Kendrick Resources : Document

Kendrick Resources PLC

7/8 Kendrick Mews

South Kensington

London

SW7 3HG

Telephone + 44 (0)20 7581 4477

30 September 2022

Kendrick Resources Plc

("Kendrick" or the "Company")

Interim Results for the Six Months Ended 30 June 2022

Kendrick Resources Plc ("Kendrick" or the "Company"), the Scandinavian focused new age mineral exploration and development company with nickel and vanadium projects in Norway, Sweden and Finland, announces its unaudited interim results for the six months ended 30 June 2022.

OPERATIONAL, FINANCIAL CORPORATE and STRATEGY REVIEWS

Operational Review

The period under review has been transformatory for the Company. On 6 May 2022, Kendrick completed an Initial Public Offering ("IPO") on the Standard List of the London Stock Exchange and the acquisition of its projects in Sweden and Finland as well as an option over its projects in Norway (the "Projects"). This option was exercised on 16 May 2022, more details of which are provided in the Corporate Highlights section of this review. Following the IPO, the Group undertaken a thorough review of all its projects and licences and has made a number of local appointments to manage operations and completed a review of all available technical information.

Technical review of Projects: After the IPO and having acquired its projects in Sweden, Finland and exercised its option in relation to its Norwegian projects, the Company 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.

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

• Finland - the Karhujupukka vanadium-magnetite exploration project
• Sweden - the Kramsta, Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively the "Central Sweden Project")

Registered in England, No. 2401127

• Norway - an option over the Espedalen, Hosanger, and Sigdal exploration nickel-copper-cobalt projects in Norway.

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

Norway Projects: The Company's review has identified significant opportunities within the nickel projects in Norway. The Director's believe this review and present nickel price forecasting means the Company is extremely well positioned with the Norwegian nickel assets. Kendrick is currently digitising and reassessing nickel ore resources, to direct future drilling programmes, towards early production. The nickel resources are demonstrating good grades and, in most cases, have accompanying copper and sometimes cobalt. It is intended that the Company will commence a strike extension drilling programme when the most prospective and amenable target has been identified.

Swedish & Finnish Projects: The Swedish vanadium project is being prepared for an extension drilling programme with the same intention for the ultramafic rock on the Finnish licences. In reviewing the Airijoki project significant copper anomalies have been identified and the occurrences for future testing are currently being modelled. All licences, where appropriate, have been applied for with copper included as an exploration target. Plans are being drafted for metallurgical test work in order to increase recoveries, whilst maintaining magnetite vanadium grade. The Company is preparing plans to conduct further test work to advance the processing to the end product vanadium electrolytes.

Financial Review

Financial highlights:

• £185K loss after tax (2021: £169K)
• Approximately £2.173m cash at bank at the period end (Dec 2021: £17k).
• The basic and diluted losses per share are summarised in the table below:

Loss per share (pence)		2022	2021
Basic	Note 3	(0.24)p	(1.51)p
Diluted	Note 3	(0.15)p	(1.51)p

• The net asset value as at 30 June 2022 was £5.26m (31 December 2021 (£236k))

Fundraisings and issues of shares

At Listing, the Company through a fundraise raised £3,250,000 (before expenses) (the "Fundraise") through the issue of 92,857,143 new ordinary shares in the capital of the Company ("Ordinary Shares") at

3.5 pence per Ordinary Share (the "Placing Price") to the subscribers to the Fundraising (the "Placees") and the issue of 91,000,143 warrants to the Placees with an exercise price of £0.06 per Ordinary Share, exercisable for 3 years from Admission (the "Placing Warrants")

The funds raised on Admission provided the Group with sufficient money to undertake the exploration and assessment of the Company's projects in Sweden, Finland and Norway. Details of these work programmes are set out in the Company's Prospectus dated 29 April 2022.

On 20 December 2020, the Company executed a £210,000 unsecured convertible loan note instrument (the "December 2020 Convertible Loan Note") and received subscriptions of £210,000 in respect of this

loan note from private investors. The December 2020 Convertible Loan Note does not pay interest and was repaid at the IPO by the issue of 10,000,000 Ordinary Shares at a 40% discount to the Placing Price.

On 2 July 2021, the Company executed a £350,000 unsecured convertible loan note instrument (the "July 2021 Convertible Loan Note") and received subscriptions of £350,000 in respect of this loan note from private investors including £30,000 from Kjeld Thygesen and £48,000 from Colin Bird, who are directors of the Company. The July 2021 Convertible Loan Note did not pay interest and was repaid at the IPO by the issue of i) 13,333,333 Ordinary Shares at a 25% discount to the Placing Price of which 1,142,857 were issued to Kjeld Thygesen and 1,828,571 to Colin Bird and ii) one (1) warrant for each Ordinary Share issued to the noteholders at a strike price of the Placing Price. The 13,333,333 warrants will be valid for a period of 18 months from the IPO and 1,142,857 of the warrants will be issued to Kjeld Thygesen and 1,828,571 to Colin Bird.

On 15 November 2021, the Company executed a £150,000 unsecured convertible loan note instrument which was, with the consent of the noteholders, subsequently increased to £150,000 (the "November 2021 Convertible Loan Note") and received subscriptions of £119,500 in respect of this loan note from private investors including £37,000 from Lion Mining Finance Ltd, a company controlled by Colin Bird, a director of the Company. The November 2021 Convertible Loan Note does not pay interest and was repaid at the IPO by the issue of i) 4,552,381 New Ordinary Shares at a 25% discount to the Placing Price of which 1,409,524 were issued to Lion Mining Finance Ltd and ii) one (1) warrant for each Ordinary Share issued to the noteholders at a strike price of the Placing Price. The 4,552,381 warrants are valid for a period of 18 months from the IPO and 1,409,524 of the warrants were issued to Lion Mining Finance Ltd.

At the IPO, 9,721,254 Ordinary Shares were issued at the Placing Price to settle fees due by the Company of which 4,528,571 Ordinary Shares were issued to Colin Bird to settle £158,500 of accrued unpaid fees.

Corporate Review

Company Board: The Board of the Company comprises Colin Bird, Executive Chairman and Non- executive directors Kjeld Thygesen, Evan Kirby and Alex Borrelli.

Listing: 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 (the "Listing" or "IPO") .

Corporate Acquisitions: At Listing the Company had no subsidiaries and at IPO pursuant to a binding sales agreement dated 18 January 2021 with Pursuit Minerals (the "Binding Sales Agreement") which was assigned to the Company :

1. 100% of Northern X Finland Oy ("Northern X Finland"), which owns in Finland the Koitelainen vanadium projects which hosts a defined Mineral Resource as defined by the JORC Code (2012) and the Karhujupukka vanadium-magnetite exploration project ("Finnish Projects");
2. 100% of Northern X Scandinavia AB ("Northern X Scandinavia") which owns in Sweden the Airijoki and vanadium project (the "Airijoki Project") which hosts a defined Mineral Resource as defined by the JORC Code (2012) and the Kramsta,Kullberget, Simesvallen and Sumåssjön exploration projects in Sweden (collectively known as the "Central Sweden Projects") (the Airijoki Project and the Central Sweden Projects are collectively the "Swedish Projects"); and
3. an exploration and option agreement to acquire from Eurasian Minerals Sweden AB the Espedalen, Hosanger, and Sigdal exploration nickel-copper-cobalt projects in Norway (the "Norwegian Projects") (the "EMX Option Agreement")

Under the terms of the Binding Sales Agreement as subsequently amended the consideration payable to Pursuit Minerals was as follows:

1. A$50,000 cash paid on execution of the Binding Sales Agreement;
2. £1,475,000 satisfied through the issue of 42,142,857 Ordinary Shares;
3. A$250,000 in cash on the Company's completion of a feasibility study on any of the individual project areas in the Tenements that demonstrate an internal rate of return of not less than 25%; and
4. A$500,000 in cash upon a decision by the Company to mine in any individual project area in the projects acquired from Pursuit Minerals.

On 20 January 2021, the Company was assigned the Binding Sales Agreement by Lion Mining Finance Ltd and Camden Park Trading Limited, companies controlled by Colin Bird, (the "Assignment Agreement"). The Assignment Agreement was conditional on the completion of the Binding Sales Agreement and at the IPO the consideration due under the Assignment Agreement was £802,000 of which £52,000 is to be settled in cash and £750,000 was settled by the issue of 35,714,285 Ordinary Shares in the Company at an issue price of 2.1 pence per Ordinary Share.

On 16 May 2022 the Company announced it had exercised the EMX Option Agreement and on 12 August 2022 that the Company that it has completed the acquisition of the Espedalen, Hosanger, and Sigdal nickel- copper-cobalt exploration projects in Norway (the "Norwegian Projects") from EMX Scandinavia AB (previously named Eurasian Minerals Sweden AB) ("EMX"). The consideration paid to EMX for the exercise of the option during the period was U$81,949 and post the period end the issue of 20,226,757 Ordinary Shares.

Lock Up and Orderly Market arrangements:

At IPO the Directors and their related parties, in aggregate, held 47,294,860 Ordinary Shares, representing 21.62% of the Enlarged Share Capital. The Directors have agreed with the Company and its brokers, 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 not to dispose of their Ordinary Shares without first consulting the Company and Novum in order to maintain an orderly market for the Shares.

The 42,142,857 Ordinary Shares issued to Pursuit Minerals have not been sold as at the date of this report and are subject to the following lock up and orderly market arrangements and subject to orderly market arrangements for the 12 months to 5 May 2023

No. of shares	Lock up
15,357,143	None
8,928,572	Until 5 November 22
8,928,571	Until 5 May 23
8,928,571	Until 5 Nov 23

Strategy Review

The Company'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 Company 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 both base and precious metals, the Directors believe that its projects provide a base from which the Company will seek to add significant value through the application of structured and disciplined exploration. The Company 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 5focused on quality vanadium and nickel mineral resources in Scandinavia.

The Company 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

The review of the Company's projects acquired at the IPO has given confidence that the north European assets are well located with significant potential in the quickly emerging space of energy generation and storage.

Last year inflation was seen as a distant issue but it, and the cost of living, are now front and centre of financial headlines. This has already slowed down major stock markets but may be good for the small mines sector since as, historically they have been seen to outperform.

The Board remains confident they have assembled an enviable portfolio of projects and look forward to advancing all our projects in the second half and providing our shareholders with the prospects of enhanced value flowing into next year.

Post Period Events

On 12 August 2022 the Company announced that it has completed the acquisition of the Espedalen, Hosanger, and Sigdal nickel-copper-cobalt exploration projects in Norway (the "Norwegian Projects") from EMX Scandinavia AB (previously named Eurasian Minerals Sweden AB) ("EMX"). The consideration paid to EMX for the exercise of the option during the period was U$81,949 and post the period end the issue of 20,226,757 Ordinary Shares.

INTERIM MANAGEMENT REPORT

The Directors are required to provide an Interim Management Report in accordance with the Financial Conduct Authorities ("FCA") Disclosure Guidance and Transparency Rules ("DTR"). The Directors consider the preceding Operational, Financial, Corporate and Strategy Review of this Half Yearly Financial 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 for the remaining six months of the year ended 31 December 2022.

The following statement of the Principal Risks and Uncertainties, the Related Party Transactions, the Statement of Directors' Responsibilities and the Operational, Financial, Corporate and Strategy Review constitute the Interim Management Report of the Company for the six months ended 30 June 2022.

Principal Risks and Uncertainties

The principal risks that are specific to the Company were detailed under this heading in Part 1 Summary of the Company's prospectus which was published on 29 April 2022 (the "Prospectus") which is available