TIDMKDNC
RNS Number : 5402D
Cadence Minerals PLC
30 June 2021
Cadence Minerals Plc
("Cadence Minerals", "Cadence" or "the Company")
Results for the year ended 31 December 2020
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to
announce its final results for the year ended 31 December 2020. A
copy of the full results will be made available on the Company's
website at
https://www.cadenceminerals.com/ and will be posted to shareholders today.
- Ends -
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulation (EU) No. 596/2014.
For further information:
Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
Chairman's Statement
I am pleased to present the Company's Annual Report and Audited
Financial Statements for the year ended 31 December 2020.
In my previous statement to you as Chairman, I surmised that the
economic contraction, whilst severe and turbulent, would hopefully
recover rapidly due to global stimulus measures. Today, despite the
persistent dislocations and disruptions of the global pandemic,
this view is supported by several key metrics, including higher
commodity prices.
On behalf of the Board of Directors ("Board") and management, I
wish to express our thanks and gratitude to all our service
providers, consultants, advisors and most importantly to our
shareholders for their support throughout a difficult year. Despite
the unpredictable nature of the pandemic, the Board and the Company
have been able to operate efficiently and successfully. We are
well-positioned to transition back to our regular pre-COVID work
schedule as and when that is permitted. Our sincere hope that all
within our community have kept themselves and their families safe
and well.
Without any specific order or priority, our Board wishes to
congratulate the successes and achievements of our portfolio
companies. Bacanora has successfully negotiated agreements with one
of the Worlds biggest Lithium producers, European Metal Holdings
has continued to develop Cinovec, the largest hard rock Lithium
deposit in Europe, Macarthur Minerals has taken great strides
forward with the Lake Giles Iron project and its respective BFS,
and Hastings Technology Metals has been at the front and centre of
the global focus on rare earth metals. While remaining as
supportive shareholders to these companies, our Board remains
focused on unlocking and accelerating the value across our entire
portfolio. To this extent, despite the challenges thrown up by
COVID in conducting thorough due diligence, we have continued to
look for new investment opportunities to complement our geographic
and geological spread.
The pandemic has provided new perspectives on developing our
portfolio, none more so than at our key pending investment - the
Amapa Iron Ore (" Amapa Project") project in Brazil. The main
priority for the Board has been following the processes and
protocols outlined in the Judicial Review Procedure, which have
been meticulously and publicly disclosed at every step of the
journey. Our management team have maintained a patient and
persistent approach, following what was always expected to be a
protracted route to bring the mine and community back to life.
Today, supported by a 21% increase in total mineral resources
compared to the equivalent MRE published by Anglo American 2012 and
with the global supply of iron ore still falling short of predicted
global demand, the Amapa opportunity looks better than ever.
The unprecedented levels of global economic stimulus, combined
with a focus on infrastructure and an overarching need for
strategic supply chains for metals and minerals, suggests our
portfolio is well-positioned to benefit. Commodity prices have
responded to a rapid economic recovery, especially in China. If
legislated clean energy goals, electric vehicle production and
infrastructure spending is executed and adopted as announced by the
incumbent administrations around the globe. In that case, we
envisage strong demand growth for the underlying commodities at the
heart of the Cadence portfolio. We do not predict prices, but it is
worth noting that peak predictions often come at peak prices. As
such, our focus on the long-term fundamentals of each commodity
allows for a more sustainable and longer-term investment
thesis.
While the challenges of the pandemic remain in focus, I would
like to conclude by personally thanking our Cadence Community,
management, fellow Board members, staff and partners and of course,
all Shareholders for their continued support and confidence in the
Company.
Andrew Suckling
Non-Executive Chairman, 29 June 2021
Chief Executive Officer's Commentary
I am pleased to present the audited results for the year ended
31 December 2020. Alongside the financial statements and supporting
notes, a full review of business activities during the year is
provided within the Strategic Report.
Given the results presented for the period ended 31 December 20,
they reflect a historical position in terms of the Company progress
and its financial position, so we have included within the
Strategic Report further information on key events post
year-end.
Despite 2020 being a year of turbulence, Cadence has continued
to pursue its strategic objectives because we believe that assets
that are undervalued, de-risked, or have strategic advantages will
outperform their peers in the long term. During 2020 this strategy
bore fruit with the Company delivering both a net profit of GBP7.8
million (2019 loss of GBP1.9 million) and reporting considerable
progress across its key investments. Furthermore, in 2020, the
Company repaid the vast majority of its outstanding convertible
debt and in April 2021 repaid it entirely.
The challenges faced with the onset of the COVID-19 pandemic
earlier in 2020 presented the Company with some potentially large
risks to its concentration of investments. In October 2020, the IMF
stated that the total bill for the global pandemic would reach some
$28tn (GBP21.5tn) in lost output. The rapid intervention by global
governments with rate cuts, looser monetary policies and fiscal
stimulus has certainly avoided a financial catastrophe, but at the
same, increased demand for commodities. Historically the
consequences of such events invariably see a strong recovery in
commodity markets. This factor was clearly in evidence as 2020
progressed. Prices of commodities such as Iron Ore and Nickel and
precious metals including Gold and Silver all increased in
value.
In the wake of the sharp economic contractions in 2020, the IMF
forecast that only China was expected to emerge with any economic
growth during the year. 2021 is set to be a different story,
however, and with the vaccine rollout accelerating globally, there
are expectations for sharp recoveries across most leading
economies. Added to this, the new $1.9tn stimulus package in the US
from the Biden administration will see heavy investment into ageing
US infrastructure. These factors should ensure sustained demand and
pricing for iron ore and base metals.
There is also the revolution taking place within the automotive
industry to consider. The move towards EV's is accelerating
rapidly, with a plethora of commitments from key automotive
manufacturers such as Ford, Volvo, BMW and Jaguar to switch to
electric-only production in the next few years. This move, of
course, sounds the death knell for the internal combustion engine,
but at the same time is driving the cost of battery metals and
component commodities such as lithium, nickel, cobalt and
graphite
The net effect is that specific commodities and minerals assets
that we have invested in are undergoing a significant global
resurgence. I believe that our diverse and complementary nature of
investments is uniquely positioned, with downside risk protection
and several potential scenarios which could create substantial
value to the Company
Our portfolio has been focused on two main investments, and the
first is the private Amapa Project . The terms of our investment
and the judicial recovery plan were finalised in 2019. The key
outstanding item for Cadence to complete its initial US$2 million
(20%) investment in the Amapa Project is the execution of a
settlement agreement with the secured bank creditors. During the
year, we reached an agreement in principle with secured banks
creditors. At the time of writing, we understand the secured
creditors either have credit committee approval or are awaiting it.
The final settlement agreement has been circulated and is with the
respective legal teams for review.
Given the time it had taken for the secured bank creditors to
obtain internal approval for the settlement agreement in February
2021, the Commercial Court of São Paulo ("the Court") ruled that
DEV Mineração S.A's ("DEV") the owner of the Amapa Project could
commence the shipment of the iron ore stockpiles situated at DEV's
wholly-owned port in Santana, Amapa, Brazil. DEV was permitted to
export sufficient iron ore to realise a US$10 million profit from
the Amapa stockpiles at the port. As of the end of June 2021, DEV
had shipped three of the estimated four shipments of 58% iron ore
required to net US$ 10 million profit. DEV is also contracted to
carry out logistical and shipping activities for third parties who
have stockpiles held at DEV's port.
Despite the lack of a settlement agreement, Cadence, our joint
venture partners, Indo Sino Pte Ltd ("Indo Sino"), and DEV
determined that it was essential to progress the Amapa Project. In
this vein, we completed an updated mineral resource statement
increasing the total mineral resources by 21%. In addition, we have
commenced various other work streams which will enable us to
complete and a pre-feasibility study.
As we have mentioned on numerous occasions, the opportunity to
invest in such a project is rare within our industry, and we
believe this project provides us with a potentially transformative
asset for our Company. The Amapa Project gives Cadence 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.
The second of our key investments is European Metals Holdings
("EMH"), whose strategy is to become a Czech based lithium and tin
producer. During the year, EMH's Cinovec Project has been
significantly de-risked and is moving rapidly towards a final
investment decision. The year was marked primarily by the
completion of an agreement with CEZ a.s., the Czech national power
utility, by which CEZ became a 51% shareholder of the Project
Company, Geomet and injected approximately EUR 29 million into
Cinovec. This agreement not only provides all necessary funding to
move the Project to the final investment decision, but it also
provides strong business and management support within the Czech
Republic.
I would like to record my thanks to the team members at Cadence
and our investee companies who have all worked incredibly hard to
bring the Company and its investment to its present strong
position. We continue to deliver on identifying opportunities in
line with our investment strategy, and we believe the concentration
of risk across a few key assets and commodities will bear fruit.
Our investments have some downside protection, optionality and
exposure to potentially significant upside.
We look forward to continuing to actively assess investment
opportunities as well as managing them actively and diligently.
Kiran Morzaria
Chief Executive Officer, 29 June 2021
Investment Review
As outlined in the section "Our Business and Investment
Strategy," Cadence operates an investment strategy in which we
invest in private projects via a private equity model and in public
equity. In both investment classes, we take either an active or
passive role. We have reported in these segments below.
The Amapa Iron Ore Project, Brazil
Private Investments (Active)
The Amapa Project is a large-scale iron open pit ore mine with
associated rail, port and beneficiation facilities that 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
Amapa Project at US$462m ( 100% US $600m).
In 2019 Cadence entered into a binding investment agreement to
invest in and acquire up to 27% in the Amapa iron ore mine,
beneficiation plant, railway and private port owned by DEV ("The
Agreement"). The Agreement also gave Cadence a first right of
refusal to increase its stake to 49%.
To acquire its 27% interest, Cadence will invest US$6 million
over two stages in a joint venture company. 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
contingent on DEV delivering several key preconditions.
During the year, the key driver for the Company was to satisfy
the remaining major precondition for Cadence to make its investment
in the Amapa Project (the monies of which are currently held in
escrow in a judicial trust account). This precondition requires DEV
and the investors (Cadence and Indo Sino via our joint venture
company) to reach a settlement agreement with the secured bank
creditors. During the year, we spent our time negotiating with
secured bank creditors. This process was frustrating, given that we
have been dealing with four banks across five different time zones
and three different business cultures and various internal
approvals. This was further complicated that during the process,
two of the banks underwent a merger and changed personnel and
processes. Nonetheless, all parties reached an agreement in
principle in late 2020.
Subsequent to this date, the internal process of approval within
two of the secured lenders in India was further delayed due to an
increase in infections of the SARS-CoV-2 delta variant.
Nonetheless, we are highly confident that we will be able to
execute a settlement agreement, as, at the time of writing, we
understand the secured creditors have had either credit committee
approval or are awaiting it, and the final settlement agreement has
been circulated and is with the respective legal teams for review.
Once this precondition has been met, Cadence will release its
monies held in escrow, at which point Cadence will become a 20%
shareholder in the Amapa Project via our joint venture company
which will own 99.9% of DEV.
Subsequent to the year-end and while negotiations with the
secured bank creditors were ongoing, DEV was permitted by the
Commercial Court of São Paulo to commence shipment of the iron ore
stockpiles situated at DEV's wholly-owned port in Santana, Amapa,
Brazil.
DEV is permitted to export sufficient iron ore to realise a
US$10 million profit from the Amapa stockpiles at the port (after
the deductions of all logistical, regulatory, shipping and sale
costs).
The first portion of the net revenues will be used to pay
historic small and employee creditors. R$7.5 million was paid from
the first shipment, after which approximately US$ 6 million of the
net revenues will be used to begin recommissioning studies on the
Amapa Project and to start maintenance and monitoring of the
current tailing dam facilities. The remaining net revenues will be
used to provide working capital for the operations and for payment
against the outstanding amount due to the Bank Creditors.
As of the end of June 2021, DEV had shipped three of the
estimated four shipments of 58% iron ore required to net a US$ 10
million profit. DEV is also contracted to carry out logistical and
shipping activities for third parties who have stockpiles held at
DEV's port.
On an operational basis during the year, Cadence commissioned an
updated mineral resource estimate of the Amapa Project. This
resulted in a mineral resource of 176.7 million tonnes ("Mt")
grading 39.7% Fe in the Indicated category and a mineral resource
of 8.7Mt at 36.9% in the Inferred category. Both were reported
within an optimised pit shell and using a cut-off grade of 25%
Fe.
This mineral resource represents a 21% increase in total mineral
resources compared to the equivalent mineral resource estimate
published by Anglo American 2012. The mineral resource estimate
forms the basis of the mine planning studies, which are ongoing,
supporting the operational plan to produce 4.4Mt of 65% Fe and 0.3
Mt of 62% Fe per annum. The mineral resource work will form part of
a pre-feasibility study.
Work on the pre-feasibility study has started, consultants have
been engaged to commence the engineering and conditioning studies
on the plant and railway, and in addition, we are in the process of
commissioning engineering studies on the tailings damns and the
port. We had originally envisaged publishing a scoping study and
then progressing to a pre-feasibility study. However, given the
delays we have seen in finalising the settlement, the secured bank
creditors, DEV, Cadence and Indo Sino, have agreed to progress
straight to pre-feasibility level studies. This will shorten the
overall development timeline, save capital and provide a more
accurate estimate of capital and operational costs (25%-30% as
opposed to 45%-50%).
General low-level maintenance is ongoing, and the mine site,
tailings dam and port and we are continuing to liaise with the
relevant regulatory authorities to obtain the necessary licenses to
operate.
The Amapa Project's Current Development Plan
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 Amapa Project. This review was
based on a site visit, historical analysis and the review of
technical independent engineers reports published in 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 Amapa Project consists of an open-pit iron ore mine, railway
and port facility and is located in Amapa State, northeast Brazil.
The Amapa mine site, forming part of the Amapa Project, is located
near the towns of Pedra Branca do Amapari and Serra do Navio,
approximately 200km northwest of Macapa.
The redevelopment programme will broadly follow the stages
outlined below:
1. Recommissioning Studies - DEV has started the relevant
resource and engineering studies required for banking project
finance.
2. Reinvestment of Iron Ore Stockpile Sales.
a. DEV is currently shipping the stockpile under the courts'
approval, outlined previously, and once an executed agreement with
the secured creditors is completed DEV, will continue to ship this
material. It is anticipated that it will take up to 2 years to
ship.
b. An independent survey of these stockpiles carried out post
the year-end indicates some 1.39 Mt (+/- 10%) of iron ore in three
stockpiles with an average Fe grade of 58%.
c. These funds will be reinvested in the capital development of
the Amapa Project; however, they could also be used in part as part
of a settlement package with the Bank Creditors.
3. Capital Investment
a. DEV's estimate 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. This will be
updated as part of the pre-feasibility studies and is expected to
increase due to the underlying inflation we are currently seeing in
the steel markets.
b. The above capital investment will occur after the completion
of the recommissioning studies and raising additional capital.
c. The reconstruction is estimated to take approximately 18-24 months after the completion of the recommissioning studies.
4. Operations
a. The ore is planned to be beneficiated to a 65% Fe Pellet Feed and 62% Fe Spiral Concentrate
b. Based on available historic mine plans and an independent
consultant review, it is expected that at full production, the
Amapa 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
Lithium Technologies Pty Ltd & Lithium Suppliers Pty Ltd
("LT" & "LS)
Private Investments (Active)
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,
which was subsequently varied 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.
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 maintained the
licenses but carried out no further work on these areas. This is
because Cadence believes that our capital and time should be
focused on our investment in the Amapa Project, which is of a lower
risk profile than LT and LS investment.
Sonora Lithium Project, Mexico
Private Investments (Passive)
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.
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.
The Sonora Project holds one of the world's larger 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') in accordance
with NI 43-101. The following tables present the summary of current
lithium resources for the Project and the attributable amounts to
Cadence; these Mineral Resources are inclusive of Mineral
Reserves:
MINERAL RESERVES (Cut-off grade of 1,500 ppm Li)
Category Tonnes Ore Li (ppm) K (%) LCE (000t) LCE attributable to
(000t) Cadence (000t)
Proven 80,146 3,905 1.64 1,666 116
----------- --------- ------ ----------- --------------------
Probable 163,662 3,271 1.36 2,849 723
----------- --------- ------ ----------- --------------------
Total 243,808 3,480 1.45 4,515 839
----------- --------- ------ ----------- --------------------
MEASURED AND INDICATED MINERAL RESOURCES (Cut-off grade of 1,000
ppm)
Category Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to
Cadence (000t)
Measured 103,000 3,480 1.5 1,910 134
-------------- --------- ------ ----------- --------------------
Indicated 188,000 3,120 1.3 3,130 785
-------------- --------- ------ ----------- --------------------
Total 291,000 3,250 1.4 5,038 919
-------------- --------- ------ ----------- --------------------
INFERRED MINERAL RESOURCES (Cut-off grade of 1,000 ppm)
Category Tonnes (000t) Li (ppm) K (%) LCE (000t) LCE attributable to
Cadence (000t)
Inferred 268,000 2,650 1.2 3,779 559
-------------- --------- ------ ----------- --------------------
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 and 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 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.
The full report can be found here:
https://www.bacanoralithium.com/pdfs/Bacanora-FS-Technical-Report-25-01-2018.pdf
Summary of Activities
During the year, Bacanora completed a 50% share of the funding
requirements of the Sonora Lithium Project; this was via equity
raises through the public markets and its cornerstone investor
Gangfeng Lithium CO., Ltd ("Gangfeng"). Gangfeng also increased its
direct project stake in Bacanora's stake of the Sonora Lithium
Project. This dilution has had no effect on the Company's 30% stake
in Mexalit.
Subsequent to the year-end, Bacanora entered into an agreement
dated 6 May 2021 regarding the terms of a possible cash offer by
Ganfeng for the entire issued and to be issued share capital of
Bacanora other than that which it already owns, at a price of 67.5p
per Bacanora share.
Although this does not directly affect the terms of our Joint
Venture, should the cash offer be successful, our partner in
Mexalit will be Gangfeng. This is highly encouraging for the
development of the project, given that Gangfengs involvement in the
development of the project to date and their extensive experience
in the lithium market holding company is the world's third-largest
and China's largest lithium compounds producer and the world's
largest lithium metals producer in terms of production capacity.
Its operations are vertically integrated, encompassing all critical
stages of the value chain, including upstream lithium extraction,
midstream lithium compounds and metals processing, as well as
downstream lithium battery production and recycling.
Whilst COVID-19 has impacted the Bacanora's and its partners,
work to complete the front-end engineering design ("FEED") has
continued throughout the period, with GR Engineering Services
("GRES") completing the front-end concentrator and mechanical
engineering and Ganfeng completing its flow sheet design testwork
for the production of battery-grade lithium from the samples
provided by the pilot plant. Ganfeng is continuing to integrate its
flow sheet for the production of battery-grade lithium into the
overall large scale design and remains on schedule to deliver its
final engineering packages to Bacanora in Q2 2021. Ganfeng
continues to work with its equipment suppliers to determine
equipment delivery times to align with a target of first production
in 2023.
In Q1 2021, the Company commenced initial site activities for
the development of the Sonora Project. Initial works involve the
rescue and removal of surface vegetation and topsoil in the area
required for the construction of the lithium processing plant. The
Sonora construction team also commenced preparatory work to upgrade
the main access road to the site in preparation for providing
access for heavy equipment for commencing bulk site earthworks
later in the year.
Yangibana Project, Australia
Private Investments (Passive)
The Yangibana Project (the Project) is a significant Australian
Rare Earths Project, containing substantial Neodymium and
Praseodymium resources. The Project currently covers approximately
650 square kilometres. The Project is located in the Gascoyne
region of Western Australia, some 250 kilometres northeast of
Carnarvon.
Cadence holds interests in tenements covering some of the
prospective Gifford Creek Ferrocarbonatite Complex. Through
wholly-owned subsidiaries, Cadence holds:
-- 30% interest in 3 Mining Leases, 6 Exploration Licences, and 2 General Purpose Leases;
-- 3 Mining Licenses Include:M09/159,M09/161,M09/163;
-- 6 Exploration Licenses Included: E09/1043, E09/1049,
E09/1703, E09/1704, E09/1705, E09/1706;
-- 2 General Purpose Leases: G09/11, G09/13.
The tenements in which Cadence holds a 30% interest are in
joint-venture with Australian listed Hastings Technology Metals
("Hastings"), and Hastings carries all costs up to the decision to
commission a bankable feasibility study.
Summary of Activities
During the year, Hastings updated their mineral resources and
ore reserve estimate (JORC 2012); the result that affects our joint
venture area are reported below:
Yangibana M09/163 (JV Tenement 30% of Total to Cadence)
Category Million Tonnes %TREO % Nd 2O3+Pr6O11
Indicated 0.11 0.78 0.39
----------------- ------------------ ------------------
Inferred 0.05 0.85 0.42
----------------- ------------------ ------------------
TOTAL 0.16 0.80 0.40
----------------- ------------------ ------------------
Yangibana North M09/159 (JV Tenement 30% of Total to
Cadence)
Category Million Tonnes %TREO % Nd 2O3+Pr6O11
Measured 0.29 1.35 0.35
------------------- ----------------- -------------------
Indicated 1.66 1.43 0.37
------------------- ----------------- -------------------
Inferred 0.60 1.43 0.37
------------------- ----------------- -------------------
TOTAL 2.55 1.42 0.37
------------------- ----------------- -------------------
Probable ore reserves within JV tenements 30% of Total to
Cadence
Deposit Million Tonnes %TREO %Nd2O3+Pr6O11 Nd2O3+Pr6O11
as % of TREO
Yangibana 0.10 0.78 0.39 50
------------------- ---------- ------------------ ------------------
Yangibana North 1.76 1.39 0.37 26
------------------- ---------- ------------------ ------------------
TOTAL 1.86 1.36 0.37 28
------------------- ---------- ------------------ ------------------
Hastings also reported in June an update to their economic model
a reported the following financial evaluation results: No costs or
revenue ascribed to the 30% interest in the deposits held by Mojito
Resources are reported in the financial modelling.
Operating Life 13.0 years
Net Present Value (NPV) A$549 million
--------------
Internal Rate of Return
(IRR) 21.1%
--------------
Payback Period 3.4 years
--------------
The economic model assumes Cadence will participate in the
development and mining of the deposits held 70% by Hastings in a
joint venture with our subsidiary Mojito Resources (30%) under the
'Yangibana Joint Venture Agreement'. As set out in the "Probable
ore reserves table" above, the specific deposits to which the joint
venture applies are Yangibana and Yangibana North.
Assuming there is a development of the mine by the joint
venture, not only will there need to be a Mining Joint Venture
Agreement agreed and put in place to replace the existing joint
venture documentation and regulate the arrangements between the
participants for the mine development, but arrangements will also
need to be established to determine how the Yangibana production
and tenements (the subject of the joint venture) fit with the
broader 100% Hastings group-owned production and tenements.
European Metals Holdings Limited ("European Metals")
Public Equity (Active)
Cadence has held an investment in European Metals since June
2015. As of year-end, Cadence held 12.97% in the Cinovec deposit in
the Czech Republic through a direct holding in the share capital of
European Metals that owns 100% 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 had been declared to cover the first 20 years
mining at an output of 22,500tpa of lithium carbonate reported 11
July 2018.
Our exposure in our equity portfolio is heavily concentrated in
European Metals, and therefore given European Metals volatility
means Cadence is exposed to significant risk; as such and given the
significant returns from European Metals we saw in 2020, we reduced
our exposure from circa 19% to 12.97%. Subsequent to the year-end,
we further reduced our stake in European Metals to 9.99% as of 28
May 2021.
As of 25 June 2021, the total return on this investment is 400%.
The realised return is 204%, and the unrealised return is 527%.
Summary of Activities
The Project has been significantly de-risked and, at the time of
this report, is moving towards a final investment decision. The
year was marked primarily by the completion of an agreement with
CEZ a.s., the Czech national power utility, by which CEZ became a
51% shareholder of the Project Company, Geomet and injected
approximately EUR 29 million into the Project.
This agreement not only provides all necessary funding to move
the Project to the final investment decision, but it also provides
strong business and management support within 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.
The automotive industry in Czech is a significant contributor to
GDP, and the number of EV's in the country is expected to grow
significantly in coming years. In addition to the partnership with
CEZ, European Metals announced, post balance date, a partnership
agreement with EIT InnoEnergy - a European Union body that is the
principal facilitator and organiser of the European Battery
Alliance (EBA). The EBA was initiated by the European Commission to
create a competitive and sustainable battery cell manufacturing
value chain in Europe.
The purpose of the partnership agreement with EIT InnoEnergy is
to facilitate the accelerated construction financing and ultimate
commercialisation of Cinovec. This will be achieved through
assistance in the sourcing of construction finance, grant funding,
and offtake introductions and negotiations.
The deposit is uniquely located, being in the centre of the
Czech and European car industry and proximal to a large number of
new and planned battery factories. Europe has recently overtaken
China as the largest producer of Electric Vehicles globally, and
the EC has released an action plan on critical raw materials to
ensure a more secure and sustainable supply.
The Project Company appointed SMS group, a German-based
world-leading engineering firm, as the lead engineer for the
minerals processing and lithium battery-grade chemicals production
at Cinovec. This marks the beginning of the formal Front-End
Engineering Design study as the major component of the ongoing
Definitive Feasibility Study. This detailed engineering contract,
along with advances in permitting and offtake discussions, moves us
closer to the development of Europe's largest hard rock lithium
resource for the benefit of all stakeholders.
Trading Portfolio
Public Equity (Passive)
Cadence's passive investments are typically direct purchases of
listed mining equities but may include other investment structures.
The aim is to make capital gains in the short to medium term.
Investments are considered individually based on a variety of
criteria. Investments are typically traded on the TSX, ASX, AIM or
LSE.
During the year, we reduced our exposure to Macarthur Minerals
Limited ("Macarthur") from 7.1% to approximately 1%. We reduced our
exposure to Macarthur as we believe that we can deliver more value
to our shareholders by investing the Amapa Project, which is in the
same commodity, and we have an active stake in the development of
the asset. The realised loss on disposal was GBP190,000.
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 it's 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. 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.
In addition to Macarthur, during the year, we disposed of our
stake in Rarex Limited (formerly Clancy Resources), realising a
loss of GBP22,000.
Financial Review
Total comprehensive profit for the year attributable to equity
holders was GBP7.82m loss (2019 restated: loss of GBP1.94m). This
increase in profitability from the previous year of approximately
GBP9.76m is due to the movement in realised and unrealised profits
and losses of approximately GBP10.32m relating to our share
investment portfolio (available for resale assets) held during the
period. Administrative expenses were down GBP0.41m from GBP1.85m to
GBP1.44m, but foreign exchange losses were up GBP0.71m from
GBP0.12m to GBP0.82m.
Diluted profit per share was 6.609p (2019: loss of 2.382p).
The net assets of the Group at the end of the period was
GBP22.09 million (2019: GBP10.99 million). This increase of
approximately GBP11.1m reflects the profits and shares issued in
the year.
Restatement of Accounts
Cadence Minerals Plc is an investment entity, and its interests
are held exclusively with a view to subsequent resale. Historically
the Company adopted a consolidation policy that didn't reflect the
nature, purpose and cashflows of the entity. This policy has been
amended, and the prior years have been restated in recognition of
the change in accounting policy in line with IAS 8. Further details
are disclosed in Note 20.
All investments have been reclassified as Financial Assets held
at Fair Value through Profit and Loss ("FVPTL").
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 .
The main business risk is considered to be investment risk.
The Company faces external risks that can materially impact or
influence the investment environment within which the Company
operates and can include changes in commodity prices, and the
numerous factors which can influence those changes, including
economic recession and investor sentiment and including the current
and potential effects of the coronavirus pandemic.
Commodity prices have an impact on the investment performance
and prospects of all our investments. The extent of the impact
varies depending on a wide variety of factors but depend largely by
where the investment sits on the mineral development curve. The
majority of Cadences investments sit at the more advanced stage of
the development curve. Commodity price risk is pervasive at all
stages of the development curve, but other prominent risks such as
exploration risk and technical and funding risks at the
exploration/development stage, may be considered to be weighted
higher earlier in the curve than pure commodity risk which tends to
have a greater impact on producers.
The Company's investments are located in jurisdictions other
than the UK and therefore carries with it country risk,
regulatory/permitting risk, political risk and environmental risk.
Our investments can be at different stages of development and each
stage within the mining exploration and development cycle can carry
its own risks.
Where possible Cadence seek to mitigate these risks by
structuring its investments in a format which the Board can
influence, obtain high level oversight (often at board level) and
use legal agreements to provide control mechanisms (often negative
control) to protect the Company's investments. In addition, we seek
to further mitigate our risk exposure by obtaining a deep
fundamental understanding of an asset, its potential economics,
operating and legal environment and its management team, prior to
investment.
It should be noted that because the Company does not operate its
project investments on a day-to-day basis there is a risk that the
operator does not meet deadlines or budgets, fails to propose or
pursue the appropriate strategy, does not adhere to the legal
agreements in place or does not provide accurate or sufficient
information to Cadence.
The Equity Investment segment of the Company's investments is
exposed to price risk within the market, interest rate changes,
liquidity risk and volatility. Although the investment risk within
the portfolio is dependent on many factors, the Group's principal
investments at the year-end are in companies with significant iron
ore and lithium assets and, to some extent, dependent on the
market's view of these commodities or chemicals and/or the market's
view of the management of the companies in managing those assets.
As with our private investment, the Board seeks to mitigate this by
obtaining a deep fundamental understanding of an asset, its
potential economics, operating and legal environment and its
management team, prior to investment.
All countries carry political risk that can lead to interruption
of activity. Politically stable countries can have enhanced
environmental and social risks, risks of strikes and changes to
taxation, whereas less developed countries can have, in addition,
risks associated with changes to the legal framework, civil unrest
and government expropriation of assets. The Company has working
knowledge of the countries in which the joint venture holds
exploration licences and its local joint venture partner has
experienced local operators to assist the Company in its management
of its investment in order to help reduce possible political
risk.
Directors' Section 172 Statement
The following disclosure describes how the Directors have had
regard to the matters set out in section 172(1)(a) to (f) and forms
the Directors' statement required under section 414CZA of The
Companies Act 2006. This new reporting requirement is made in
accordance with the new corporate governance requirements
identified in The Companies (Miscellaneous Reporting) Regulations
2018, which apply to company reporting on financial years starting
on or after 1 January 2019.
The matters set out in section 172(1) (a) to (f) are that a
Director must act in the way they consider, in good faith, would be
most likely to promote the success of the Company for the benefit
of its members as a whole, and in doing so have regard (amongst
other matters) to:
-- the likely consequences of any decisions in the long-term;
-- the interests of the Company's employees;
-- the need to foster the Company's business relationships with suppliers/customers and others;
-- the impact of the Company's operations on the community and environment;
-- the Company's reputation for high standards of business conduct; and
-- the need to act fairly between members of the Company
As set out above in the Strategic Report the Board remains
focused on providing for shareholders through the long term success
of the Company. The means by which this is achieved is set out
further below.
Likely consequences of any decisions in the long-term;
The Chairman's Statement, the Chief Executive Officer's
Commentary and the Strategic Review set out the Company's strategy.
In applying this strategy, particularly in seeking new Project
Investments and strategic holdings in other public companies the
Board assesses the long term future of those companies with a view
to shareholder return. The approach to general strategy and risk
management strategy of the group is set out in the Statement of
Compliance with the Quoted Companies Alliance ("QCA") Corporate
Governance Code (the "QCA Code") (Principles 1 and 4) on pages
22-23.
Interest of Employees;
The Group has a very limited number of employees and all have
direct access to the Executive Directors on a daily basis and to
the Chairman, if necessary. The Group has a formal Employees'
Policy manual which includes process for confidential report and
whistleblowing.
Need to foster the Company's business relationships with
suppliers/customers and others;
The nature of the Group's business is such that the majority of
its business relationships are with joint venture partners, the
boards of directors of the companies in which the Group has
strategic stakes to the extent that such relationships are
permitted, and with suppliers for services. As the success of the
business primarily depends on its relationship with its partners
and investees, the Executive Directors manage these relationships
on a day-to-day basis. Where possible, the Group will take a board,
or similar appointment, in strategic investees to ensure that there
is a close and successful ongoing dialog between the parties.
Service providers are paid within their payment terms and the Group
aims to keep payment periods under 30 days wherever practical.
Impact of the Company's operations on the community and
environment;
The Group takes its responsibility within the community and
wider environment seriously. Its approach to its social
responsibilities is set out in the Statement of Compliance with the
QCA Code (Principle 3) on page 23.
The desirability of the Company maintaining a reputation for
high standards of business conduct;
The Directors are committed to high standards of business
conduct and governance and have adopted the QCA Code which is set
out on pages 22 to 29. Where there is a need to seek advice on
particular issues, the Board will consult with its lawyers and
nominated advisors to ensure that its reputation for good business
conduct is maintained.
The need to act fairly between members of the Company;
The Board's approach to shareholder communication is set out in
the Statement of Compliance with the (Principle 2) on page 22. The
Company aims to keep shareholders fully informed of significant
developments in the Group's progress. Information is disseminated
through Stock Exchange announcements, website updates and, where
appropriate video/web casts. During 2020 the Company issued various
RNS and videos to update shareholders. All information is made
available to all shareholders at the same time and no individual
shareholder, or group of shareholders, is given preferential
treatment.
The Directors present their annual report together with the
audited financial statements of the Company for the Year Ended 31
December 2020.
Principal activity
The principal activity of the Company is that of holding assets
involved in the identification, investment and development of
mineral resources.
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 and Future Development
The results of the Company are shown on page 39.
Results and Dividends The Directors do not recommend the payment
of a dividend. A review of the performance of the Company and its
future prospects is included in the Strategic Report on pages 1 to
17.
Key Performance Indicators
Due to the current status of the Company, the Board has not
identified any performance indicators as key other than cash
management and the carrying value of investments. Having sufficient
cash for business operations is vital and must be managed
accordingly. The Directors review and manage the Group's cash flow
on a monthly basis. The financial strategy is to ensure that,
wherever possible, there are sufficient funds to cover corporate
overheads and exploration expenditure for as long a period as
possible. Management has confidence that financing of the Company
can continue as and when required, albeit the board is keen to
avoid excessive dilution and will manage the financing process with
that objective in mind. Further details on the investments are
included in the Chairman's statement.
Furthermore, the Company has ensured that where possible it has
built operational flexibility in its corporate and exploration
expenditure to be paused should the financing environment prove
difficult and cash preservation prove essential
Principal risks and uncertainties
The principal risks and uncertainties facing the Company involve
are specified on pages 14 to 15.
Financial risk management objectives and policies
The Company'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 Company's operations.
It is, and has been throughout the period under review, the
Company's policy that no trading in financial instruments shall be
undertaken. The main risks arising from the Company'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 Company'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 15
to the financial statements.
Interest rate risk
The Company only has borrowings at fixed coupon rates and
therefore minimal interest rate risk, as this is deemed its only
material exposure thereto. The Company seeks the highest rate of
interest receivable on its cash deposits whilst minimising
risk.
Market risk
The Company is subject to market risk in relation to its
investments in listed Companies held as available for sale
assets.
Directors
The membership of the Board is set out below. All directors
served throughout the period unless otherwise stated.
Andrew Suckling
Kiran Morzaria
Donald 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 2020 were as
follows:
Ordinary shares Percentage
held Number of capital
%
Hargreaves Lansdown (Nominees) Limited Des:15942 14,918,452 10.08%
---------------- ------------
Barclays Direct Investing Nominees Limited
Des:CLIENT1 11,934,976 8.07%
---------------- ------------
JIM Nominees Limited Des:JARVIS 9,835,675 6.65%
---------------- ------------
Interactive Investor Services Nominees Limited
Des:SMKTISAS 9,252,265 6.25%
---------------- ------------
Hargreaves Lansdown (Nominees) Limited Des:VRA 8,578,606 5.80%
---------------- ------------
Interactive Investor Services Nominees Limited
Des:SMKTNOMS 8,243,988 5.57%
---------------- ------------
Forest Nominees Limited Des:DIVWAIV 7,020,000 4.74%
---------------- ------------
HSDL Nominees Limited Des:MAXI 6,682,881 4.52%
---------------- ------------
Hargreaves Lansdown (Nominees) Limited Des:HLNOM 6,339,761 4.29%
---------------- ------------
HSBC Global Custody Nominee (UK) Limited
Des:941346 4,812,417 3.25%
---------------- ------------
Payment to suppliers
It is the Company'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 Company 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 18 to the
Financial Statements.
Going concern
The Directors have prepared cash flow forecasts for the period
ending 30 June 2022 which take account of the current cost and
operational structure of the Company.
The cost structure of the Company 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
Company to operate within its available funding.
These forecasts demonstrate that the Company 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.
In the current business climate, the Board acknowledges the
COVID-19 pandemic risk and continues to monitor the need to
implement any changes to underpin the Group's resilience to
COVID-19, with the key focus being on protecting all personnel,
minimising the impact on critical workstreams and ensuring business
continuity.
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 Company 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 Company 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 Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company 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 Company 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 Company'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 resigned as auditors and PKF Littlejohn LLP
were appointed in their place. PKF Littlejohn 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
Chief Executive Officer, 29 June 2021
Introduction 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.
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.
1. Establish a strategy and business model which promote long-term value for shareholders
Our strategy is to identify undervalued assets with
irreplaceable strategic advantages that will deliver capital growth
to our shareholders. We invest in these assets and where required
help deliver capital growth. To meet long-term demand, we believe
the metals and mining sectors require focused investment capital
from knowledgeable investors that understand the substantial risk
of the mineral resource sector and how to mitigate these risks to
maximise potential returns for our investors.
A more detailed description of its Strategy and Business Model
is available on page 1. Details on the principal risks and
uncertainties which the Company faces are specified on pages 14 to
15. The Company 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
2. Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining an open dialogue with
shareholders. Communication with The Board is committed to
maintaining an open dialogue with shareholders. Communication with
shareholders is coordinated by the CEO. Cadence encourages two-way
communication with institutional and private investors. The
Company's major shareholders maintain an active dialogue and ensure
that their views are communicated fully to the Board. Where voting
decisions are not in line with the Company's expectations the Board
will engage with those shareholders to understand and address any
issues. The Company Secretary is the main point of contact for such
matters.
The Company seeks out appropriate platforms to communicate to a
broad audience its current activities, strategic goals and broad
view of the sector and other related issues. This includes but is
not limited to media interviews, website videos in -person investor
presentations and written content. Communication to all
stakeholders is the direct responsibility of the Senior Management
team. Managers work directly with professionals to ensure all
inquiries (through established channels for this specific purpose
such as email or phone) are addressed in a timely matter. Managers
also ensure that the Company communicates with clarity on its
proprietary internet platforms. The Board routinely reviews the
Company communication policy and programmes to ensure the quality
communication with all stakeholders.
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 Company's position and
prospects. All reports and press releases are published under the
"Investors" tab of the Company's website.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term success
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 and webcasts on a regular basis, at which
feedback from shareholders is sought. Regular dialogue is
maintained with employees through regular discussion and updates
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.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board has an established Audit Committee, a summary of its
roles and 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.
5. Maintain the Board as a well-functioning, balanced team led by the chair
The Board is comprised of Andrew Suckling the Non-Executive
Chairman, a Non-Executive Director and two Executive Directors. The
CEO, Kiran Morzaria, is engaged to work a minimum of a 27-hour week
and is an employee of the Company. The Finance Director Donald
Strang, is engaged to work a minimum of a 27-hour 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 5 working days per
month and the Non-Executive Director 3 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.
5. Maintain the board as a well-functioning, balanced team led by the chair
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 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. An
Audit Committee and a Remuneration Committee support the Board.
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 8 of 13
Adrian Fairbourn 8 of 13
Kiran Morzaria 13 of 13
Donald Strang 13 of 13
6. Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
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 page
27 and the website.
7. Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
On the 28 September 2018, the Company 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, 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.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company 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
-- Code of conduct
-- Whistleblowing policy
-- Health and safety policy
-- Email and internet policy
-- Social media policy
The Company has an anti-bribery policy and has implemented
adequate procedures described by the Bribery Act 2010. The Company
reports on its compliance to the Board on an annual basis. The
Company has undertaken a review of its requirements under the
General Data Protection Regulation, implementing appropriate
policies, procedures and training to ensure it is compliant.
9. Communicate how the company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
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 our 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.
Currently there is no 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.
10. Maintain governance structures and processes that are fit
for purpose and support good decision-making by the board
Details of the Company's corporate governance arrangements are
provided within this Corporate Governance section Details of the
Company's corporate governance arrangements are provided within
this Corporate Governance section the Annual Report and Accounts.
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 GBP200,000;
-- 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.
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.
Board Members
The Board comprises of a Non-Executive Chairman, one
Non-Executive Director and two Executive Directors.
Andrew Suckling, Non-Executive Chairman
Andrew has over 25 years' experience in the commodity industry.
He began in 1994 as a trader on the London Metal Exchange and
subsequently became a founding partner, research analyst and trader
with the multi-billion fund management group Ospraie. Andrew is a
graduate of Brasenose College, Oxford University, earning a BA
(Hons) in Modern History in 1993 and an MA in Modern History in
2000. Andrew is the chair of the Audit and Remuneration
Committee
Kiran Morzaria, Chief Executive Officer
Kiran holds a B.Eng. from the Camborne School of Mines and an
MBA (Finance). He has over 20 years' experience in the mineral
resource industry, working in both operational and management
roles. The first four years of his career were spent in
exploration, mining and civil engineering, after which he was
involved in the acquisition, recommissioning and eventual sale of
the Vatukoula Gold Mine
Donald Strang, Finance Director
Donald is a member of the Australian Institute of Chartered
Accountants and has been in business for over 20 years, holding
senior financial and management positions in both publicly listed
and private enterprises in Australia, Europe and Africa. He has
considerable corporate and international expertise, and over the
past decade, has focused on mining and exploration activities. He
is an Executive Director of Gunsynd plc.
Adrian Fairbourn, Non-Executive Director
Adrian began his career as an investment analyst before moving
to build and manage the highly successful alternative fund-of-funds
operation at the Bank of Bermuda. Adrian has co-managed a
multi-family office in London, responsible for hedge fund
investments, direct investments and also asset-raising for
co-investment opportunities. He has successfully assisted in over
$US1 billion of structuring, capital and fundraising projects for
private companies and alternative funds. Adrian is a member of the
Audit and Remuneration Committee
The Board is responsible for formulating, reviewing and
approving the Company's strategy, financial activities and
operating performance. Day-to-day management is devolved to the
Executive Directors, who are charged with consulting the Board on
all significant financial and operational matters. The Board
retains ultimate accountability for governance and is responsible
for monitoring the activities of the executive team.
The roles of Chairman and Chief Executive Officer are split in
accordance with best practice. The Chairman has the responsibility
of ensuring that the Board discharges its responsibilities. The
Chairman is responsible for the leadership and effective working of
the Board, for setting the Board agenda, and ensuring that
Directors receive accurate, timely and clear information. No one
individual has unfettered powers of decision.
The two Executive Directors are comprised of a Chief Executive
Officer ("CEO") and Finance Director. The CEO has the overall
responsibility for creating, planning, implementing, and
integrating the strategic direction of the Company. This includes
responsibility for all components and departments of a business.
The CEO to ensures that the organisation's leadership maintains
constant awareness of both the external and internal competitive
landscape, opportunities for expansion, customer base, markets, new
industry developments and standards.
The non-executive directors are not considered independent under
the Financial Reporting Council's Corporate Governance Code (April
2016) ("FRC Code") as they both have options in the Company.
However, the Board considers that both non-executives are
independent of management under all other measures and able to
exercise independence of judgement.
The Committees
Audit Committee
The Audit Committee consists of two non-executive members of the
board and meet at least twice a year.
The principal duties and responsibilities of the Audit Committee
include:
-- Overseeing the Company's financial reporting disclosure
process; this includes the choice of appropriate accounting
policies
-- Monitor the Company's internal financial controls and assess their adequacy
-- Review key estimates, judgements and assumptions applied by
management in preparing published financial statements
-- Assess annually the auditor's independence and objectivity
-- Make recommendations in relation to the appointment,
re-appointment and removal of the company's external auditor
Remuneration Committee
The Remuneration Committee consists of two non-executive members
of the board and meet at least once a year.
The principal duties and responsibilities of the Remuneration
Committee include:
-- Setting the remuneration policy for all Executive Directors
-- Recommending and monitoring the level and structure of remuneration for senior management
-- Approving the design of, and determining targets for,
performance related pay schemes operated by the company and approve
the total annual payments made under such schemes
-- Reviewing the design of all share incentive plans for
approval by the Board and shareholders
-- None of the Committee members have any personal financial
interest (other than as shareholders and option holders), conflicts
of interest arising from cross-directorships or day-to-day
involvement in the running of the business. No director plays a
part in any financial decision about his or her own
remuneration.
Principle and Approach of the Board
Cadence is committed to achieve and maintain high standards of
governance. As such, the Board has chosen to adopt the Quoted
Companies Alliance Corporate Governance Code for Small and Mid-Size
Quoted Companies 2018 ("the QCA Code"). Detailed below is how the
Board applies the 10 principles of Corporate Governance, which form
part of the QCA code.
Internal Controls
The Directors acknowledge their responsibility for the Company'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
-- environmental requirements
-- commodity price, interest rate, liquidity and volatility risks
-- political and country risks where appropriate.
Insurance
The Company maintains insurance in respect of its Directors and
Officers against liabilities in relation to the Company.
Treasury Policy
The Company finances its operations through equity and holds its
cash as a liquid resource to fund the obligations of the Company.
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.
On behalf of the Board, I am pleased to present the Directors'
Remuneration Report summarising the Company's remuneration policy
and providing information on the Company's remuneration approach
and arrangements for Executive Directors, Non-Executive Directors
and Senior Executive Management for the year ended 31 December
2020.
This report is prepared in accordance with the QCA Remuneration
Committee Guide for small and mid-sized quoted companies, revised
in 2020. A summary of the Remuneration Committee's role, membership
and relevant qualifications can be found in the corporate
governance section
Remuneration Committee meetings are held at least twice a year
with the primary focus of setting goals for the coming period and
then assessing results at the end of that period. During the year,
the Remuneration Committee met twice times and;
-- Benchmarked the Boards Remuneration, both fixed and variable
and as a whole, and compared it to AIM-listed companies of a
similar market capitalisation.
-- Reviewed the above comparisons and establish short, medium
and long-term incentive schemes, which it then recommended to the
Board for approval,
-- Reviewed the performance of the Board against targets and
awarded incentives covering the reporting period.
The Board recognises that Directors' remuneration is of
legitimate concern to the shareholders. The Company 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 Company'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
Company's objectives.
Salary and Fees,
Benchmarking data indicates that at the time of the review, for
Salary and Fees, Cadence is slightly above the lower quartile of
companies of a market capitalisation of between GBP20 million and
GBP50 million on the AIM market. During this review, the
Remuneration Committee recommended not material changes to the
remuneration of its members.
Bonuses
During the review by the Remuneration Committee and the
benchmarking exercise, Cadence was found that by not have a
sufficient variable component as part of its remuneration policy,
it was not in line with comparable companies. Therefore it was
recommended that Cadence should put in place a short term incentive
based on specific operational achievements of the Company's
investments. This achievement was met during the period, and the
bonuses were recommended for approval and paid during the
period.
A condition of the award of these cash bonuses was that once the
board was in an open period that the net amount received should be
used to acquire shares in the Company, which was done by all board
members. The bonuses paid in the year ended 31 December are shown
below. In Year ended 31 December 2019, no bonuses were paid.
Share Awards (Share Incentive Plan)
To incentive the Board on a medium-term basis, the Remuneration
Committee recommended that the Board could be awarded up to 240,000
Ordinary Shares each in the employee benefit trust. The award of
these shares from the employee benefit trust is conditional on
meeting performance and vesting conditions in line with market
practice. During the period, one of these targets was achieved,
entitling each director to be awarded 80,000 shares (net of tax)
from the employee benefit trust. The shares were not awarded during
the period, however as the award had vested, the costs associated
with this was accrued during the year.
Pensions
The Company only operates a basic pension scheme for its
directors and employees as required by UK legislation. The Company
made the following pension contributions in the year: K Morzaria
GBP1,424 (2019: GBPNil) and D Strang GBP219 (2019: GBPNil).
Benefits in kind
No benefits in kind were paid during the year to 31 December
2020 or the year ended 31 December 2019.
Notice periods
Andrew Suckling, Kiran Morzaria, Donald Strang and Adrian
Fairbourn each have a 12 month rolling notice period.
Share option incentives
At 31 December 2020 no options were held by the Directors.
The remuneration of the Directors was as follows:
A Fairbourn A Suckling K Morzaria D Strang Total
GBP GBP GBP GBP GBP
Year to 31 December
2020
Salary and fees 48,000 99,333 120,000 116,000 383,333
Bonus 30,000 30,000 60,000 60,000 180,000
Cost of shares
awarded (2) 9,600 9,600 18,113 18,113 55,426
Total 87,600 138,933 198,113 194,113 618,759
============ =========== =========== ========== ==========
Year to 31 December
2019
Salary and fees 48,000 100,000 150,000 120,000 418,000
Share based payments
(1) 142 327 327 327 1,123
Total 48,142 100,327 150,327 120,327 419,123
============ =========== =========== ========== ==========
(1) 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.
(2) The cost of shares awarded represents the value of the
shares awarded to the Directors for milestones reached.
At 31 December 2020 the following amounts were outstanding in
fees to directors; GBPNil (2019: GBP66,919).
The high and low share price for the year were 16.5p and 3p
respectively (year ended 31 December 2019: 38p and 6.625p). The
share price at 31 December 2020 was 14.5p (31 December 2019:
6.75p).
Andrew Suckling
Non-Executive Chairman, 29 June 2021
Opinion
We have audited the financial statements of Cadence Minerals Plc
(the 'company') for the year ended 31 December 2020 which comprise:
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and
international accounting standards in conformity with the
requirements of the Companies Act 2006.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2020 and of the company's profit for the
year then ended;
-- have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006; and
-- 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 company
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 as applied to listed entities, 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
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the company's ability to
continue to adopt the going concern basis of accounting
included:
-- Reviewing the cash flow forecasts prepared by management for
the period up to June 2022, providing challenge to key assumptions
and reviewing for reasonableness;
-- A comparison of actual results for the year to past budgets
to assess the forecasting ability/accuracy of management;
-- Reviewing post-year end RNS announcements and held
discussions with management on expenditure plans, as well as the
potential consequences of not meeting minimum spend requirements on
the licenses during 2021; and
-- Assessing the adequacy of going concern disclosures within the Annual Report and Accounts
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. At the planning stage, materiality is used to
determine the financial statement areas that are included within
the scope of our audit and the extent of sample sizes during the
audit.
We determined our overall financial statement materiality to be
GBP330,000, based on 1.5% of net assets. We consider net assets to
be the most significant determinant of the company's financial
position and performance used by shareholders, with the key
financial statement balances being investments and cash and cash
equivalents. The going concern of the company is dependent on its
ability to fund operations going forward, as well as on the
valuation of its assets, which represent the underlying value of
the company.
We set performance materiality at 70% of overall financial
statement materiality to reflect the risk associated with the
judgemental and key areas of management estimation within the
financial statements.
We agreed with the board of directors that we would report to
the committee all audit differences identified during the course of
our audit in excess of GBP16,500.
No significant changes have come to light through the audit
fieldwork which has caused us to revise our materiality figure.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risk of material misstatement in the financial statements. In
particular, we looked at areas requiring the directors to make
subjective judgements, for example in respect of assessing the
carrying value and recoverability of investments, and the
consideration of future events that are inherently uncertain. We
also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias
by the directors that represented a risk of material misstatement
due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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) we identified, including 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.
Key Audit Matter How our scope addressed this matter
======================================== ========================================================================
Carrying value of Financial
Assets (Refer note 6)
========================================================================
The Company held investments Our work in this area included:
with a value of GBP16.6m as
at 31 December 2020. These are * Reviewing the valuation methodology for the
valued in accordance with IFRS investments held and ensuring that the carrying
13 and the fair value hierarchy; values are supported by sufficient and appropriate
and classified as per IFRS 9. audit evidence;
There is the risk that these
investments have not been valued
in accordance with IFRS 13 and * Ensuring that all asset types are categorised
IFRS 9 and require impairment. according to IFRS, including the accounting
disclosures as required under IFRS 9;
* Reviewing the movement in investments to ensure they
are accounted for and disclosed correctly in line
with IFRS 9;
* Reviewing disclosures in relation to said assets;
* Ensuring that Cadence Minerals Plc has full title to
the investments held;
* Ensuring that appropriate disclosures surrounding the
estimates made in respect of any valuations are
included in the financial statements; and
* Considering whether the transactions have been
accounted for correctly within the financial
statements.
A prior year restatement in respect
of the classification of the investments
held, was reflected within the financial
statements as the Company is an investment
entity and their investments should
be recorded as financial assets instead
of investments in associates or joint
ventures.
In addition, the Company's subsidiaries
are also investment vehicles and because
the Company itself is an investment
vehicle, they are exempt from consolidation
under IFRS 10 and the Directors have
taken this exemption.
Further details of the prior year
adjustment are in note 20.
Based on the work performed, we are
satisfied that the carrying value
of financial investments is materially
correct and adequately disclosed.
========================================================================
Carrying value and classification
of loans receivable. (Refer
note 7)
========================================================================
There is a risk that the loan Our work in this area included:
amount is not recoverable given
that no repayments were made * Obtaining and reviewing the loan agreement to
by the debtor for the loan outstanding ascertain the key terms of the loan agreement;
since prior year and in addition
to the existing loan another
loan was extended. * Ensuring that the loan has been classified and
There is also a risk that the disclosed correctly in accordance with IFRS 9;
loan has not been accounted
for in accordance with IFRS
9. * Discussing with Management to ascertain their
justification for no IFRS 9 ECL charge being
recognised in the year. Challenge management's key
assumptions and consider whether the loan is fully
recoverable or whether an IFRS 9 ECL charge is
required; and
* Ensuring that the loan is correctly classified as
current or non-current in accordance with the payment
terms per the loan agreement.
Based on the work performed, we are
satisfied that the carrying value
and classification of loans receivable
is materially correct.
========================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. 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.
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 course of 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 this gives rise to a material misstatement in the financial
statements themselves. 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 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, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the 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 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 company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the company and the sector in
which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management, industry research and the application
of cumulative audit knowledge and experience of the sector.
-- We determined the principal laws and regulations relevant to
the company in this regard to be those arising from
o Aim rules;
o Companies Act 2006;
o GDPR;
o Employment Law;
o Health and Safety Law;
o Anti-Bribery Money Laundering Regulations; and
o QCA compliance
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the company with those laws and regulations. These procedures
included, but were not limited to:
o review of legal and professional fees to understand the nature
of the costs and the existence of any non-compliance with laws and
regulations;
o discussion with management regarding potential non-compliance;
and
o review of minutes of meetings of those charged with governance
and RNS
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, the potential for management bias
was identified in relation to the going concern of the company and
as noted above, we addressed this by challenging the assumptions
and judgements made by management when auditing that significant
accounting estimate.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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.
Zahir Khaki (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn Canary Wharf
LLP
Statutory Auditor London E14 4HD
29 June 2021
STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
Note 31 December 31 December
2020 2019 (restated)
GBP'000 GBP'000
Income
Unrealised profit on financial investments 6 10,252 230
Realised profit/(loss) on financial
investments 6 65 (91)
Other income 1 54 10
------------ -----------------
10,371 149
Share based payments (57) (1)
Impairment of financial assets 6 - (129)
Other administrative expenses (1,379) (1,716)
------------ -----------------
Total administrative expenses (1,436) (1,846)
Operating profit/(loss) 1 8,935 (1,697)
Finance income 6
Finance cost 3 (298) (381)
Foreign exchange losses (820) 140
Profit/(loss) before taxation 7,823 (1,938)
Taxation 4 - -
Profit/(loss) attributable to the
equity holders of the Company 7,823 (1,938)
------------ -----------------
Total comprehensive profit/(loss)
for the year, attributable to the
equity holders of the company 7,823 (1,938)
============ =================
Earnings per ordinary share
Basic earnings per share (pence) 5 6.705 (2.171)
============ =================
Diluted earnings per share (pence) 5 6.609 n/a
============ =================
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
STATEMENT OF FINANCIAL POSITITON
31 December 31 December 31 December
2020 2019 (restated) 2018 (restated)
ASSETS Note GBP'000 GBP'000
Non-current
Financial Assets 6 2,885 2,240 1,231
2,885 2,240 1,231
------------ ----------------- -----------------
Current
Trade and other receivables 7 5,365 6,144 4,515
Financial Assets 6 13,761 5,446 7,564
Cash and cash equivalents 596 481 468
Total current assets 19,722 12,071 12,547
Total assets 22,607 14,311 13,778
------------ ----------------- -----------------
LIABILITIES
Current
Trade and other payables 8 295 343 223
Borrowings 9 219 2,982 3,706
Total current liabilities 514 3,325 3,929
------------ ----------------- -----------------
Total liabilities 514 3,325 3,929
------------ ----------------- -----------------
EQUITY
Issued share capital 10 1,896 1,471 1,202
Share premium 33,159 30,357 27,552
Share based payment reserve 39 1,383 1,392
Retained earnings (13,001) (22,225) (20,297)
Equity attributable 22,093 10,986 9,849
to equity holders of the
Company
Total equity and liabilities 22,607 14,311 13,778
============ ================= =================
The financial statements were approved by the Board on 29 June
2021, and signed on their behalf by;
Kiran Morzaria Donald Strang
Director Director
Company number 05234262
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
Share Share Share Equity Retained Total
capital premium based loan earnings equity
payment reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December
2017 (restated) 1,202 27,552 3,178 412 (4,643) 27,701
Share based payments 7 7
Transfer on lapse
of warrants - - (1,793) - 1,793 -
On settlement of
loan notes - - - (412) - (412)
Transactions with
owners - - (1,786) (412) 1,793 (405)
--------- --------- --------- --------- ---------- ---------
Loss for the period - - - - (17,447) (17,447)
--------- ---------- ---------
Total comprehensive
loss for the period - - - - (17,447) (17,447)
--------- --------- --------- --------- ---------- ---------
Balance at 31 December
2018 (restated) 1,202 27,552 1,392 - (20,297) 9,849
========= ========= ========= ========= ========== =========
Share based payments - - 1 - - 1
Warrants issued - - (10) - 10 -
Share issue 269 3,031 - - - 3,300
Share issue costs - (226) - - - (226)
Transactions with
owners 269 2,805 (9) - 10 3,075
--------- --------- --------- --------- ---------- ---------
Loss for the period - - - - (1,938) (1,938)
Total comprehensive
loss for the period - - - - (1,938) (1,938)
--------- --------- --------- --------- ---------- ---------
Balance at 31 December
2019 (restated) 1,471 30,357 1,383 - (22,225) 10,986
========= ========= ========= ========= ========== =========
Share based payments - - 57 - - 57
Transfer on lapse
of warrants - - (1,369) - 1,369 -
Transfer on exercise
of warrants - - (32) - 32 -
Share issue 425 2,993 - - - 3,418
Share issue costs (191) - - -
Transactions with
owners 425 2,802 (1,344) - 1,401 3,475
--------- --------- --------- --------- ---------- ---------
Profit for the period - - - - 7,823 7,823
--------- ---------- ---------
Total comprehensive
profit for the period - - - - 7,823 7,823
--------- --------- --------- --------- ---------- ---------
Balance at 31 December
2020 1,896 33,159 39 - (13,001) 22,093
========= ========= ========= ========= ========== =========
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
STATEMENT OF CASH FLOWS
Year ended Year ended Year ended
31 December 31 December 31 December
2020 2019 (restated) 2018 (restated)
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Continuing operations
Operating profit/(loss) 8,935 (1,697) (16,855)
(Profit)/loss on financial
investments (10,317) (139) 15,535
Impairment of intangible assets - 446 -
Equity settled share based
payments 57 1 7
Decrease/(increase) in trade
and other receivables 32 (1,946) 406
(Decrease)/increase in trade
and other payables (68) 118 (39)
Net cash outflow from operating
activities from continuing
operations (1,361) (3,217) (946)
------------ ----------------- -----------------
Cash flows from investing
activities
Receipts from investments
in associates - 160 (50)
Payments for non-current financial
investments (645) (738) (325)
Payments for investments in
current financial investments (50) - (523)
Receipts on sale of current
investments 2,052 2,097 1,755
Net cash inflow from investing
activities 1,357 1,519 857
------------ ----------------- -----------------
Cash flows from financing
activities
Proceeds from issue of share
capital 2,723 2,900 -
Share issue costs (191) (226) -
Net borrowings (2,120) (583) (1,101)
Net finance cost (292) (381) (377)
Net cash inflow/(outflow)
from financing activities 120 1,710 (1,478)
------------ ----------------- -----------------
Net change in cash and cash
equivalents 116 12 (1,567)
Foreign exchange movements
on cash and cash equivalents (1) 1 (2)
Cash and cash equivalents
at beginning of period 481 468 2,037
Cash and cash equivalents
at end of period 596 481 468
============ ================= =================
The accompanying principal accounting policies and notes form an
integral part of these financial statements.
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 AQUIS Growth Market as operated
by AQUIS Stock Exchange ("AQUIS").
The Financial Statements are for the year ended 31 December 2020
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 29 June 2021 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 (GBP) and all
values are rounded to the nearest thousand pounds (GBP'000) unless
otherwise stated.
Prior Year Restatement
Cadence Minerals Plc is an investment entity and its interests
are held exclusively with a view to subsequent resale. Historically
the Company adopted a consolidation policy which didn't reflect the
nature, purpose and cashflows of the entity. This policy has been
amended and the prior years have been restated in recognition of
the change in accounting policy in line with IAS 8.
All investments preciously wrongly classified have been
reclassified as Financial Assets held at Fair Value through Profit
and Loss ("FVPTL"). The prior year accounts have been restated as a
result. Additionally deposits have been reclassified from cash and
cash equivalent to other debtors as it is not considered to be
readily available. For details please see note 20.
Investing Policy
The Company's investing policy, which was approved at a General
Meeting on 29 November 2010, is to acquire a diverse portfolio of
direct and indirect interests in exploration and producing rare
earth minerals and/or other metals projects and assets ('Investing
Policy'). In light of the nature of the assets and projects that
will be the focus of the Investing Policy, the Company will
consider investment opportunities anywhere in the world.
The Directors have considerable investment experience, both in
structuring and executing deals and in raising funds. Further
details of the Directors' expertise are set out on the Company
website. The Directors will use this experience to identify and
investigate investment opportunities, and to negotiate
acquisitions. Wherever necessary, the Company will engage suitably
qualified technical personnel to carry out specialist due diligence
prior to making an acquisition or an investment. For the
acquisitions that they expect the Company to make, the Directors
may adopt earn-out structures with specific performance targets
being set for the sellers of the businesses acquired and with
suitable metrics applied.
The Company may invest by way of outright acquisition or by the
acquisition of assets - including the intellectual property - of a
relevant business, partnership or joint venture arrangement. Such
investments may result in the Company acquiring the whole or part
of a company or project (which, in the case of an investment in a
company, may be private or listed on a stock exchange, and which
may be pre-revenue), and such investments may constitute a minority
stake in the company or project in question. The Company's
investments may take the form of equity, joint venture, debt,
convertible documents, licence rights, or other financial
instruments such as the Directors deem appropriate.
The Company may be both an active and a passive investor
depending on the nature of the individual investments in its
portfolio. Although the Company intends to be a long-term investor,
the Directors will place no minimum or maximum limit on the length
of time that any investment may be held.
There is no limit on the number of projects into which the
Company may invest, or on the proportion of the Company's gross
assets that any investment may represent at any time, and the
Company will consider possible opportunities anywhere in the
world.
The Directors may offer new ordinary shares in the capital of
the Company by way of consideration as well as cash, thereby
helping to preserve the Company's cash for working capital and as a
reserve against unforeseen contingencies including, by way of
example and without limit, delays in collecting accounts
receivable, unexpected changes in the economic environment and
unforeseen operational problems. The Company may, in appropriate
circumstances, issue debt securities or otherwise borrow money to
complete an investment. There are no borrowing limits in the
Articles of Association of the Company. The Directors do not intend
to acquire any cross-holdings in other corporate entities that have
an interest in the ordinary shares.
Going Concern
The Directors have prepared cash flow forecasts for the period
ending 30 June 2022 which take account of the current cost and
operational structure of the Company.
The cost structure of the Company 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
Company to operate within its available funding.
These forecasts demonstrate that the Company 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
Company remains a going concern. At 31 December 2020 the Company
had cash and cash equivalents of GBP596,000, current financial
assets of GBP13,761,000 and borrowings of GBP219,000, which has
been repaid since the year end. The Company 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 I FRS
The Company's financial statements have been prepared under the
historical cost convention except for the measurement to fair value
of financial assets as described in the accounting policy below,
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 Company are set out below.
OTHER INCOME
Other income represents the total value, excluding VAT of
ad-income charged by the company to third parties for temporary use
of office facilities, which is outside the scope of IFRS 15 as this
income is not the Company's main form of income.
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 Company 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 Company's financial assets include cash, other receivables
and financial assets. Except for those trade receivables that do
not contain a significant financing component and are measured at
the transaction price in accordance with IFRS 15, all financial
assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective as
hedging instruments, are classified
into the following categories:
-- amortised cost
-- fair value through profit or loss (FVTPL)
-- fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any
financial assets categorised as FVOCI.
The classification is determined by both:
-- the entity's business model for managing the financial
asset
-- the contractual cash flow characteristics of the financial
asset.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Company'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 Company 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 Company
uses its historical experience, external indicators and
forward-looking information to calculate the expected credit losses
using a provision matrix.
FAIR VALUE MEASUREMENT
IFRS 13 establishes a single source of guidance for all fair
value measurements. IFRS 13 does not change when an entity is
required to use fair value, but rather provides guidance on how to
measure fair value under IFRS when fair value is required or
permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the
assessment of fair value under IFRS 13 has not materially changed
the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Company. It requires specific disclosures about
fair value measurements and disclosures of fair values, some of
which replace existing disclosure requirements in other
standards
Financial Investments
Non-derivative financial assets comprising the Company's
strategic financial investments in entities not qualifying as
subsidiaries, associates or jointly controlled entities. These
assets are classified as financial assets at fair value through
profit or loss. They are carried at fair value with changes in fair
value recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial
investment (which constitutes objective evidence of impairment),
the full amount of the impairment is recognised in the income
statement.
Due to the nature of these assets being unlisted investments or
held for the longer term, the investment period is likely to be
greater than 12 months and therefore these financial assets are
shown as non-current assets in the Statement of financial position.
Listed investments are valued at closing bid price on 31 December
2020. For measurement purposes, financial investments are
designated at fair value through income statement. Gains and losses
on the realisation of financial investments are recognised in the
income statement for the period. The difference between the market
value of financial instruments and book value to the Company is
shown as a gain or loss in the income statement for the period.
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 Company's
cash management.
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, as
adjusted for prior year adjustments, results as disclosed in the
income statement.
Operating Leases
The Company does not have any leases within the scope of IFRS 16
in the current year. In the prior year the Company had a short term
lease which subsequently expired.
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 Company.
In the individual financial statements of the consolidated
entities, foreign currency transactions are translated into the
functional currency of the individual entity using the exchange
rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities
denominated in foreign currencies at year-end exchange rates are
recognised in profit or loss.
In the consolidated financial statements, the financial
statements of subsidiaries, originally presented in a functional
currency, have been translated into Sterling. Assets and
liabilities have been translated into Sterling at the exchange
rates ruling at the balance sheet date. Profit and losses have been
translated at an average monthly rate for the period. Any
differences arising from this procedure are taken to the foreign
exchange reserve. Goodwill and fair value adjustments arising on
the acquisition of a foreign entity have been treated as assets and
liabilities to the foreign entity and translated into Sterling at
the closing rates.
Share Based Payments
The Company 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 Company's estimate of the shares that will
eventually vest.
Fair value is measured using the Black-Scholes model. The
expected life used in the model 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 Company's financial liabilities include trade and other
payables. Financial liabilities are obligations to pay cash or
other financial assets and are recognised when the Company 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.
Unlisted investments
The Company is required to make judgments over the carrying
value of investments in unquoted companies where fair values cannot
be readily established and evaluate the size of any impairment
required. It is important to recognise that the carrying value of
such investments cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being
realised immediately. Management's significant judgement in this
regard is that the value of their investment represents their cost
less previous impairment. Further details relating to management's
assessment of the carrying value of unlisted investments can be
found in the Chairman's Report.
Share-based payments
The Company 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 2020 of GBP57,000 (2019: GBP1,000) is
determined using a Black-Scholes Valuation model, using the
assumptions detailed in note 11.
Adoption of New or Amended IFRS
New standards, amendments and interpretations adopted by the
Company
The company has applied the following standards and amendments
for the first time for its annual reporting period commencing 1
January 2020:
-- Definition of Material - Amendments to IAS 1 and IAS 8;
-- Definition of a Business - Amendments to IFRS 3;
-- Interest Rate Benchmark Reform - Amendments to IFRS 9 , IAS 39 and IFRS 7;
-- Revised Conceptual Framework for Financial Reporting;
Adoption of New or Amended IFRS
-- Annual Improvements to IFRS Standards 2018-2020 Cycle; and
COVID-19 related rent concessions - amendments to IFRS 16
Other than the treatment of financial assets at fair value
through profit or loss in accordance with IFRS 9, the adoption of
the above has not had any material impact on the disclosures or
amounts reported in the financial statements.
New standards, amendments and interpretations not yet
adopted
There are no 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.
Segment reporting
Segmental analysis is not applicable as there is only one
operating segment of the continuing business - investment
activities
1. Profit Before Taxation And Segmental Information
Profit before taxation - continuing operations
The loss before taxation is attributable to the principal
activities of the Company.
The loss before taxation is stated after charging:
Year ended Year ended
31 December 31 December
2020 2019 (restated)
GBP'000 GBP'000
Share based payment charge 57 1
Impairment of financial investments - 446
Directors' fees and consulting (see note
2) 383 418
Operating lease rentals: land and buildings 164 211
Fees payable to the Company's auditor
for the audit of the financial statements 28 18
Fees payable to the Company's auditor
and its associates for other services:
Other services relating to taxation compliance - -
=============== ===================
Segment reporting
The Company operates a single primary activity to invest in
businesses so as to generate a return for the shareholders.
Year ended Year ended
31 December 31 December
2020 2019 (restated)
GBP'000 GBP'000
Unrealised profit on financial investments 10,252 230
Realised profit/(loss) on financial investments 65 (91)
Other income 54 10
--------------- -------------------
10,371 149
2. Employee Remuneration
Employee benefits expense
The expense recognised for employee benefits, including
Directors' emoluments, is analysed below:
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Wages, salaries and consulting fees 475 478
Bonus payments 180 -
Employers NI 48 30
Shares awarded 55 -
Share based payments - 1
758 509
------------ ------------
The average number of employees (including directors) employed
by the Company during the period was:
2020 2019
No. No.
Directors 4 4
Other 2 1
6 5
----- -----
Included within the above are amounts in respect of Directors,
who are considered to be the key management personnel, as
follows:
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Wages, salaries and consulting fees 383 418
Bonus payments 180 -
Shares awarded 55 -
Share based payments - 1
619 419
------------ ------------
Details of Directors' emoluments are included in the Report on
Remuneration on pages 30 to 32.
3. Finance Income & Costs
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Loan interest received 6 220
6 220
============= =============
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
Loan interest 296 220
Finance Fees 2 161
298 381
============= =============
4. Taxation
The tax assessed for the period differs from the standard rate
of corporation tax in the UK as follows:
Year ended Year ended
31 December 2020 31 December 2019
2020 2019 (restated)
GBP'000 % GBP'000 %
(Loss)/profit before taxation 7,823 (2,193)
(Loss)/profit multiplied by standard
rate 1,486 19 (417) 19
of corporation tax in the UK
Effect of:
Deferred tax asset not recognised 445 437
Income not taxable (1,948) (97)
Expenses not deductible for tax purposes 17 77
Total tax charge for year - -
============ =================
The Company has tax losses in the UK, subject to Her Majesty's
Revenue and Customs approval, available for offset against future
operating profits. The Company has not recognised any deferred tax
asset in respect of these losses, due to there being insufficient
certainty regarding its recovery.
5. EARNINGS per Share
The calculation of the basic earnings 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.
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
(Loss)/profit attributable to owners
of the Company 7,823 (1,938)
------------ ------------
2020 2019
Number Number
Weighted average number of shares for
calculating basic earnings per share 116,675,272 89,273,886
------------ ------------
Share options and warrants exercisable 1,698,405 n/a
Weighted average number of shares for 118,373,677 n/a
calculating diluted earnings per share
------------ ------------
2020 2019
Pence Pence
Basic earnings per share 6.705 (2.171)
Diluted earnings per share 6.609 n/a
------------ ------------
The impact of the share options are considered anti-dilutive
when the Company's result for a period is a loss.
6. Financial Investments
Financial assets at fair value GBP'000 GBP'000 GBP'000 GBP'000
through profit or loss:
Level Level Level
1 2 3 Total
Fair value at 31 December 2017 24,281 - 906 25,187
Additions 573 - 325 898
Fair value changes (13,568) - - (13,568)
(Loss)/Gains on disposals (1,967) - - (1,967)
Disposal (1,755) - - (1,755)
Fair value at 31 December 2018 7,564 - 1,231 8,795
--------- -------- -------- ---------
Additions - - 1,138 1,138
Fair value changes 230 - - 230
(Loss)/Gains on disposals (91) - - (91)
Disposal (2,257) - - (2,257)
Impairment provision - - (129) (129)
Fair value at 31 December 2019
(restated) 5,446 - 2,240 7,686
--------- -------- -------- ---------
Additions 50 - 645 695
Fair value changes 10,252 - - 10,252
(Loss)/Gains on disposals 65 - - 65
Disposal (2,052) - - (2,052)
Fair value at 31 December 2020 13,761 - 2,885 16,646
--------- -------- -------- ---------
Gains on investments held at fair
value through profit or loss
Fair value gain on investments 10,252 - - 10,252
Realised gain on disposal of investments 65 - - 65
Net gain on investments held at
fair value through profit or loss 10,317 - - 10,317
--------- -------- -------- ---------
Level 1 represents those assets, which are measured using
unadjusted quoted prices for identical assets.
Level 2 applies inputs other than quoted prices that are
observable for the assets either directly (as prices) or indirectly
(derived from prices).
Level 3 applies inputs, which are not based on observable market
data.
Level 1 assets comprise investments in listed securities which
are traded on stock markets throughout the world, and are held by
the Company as a mix of strategic and short term investments. These
are classified as current assets by virtue of their liquidity. The
listed investments have been valued at bid price, as quoted on
their respective Stock Exchanges, at 31 December 2020. During the
year ended 31 December 2020 the company disposed of a variety of
its shareholdings.
Level 3 assets comprise of investment in exploration costs where
licences are not 100% owned by the Company, and investments in
other companies. The Directors carried out an impairment review as
at 31 December 2020, and determined that no impairment was
necessary. a The remainder of the exploration costs capitalised in
respect of Argentina of GBP129,000 were fully impaired in the year
ended 31 December 2019.
The investment in Argentina was impaired by GBP129,000 in the
year ended 31 December 2019. During 2020, GBP645,000 was invested
in exploration costs by the Company (2019: GBP663,000). The Company
paid GBP400,000 in shares and GBP75,000 in cash during the year
ended 31 December 2019, in addition to the investment of GBP100,000
in 2018, and in total has acquired a 25.875% interest in both
Lithium Supplies PTY Ltd and Lithium Technologies PTY Ltd.
7. Trade and Other Receivables
31 December 31 December 31 December
2020 2019 (restated) 2018 (restated)
GBP'000 GBP'000 GBP'000
Current
Trade receivables 43
Other receivables 1402 2133 154
Amounts owed by subsidiaries 3,883 3,883 4,200
Prepayments and accrued
income 80 128 118
5,365 6,144 4,515
============ ================= =================
There is no impairment of receivables and no amounts are past
due at 31 December 2020 or 31 December 2019.
The fair value of these financial assets is not individually
determined as the carrying amount is a reasonable approximation of
fair value.
8. Trade and Other Payables
31 December 31 December 31 December
2020 2019 2018
GBP'000 GBP'000 GBP'000
Trade payables 171 232 78
Tax and social security 16 45 -
Other payables - 5 -
Accruals and deferred income 108 61 145
295 343 223
============ ============ ============
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.
9. Borrowings
31 December 31 December 31 December
2020 2019 2018
GBP'000 GBP'000 GBP'000
Current liabilities
Loan Notes 210 2,973 3,672
Interest accrued 9 9 34
219 2,982 3,706
============ ============ ============
During the year ended 31 December 2018, one Loan Note was repaid
in full and new loans were entered into in September 2018 totalling
GBP3,713,000 (USD$4,875,000) to repay a second Loan Note 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 Company 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.
During the year ended 31 December 2019, GBP2,089,000
(USD$2,677,000) of loans were repaid including interest of
GBP146,000 (USD$186,000) and foreign exchange of (GBP1,000) was
recognised, leaving a balance of GBP1,762,000 (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 restructure 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 further $500,000 was drawn down.
Additionally on 26 November 2019 a further $200,000 was drawn
down.
Of the new loan notes, GBP235,000 (USD$289,000) interest and
finance charges were charged in the period, GBP429,000
(USD$499,000) was repaid and (GBP139,000) foreign exchange was
recognised.
During the year ended 31 December 2020, GBP296,000 (USD$379,000)
interest and finance charges were charged in the period,
GBP2,416,000 (USD$3,123,000) was repaid, GBP695,000 (USD$889,000)
was converted into ordinary shares in the Company and GBP52,000 of
foreign exchange was recognised.
10. Share Capital
31 December 31 December 31 December
2020 2019 2018
GBP'000 GBP'000 GBP'000
Allotted, issued and fully
paid
173,619,050 deferred shares
of 0.24p 417 417 417
148,009,008 ordinary shares
of 1p (31 December 2019:
105,461,968 ordinary shares
of 1p, 31 December 2018:
7,851,440,338 ordinary
shares of 0.01p) 1,479 1,054 785
1,896 1,471 1,202
============ ============ ============
Ordinary shares
No. GBP'000
Allotted and issued
At 1 January 2018 and 31 December
2018 7,851,440,338 785
Issue of shares during the year 2,694,756,406 269
Share consolidation (10,440,734,776) -
At 31 December 2019 105,461,968 1,054
Issue of shares during the year 42,547,120 425
At 31 December 2020 148,009,088 1,479
================= ========
During the year ended 31 December 2020 the following shares were
issued: On 7 May 2020, 10,749,998 shares were issued for gross
proceeds of GBP645,000 and 3,995,000 shares were issued in respect
of a loan conversion of GBP239,700. On 5 June 2020 1,835,706 shares
were issued in respect of a loan conversion of GBP174,392. On 8
June 2020 7,222,219 shares were issued for gross proceeds of
GBP650,000. On 21 August 2020 537,500 shares were issued on
exercise of warrants for proceeds of GBP32,250. On 26 August 2020,
10,416,662 shares were issued for gross proceeds of GBP1,250,000.
On 16 November 2020, 200,000 shares were issued on exercise of
options for proceeds of GBP12,000, and 4,300,000 shares were issued
to the trust for proceeds of GBP43,000. On 19 November 2020,
888,420 shares were issued on exercise of warrants for proceeds of
GBP90,504, and 2,341,625 shares were issued in respect of a loan
conversion of GBP280,995.
During the year ended 31 December 2019 the following shares were
issued: On 26 March 2019, 866,666,663 shares were issued for gross
proceeds of GBP1,300,000. 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
GBP1,600,000. During the year ended 31 December 2018, no shares
were issued.
The deferred shares have no voting rights and are not eligible
for dividends.
11. Share Based Payments
Share Options
The Company 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 2020 or 31 December 2019.
Details of the number of share options and the weighted average
exercise price (WAEP) outstanding during the period are as
follows:
31 December 2020 31 December 2019
Number WAEP Number WAEP
GBP GBP
Outstanding at the beginning
of the year 2,800,000 0.437 5,125,706 0.457
Lapsed (2,500,000) (0.0600) (2,325,706) -
Exercised (200,000) (0.0600) - -
Outstanding at the end of
the year 100,000 0.060 2,800,000 0.437
============ ========= ============ ======
Exercisable at year end 100,000 2,800,000
The share options outstanding at the end of the period have a
weighted average remaining contractual life of Nil years (31
December 2019: 0.97 years) and have the following exercise prices
and fair values at the date of grant:
First exercise Grant date Exercise Fair 31 December 31 December
date (when price value 2020 2019
vesting conditions
are met)
GBP GBP Number Number
28 January 28 January
2013 2010 0.06 0.0004 100,000 100,000
13 December 13 December
2012 2012 0.06 0.00055 - 200,000
28 June 2013 28 June 2013 0.06 0.000371 - 100,000
21 May 2014 21 May 2014 0.48 0.004711 - 2,000,000
23 May 2014 23 May 2014 0.58 0.005574 - 400,000
100,000 2,800,000
============ ============
At 31 December 2020 100,000 options were exercisable (31
December 2019: 2,800,000).
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:
Risk free Share price Expected Share price
rate volatility life at date
of grant
29 August 2017 n/a n/a 18 months GBP0.00415
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.
Warrants
Details of the number of warrants and the weighted average
exercise price (WAEP) outstanding during the period are as
follows:
31 December 2020 31 December 2019
Number WAEP Number WAEP
GBP GBP
Outstanding at the beginning - - - -
of the year
Issued 3,024,325 0.10056
Exercised (1,425,920) (0.86088) - -
Outstanding at the end
of the year 1,598,405 0.11348 - -
============ ========== ========== =======
Exercisable at year end 1,598,405 -
The warrants outstanding at the end of the period have a
weighted average remaining contractual life of 1.98 years (31
December 2019: Nil years) and have the following exercise prices
and fair values at the date of grant:
First exercise Grant date Exercise 31 December 31 December
date (when vesting price 2020 2019
conditions are
met)
GBP Number Number
01 January 2020 01 January 2020 0.15 435,905 -
01 January 2020 01 January 2020 0.11 - -
01 January 2020 01 January 2020 0.085 600,000 -
06 May 2020 06 May 2020 0.06 41,667 -
10 June 2020 10 June 2020 0.09 - -
20 August 2020 20 August 2020 0.12 520,833 -
1,598,405 -
============ ============
The Company therefore recognised total expenses of 57,000 (year
ended 31 December 2019: GBP1,000) relating to equity-settled
share-based payment transactions during the period.
12. Contingent Liabilities
There were no contingent liabilities at 31 December 2020 or 31
December 2019 or 31 December 2018.
13. Capital Commitments
There were no capital commitments at 31 December 2020 or 31
December 2019 or 31 December 2018.
14. Lease Commitments
There were the following commitments under non-cancellable
operating leases.
31 December 31 December
2020 2019
GBP'000 GBP'000
Amounts due within one year - 66
Amounts due within two to five years - -
- 66
============== ============
The Company has taken advantage of the break clause in the lease
which ended on the 20(th) July 2020.
15. Financial Instruments
The Company 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 Company's risk management and
focuses on actively securing the Company's short to medium term
cash flows. Long term financial investments are managed to generate
lasting returns.
The Company 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 Company is exposed are described
below:
a Credit risk
The Company's credit risk will be primarily attributable to its
trade receivables. At 31 December 2019, the Company had minimal
trade receivables and therefore minimal risk arises.
Generally, the Company'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 2020 31 December 2019 (restated)
Investments Loans Derivative Statement Investments Loans Derivative Statement
(carried and financial of (carried and financial of financial
at fair receivables assets Financial at fair receivables assets position
value) (carried position value) (carried total
at total at
amortised amortised
cost) cost)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investments
(carried
at fair
value) 13,761 - - 13,761 1,121 - - 1,121
Other
long term
financial
assets 2,885 - - 2,885 2,240 - - 2,240
Other
receivables - 1,402 - 1,402 - 2,133 - 2,133
Amounts
owed by
subsidiaries 3,883 - 3,883 - 3,883 - 3,883
Prepayments
and accrued
income - 80 - 80 - 128 - 128
Cash and
cash
equivalents - 596 - 596 - 481 - 481
Total 16,646 5,961 - 22,607 3,361 6,625 - 9,986
============ ============ =========== ========== ============ ============ =========== ==============
31 December 2018 (restated)
Investments Loans Derivative Statement
(carried and receivables financial of Financial
at fair (carried assets position
value) at amortised total
cost)
GBP'000 GBP'000 GBP'000 GBP'000
Investments (carried at fair value) 7,564 - - 7,564
Other long term financial assets 1,231 - - 1,231
Trade and other receivables - 197 - 197
Amounts owed by subsidiaries - 4,200 - 4,200
Prepayments and accrued income - 118 - 118
Cash and cash equivalents - 468 - 468
Total 8,795 4,983 - 13,778
============ ================= =========== ==============
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 Company's investment in shares in Listed Companies are
included as an financial investment and has been classified as
Level 1, as market prices are available and the market is
considered an active, liquid market.
The Company's investment in exploration costs where licences are
not 100% owned by the Company, and investments in other companies
are classified as non-current Level 3.
The credit risk on liquid funds is limited because the Company
only places deposits with leading financial institutions in the
United Kingdom.
a Liquidity risk
The Company 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.
b Market risk
The amount and quality of minerals available and the related
costs of extraction and production represent a significant risk to
the Company. The Company is exposed to fluctuating commodity prices
in respect of the underlying assets. The Company seeks to manage
this risk by carrying out appropriate due diligence in respect of
the projects in which it invests.
The Company 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 Company manages this risk through constant
monitoring of its investments share prices and news information,
but does not hedge against these investments.
c Interest rate risk
The Company only has borrowings at fixed coupon rates and
therefore minimal interest rate risk, as this is deemed its only
material exposure thereto.
d Foreign exchange risk
The Company had borrowings of GBP219,000 which are denominated
is US dollars. This has been repaid since the year end. The Company
operates foreign currency bank accounts to help mitigate the
foreign currency risk.
e Financial liabilities
The Company's financial liabilities are classified as
follows:
31 December 2020 31 December 2019
Other Liabilities Total Other Liabilities Total
financial not within financial not within
liabilities the scope liabilities the scope
at amortised of IAS at amortised of IAS
cost 39 cost 39
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 171 - 171 232 - 232
Accruals and
deferred income - 108 108 - 61 61
Other payables 16 - 16 50 - 50
Borrowings 219 - 219 2,982 - 2,982
Total 406 108 514 3,264 61 3,325
============== ============ ======== ============== ============ ========
31 December 2018
Other financial Liabilities Total
liabilities not within
at amortised the scope
cost of IAS
39
GBP'000 GBP'000 GBP'000
Trade payables 78 - 78
Accruals and deferred income - 145 145
Other payables - - -
Borrowings 3,706 - 3706
Total 3,784 145 3,929
================ ============ ========
Maturity of financial liabilities
All financial liabilities at 31 December 2020, 31 December 2019
and 31 December 2018 mature in less than one year.
Borrowing facilities for the period ended 31 December 2020
The Company has committed borrowing facilities at 31 December
2020 of GBP219,000 (31 December 2019: GBP2,982,000, 31 December
2018: GBP3,706,000). See Note 9 for details.
The Company had no committed undrawn facilities at 31 December
2020, 31 December 2019 or 31 December 2018.
f Capital risk management
The Company's objectives when managing capital are:
- to safeguard the Company's ability to continue as a going
concern, so that it continues to provide returns and benefits for
the shareholders;
- to support the Company's stability and growth; and
- to provide capital for the purpose of strengthening the Company's risk management capability.
The Company 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 Company 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.
16. Reconciliation of Liabilities Arising from Financing
Activities
Short-term
borrowings Total
1 January 2020 2,982 2,982
------------ --------
Cash-flows:
- Interest charged 296 296
- Realised foreign exchange 39 39
- Repayments (2,416) (2,416)
------------ --------
Non-cash:
- Loans converted (695) (695)
- Unrealised Foreign exchange movement 13 13
31 December 2020 219 219
============ ========
Short-term
borrowings Total
1 January 2019 3,706 3,706
------------ --------
Cash-flows:
- Proceeds 1,715 1,715
- Interest charged 220 220
- Realised foreign exchange (2) (2)
- Repayments (2,518) (2,518)
------------ --------
Non-cash:
- Unrealised Foreign exchange movement (139) (139)
31 December 2019 2,982 2,982
============ ========
Short-term
borrowings Total
1 January 2018 4,182 4,182
------------ --------
Cash-flows:
- Proceeds 3,713 3,713
- Interest charged 220 220
- Realised foreign exchange 97 97
- Repayments (5,034) (5,034)
------------ --------
Non-cash:
- Loans converted - -
- Transfer from equity 412 412
- Transfer to equity - -
- Unrealised Foreign exchange movement 116 116
31 December 2018 3,706 3,706
============ ========
17. 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 30 to 32, and within Note 2 to
the financial statements.
18. Events after the end of the Reporting Period
On 3 January 2021, the Company issued 100,000 ordinary shares in
respect of the option exercise announced on 23 December 2020.
On 12 January 2021, the Company announced that 300,000 ordinary
shares had been issued in respect of warrants exercised at
8.5p.
On 23 April 2021, the Company announced that 300,000 ordinary
shares had been issued in respect of warrants exercised at
8.5p.
On 30 April 2021, the Company announced that 7,200,000 options
had been issued to directors at an exercise price of 23.75p.
Following these share issues, the Company has 148,649,098
Ordinary shares of 1 pence each in issue. No ordinary shares are
held in treasury. The figure of 148,649.098 Ordinary shares may be
used by the Company's shareholders as the denominator for the
calculations by which they will determine if they are required to
notify their interest in, or a change to their interest in, the
Company under the Financial Conduct Authority's Disclosure and
Transparency Rule.
19. Ultimate Controlling Party
In the opinion of the directors there is no controlling
party.
20. Prior Year Restatement
Cadence Minerals Plc has taken advantage of the exemption of the
requirement to produce consolidated group accounts as it is an
investment companies and its interests are held exclusively with a
view to subsequent resale as allowed under IFRS 10. As a result of
the changes in the entity's accounting policies, prior year
financial statements had to be restated in accordance with IFRS 1.
Items previously wrongly classified as intangible exploration cost,
investments in associates and subsidiaries, and available for sale
assets have all been reclassified as financial assets held at fair
value through profit and loss. The investments held as shares in
listed companies are held as current financial assets due to their
liquid nature, whereas all other financial assets are held as
non-current assets. Additionally deposits have been reclassified
from cash and cash equivalent to other debtors as it is not
considered to be readily available, and foreign exchange movements
have been reclassified from other comprehensive income to profit
and loss.
The following tables show the adjustments recognised for each
individual line item. The adjustments are explained in more detail
below.
Adjustments affecting periods prior to 1 January 2018
Previous retained earnings (5,092)
Reversal of share of associates losses recognised 431
Reversal of foreign exchange movements through OCI (6)
Fair value movement of asset previously recognised as
an investment in associate 24
Revised retained earnings at 1 January 2018 (4,643)
--------
31 December Restatement 31 December
2018 as originally as a result 2018 (restated)
presented of reclassification
ASSETS GBP'000 GBP'000
Non-current
Financial Assets - 1,231 1,231
Intangible assets 325 (325) -
Investment in associates 9,794 (9,794) -
Investment in subsidiaries 906 (906) -
11,025 (9,794) 1,231
-------------------- --------------------- -----------------
Current
Trade and other receivables 4,515 - 4,515
Financial Assets - 7,564 7,564
Available for resale
asset 2,895 (2,895) -
Cash and cash equivalents 468 - 468
Total current assets 7,878 4,669 12,547
Total assets 18,903 (5,125) 13,778
-------------------- --------------------- -----------------
LIABILITIES
Current
Trade and other payables 223 - 223
Borrowings 3,706 - 3,706
Total current liabilities 3,929 - 3,929
-------------------- --------------------- -----------------
Total liabilities 3,929 - 3,929
-------------------- --------------------- -----------------
EQUITY
Issued share capital 1,202 - 1,202
Share premium 27,552 - 27,552
Share based premium reserve 1,392 - 1,392
Equity loan and exchange
reserve (116) 116 -
Retained earnings (15,056) (5,241) (20,297)
Equity attributable 14,974 (5,125) 9,849
to equity holders of
the Company
Total equity and liabilities 18,903 (5,125) 13,778
==================== ===================== =================
Year ended Year ended Year ended
31 December Restatement 31 December
2018 as originally as a result 2018 (restated)
presented of reclassification
GBP'000 GBP'000 GBP'000
Income
Unrealised profit/(loss)
on financial investments (7,440) (6,128) (13,568)
Realised loss on financial
investments (1,967) - (1,967)
Other income 140 - 140
-------------------- --------------------- -----------------
(9,267) (6,128) (15,395)
Share based payments (7) - (7)
Impairment of financial
assets - - -
Other administrative expenses (1,453) - (1,453)
-------------------- --------------------- -----------------
Total administrative expenses (1,460) - (1,460)
Operating loss (10,727) (6,128) (16,855)
Share of associates losses (548) 548 -
Finance cost (377) - (377)
Foreign exchange gains/(losses) (105) (110) (215)
Loss before taxation (11,757) (5,690) (17,447)
Taxation - - -
Loss attributable to the
equity holders of the
Company (11,757) (5,690) (17,447)
-------------------- --------------------- -----------------
Other comprehensive income
Foreign exchange (110) 110 -
Other comprehensive income
for the period, net of
tax (110) 110 -
-------------------- --------------------- -----------------
Total comprehensive loss
for the year, attributable
to the equity holders
of the company (11,867) (5,580) (17,447)
==================== ===================== =================
(Loss)/Profit per ordinary
share
Basic loss per share (pence) (14.970) (7.244) (22.214)
==================== ===================== =================
The effect of reclassification of each category of asset at 31
December 2018 is shown in detail below.
Classification Measurement Carrying Amount
Original New Original New Original New Difference
GBP'000 GBP'000 GBP'000
Non-current
Intangible financial Amortised
assets assets cost FVTPL 325 325 -
Current Amortised
Investment financial cost less
in associates assets share of losses FVTPL 9,794 4,669 (5,125)
Non-current
Investment financial Amortised
in subsidiaries assets cost FVTPL 906 906 -
Available Current
for resale financial
asset assets FVTPL FVTPL 2,895 2,895 -
31 December Restatement 31 December
2019 as originally as a result 2019 (restated)
presented of reclassification
ASSETS GBP'000 GBP'000
Non-current
Financial Assets - 2,240 2,240
Intangible assets 759 (759) -
Investment in associates 9,937 (9,937) -
Investment in subsidiaries 906 (906) -
11,602 (9,362) 2,240
-------------------- --------------------- -----------------
Current
Trade and other receivables 4,129 2,015 6,144
Financial Assets - 5,446 5,446
Available for resale
asset 1,121 (1,121) -
Cash and cash equivalents 2,496 (2,015) 481
Total current assets 7,746 4,325 12,071
Total assets 19,348 (5,037) 14,311
-------------------- --------------------- -----------------
LIABILITIES
Current
Trade and other payables 343 - 343
Borrowings 2,982 - 2,982
Total current liabilities 3,325 - 3,325
-------------------- --------------------- -----------------
Total liabilities 3,325 - 3,325
-------------------- --------------------- -----------------
EQUITY
Issued share capital 1,471 - 1,471
Share premium 30,357 - 30,357
Share based premium reserve 1,383 - 1,383
Equity loan and exchange
reserve 139 (139) -
Retained earnings (17,327) (4,898) (22,225)
Equity attributable 16,023 (5,037) 10,986
to equity holders of
the Company
Total equity and liabilities 19,348 (5,037) 14,311
==================== ===================== =================
Year ended Year ended Year ended
31 December Restatement 31 December
2019 as originally as a result 2019 (restated)
presented of reclassification
GBP'000 GBP'000 GBP'000
Income
Unrealised profit/(loss)
on financial investments 420 (190) 230
Realised loss on financial
investments (97) 6 (91)
Other income 10 - 10
-------------------- --------------------- -----------------
333 (184) 149
Share based payments (1) - (1)
Impairment of financial
assets (129) - (129)
Other administrative
expenses (1,716) - (1,716)
-------------------- --------------------- -----------------
Total administrative
expenses (1,846) - (1,846)
Operating loss (1,513) (184) (1,697)
Share of associates losses (272) 272 -
Finance cost (381) - (381)
Foreign exchange gains/(losses) (115) 255 (140)
Loss before taxation (2,281) 343 (1,938)
Taxation - - -
Loss attributable to
the equity holders of
the Company (2,281) 343 (1,938)
-------------------- --------------------- -----------------
Other comprehensive income
Foreign exchange 255 (255) -
Other comprehensive income
for the period, net of
tax 255 (255) -
-------------------- --------------------- -----------------
Total comprehensive loss
for the year, attributable
to the equity holders
of the company (2,026) 88 (1,938)
==================== ===================== =================
Earnings per ordinary
share
Basic earnings per share
(pence) (2.555) 0.384 (2.171)
==================== ===================== =================
The effect of reclassification of each category of asset at 31
December 2019 is shown in detail below.
Classification Measurement Carrying Amount
Original New Original New Original New Difference
GBP'000 GBP'000 GBP'000
Non-current
Intangible financial Amortised
assets assets cost FVTPL 759 759 -
Amortised
cost less
Investment Current financial share of
in associates assets losses FVTPL 9,362 4,325 (5,037)
Amortised
Non-current cost less
Investment financial share of
in associates assets losses FVTPL 575 575 -
Non-current
Investment financial Amortised
in subsidiaries assets cost FVTPL 906 906 -
Available
for resale Current financial
asset assets FVTPL FVTPL 1,121 1,121 -
Cash and Trade and Amortised Amortised
cash equivalents other receivables cost cost 2,015 2,015 -
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END
FR SELFIUEFSEEM
(END) Dow Jones Newswires
June 30, 2021 02:00 ET (06:00 GMT)
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