group operates share option schemes for certain employees (including directors). Options are exercisable at the
option price agreed at the date of grant. The options are settled in equity once exercised. The expected life of the
options varies between 1 and 6 years. All options issued in the prior years vested immediately, with no vesting
requirements. . The options which were issued during the year ended 31 December 2017 have vesting conditions
attached thereto, and these are detailed on the subsequent disclosures within this note. No options were issued during
the years ended 31 December 2019 or 31 December 2018.
Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the period
are as follows:
Outstanding at the beginning of the
year
Lapsed
Outstanding at the end of the year
Exercisable at year end
31 December 2019
31 December 2018
Number
WAEP
£
Number
5,125,706
0.437
5,125,706
(2,325,706)
2,800,000
2,800,000
-
-
0.434
5,125,706
2,800,000
WAEP
£
0.457
-
0.437
The share options outstanding at the end of the period have a weighted average remaining contractual life of 0.97
years (31 December 2018: 1.15 years) and have the following exercise prices and fair values at the date of grant:
First exercise date
(when vesting
conditions are met)
Grant date
Exercise
price
Fair
value
31 December
2019
31 December
2018
£
£
Number
Number
28 January 2013
13 December 2012
28 June 2013
21 May 2014
23 May 2014
1 March 2019
1 March 2019
1 March 2019
28 January 2010
13 December
2012
28 June 2013
21 May 2014
23 May 2014
29 August 2017
29 August 2017
29 August 2017
0.06
0.0004
0.06
0.00055
0.06
0.48
0.58
0
0
0
0.000371
0.004711
0.005574
0.00415
0.00415
0.00415
100,000
200,000
100,000
2,000,000
400,000
-
-
-
2,800,000
100,000
200,000
100,000
2,000,000
400,000
288,859
393,269
1,643,578
5,125,706
At 31 December 2019 2,800,000 options were exercisable (31 December 2018: 2,800,000).
All option numbers and prices have been adjusted for the share consolidation.
Page 59
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
14. SHARE BASED PAYMENTS CONTINUED
For those options and warrants granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were
calculated using the Black-Scholes model. The inputs into the model for share based payments recognised in the
current and prior year were as follows:
29 August 2017
n/a
n/a 18 months
Risk free rate
Share price
volatility
Expected life
Share price at
date of grant
£0.415
Expected volatility was determined by calculating the historical volatility of the Company's share price for 12 months
prior to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural considerations.
The options granted on 29 August 2017, had a zero exercise price and therefore the value was the share price at the
time of issue of 41.5p, irrespective of the interest rate and volatility.
All of the options are exercisable 18 months after the grant date provided that the share price has met a certain price.
Should the share price not be achieved the options will lapse.
288,859 options only vest if VWAP is greater or equal to 92p on vesting date
393,269 options only vest if VWAP is greater or equal to 182p on vesting date
1,643,578 options only vest if VWAP is greater or equal to 218p on vesting date
All share prices have been adjusted for the share consolidation.
Additionally the option holder must have made market purchases of ordinary shares equal to a total of one third of
the Option Holders's annual salary or participated in a Company share purchase programme for a period of at least
six months prior to the grant date.
It has been assumed that the likelihood on the options of the three sets of options vesting is 60%, 20% and 10%
respectively, and the share option has been calculated accordingly.
Of the 2,325,706 options issued during the year ended 31 December 2017, 2,236,321 were replacement options for
the 3,000,000 options issued in July 2016, which were cancelled at the time the new options were issued. The charge
in respect of these would have been £163,000, but as £716,000 had already been charged in respect of the 2016 options
no charge has been made. The remaining 89,385 new options issued during the year ended 31 December 2017, carry
a charge of £10,000 which has been spread over the 18 month vesting period.
All share prices and volumes have been adjusted for the share consolidation.
The Group therefore recognised total expenses of £1,000 (year ended 31 December 2018: £7,000) relating to equity-
settled share-based payment transactions during the period.
15. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 December 2019 or 31 December 2018.
16. CAPITAL COMMITMENTS
There were no capital commitments at 31 December 2019 or 31 December 2018.
Page 60
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
17. LEASE COMMITMENTS
There were the following commitments under non-cancellable operating leases.
Amounts due within one year
Amounts due within two to five years
31 December 2019
£'000
31 December 2018
£'000
66
-
66
168
251
419
The Company has taken advantage of the break clause in the lease which ends on the 20th July 2020.
18. FINANCIAL INSTRUMENTS
The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The
Board is responsible for co-ordinating the Group's risk management and focuses on actively securing the Group's short
to medium term cash flows. Long term financial investments are managed to generate lasting returns.
The Group has purchased shares in Companies which are listed on public trading exchanges such as the LSE, TSX
and ASX, and these shares are held as an available-for-sale asset. The most significant risks to which the Group is
exposed are described below:
a Credit risk
The Group's credit risk will be primarily attributable to its trade receivables. At 31 December 2019, the Group had
minimal trade receivables and therefore minimal risk arises.
Generally, the Group's maximum exposure to credit risk is limited to the carrying amount of the financial assets
recognised at the balance sheet date, as summarised below:
31 December 2019
31 December 2018
AFS
(carried
at fair
value
Loans and
receivables
Derivative
financial
assets
Statement
of
Financial
position
total
AFS
(carried
at fair
value)
Loans and
receivables
Derivative
financial
assets
Statement
of
financial
position
total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Available-for-
sale financial
asset
Other long
term financial
assets
Trade
receivables
Other
receivables
Prepayments
and accrued
income
Cash and cash
equivalents
1,121
1,121
-
-
-
-
-
-
0
118
128
2,496
-
1,121
2,895
-
1,121
2,895
-
-
-
-
-
118
128
2,496
-
-
-
-
-
-
-
2,895
-
2,895
43
-
43
154
118
468
-
154
-
-
118
468
Total
1,121
2,742
- 3,863
2,895
783
- 3,678
Page 61
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
18. FINANCIAL INSTRUMENTS CONTINUED
Financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based
on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such
cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to
the fair value measurement. Management’s assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgement, and considers factors specific to the investment.
Investments
The Group’s investment in shares in Listed Companies are included as an available-for-sale asset has been classified
as Level 1, as market prices are available and the market is considered an active, liquid market.
The credit risk on liquid funds is limited because the Group only places deposits with leading financial institutions
in the United Kingdom.
b Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and
to invest cash assets safely and profitably. The Directors prepare rolling cash flow forecasts and seek to raise
additional equity funding whenever a shortfall in funding is forecast. Details of the going concern basis of preparing
the financial statements are included in the principal accounting policies.
c Market risk
The amount and quality of minerals available and the related costs of extraction and production represent a significant
risk to the group. The group is exposed to fluctuating commodity prices in respect of the underlying assets. The Group
seeks to manage this risk by carrying out appropriate due diligence in respect of the projects in which it invests.
The Group is exposed to the volatility of the stock markets around the world, on which it holds shares in various listed
entities, and the fluctuation of share prices of these underlying companies. The Group manages this risk through
constant monitoring of its investments share prices and news information, but does not hedge against these
investments.
d Interest rate risk
The Group only has borrowings at fixed coupon rates and therefore minimal interest rate risk, as this is deemed its
only material exposure thereto.
e Foreign exchange risk
The Group has borrowings of £2,982,000 which are denominated is US dollars. These loans leave the Group
exposed to a foreign currency risk. The Board is considering whether arrangements should be made to mitigate this
risk. The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.
Page 62
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
18. FINANCIAL INSTRUMENTS CONTINUED
f Financial liabilities
The group's financial liabilities are classified as follows:
31 December 2019
31 December 2018
Other
financial
liabilities
at
amortised
cost
£'000
Liabilities
not within
the scope
of IAS 39
Total
£'000
£'000
Other
financial
liabilities
at
amortised
cost
£'000
Liabilities
not within
the scope
of IAS 39
Total
£'000
£'000
Trade
payables
Accruals and
deferred
income
Other
payables
Borrowings
232
-
50
2,982
-
61
-
-
232
61
50
78
-
-
2,982
3,706
-
78
145
145
-
-
-
3,706
Total
3,264
61
3,325
3,784
145
3,929
Maturity of financial liabilities
All financial liabilities at 31 December 2019 and 31 December 2018 mature in less than one year.
Borrowing facilities for the period ended 31 December 2019
The Group has committed borrowing facilities at 31 December 2019 of £2,967,000 (31 December 2018: £3,706,000).
See Note 12 for details.
g Capital risk management
The Group's objectives when managing capital are:
-
-
-
to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits
for the shareholders;
to support the Group's stability and growth; and
to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital structure, to ensure an optimal capital structure, and
equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency,
prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected
strategic investment opportunities. Management regards total equity as capital and reserves, for capital management
purposes.
Page 63
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
19. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
1 January 2019
Cash-flows:
- Proceeds
- Interest charged
- Realised foreign exchange
- Repayments
Non-cash:
Short-term
borrowings
Total
3,706
3,706
1,715
220
(2)
(2,518)
1,715
220
(2)
(2,518)
- Unrealised Foreign exchange movement
(139)
(139)
31 December 2019
2,982
2,982
1 January 2018
Cash-flows:
- Proceeds
- Interest charged
- Realised foreign exchange
- Repayments
Non-cash:
- Transfer from equity
- Unrealised Foreign exchange movement
Short-term
borrowings
Total
4,182
4,182
3,713
220
97
(5,034)
412
116
3,713
220
97
(5,034)
412
116
31 December 2018
3,706
3,706
20. RELATED PARTY TRANSACTIONS
There are no related party transactions to disclose.
Key Management Personnel are considered to be the Company Directors only, and their fees and remuneration are
disclosed in the Directors Remuneration on pages 23 to 24, and within Note 2 to the financial statements.
Page 64
CADENCE MINERALS PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
21. EVENTS AFTER THE END OF THE REPORTING PERIOD
On 1 May 2020, the Company announced that it had placed a total of 10,749,998 new Ordinary Shares at 6p each
raising £525,000 before expenses. The Company also announced that it had converted $300,000 of its Convertible
Loan Notes into 3,995,000 new Ordinary Shares at 6p each.
On 5 June 2020, the Company announced that it converted approximatel £220,000 of its Convertible Loan Notes into
1,835,706 new Ordinary Shares at 12p each.
On 8 June 2020, the Company announced that it had placed a total of 7,222,219 new Ordinary Shares at 9p each
raising £650,000 before expenses. The Company now has 129,264,891 Ordinary Shares in issue. There are no shares
held in treasury. The total voting rights in the Company is therefore 129,264,891 and Shareholders may use this figure
as the denominator by which they are required to notify their interest in, or change to their interest in, the Company
under the Disclosure Guidance and Transparency Rules.
After the reporting date, there has been a significant fall in global stock markets as a result a number of the Company's
investments have been impacted by COVID-19. Under IFRS these are non-adjusting events in respect of the year-end
31 December 2019. Although the full extent and timing of the impact of these events is not yet known, the Company
expects it may experience delays in returns generated as a result of COVID-19. Consequently, the financial reporting
impact will need to be considered in 2020 and could impact areas such as the carrying value of our Available for Sale
Investments.
22. ULTIMATE CONTROLLING PARTY
In the opinion of the directors there is no controlling party.
23. PROFIT AND LOSS ACCOUNT OF THE PARENT COMPANY
As permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not
been separately presented in these accounts. The parent company loss for the year was £2,281,000 (2018:
£11,757,000).
Page 65