Cadence Minerals (AIM/NEX: KDNC) is pleased to announce its final results for the year ending 31 December 2022.

The full Annual Report and Audited Financial Statements will be available on the Company's website at https://www.cadenceminerals.com/ and posted to shareholders by 30 June 2023.

CHAIRMAN'S STATEMENT

I am pleased to present the Company's Annual Report and Audited Financial Statements for the year ended 31 December 2022.

The global macroeconomic outlook continues to be unpredictable and difficult to navigate. The expected recovery and bounce back from pandemic-era conditions have largely been tempered by fast-rising interest rate and inflation forecasts. Coupled with an increasing focus on China's status as an adversary rather than just a competitor, the global outlook remains mixed and confusing. Over a year has passed, and the Ukraine invasion has now become an entrenched war, with many of the initial supply disruptions looking set to become semi-permanent dislocations. The Cadence Minerals portfolio is both balanced, diversified and constructed to anticipate supply and demand shocks. As such it should be well placed to weather this ongoing uncertainty.

Although the above suggests caution and a degree of pessimism, there are actual positives emerging. Recent economic forecasts suggest continued stimulus and support for infrastructure projects globally. Inflation, by some metrics, may have peaked, and the transformation to an EV world is gaining even more momentum. Recent merger and acquisition activity suggests an increasing awareness among multinational companies to integrate critical and strategic materials into their respective portfolios.

Market observers will be aware of an increase in the number of potential nationalisations across specific strategic industries and the resources sector. The net result is of course a greater focus on the resource sector, particularly while major resource companies continue to ramp up capital allocation into the EV material space to meet the sea change in demand for raw materials.

On behalf of the Board of Directors (Board) and management, I thank all our advisors, consultants, service providers, and especially our shareholders for their support throughout the year. The Board and company have continued site visits, viewed potential investment opportunities, and attended many industry conferences.

I am always reminded never to approach a marathon by counting every inch; it is a very hard way to keep and maintain perspective. Investing in the resource space really is a marathon versus a sprint. In every area, it continues to surprise how long permitting, licenses approvals, environmental studies, and raising capital can take.

Many times, the Board has stated 'we will look for opportunities to unlock and discover value across our portfolio.' I am particularly grateful that our patience has been rewarded with the continued success and maturing of many of our portfolio companies. The successful listing on the ASX of Evergreen Lithium is a good case in point and the Board sends its congratulations to all who made that listing possible.

The Board sees further potential within our private and public holdings for further listings and potential transactional activity to bolster Company returns. In the wake of such a challenging year, we send our congratulations and support to our portfolio companies for their continued success. As the Cadence investment portfolio continues to mature, we will continue our search for new, accretive investments with the same methodology and rigorous diligence as before in order to assure a continued supply of diversified growth opportunities.

We have a clear path ahead for our flagship Iron Ore investment at Amapa, Brazil. The publication of initial and preliminary studies, and the DEV team's liaison with federal, state, and local authorities, continues to unlock the potential of this project. The Board thanks our JV partner, lawyers, and consultants for their hard work in negotiations, settlements, and the operational success emanating from this investment.

The challenge of a dislocated economic recovery and the prospect of a slowing Chinese economy, highlighted by the likelihood of steel production at or below one billion tons, has proved to be a continual challenge to the Cadence share price. However, due to the likelihood of support and stimulus coupled with acquisition and investment in the resources sector, (particularly related to the EV transition), we expect the constitution of the Cadence portfolio to remain robust and focussed on the strategic and critical sectors of the economy.

I would like to personally thank my fellow Board members, staff, and partners, all of whom constitute the Cadence Community and, of course, all of our shareholders for their encouragement and continued confidence in the company

I am pleased to present the audited results for the year ended 31 December 2022, along with the Strategic Report that provides a comprehensive review of our business activities during the year. It is important to note that these results reflect the historical position of the Company's progress and financial standing, and we have included additional information on key post-year-end events in the Strategic Report.

In reviewing the performance of Cadence during the year, it would be fair to say that our two portfolios preformed quite differently despite the solid operational performance of the underlying assets and the long-term outlook of the commodities these projects intend to extract. While we delivered excellent operational results and strong investment returns within our private portfolio, our public traded portfolio decreased substantially, despite the underlying assets delivering to their goals.

In our private portfolio, the Amapa iron ore project remained the primary focus for Cadence's management. In my capacity as a director of the joint venture, Cadence was heavily involved in the operational progress we have seen to date, which cumulated in the delivery of a robust Pre-Feasibility Study ('PFS'), which confirmed the project's strong economics. To date, our investment has been circa US$9.3 million for 30% of the Amapa iron ore project; the net present value of 100% was estimated in the PFS at US$949 million.

In addition to the progress made at Amapa, the Company increased the investment returns by converting some of its passive private investments into public traded equity. These returns were achieved via two asset sales, firstly our 31.5% interests in Lithium Technology Pty Ltd and Lithium Supplies Pty Ltd ('LT and LS') were sold to Evergreen Lithium, and secondly, our 30% interest in licenses within the Yangibana Rare Earth Project ('Yangibana Project') were sold to owner/operator Hastings Technology Metals. These transactions were completed after a year-end, so the financial returns are not reflected in these financial statements. Cadence has invested approximately GBP1.7 million in these assets, and our sale price into the equity of the two public companies was the equivalent of GBP7.4 million, representing a 335% cumulative return on our investments.

In contrast to these achievements, the performance of our publicly listed portfolio tracked our largest holding, European Metals Holdings ('EMH'), which was down some 49% over the year despite the excellent progress made in developing the asset. EMH's price depreciation came off multi-year highs achieved during 2021 and followed the general trend of the AIM basic resource index, which was also down year on year, reflecting the risk-off approach we have seen with investors since mid-Aug 2021.

These negative year-over-year returns contradict the fundamental drivers in our portfolio, namely the incredible growth of the lithium raw material market and the stabilisation of the iron ore market. Therefore, the driver for the lacklustre performance appears to be a weakening in equity funds flow. Investment fund flows were the weakest in eight years as investors turned their backs on UK equity funds in 2022, selling a record GBP8.38 billion. In summary, Investors have sold UK equity and sought the safest havens, taking refuge in cash and perceived lower-risk investments.

As previously stated, the lithium market has continued to expand rapidly. The global lithium-ion battery manufacturing industry's expansion to feed the transportation sector's electrification fuelled this growth. This expansion results from a concerted shift toward decarbonisation and net zero targets set by the private sector and governments worldwide. The IEA predicts that demand for EV batteries will rise from around 340 Gigawatt hours (GWh) today to over 3,500 GWh by 2030, with the industry requiring 50 additional lithium mines by then. These macro drivers should continue to support the fundamentals behind our lithium and rare earth investments.

Within the iron ore market, although we saw a softening in the first of the year, it recovered by the end of 2022, with the 62% Fe Platts closing at circa US$117 per dry metric tonne ('dmt'). Both short and longer-term prospects for iron ore are driven by China, given that the nation is the world's biggest steel producer and currently buys about 70% of global seaborne iron ore.

In the coming year, we look forward to further developing the Amapa Iron Ore project, progressing the permitting pathway, and, if possible, securing a joint venture partner to co-develop the asset.

With our other investments, we look forward to developments at Evergreen Lithium, which given its proximity to the Finnis project, represents the most prospective investment in our portfolio. Hastings and EMH are well advanced in their development cycle, and we look forward to seeing the construction of the beneficiation plant at Hastings in Q3 of this year and the publication of the EMH Definitive Feasibility Study in Q4 of this year.

As discussed in the Investment Review, Cadence's ambition is to mitigate the need for external capital by growing and reinvesting the profits from our assets under management. We believe we are on our way to achieving this goal with our investments over the last three years of GBP8.64 million being funded by GBP7.77 million of sales in our public portfolio and GBP0.87 million from equity capital. Excluding the equity funding for our investments over the last three years Cadence has raised a total net funding from external sources of GBP3.72 million. At the time of writing, the realised profit since inception from the current public portfolio is GBP5.27 million and a total unrealised and realised gain is 338%.

I want to express my gratitude to the Cadence team and our investee companies, who have all worked tirelessly to bring the Company and its investment to their current position. We believe concentrating risk across a few crucial assets and commodities will pay off.

As outlined in the section 'Our Business and Investment Strategy' in the Annual Report, Cadence operates an investment strategy in which we invest in private projects via a private equity model and public equity. In both investment classes, we take either an active or passive role. We have reported in these segments below.

Overall, we achieved our goals within our private investment portfolio. Amapa delivered against its operational targets, and the publication of the PFS outlined a potential asset value well above the valuation we have been investing at. For Evergreen Lithium and our Investment in the Yangibana Rare Earth deposit, our goals were to monetise these illiquid assets at a higher valuation for re-investment in our portfolio. We reached agreements that would have achieved this during the year, delivering a 335% cumulative return on our investments. However, due to regulatory delays outside our control, the crystallisation of this value was only after the year-end.

Our public portfolio followed the overall risk-off, the downward trend of the AIM basic resource index. In particular, our holding in EMH reduced in price by 49% during the year, impacting our cumulative returns and was reflected in our share price. Nonetheless, we were able to sell some of this stake to partly fund our continuing investment in Amapa; the realised return on these sales was some 174% our overall return on EMH (realised and unrealised) is some 264%.

The overall ambition of the portfolio is capital growth of the assets under management which should be reflected in Cadence's share price. We intend to fund this growth, where possible, by investing in undervalued assets, selling these investments at higher valuations, and reinvesting the proceeds.

Once we reach critical mass in terms of assets under management, this investment cycle will mitigate the need for outside capital, either in new equity or debt. Over the last three years, we have been slowly achieving this with a total of GBP7.77 million in sales of our portfolio, which has partly funded a total of GBP8.64 million of new investments. At the time of writing, the realised profit from the current public portfolio is GBP5.27 million since inception.

PRIVATE INVESTMENTS, ACTIVE

The Amapa Iron Ore Project, Brazil

Interest - 30% at 31/12/2022 and 30% at 31/05/2023

The Amapa Project is a large-scale iron ore mine with associated rail, port and beneficiation facilities that commenced operations in December 2007. The Project ceased operations in 2014 after the port facility suffered a geotechnical failure, which limited iron ore export. Before the cessation of operations, the Project generated an underlying profit of US$54 million in 2012 and US$120 million in 2011. Operations commenced in December 2007, and 2008, the Project produced 712 thousand tonnes of iron ore concentrate. Production steadily increased, producing 4.8 Mt and 6.1 Mt of iron ore concentrate products in 2011 and 2012, respectively.

Investment

In 2019 Cadence entered into a binding investment agreement to invest in and acquire up to 27% of the Amapa iron ore mine, beneficiation plant, railway and private port owned by DEV. The agreement also gave Cadence a first right of refusal to increase its stake to 49%.

To acquire its 27% interest, Cadence invested US$6 million over two stages in a joint venture company. The first stage is for 20% of the JV, the consideration for which was US$2.5 million. The second stage was for a further 7% of the JV for a consideration of US$3.5 million. Both of these investments were completed in the first quarter of 2022. In October 2022, we increased this stake to 30% through the conversion of loans, management capitalisation, consultancy charges, and cash investment. Cadence's investment in the Amapa Project at the end of the year was US$ 9.3 million for 30% of the asset.

Operations Review

During the reporting period, the operational focus for the year at the Amapa Project was the completion of the Pre-Feasibility Study ('PFS') and the progress of the permitting pathway, including the regularisation of the mining concessions, tailing storage facilities and the environmental permits.

Pre-Feasibility Study

As part of the PFS, the Amapa Project increased and upgraded its Mineral Resource Estimate. This resulted in a substantial crease in total Measured, Indicated and Inferred Mineral Resources to 276.24 Million Tonnes grading 38.33% Fe and a maiden Measured Resource of 55.33 Mt grading 39.26% Fe.

The PFS was completed during the year, with the results announced in early January 2023. The PFS confirmed the potential for the Amapa Iron Ore Project to produce a high-grade iron ore concentrate and generate strong returns over its life of mine. It delivered a robust 5.28 Mtpa operation which can provide excellent cash flows and a post-tax NPV of US$949 million.

The Key Highlights of the PFS are below:

Annual average production of 5.28 million dry metric tonnes per annum ('Mtpa') of Fe concentrate, consisting of 4.36 Mtpa at 65.4% Fe and 0.92 Mtpa at 62% Fe concentrate.

Post-tax Net Present Value ('NPV') of US$949 million ('M') at a discount rate of 10%.

Post-tax Internal Rate of Return of 34%, with an average annual life of mine EBITDA of US$235 M annually

Maiden Ore Reserve of 195.8 million tonnes ('Mt') at 39.34% Fe demonstrates an 85% Mineral Resource conversion.

Free on Board ('FOB') C1 Cash Costs of US$35.53/dmt at the port of Santana. Cost and Freight ('CFR') C1 Cash Costs US$64.23/dmt in China.

Pre-production capital cost estimate of US$399 million, including the improvement and rehabilitation of the processing facility and the restoration of the railway and the wholly owned port export facility

Opportunities: exploration target at the Tucano Mine to further extend initial mine life and potential capital savings at port loading facilities.

Based on the positive outcome of the PFS and subsequent consultations with the key contractors, three areas of possible improvement to the Amapa Project were identified. The first was to review the historical drilling and geological data north of the Amapa mining concessions. The data has been acquired and is currently being processed to identify further iron ore resources, which, if present, would further increase the mine life.

The second area of potential improvement is a change in the layout of the port at Santana by moving the railway loop further from the shore. After the year's end, a scoping study regarding this option was completed and identified a potential net capital saving to the port refurbishment costs of US$28 million.

The last area of potential improvement is to investigate and review the flowsheet to improve the final product quality over and above the current 65% iron ore concentrate. Once these studies are completed, work on a Definitive Feasibility Study ('DFS') can begin. The DFS is required to seek project debt and equity finance, which will be sought once the DFS is complete.

Permitting Pathway

Although DEV owns the Mining Concessions, it does need to obtain Mine Extraction and Processing Permit to begin operations, and this is done by obtaining an Operational License ('LO') from the state environment authority. Once this has been completed, DEV will apply for Mine Extraction Permit. Since the Project was acquired by its current owners in 2022, DEV has made the required regulatory filings and embarked on studies and maintenance works to comply with the National Mineral Agency requirements.

In 2022 DEV began the regularisation of the expired environmental permits. In consultation with the Amapa State Environmental Agency and the relevant state authorities, DEV has requested that the requirement for an environmental impact study be waived.

This request for a waiver was on the basis that the previous LOs were granted on an operation that is substantially the same as is currently planned and remains applicable to future operations. DEV proposes that the company submits an Environmental Control Plan - 'PCA' (Plano de Controle Ambiental);and Environmental Control Report - 'RCA' (Relatorio de Controle Ambiental). DEV has begun its proposed permit pathway for the Project based on the above requirements of a PCA and RCA.

The proposed permit pathway for the Project has both legal and practical precedent and is a reasonable approach, given the Project's status and level of development.

The state owns the railway line and associated land; therefore, for the Project to utilise this, it requires both the LO and a concession agreement with the State of Amapa. The previous operators of the Project were granted this concession in 2006 for 20 years under specific terms and conditions. The reinstatement of this concession to one of DEV's 100% owned subsidiaries was in December 2019 and was extended to 2046. The concession allows DEV's 100% owned subsidiary to operate the railway to primarily transport iron ore from the mine to its port in Santana. The State of Amapa owns the surface rights associated with the railway, and under the Railway Concession, DEV has been granted use over these surface rights.

In addition to the LO detailed above, the company's port is regulated by the Agencia Nacional de Transportes Aquaviarios ('ANTAQ'). As a result of the change of ultimate beneficiary of DEV, a change of control request was filed. This change of control was granted in November 2021. As part of the port change of control, ANTAQ agreed to cease the recommended abrogation of the port concession. DEV owns the surface rights associated with the port.

Secured Bank Settlement Iron Ore Shipments

As per the settlement agreement announced in December 2021 here, the net proceeds of the one shipment carried out in 2022, along with approximately half of the net proceeds from the shipments in 2021, have been used to pay the secured bank creditors.

The main driver for the lack of shipment during the year resulted from the impact of the Ukraine war and the legacy of Covid on supply chains resulting in higher shipping costs and lower iron ore pricing. Other iron ore producers in the region have been able to ship because their product is of a higher grade than our stockpiled historical product (58% Iron), which typically will achieve a 10%-12% discount to 62% Fe Platts CFR. Given these unprecedented macroeconomic conditions, DEV could not meet the 2022 payment schedule per the settlement deed. Although the bank creditors have reserved their rights, the settlement deed remains in full effect with all parties in discussions to agree on a new timetable to rephase payments so these can be met in light of market conditions.

With improving iron ore prices and stability returning to shipping costs, selling the 58% iron ore concentrate stockpile is economically viable. Although DEV can recommend material shipment, the secured bank creditors must approve such a shipment. Nonetheless, assuming that the secured bank creditors act under an economic desire for their debt to be repaid, we expect shipping to recommence by the beginning of Q3 2023.

Development Plan for the Amapa Project

The goal is to bring this project back into production. With the PFS completed, a project would typically directly proceed to DFS, funding, and construction. Cadence and Its joint venture partners have agreed that the lowest risk and currently best commercial approach to developing this project is to bring on a highly experienced mining operator or EPCM contractor as a joint venture partner, and we are working towards this goal. We currently have three interested parties reviewing the data room in this regard. However, the above strategy does not preclude the option for our joint venture company developing the project or embarking on trade sale of the project.

In our ongoing discussions with stakeholders of the Amapa Project, including shareholders of Cadence, there has been concerns expressed in relation to the timing of the development of the project as we would have originally expected to be in production at this point in time.

The extension of the development timeline is primary attributable to the almost two and half year delay in reaching a settlement with the secured bank creditors, this was substantially more than we had all expected. Given that a representative of the secured bank creditors indicated that they would be amenable to being paid from the cashflow after operations had started. However, it transpired that the secured bank creditors were seeking payment from the iron ore stockpiles and as such alongside our joint venture partners we negotiated a substantial reduction if the amounts payable delivering substantial long term cash savings to the project.

In the absence of a settlement, as per the investment agreement with our joint venture partners, Cadence did not want to risk capital in the project and therefore did not invest any substantial monies until this matter had been resolved. It was only at this point in February 2022 that investment in the project and could start in earnest.

In July 2022, Cadence Minerals received approximately 15.8 million shares in Evergreen Lithium ('Evergreen') when Cadence sold its 31.5% stake in Lithium Technologies and Lithium Supplies ('LT and LS') to Evergreen as announced on 27 June 2022. After the year-end, Evergreen was listed on the Australian Stock Exchange ('ASX'). Before listing, Cadence's equity stake in Evergreen was 13.16%; due to the IPO and associated fundraising, this was reduced to 8.74%. At the time of writing, the value of this stake was approximately GBP3.3 million; our initial investment into this asset was GBP0.83 million.

A further AS$ 6.63 million (GBP3.80 million) shares in Evergreen are due to Cadence on achieving certain performance milestones by Evergreen. Further details of these milestones can be found in the Evergreen prospectus. Cadence's shares are subject to a 2-year escrow agreement as determined by the listing rules of the ASX.

On acquiring LT and LS, Evergreen became the 100% owner of three exploration tenements. The Bynoe Lithium Project and Fortune Lithium Project (awaiting grant of exploration permit) are located in the Northern Territory, and the Kenny Lithium Project is in Western Australia.

The Bynoe Lithium Project is Evergreen's flagship prospect. Evergreen's primary focus is to explore and discover an economically viable lithium resource for development. The Bynoe Lithium Project is located south of Darwin in the Northern Territory, Australia. It covers the north-eastern strike extent of the lithium- and tantalum-endowed Bynoe Pegmatite Field.

The Bynoe Pegmatite Field is host to Core Lithium Ltd's (ASX: CXO) ('Core Lithium' or 'Core') high-grade Finniss lithium deposit, which is adjacent to Core Lithium's producing lithium mine. Core Lithium's deposit is just 1.2km from the Bynoe Lithium Project. Soil sampling conducted on the Bynoe Lithium Project has returned geochemical anomalies that indicate the lithium mineralisation continues along the trend into the Company's Bynoe Lithium Project. Based on the initial stages of soil sampling alone (which only covers approximately 10-20% of the Bynoe Lithium Project area, an initial five target zones have been identified that contain lithium mineralisation. The Bynoe Lithium Project covers an area of 231 km2, making Evergreen one of the largest tenement holders within the central Bynoe Pegmatite Field after Core Lithium.

In recent years, exploration activities within the Bynoe Field have been focused on the discovery of economic lithium mineralisation hosted in pegmatites, the most successful of which has been Evergreen's neighbour, Core Lithium, which in a very short time frame, has delineated a JORC mineral resource of 18.9mt at 1.32% Li2O at its Finniss Project. Core Lithium has achieved excellent drilling intercepts at their BP33 prospect of 107 metres at 1.70% Li2O, located within 1km of the Bynoe Lithium Project and Core Lithium's Finniss (BP33) mine. Evergreen intends to expand the geochemical soil sampling significantly. In addition, Evergreen recently completed an Ambient Noise Topography ('ANT') Survey and is currently awaiting its geophysical interpretation. Core Lithium recently used ANT (refer to ASX announcement Core Lithium, 1 August 2022, 'BP33 drilling delivers outstanding results'). Core noted the results were an 'outstanding success' and showed 'excellent correlation' with known pegmatite bodies already identified by drilling. Once the baseline geochemical and geophysical data is collected, Evergreen plans to systematically drill the anomalies, starting with the highest priority along strike from Core Lithium's mineralised pegmatites.

The Kenny Lithium Project is located within the Dundas Mineral Field of Western Australia and 50km East of Norseman in the Eastern Goldfields. It is near the Mt Dean and Mt Belches-Bald Hill pegmatite fields, and multiple significant lithium discoveries have been made near the Kenny Lithium Project.

The Kenny Lithium Project covers an area of 210 km2, providing Evergreen with a large and prospective land holding within the Dundas mineral field.

The Kenny Lithium Project lies at the southern end of the Norseman-Wiluna Granite Greenstone Belt within the Archaean Yilgarn Craton. This well-known lithium-producing region/mineral field is host to the significant Mount Marion, Bald Hill and Baldania mines, respectively, close to the Company's Kenny Lithium Project.

Initial field mapping on the Kenny Lithium Project has confirmed the presence of substantial outcropping pegmatites, whereby an approximate 10km zone of pegmatite outcropping has been confirmed in the North-Eastern section of the Kenny Lithium Project, which significantly exceeds what has already been identified by the Government Survey of Western Australia (GSWA).

Evergreen aims to explore and discover an economic lithium resource for subsequent development. As with the Company's Bynoe Lithium Project, minimal geochemical work has been undertaken within the tenure; however, historical results have proven encouraging. Evergreen has recently completed a comprehensive auger program, drilling 1,731 holes.

Since the end of the year, Evergreen, listed on the ASX, has continued to progress the development of these assets with some initial positive results from the geochemical results on both the Byone and Kenny lithium prospects.

PRIVATE INVESTMENTS, PASSIVE

Sonora Lithium Project, Mexico

Interest - 30% on 31/12/2022 and 31/05/2023

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 Sonora Lithium Project consists of ten contiguous concessions covering 97,389 hectares. Two of the concessions (La Ventana, La Ventana 1) are owned as of the date 100% by subsidiaries of Gangfeng Lithium Co., Ltd ('Gangfeng'). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions are owned by Mexalit S.A. de C.V. ('Mexalit'), which is owned 70% by Gangfeng and 30% by Cadence.

The Sonora Project holds one of the world's largest lithium resources and benefits from being both high-grade and scalable. The polylithionite mineralisation is hosted within shallow dipping sequences, outcropping on the surface. A Mineral Resource estimate was prepared by SRK Consulting (UK) Limited ('SRK') following NI 43-101.

A feasibility study report was published in January 2018, 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, an Internal Rate of Return of 26.1%, and Life of Mine operating costs of US$3,910/t of lithium carbonate. 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 and cease at the end of the mine life in year 19, and as such, assuming Cadence retains its position, any net realisable economic benefit to Cadence would only accrue at this time.

In 2021, Mexican politicians from the MORENA party tabled a draught bill to reform Mexico's energy sector, including statements that lithium would be included among the minerals considered strategic for the energy transition and that no new concessions for lithium exploitation by private companies could be granted. After the year-end, the Mexican senate elevated lithium deposits to the 'strategic minerals' category, declaring lithium's exploration, exploitation, and use as the state's exclusive right. In February 2022, the Mexican government established a decree that reserved some 234,855 hectares as a lithium mining reserve, which includes the areas covered by the Sonora Lithium Project. However, the Decree also notes that the rights and obligations of the holders of current mining concessions within the lithium mining reserve area are not affected.

We are constantly examining possible legislative changes. Our current view is that the Decree passed by the senate only impacts licenses, concessions, or contracts to be granted, not already those given, as is the case for the Sonora Lithium Project. Therefore, at this point, we do not believe there is a material impact on our joint venture areas.

PRIVATE INVESTMENTS, PASSIVE

Yangibana Project, Australia

Interest - 30% at 31/12/2022

In June 2022, Cadence entered into a binding agreement to sell its working interest in the leases in the Yangibana Project to Hastings Technology Metals (ASX: HAS) ('Hastings'), the current owner and operator of the Yangibana Rare Project. Cadence sold its 30% working interest in the Yangibana Project tenements, to Hastings, for A$9 million (GBP5.1 million), which has been satisfied via the issue of 2,452,650 new ordinary shares in Hastings to Cadence. These shares represent approximately 1.9% of the current issued share capital of Hastings Technology and are subject to a 12-month voluntary escrow. At the time of writing, the value of this stake was approximately GBP1.9 million; our initial investment into this asset was GBP0.91 million.

Hastings is a well-managed Perth-based rare earth company primed to become the world's next producer of neodymium and praseodymium concentrate ('NdPr'). NdPr is vital in manufacturing permanent magnets used daily in advanced technology products ranging from electric vehicles to wind turbines, robotics, medical applications and digital devices.

Hastings flagship Yangibana project, in the Gascoyne region of Western Australia, contains a highly valued NdPr deposit with an NdPr: TREO ratio of up to 52%. The site is permitted for long-life production and with offtake contracts signed and debt finance in an advanced stage.

Hastings announced after the year's end that it had introduced a staged development programme to the Yangibana asset. This strategy will reduce upfront capital requirements and project execution risks and provide a faster pathway to cash flow by Q1 2025. Hastings will initially focus on constructing the Yangibana mine and beneficiation plant to produce rare earths concentrate (Stage 1), followed by developing a hydrometallurgical plant to produce mixed rare earth carbonate (Stage 2). This has resulted in the total project capital cost being estimated at $948m, with the Stage 1 component being $470m. The beneficiation plant construction will commence in Q3 2023, supporting the Stage 1 concentrate delivery target date of Q1 2025.

As a result of this staged development programme, Stage 1 will have a post-tax NPV11 of $538m, an IRR of 27.54% and an average annual EBITDA of $174m, providing a funding source for Stage 2.

PRIVATE INVESTMENTS, PASSIVE

Ferro Verde Iron Ore, Brazil

Interest - 1% at 31/12/2022

During the year, Cadence made a small (GBP0.21 million) in an advanced iron ore deposit in Brazil. The Ferro Verde Deposit is located in the southern portion of the state of Bahia, in the north-eastern region of Brazil, next to the town of Urandi, some 700 km southwest of Salvador, the capital of the state of Bahia.

The project is currently progressing its definitive feasibility study. It has a historic inferred resource of 284 million tonnes of iron ore at 31% Fe. The intent is to produce 4.5 Mtpa of 67% Fe. Our intended exit strategy is either when the asset is listed, or the owners carry out a trade sale.

PUBLIC EQUITY

The public equity investment segment includes active and passive investments in our trading portfolio. The trading portfolio consists of investments in listed mining entities that the board believes possess attractive underlying assets. The focus is to invest in mining companies that are significantly undervalued by the market and where there is substantial upside potential through exploration success and/or the development of mining projects for commercial production. Ultimately, the aim is to make capital gains in the short to medium term. Investments are considered individually based on various criteria and are typically traded on the TSX, ASX, AIM or LSE.

During the period, our public equity investments generated an unrealised loss of GBP4.59 million (2021: profit of GBP0.58 million). These unrealised losses tracked our largest holding, EMH, down some 49% over the year despite the excellent progress in developing the asset. We realised a profit from sales of GBP0.55 million (2020: GBP0.59 million). Most of these profits were derived from selling EMH. If we look at the portfolio performance since inception the sales made during the year represented a 174% profit above the original purchase price. Our investment in EMH is the only active investment in the public equity portfolio. Our realised return, unrealised return and total return on our EMH to date is 244%, 290% and 264% respectively.

16,000 shares in Macarthur Minerals for net proceeds of GBP24,426 (2021: 286,000 shares disposed of for proceeds of GBP50,581). At the year end the company held nil shares in Macarthur Minerals (2021: 1,016,000).

Key Management Personnel are considered to be the Company Directors only, and their total within Note 2 to the financial statements.

EVENTS AFTER THE END OF THE REPORTING PERIOD

On 25 January 2023, the Company announced that it had completed the sale of its working interests in the Yangibana Rare Earths project ('Yangibana Project') tenements to Hastings Technology Metals (ASX: HAS) ('Hastings'). The Company received 2,452,650 shares of Hastings valued at AUD $9m.

On 26 January 2023, the Company announced that Evergreen Lithium Limited ('Evergreen') has filed its admission Prospectus with Australian Securities & Investments Commission and the Australian Stock Exchange ('ASX'). Cadence owns approximately 15.8 million Evergreen shares which are anticipated to represent 8.7% of the issued share capital of Evergreen on admission. At the offer price the Company's interest is valued at AUD $3.96m.

On 13 April 2023, the Company announced that Evergreen was listed on ASX on 11 April 2023, and that Cadence is the largest shareholder, holding 8.74% of the issued share capital.

ULTIMATE CONTROLLING PARTY

In the opinion of the directors there is no controlling party.

FORWARD LOOKING STATEMENTS

This annual report contains 'forward-looking information', which may include but is not limited to, statements concerning the future. This annual report contains 'forward-looking information', which may include but is not limited to, statements concerning the future financial and operating performance of Cadence Minerals, 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. 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

Contact:

Tel: 020 3582 6636

Email: Info@cadenceminerals.com

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