Audited Financial Results for the Year Ended 31 December 2023

Medcaw is please to announce the publication of the audited results for the year ended 31 December 2023. A copy of the Company’s annual report will be made available on the Company’s website.

Chairman’s Statement

It is my pleasure to submit the Chairman’s Statement for the Company covering the twelve-month period to 31 December 2023.

During the period, the company commenced its search for a suitable acquisition target with the potential to return real value to shareholders. The directors reviewed several opportunities before agreeing to acquire 100% of Abyssinian Metals Limited ("AML"), a company developing the Kenticha Lithium Project located in Oromia State, Southern Ethiopia (“the Transaction”).

AML is a public limited company incorporated in Australia. It is a clean energy metals company with a focus on the development of the Kenticha Lithium Project in which it has a 51% legal and beneficial interest. Kenticha is a highly evolved, rare element, Lithium Caesium Tantalum (LCT) pegmatite project comparable to other major rare-element pegmatites such as Greenbushes, Tanco, Wodgina, Volta Grande and Altai No.3. Kenticha is a development asset which AML intends to develop with the production of spodumene concentrate planned in stages, with near-term production through a Dense Media Separation (DMS) modular plant.

Under AML’s stewardship the geological inventory at Kenticha has grown from circa 47mt of lithium oxide (Li2O) at a grade of around 0.8%; to 85.6mt at 0.98% Li2O plus a further 50Mt Exploration Target (at similar grade). By world standards, Kenticha is considered to be in the top 3-4 largest undeveloped hard rock lithium projects in the world, with an estimated economic life of in excess of 40 years (based on prevailing lithium-spodumene prices).

The Transaction has taken longer than was initially intended and this is due to the emergence of a dispute between AML and its 49% joint venture partner in the project - Oromia Mining Share Company (the parastatal mining company for Oromia State). In the last quarter of 2023, negotiations occurred between the joint venture partners, the Federal Government of Ethiopia and the Ethiopian Federal Ministry of Mines and there is now a clear process in motion to achieve a resolution of the dispute. AML, through its legal advisors (Clifford Chance), constructed and tabled a proposal which not only serves as a dispute resolution, moreover, establishes a platform for a revised joint venture agreement, and the issuance of the Mining Licence for the Kenticha Lithium Project (currently an Exploration License exists over the primary rock resource).

Over the last seven months, notwithstanding that there has been no “on ground” activity at Kenticha Mine, AML has used the time to enhance its technical studies for the development of the Kenticha Lithium Project. The team at AML are ready to re-commence operations at the Kenticha Mine shortly and the Transaction with Medcaw can then proceed.

The Transaction constitutes a reverse takeover under the Listing Rules. The Company requested its securities be suspended from trading with effect from 7 July 2023.

The Company and AML have engaged professional advisors and continue to work through diligence and documentation to complete the Transaction.

Additionally during the period, the Company raised gross proceeds of £400,000 via the issue of a total of 5,000,000 new Ordinary Shares in the Company. These shares rank pari passu with the existing Ordinary Shares in the Company. Alongside the equity raise, 300,000 broker warrants at the placing price of 8p per share and 1,600,000 warrants at 4p were also issued to a third-party consultant for transactional services.

I would like to thank our shareholders, my fellow directors and our colleagues at Orana Corporate for their continuing patience and ongoing support.

Marcus Yeoman

Non-Executive Chairman

The accompanying notes to the annual report form part of these financial statements.

STATEMENT OF FINANCIAL POSITION

AS AT 31 December 2023

The accompanying notes to the annual report form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2023

1 In 2023 £187,160 of IPO funds were received by the Company

The accompanying notes on pages 23 to 35 form part of these financial statements

General Information

The principal activity of the Company is to pursue one or more acquisitions.

The Company listed on the London Stock Exchange (“LSE”) on 21ST December 2022.

Accounting policies

2.1 Basis of preparation

The principal accounting policies applied in the preparation of the Financial Statements are set out below. These policies have been consistently applied to the year presented, unless otherwise stated.

The Company Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards (‘IFRS’).

The Company Financial Statements are presented in £ unless otherwise stated.

2.2 Going concern

The Company’s business activities, together with facts likely to affect its future operations and financial and liquidity positions are set out in the Chairman’s Statement and the Strategic Report.

The Company’s financial statements have been prepared on the going concern basis, which contemplates that the Company will be able to realize its assets and discharge liabilities in the normal course of business. Despite this, there can be no assurance that the Company will either achieve or maintain profitability in the future and financial returns arising therefrom, may be adversely affected by factors outside the control of the Company.

The Company has had recurring losses in the current year and prior period, and its continuation as a going concern is dependent on the Company’s ability to successfully fund its operations by obtaining additional financing from equity injections or other funding.

This indicates that a material uncertainty exists that may cast significant doubt over the Company’s ability to continue as a going concern.

The Company may reasonably expect to maintain continued support from shareholders and other financiers that have supported the Company’s previous capital raising to assist with meeting future funding needs; and

All outgoing and expenditure can be suspended until the sufficient completion of a capital raise.

The financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern. The auditors have made reference to going concern by way of a material uncertainty within their report.

2.3 Cash and cash equivalents

2.4 Equity

Share capital is determined using the nominal value of shares that have been issued.

Retained losses includes all current and prior year results as disclosed in the income statement.

2.5 Foreign currency translation

Transactions in currencies other than the functional currency are recognised at the rates of exchange on the dates of the transactions. At each reporting date, monetary assets and liabilities are retranslated at the rates prevailing at the balance sheet date with differences recognised in the Statement of comprehensive income in the year in which they arise.

2.6 Financial instruments

Classification

The Company classifies its financial assets in the following measurement categories:

those to be measured subsequently at fair value (either through OCI or through profit or loss);

those to be measured at amortised cost; and

those to be measured subsequently at fair value through profit or loss.

• Recognition
• Measurement

Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Impairment

2.7 Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received net of any direct issue costs.

2.8 Share based payments

The Group issues equity-settled share based payments to certain advisors.

Equity-settled Share based payments are measured at fair value at the date of grant.

Fair value is measured using an appropriate options pricing 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 fair value determined at the grant date of the equity-settled Share based payments is expensed on a straight-line basis over the vesting period, together with a corresponding increase in equity, based upon the Group’s estimate of the shares that will eventually vest.

Where the terms of an equity-settled transaction are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in value of the transaction as a result of the modification, as measured at the date of the modification.

Where an equity-settled transaction is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the transaction is recognised immediately. However, if a new transaction is substituted for the cancelled transaction and designated as a replacement transaction on the date that it is granted, the cancelled and new transactions are treated as if they were a modification of the original transaction, as described in the previous paragraph.

2.9 Taxation

2.10 Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.

Estimation of fair value of warrants issued in the year

The fair value of the warrants issued during the period have been calculated using a Black Scholes model which requires a number of assumptions and inputs, see Note 14 below.

2.11 New standards and interpretations not yet adopted

Segmental analysis

The Company manages its operations in one segment, being seeking a suitable investment. The results of this segment are regularly reviewed by the board as a basis for the allocation of resources, in conjunction with individual investment appraisals, and to assess its performance.

Operating Loss

Operating loss for the company is stated after charging:

Directors’ and Employees

The average number of persons employed by the Company (including executive directors) during the year year ended 31 December 2023 was:

The aggregate payroll costs of these persons were as follows:

The Company has total carried forward losses of £815,418 (2022: £ 260,107). The taxed value of the unrecognised deferred tax asset is £156,249 (2022: £49,420) and these losses do not expire. No deferred tax assets in respect of tax losses have been recognised in the accounts because there is currently insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.

Earnings per share

On 23rd June 2023 £149,109 was loaned to Abyssinian Metals Pty Ltd (AML) to fund working capital requirements. The loan accrues interest at 10% per annum payable in monthly instalments. The loan is repayable upon demand by the lender and can be converted into shares in AML subject to certain milestones. As at reporting date the loan has not been converted to equity. Due to inherent uncertainties around the collectability of the loan a provision has been raised and an impairment charge for the full amount recorded in the current year.

Trade and other payables

1 On 9th May 2022 and 10th November 2022 the company issued 1,011,275 Ordinary Shares at a subscription price of £0.04 in connection with the seed round of fundraising.

2 On admission to the Standard List of the LSE on 21st December 2022, 6,370,820 shares were issued at a placing price of £0.10

3 On 6th July 2023 the company issued 5,000,000 Ordinary shares at a subscription price of £0.01.

Share based payments reserve

The weighted average time to expiry of the warrants as at 31 December 2023 is 2.02 years (2022 : 1.98 years)

Financial Instruments and Risk Management

Principal financial instruments

The financial liabilities are payable within one year.

General objectives and policies

Per the Directors report the overall objective of the Board is to set policies that seek to reduce risk as far as practical without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are:

Policy on financial risk management

The Company’s principal financial instruments comprise cash and cash equivalents, loan receivables, trade and other payables. The Company’s accounting policies and methods adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are set out in note 2 – “Accounting Policies”.

Derivatives, financial instruments and risk management

Credit risk

The Company applies IFRS 9 to measure expected credit losses for its loan receivables, these are regularly monitored and assessed. Loans aresubject to an expected credit loss provision when it is probable that amounts outstanding are not recoverable as set out in the accounting policy. Due to the inherent uncertainty in the recoverability of the loan to AML the Company has raised a provision against the full amount and an impairment charge has been recorded.

The Company’s principal financial assets are cash and cash equivalents and a loan note. Cash equivalents include amounts held on deposit with financial institutions. The loan note is an unsecured loan accruing interest at 10% per annum. The loan is repayable upon demand by the lender and can be converted into shares in AML subject to certain milestones not being met. As at reporting date the loan has not been converted to equity

No financial assets have indicators of impairment.

Liquidity risk

During the 31 December 2023, the Company was financed by cash raised through equity funding. Funds raised surplus to immediate requirements are held as cash deposits in Sterling.

The table below shows the undiscounted cash flows on the Company’s financial liabilities as at 31 December 2023 on the basis of their earliest possible contractual maturity.

Capital management

The Company considers its capital to be equal to the sum of its total equity. The Company’s objective when managing its capital is to ensure it obtains sufficient funding for continuing as a going concern. The Company funds its capital requirements through the issue of new shares to investors.

Related Party Transactions

Provision of services

During the year £107,225 (2022: £12,670 was incurred for the provision of administrative and corporate accounting services from Orana Corporate LLP of which Charles Wood and Sarah Cope are both directors or past directors of the Company and Partners of Orana Corporate LLP. These transactions have been treated at arm’s length and processed at the fair market value of services provided. Other than these there were no other related party transactions.

Ultimate Controlling Party

As at 31 December 2023, there was no ultimate controlling party of the Company.

Capital Commitments

As at 31 December 2023 there were no capital commitments for the Company.

Subsequent events

There have been no subsequent of events after 31 December 2023.