KEN Kendrick Resources Plc

29 April 2024

Kendrick Resources Plc
("Kendrick" or the "Company")

  Final Results for period to 29 December 2023

Kendrick Resources Plc (LSE: KEN), the mineral exploration and development company building vanadium, nickel and copper battery metal projects in Scandinavia is pleased to announce its full year results for the year ended 29 December 2023.

The Annual Report and Financial Statements for the year ended 29 December 2023 will shortly be available on the Company's website at https://www.kendrickresources.com. A copy of the Annual Report and Financial Statements will also be uploaded to the National Storage Mechanism where it will be available for viewing at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

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

This announcement contains information which, prior to its disclosure, was inside information as stipulated under Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended).

Financial Highlights

·    £1.1m loss before tax (2022: £1.04m)

·    Approximately £200K cash at bank at the period end (2022: £1.818m).

·    The loss per share of 0.45 pence (2022: loss 0.68 pence) has been calculated on the basis of the loss of £1,099,162 (2022: loss £1,043,466) and on 242,565,645 (2022: 153,882,205) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 29 December 2023.

·    The net asset value as at period end was £4.58m (2022: £5.57m).

CHAIRMAN'S STATEMENT

Dear Shareholder,

The year under review has seen significant progress, with drilling work carried out at our existing major Airijoki and Espedalen projects, and the acquisition of the Mjovattnet and Njuggtraskliden nickel, copper and PGM licences ("Swedish Nickel").

Results from an extension drill programme at the Airijoki Project in Northern Sweden and the results suggested that we have the potential to at least double the current 44million tonne resource at similar grades. 

During the year, Wardell Armstrong carried out metallurgical test work with the objectives of building on previous work on maintaining concentrate grade, whilst increasing vanadium recovery.  The work was very successful and the results revealed much about the geo-metallurgy of the orebody, which we will incorporate into future mine planning. 

Global production of vanadium is currently just over 100,000 tonnes per year with China and Russia responsible for about 65% and 20% of production respectively. Steelmaking has been responsible for over 90% of vanadium consumption and demand has been strong due to global adoption of higher strength rebar specifications and increasing use of vanadium containing steel by the automotive industry. The use of vanadium in REDOX vanadium storage batteries is increasing with the focus on alternative energy sources.  We have no doubt that power storage will command much more importance as the decade continues.  

We mounted a significant drilling programme in Norway at our Espedalen nickel complex, reporting good intersection of over 1% nickel, which will be described in the operation section.  The nickel complex is showing itself to be highly prospective with at least 10 untested targets.  The prognosis for significant increase in nickel tonnage is very good and we intend to carry out further drilling programmes during Q4 2024.  In reviewing all historical information available on the project, we identified a potentially significant magnetic anomaly, which may represent the high-grade roots to the overall system.

In July we acquired from EMX Royalties the Mjovattnet and Njuggtraskliden nickel, copper and PGM licences ("Swedish Nickel"). A number of boreholes will be reviewed in the operational review, but we are very pleased with this acquisition based on its history and potential.  Between the two projects, we have some 25km potential strike to investigate.  The geological environment of the project is being likened to the Thompson Nickel belt in Manitoba, Canada, which is a major nickel supplier in Canada. The acquisition is made even more interesting by its proximity to battery manufacturing facilities and the eastern coast of mid-Sweden, together with Boliden's nickel refinery, which is some 100km by sea away.

The initial part of the reporting period was spent in establishing a management team that is able to work within the cost regimes we are accustomed to and, also previous experience of working the Scandinavian geological environment.

Towards the end of the period, it became obvious that a new awareness was emerging in Scandinavia and with high recognition that if the planet is free from pollution, then critical mining has to take place.  Indeed the southern coast of Norway is becoming known as the "Battery Coast" by industry pundits. 

We believe that we have a good portfolio in the much sought after commodities at a time when Scandinavia may well undergo a mining renaissance and are well positioned among our peers.

I look forward to adding more value to our projects during the coming year and give thanks to my fellow board members and management team, who have made an excellent job of placing Kendrick in what might well be a rapidly evolving new Scandinavian mining arena.

Results for the year

The Group reported a loss before taxation for the year of £1,099,162 (2022: £1,043,466) mainly due to administrative costs of £580,287 (2022: £418,294), including professional, consulting and directors' fees and an impairment of £448,904 (2022: £Nil) against licences we relinquished to focus on our Airijoki, Espedalen and Swedish Nickel projects.  In 2022 listing related costs were £606,575. Net assets at 29 December 2023 amounted to £4,577,999 (2022: £5,567,673) including exploration and evaluation assets of £4,756,879 (2022: £3,932,973) and cash of £199,992 (2022: £1,817,706).

AGM and Resolutions

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

Colin Bird

Chairman

29 April 2024

Operational Financial Corporate and Strategy Reviews

INTRODUCTION

Kendrick Resources Plc was admitted to the Standard Segment of the Main Market of the London Stock Exchange ("Admission") on 6 May 2022 and its principal activity is that of mining exploration and development and it has nickel, vanadium and copper projects in Norway, Sweden and Finland (the "Projects").

The Directors are required to provide a year-end report in accordance with the Financial Conduct Authorities ("FCA") Disclosure Guidance and Transparency Rules ("DTR"). The Directors consider this Financial, Corporate and Operational Review along with the Chairman's Report, the Strategic Review and the Director's Report provides details of the important events which have occurred during the period and their impact on the financial statements as well as the outlook for the Company going forward.

The Company's strategy is to build a top tier energy metals production business focused on nickel, vanadium and copper mineral resources projects in Scandinavia and its short to medium term strategic objectives are to enhance the value of its mineral resource Projects through exploration and technical studies conducted by the Company or through joint venture or other arrangements with a view to establishing the Projects can be economically mined for profit. With a positive outlook for energy metals in Europe and energy security, the Directors believe that the Projects provide a base from which the Company can help Europe enable its energy transformation.

Operational Review

Acquisition during the year

On 7 August 2023 the Company acquired EV Metals AB a Swedish company that owns the Njuggtraskliden and Mjovattnet exploration licences (the "Swedish Nickel Projects") hosting drill-defined magmatic nickel-copper-cobalt-platinum group metal mineralisation along the Swedish Nickel Line (see note 13).

At the year end the Group decided that in light of the Group's exploration commitment in relation to the Swedish nickel projects and their relative lack of prospectivity not to continue with the Signal and Hosanger nickel exploration projects in Norway. This decision does not affect the Group's Espedalen Project, which has always been the Company's principal project in Norway and currently contains the following two nickel deposits:

• _Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co and classified as Inferred in accordance with JORC (2012); and

• _Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and classified as Inferred in accordance with JORC (2012).

During the year the Group as part of ongoing licence management, it was decided not to renew the Kramsta 100 licence in Sweden and the Karhujupukka North & Karhujupukka North licences in Finland which were assessed to have relatively low prospectivity compared to the Group's remaining licences.

Technical review of Projects: Following Admission  and having acquired its projects in Sweden, Finland and exercised its option in relation to its Norwegian projects, the Group commenced technical reviews and / or programmes on its portfolio. The primary metal in the Swedish and Finnish projects is vanadium and nickel for the Norwegian projects. The Group used this information in 2023 to determine its exploration strategy in 2023. 

Summary of Projects:  The Projects are a portfolio of early to advanced stage exploration projects covering a combined area of 658 km2 in Scandinavia. The most advanced of these Projects are the Airijoki and Koitelainen vanadium projects in Sweden and Finland respectively and the Espedalen nickel copper project in Norway. The other projects are:

·    Sweden - the Njuggtraskliden and Mjovattnet exploration ("Swedish Nickel Projects")

·    Sweden - the Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively the "Central Sweden Project")

The Airijoki vanadium copper project in Sweden comprising seven contiguous exploration permits covering 39.41 km²  and is supported by an Inferred Mineral Resource comprising 44.3 Mt at an in-situ grade of 0.4% V₂O₅, containing 5.9 Mt of magnetite averaging 1.7% V₂O₅ (in magnetite concentrate) for 100,800 t of contained V₂O₅ based on a 13.3% mass recovery of magnetite concentrate and a 0.7% V₂O₅ cut-off grade, on a 100% equity basis (and net attributable basis).

The Koitelainen vanadium copper project in Finland comprising a single granted exploration licence covering 13.72 km2 with an Inferred Mineral Resource has been defined at the Koitelainen Vosa Prospect comprising 116.4Mt, containing 5.8 million tonnes of magnetite @ 2.3% V2O5 (in magnetite concentrate), for 131,000 tonnes of V2O5 based on 5.0% Mass Recovery of magnetite concentrate and a cut-off of 0.5% V.  The Inferred Mineral Resource was estimated in accordance with JORC (2012), utilising data from 3,784m of drilling from 27 historical drill holes.

The Espedalen nickel copper project in Norway comprising 16 contiguous exploration permits covering a combined area of 139.89 km2 and currently contains the following two nickel deposits with associated Mineral Resource estimates together with other prospects and was the subject of a successful drill programme during 2023:

·    Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co and classified as Inferred in accordance with JORC (2012)

·    Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co and classified as Inferred in accordance with JORC (2012)

Figure 1. Map showing location of Kendricks' Scandinavian license portfolio.

Norway Projects summary:

The Group's review has identified significant opportunities within the Espedalen nickel project in Norway.

Our priority Norwegian nickel target, the Espedalen Project and more specifically the Stormyra prospect (1.16Mt @ 1% Ni, 0.42% Cu & 0.04% Co) was drilled in March 2023 with 19 holes completed for a total of 1,650 metres of drilling over an initial 1,200m of strike length. The results of the programme were announced on 20 April 2023, 4 May 2023 and 24 May 2023 including several drill intercept highlights:

·      Hole ES2302 - 6.85% Ni Eq. over 1.25m from 38.20m

·      Hole ES2303 - 2.64% Ni Eq. over 3.75m from 44.45m

o  incl. 9.28% Ni Eq. over 0.75m from 47.45m

o  and 1.53% Ni Eq. over 5.80m from 51.80m

o  incl. 5.33% Ni Eq. over 0.9m from 56.7m

·      Hole ES2305 - 1.30% Ni Eq. over 4.60m from 76.70m

o  incl. 2.59% Ni Eq. over 2.10m from 79.20m

·      Hole ES2306 - 0.71% Ni Eq. over 10.6m from 96.50m

o  Incl. 2.18% Ni Eq. over 1.70m from 99.20m

§ and 1.03% Ni Eq. over 2.65m from 104.45m

§ Hole ESP2308 - 3.39% Ni Eq. over 11.60m from 52.40m including 5.80% Ni Eq over 4.9m from 59.1m

·      Hole ESP2307 - 2.59% Ni Eq. over 3.65m from 37.80m including 4.85% Ni Eq. over 1.80m from 38.50m

·      Hole ESP2312 - 2.29% Ni Eq. over 4.15m from 92.35m

·      Hole ESP2313 - 1.98% Ni Eq. over 3.55m from 79.60m including 3.86% Ni Eq. over 1.70m from 79.60m

·      Hole ESP2317 - 2.18% Ni Eq. over 3.50m from 61.50m

·      Hole ESP2318 - 0.41% Ni Eq. over 9.20m from 31.50m incl. 1.15% Ni Eq. over 0.90m from 35.20m

·      Hole ESP2319 - 2.43% Ni Eq. over 2.10m from 53.60m incl. 5.53% Ni Eq. over 0.65m from 54.35m and 1.33% Ni Eq. over 2.70m from 62.20m

Geophysics and interpretation of drilling indicates a further extension to known mineralisation of approximately 500m along the southern limit of the current orebody which is expected to increase the Mineral Resource.

The drill programme over Stormyra was very successful with impressive peak intercepts that provide all the motivation the Group needs to both test the projected extension of the Stormyra mineralised trend and assess with further  drilling multiple other targets (some of which have been drilled and intersected Ni mineralisation)  across the Espedalen project area. 

Thanks to our local team, we have managed to build a healthy relationship with the local stakeholders and we will continue to communicate with interested and affected parties and we are sufficiently confident of the continuity of mineralisation to formally engage external engineering advice for the review of future plant design.

Swedish & Finnish Projects summary:

The main field exploration focus during the year was a 1,500 metre exploration drill program at the Airijoki vanadium copper project in Sweden with the objective of significantly increasing the existing vanadium Mineral Resource; completion of an ionic leach soil sampling programme over recently awarded additional Airijoki licences where extensions to known vanadium and copper mineralisation may occur; and the completion of an ionic leach soil sampling programme over the recently acquired Mjovattnet Nickel-Copper-PGM licence. 

In reviewing the Airijoki project in Sweden, significant copper anomalism has been identified and will be tested as part of the ongoing technical review.  Where present, copper is considered a valid exploration target and may complement any future vanadium mine development or could be a stand-alone deposit in its own right. The Group has engaged Wardell Armstrong International to carry out metallurgical test work in order to assess scope for increased vanadium recoveries, whilst maintaining magnetite vanadium grade. The Group is preparing plans to conduct further test work to advance the processing to the end product vanadium electrolytes.

Post the year end on 8 February 2024 the Group announced the results of its 2023 drill programme at the Airijoki Vanadium project the highlights of which included:

Highlights

·    Results have been received for whole rock and vanadium magnetite concentrates produced from eight holes drilled north of the existing Airijoki vanadium JORC Mineral Resource containing 44.3 Mt @ 0.4% V₂O₅, in-situ, containing 5.9 Mt of magnetite averaging 1.7% V₂O₅.

·    Seven out of eight holes drilled intersected vanadium mineralisation.

·    Notable intercepts included:

o  0.52% V₂O₅ - whole rock (1.77% V₂O₅ - magnetite concentrate) over 28.80m from 77.55m in hole AIR23-003, incl.

§ 0.72% V₂O₅ - whole rock (2.15% V₂O₅ - magnetite concentrate) over 12.00m from 89.50m

o  0.43% V₂O₅ - whole rock (1.44% V₂O₅ - magnetite concentrate) over 19.15m from 75.85m in hole AIR23-008

o  0.32% V₂O₅ - whole rock (1.42% V₂O₅ - magnetite concentrate) over 28.65m from 174.50m in AIR23-002

§ incl. 0.40% V₂O₅  - whole rock (1.75% V₂O₅ -magnetite concentrate) over 12 m from 186.5m

·    Endorsement by the Board of the development of a strategy aimed at building a sustainable vanadium business in Scandinavia to deliver into future vanadium demand for battery production.

·    Drilling has now been undertaken on two of the Airijoki licences within the greater land package of seven contiguous licences and the 5 remaining licences are prospective for both vanadium and copper.

During the period the Company acquired EV Metals AB and its two Swedish Nickel Projects Mjovattnet and Njuggtraskliden highlights of which are:

Mjovattnet Licence

·    2 drill-defined zones of mineralisation (Mjovattnet and Brannorna Prospects)

·    15km of prospective strike

·    PGE value historically overlooked

·    Mjovattnet in-house non-JORC compliant drill-defined resource of 0.17Mt @ 1.29% Ni, 0.19% Cu & 0.02% Co

·    Open at depth

·    Peak shallow drill intercepts for the Brannora Prospect include:

Njuggtraskliden Licence

·    Historic non-JORC compliant mineral Resource of 0 575 Mt @ 0.71% Ni, 0.26% Cu & 0.04% Co

·    10km of prospective strike

·    Mineralised system remains open at depth

·    Drill-defined nickel sulphide mineralisation developed along more than 10km of strike extent 

·    Peak shallow drill intercepts at Njuggtraskliden include:

·    Swedish Geological Survey report suggests extensions to mineralisation at depth and along strike at all prospects on both licences

·    Both prospects host significant massive sulphide mineralisation not typical of other nickel deposits in the region indicating scope for further accumulations of locally massive sulphide located in a nickel-rich district, analogous to the Thompson nickel Belt in Manitoba, Canada

·    100km by sea from Boliden's Kokkola nickel smelter in Finland

Financial Review

Financial highlights:

·    £1.1m loss before tax (2022: £1.04m)

·    Approximately £200K cash at bank at the period end (2022: £1.818m).

·    The loss per share of 0.45 pence (2022: loss 0.68 pence) has been calculated on the basis of the loss of £1,099,162 (2022: loss £1,043,466) and on 242,565,645 (2022: 153,882,205) ordinary shares, being the weighted average number of ordinary shares in issue during the year ended 29 December 2023.

·    The net asset value as at period end was £4.58m (2022 (£5.57m).

Fundraisings and issues of shares and options

The Company did not undertake any fundraising during the year as it utilised the balance of the £3,250,000 (before expenses) raised at Admission (the "Fundraise").

During the period 4,144,395 ordinary shares were issued on 26 April 2023 in relation to the Company's acquisition of the Espedalen, Hosanger and Sigdal nickel-copper-cobalt exploration projects in Norway from EMX Scandinavia AB (see note 17).

On 4 August 2023 the Company issued 15 million 5 year options to EMX Royalty Corporation in connection with the acquisition of EV Metals AB a Swedish company that owns the Njuggtraskliden and Mjovattnet exploration licences (the "Swedish Nickel Projects") hosting drill-defined magmatic nickel-copper-cobalt-platinum group metal mineralisation along the Swedish Nickel Line (see note 13).

22,550,000 options over ordinary shares expiring on 3 February 2031 with an exercise price of 3.5 pence were granted on 2 February 2023 pursuant to the Share Option Scheme approved at the AGM on 4 February 2021 ("Share Option Scheme Options"). Of the 22,550,000 Share Option Scheme Options, 13,750,000 were awarded to directors of the Company, as detailed further below and the balance of 8,800,000  to other eligible participants. The Company has not previously issued any Share Option Scheme Options. 

The Company did not issue any warrants during the period.

Corporate Review

Company Board: The Board of the Company at the date of this report comprises Colin Bird, Executive Chairman, Martyn Churchouse Managing Director and Non- executive directors Kjeld Thygesen, Evan Kirby and Alex Borrelli.

Admission: The Company was admitted to the Official List (Standard Segment) and commenced trading on the Main Market for listed securities of the London Stock Exchange on 6 May 2022.

Corporate Acquisitions

On 12 August 2022 the Company announced that it has completed the acquisition of the "Norwegian Projects" from EMX Scandinavia AB (previously named Eurasian Minerals Sweden AB) ("EMX") by acquiring Caledonian Minerals AS. The consideration paid to EMX for the exercise of the option was U$81,949 and the issue of 20,226,757 Ordinary Shares ("EMX Option Shares") and further ordinary shares were due to be issued to EMX by 27 April 2023 in relation to the acquisition of the Norwegian Projects ("EMX 2023 Shares"). On 24 April 2023 the Company announced it had issued a further 4,144,395 ordinary shares in relation to the acquisition of the Norwegian Projects to meet its obligation to issue the EMX 2023 Shares.

On 4 August 2023 the Company signed a Share Sale and Purchase Agreement with EMX Royalty Corporation (EMX) to acquire 100% of EV Metals AB a Swedish company that owns the Njuggtraskliden and Mjovattnet exploration licences (the "Swedish Nickel Projects") hosting drill-defined magmatic nickel-copper-cobalt-platinum group metal mineralisation along the Swedish "Nickel Line". The consideration paid to acquire EV Metals AB was SEK110,780 (approx. £8,200) and the issue of 15 million 5 year options to EMX to acquire ordinary shares in the Company at 1.3 pence per ordinary share.

Lock Up and Orderly Market arrangements at IPO:

At Admission the Directors and their related parties, in aggregate, held 47,294,860 Ordinary Shares, representing 21.62% of the Enlarged Share Capital. The Directors agreed with the Company and Novum Securities Limited ("Novum") its Joint Broker, except for certain standard exceptions, not to dispose of any interest in the Ordinary Shares held by them for a period of 12 months following Admission (Lock-In Period) and then for the following 12 months until 6 May 2024 not to dispose of their Ordinary Shares without first consulting the Company and Novum in order to maintain an orderly market for the Shares.

Strategy Review

The Group is looking to build a long-term energy metals business in Scandinavia which delivers energy metals to Europe to help enable its renewable energy transformation by building a top tier energy metals production business focused on quality vanadium and nickel mineral resources in Scandinavia. The Group's short to medium term strategic objectives are to enhance the value of its mineral resource projects through exploration and technical studies conducted by the Group or in conjunction with other parties with a view to establishing these projects so they can be economically mined for profit. With a positive global outlook for energy metals, the Directors believe that its projects provide a base from which the Group will seek to add significant value through the application of structured and disciplined exploration.

The Group may in the future, if such opportunity arises, acquire other mineral resource projects whose value can similarly be enhanced. Further projects may be considered where assets in strategic commodities are either: (i) geologically prospective but undervalued; (ii) where technical knowledge and experience could be applied to add or unlock upside potential; (iii) where the assets may be synergistic to the current portfolio; or (iv) where project diversification will add strategic growth opportunities within an appropriate time frame.

Outlook

There appears a new realisation that if clean energy targets are to be met then critical mining has to take place.  Indeed the southern coast of Norway is becoming known as the "Battery Coast" by industry pundits and the Board believes we have a good portfolio in the much sought after commodities at a time when Scandinavia may well undergo a mining renaissance.

The Directors present their strategic report for the year ended 29 December 2023.

PRINCIPAL ACTIVITIES

The Company's principal activity is that of mining exploration and development and the Company has nickel, vanadium and copper projects in Scandinavia via its subsidiaries.

GOING CONCERN

As disclosed in Note 3, the Group currently has no income and meets its working capital requirements through raising development finance. In common with many businesses engaged in exploration and evaluation activities prior to production and sale of minerals the Group will require additional funds and/or funding facilities in order to fully develop its business plan.

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

As at 29 December 2023, the Group had net assets of £4.58m and cash and cash equivalents of £200k. An operating loss is expected in the year subsequent to the date of these financial statements and as a result the Group will need to raise funding to provide additional working capital to finance its ongoing activities.

On 22 April 2024 the Company announced it had entered into an unsecured convertible loan funding facility (the "Facility") for £500,000 with Sanderson Capital Partners Ltd (the "Lender"), a long term shareholder in the Company.  The Facility is convertible at 0.75 pence per ordinary share  ("Shares") and can be drawn down in 4 tranches of £125,000 each ("Loan Tranches"). The Facility is a standby facility as a potential additional source of working capital for the Group in a period when the funding market for junior exploration companies is subject to market volatility (see Note 22 for further details).

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

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

ENERGY CONSUMPTION

The Company consumed less than 40MWh during the period and as such is a Low Energy User as defined in the Environmental Reporting Guidelines Including streamlined energy and carbon reporting guidance March 2019 (Updated Introduction and Chapters 1) and as such is not required to provide detailed disclosures of energy and carbon information. 

PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE

The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members, as required by s172 of the Companies Act 2006 as detailed below.

The requirements of s172 are for the Directors to:

-      Consider the likely consequences of any decision in the long term;

-      Act fairly between the members of the Company;

-      Maintain a reputation for high standards of business conduct;

-      Consider the interests of the Company's employees;

-      Foster the Company's relationships with suppliers, customers, and others; and

-      Consider the impact of the Company's operations on the community and the environment.

Our Board of Directors remain aware of their responsibilities both within and outside of the Group. Within the limitations of a Group with so few employees we endeavour to follow these principles, and examples of the application of the s172 are summarised and demonstrated below.

The Company operates as a mining exploration and development company which is speculative in nature and at times may be dependent upon fund-raising for its continued operation. The nature of the business is well understood by the Company's members, employees and suppliers, and the Directors are transparent about the cash position and funding requirements. 

The Company is investing time in developing and fostering its relationships with its key suppliers.

As a mining exploration company with future operations based in Scandinavia, the Board  takes seriously its ethical responsibilities to the communities and environment in which it works.

The interests of future employees and consultants are a primary consideration for the Board, and we have introduced an inclusive share-option programme allowing them to share in the future success of the Company. Personal development opportunities are encouraged and supported.

KEY PERFORMANCE INDICATORS

Key performance indicators for the Group as a measure of financial control are as follows:

PRINCIPAL RISKS AND UNCERTAINTIES

The Group is subject to various risks similar to all exploration companies operating in overseas locations relating to political, economic, legal, industry and financial conditions, not all of which are within its control. The Group identifies and monitors the key risks and uncertainties affecting the Group and runs its business in a way that minimises the impact of such risks where possible.

The following risks factors, which are not exhaustive, are particularly relevant to the Group's current and future business activities:

Licensing and title risk

Governmental approvals, licences and permits are, as a practical matter, subject to the discretion of the applicable governments or government offices. The Group must generally and specifically in relation to future projects comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations by the permitting authorities. New laws and regulations, amendments to existing laws and regulations, or more stringent enforcement could have a material adverse impact on the Group's result of operations and financial condition. The Group's exploration activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitation.

There is a risk that negotiations with the relevant government in relation to the renewal or extension of a licence may not result in the renewal or grant taking effect prior to the expiry of the previous licence and there can be no assurance as to the terms of any extension, renewal or grant. This is a risk that all resource companies are subject to, particularly when their assets are in emerging markets. The Group continually seeks to do everything within its control to ensure that the terms of each licence are met and adhered to.

Dependency on key personnel

Kendrick's management comprises a small team of experienced and qualified executives. The Directors believe that the loss of any key individuals in the team or the inability to attract appropriate personnel could impact Kendrick's performance.

Although Kendrick has entered into contractual arrangements to secure the services of its key personnel, the retention of these services and the future costs associated therewith cannot be guaranteed.

Royalty arrangement and the Kabwe plant

Prior to the Company Listing on 6 May 2022 and acquiring the Nordic Projects the Company had an interest in the Kabwe Project which has been fully provided against. As reported in the 2020 accounts Jubilee Metals Group PLC ("Jubilee") is the sole operator of the Kabwe Project and has full control of the execution methodology. In addition, Jubilee has agreed to fund the Kabwe Project by way of debt finance without dilution to Kendrick's shareholding which amounted to a fixed 11% and has been converted to an 11% royalty. Jubilee is currently actively engaged in copper refining through its purpose-designed refinery at Kabwe. The zinc price has been extremely volatile and the zinc tailings at Kabwe may be metallurgically complex, giving way to copper production, being the best alternative to the refinery. Against the aforementioned, the Board has no expectation of any royalty income in the midterm.

Legal risk

The legal systems in the countries in which Kendrick's operations are currently and prospectively located are different to that of the UK. This could result in risks such as: (i) potential difficulties in obtaining effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation, or in an ownership dispute; (ii) a higher degree of discretion on the part of governmental authorities; (iii) the lack of judicial or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulation, decrees, orders and resolutions; and (v) relative inexperience of the judiciary and courts in such matters.

In certain jurisdictions the commitment of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be more uncertain. In particular, agreements in place may be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance that joint ventures, licences, licence applications or other legal arrangements will not be adversely affected by the actions of government authorities or others and the effectiveness of and enforcement of such arrangements in these jurisdictions cannot be assured.

Liquidity and financing risk

Although the Directors consider that Kendrick has sufficient funding in place, there can be no guarantee that further funding will be available and on terms that are acceptable to Kendrick should additional costs or delays arise. Nor can there be any guarantee that the additional funding will be available to allow Kendrick to obtain and develop additional projects in the necessary timeframe.

The Directors  review Kendrick's funding requirements on a regular basis, and take such action as may be necessary to either curtail expenditures and / or raise additional funds from available sources including asset sales and the issuance of debt or equity.

Governmental approvals, licences and permits

Governmental approvals, licences and permits are, as a practical matter, subject to the discretion of the applicable governments or government offices. Kendrick must comply with known standards and existing laws and regulations, any of which may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations by the permitting authorities. Delays in granting such approvals, licences and permits, new laws and regulations, amendments to existing laws and regulations, or more stringent enforcement could have a material adverse impact on Kendrick's result of operations and financial condition. Kendrick's activities are dependent upon the grant of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitation.

There is a risk that negotiations with the relevant government in relation to the renewal or extension of a licence may not result in the renewal or grant taking effect prior to the expiry of the previous licence and there can be no assurance as to the terms of any extension, renewal or grant.

Liability and insurance

The nature of Kendrick's business means that Kendrick may be exposed to potentially substantial liability for environmental damages.  There can be no assurance that necessary insurance cover will be available to Kendrick at an acceptable cost, if at all, nor that, in the event of any claim, the level of insurance carried by Kendrick now or in the future will be adequate.

Kendrick's operations are also subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with these and similar future regulations could be substantial and the risk of accidental contamination or injury from hazardous materials with which it works cannot be eliminated. If an accident or contamination were to occur, Kendrick would likely incur significant costs associated with civil damages and penalties or criminal fines and in complying with environmental laws and regulations. Kendrick's insurance may not be adequate to cover the damages, penalties and fines that could result from an accident or contamination and Kendrick may not be able to obtain adequate insurance at an acceptable cost or at all.

Currency risk

The Company expects to present its financial information in Sterling although part or all of its business may be conducted in other currencies. As a result, it will be subject to foreign currency exchange risk due to exchange rate movements which will affect Kendrick's transaction costs and the translation of its results. The majority of the payments were in Euros and SEK (Swedish Korna), but while there were significant fluctuations in the year the payments were not significant at this early stage as there were limited operations.

Economic, political, judicial, administrative, taxation or other regulatory factors

Kendrick may be adversely affected by changes in economic, political, judicial, administrative, taxation or other regulatory factors, in the territories in which Kendrick will operate particularly in the Scandinavian region.

Taxation

Any change in Kendrick's tax status or the tax applicable to holding Ordinary Shares or in taxation legislation or its interpretation, could affect the value of the investments or assets held by the Company, which in turn could affect Kendrick's ability to provide returns to Shareholders and/or alter the post-tax returns to Shareholders. Statements in this document concerning the taxation of Kendrick and its investors are based upon current tax law and practice which may be subject to change.

Approved by the Board of Directors and signed on behalf of the Board.

C Bird

Chairman

29 April 2024