Cloudbreak Discovery : Annual Report June 2022

Registered number: 6275976

CLOUDBREAK DISCOVERY PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2022

CLOUDBREAK DISCOVERY PLC

CONTENTS

	Page
Company Information	2
Chairman's Report	3
Strategic Report	5
Directors' Report	9
Statement of Directors' Responsibilities	10
Corporate Governance Report	11
Independent Auditor's Report	17
Statements of Financial Position	23
Consolidated Comprehensive Income Statement	24
Consolidated Statement of Changes in Equity	25
Company Statement of Changes in Equity	26
Statements of Cash Flows	27
Notes to the Financial Statements	28

CLOUDBREAK DISCOVERY PLC

COMPANY INFORMATION

Directors	Samuel "Kyler" Hardy
	Emma Priestley
	Andrew Male
	Paul Gurney - appointed 14th April 2022
Company Secretary	Westend Corporate LLP
Registered Office	Suite 1011
	15 Ingestre Place
	London
	W1F 0DU
Company Number	6275976
Bankers	HSBC Bank plc
	69 Pall Mall
	London
	SW1Y 5EY
Financial Adviser	Novum Securities Limited
	8-10 Grosvenor Gardens
	London
	SW1W 0DH
Registrar	Share Registrars Ltd
	Suite E, First Floor
	9 Lion and Lamb Yard
	Farnham
	Surrey
	GU9 7LL
Independent Auditor	PKF Littlejohn LLP
	Statutory Auditor
	15 Westferry Circus
	Canary Wharf
	London
	E14 4HD
Solicitors	Bird & Bird LLP
	12 New Fetter Lane
	London
	EC4A 1JP

2

CLOUDBREAK DISCOVERY PLC

CHAIRMAN'S REPORT

Company Updates

I am pleased to provide shareholders with an update on Cloudbreak's developments over the course of our first financial year as a listed company on the Main Market of the London Stock Exchange.

In what has been a challenging year for many companies, we have seen continuing shareholder support by way of a successful fundraise of £1.5 million. This will help to progress our portfolio of projects and execute on royalty acquisitions, providing near-term cashflow.

In addition to strengthening our balance sheet, Cloudbreak also appointed Paul Gurney to the Board as a Non-Executive Director in April 2022. Paul brings a wealth of experience in capital markets, deal structuring and facilitating transactions, having recently worked as a Managing Director of BMO's equity desk in London.

Projects

Throughout the Period, Cloudbreak has demonstrated the viability of its project generator model, entering into option agreements for several of its Northwest Portfolio projects, located in northwestern British Columbia ("BC").

Following a successful first phase of exploration, the Group commenced a high-resolutionhelicopter-borne magnetic survey over the Northwest Portfolio, across the Northern Treasure, Rizz, Icefall and Atlin West projects. The objective of this survey was to identify prominent, potentially mineralised structures, and to help determine the next stage of ground-based exploration. Furthermore, the Group has generated and staked an additional project in the prolific Toodoggone region of BC, called the Foggy Mountain Project, announced in April 2022, highlighting Cloudbreak's continued desire to explore and monetize new opportunities.

Another key milestone for Cloudbreak was the formation of a strategic alliance with Alianza Minerals (the "Alliance") to explore for copper deposits in the United States. During the Period, the Alliance made two acquisitions, the Klondike project in Colorado and the Stateline project. Both properties were optioned to Allied Copper in December 2021 and February 2022 respectively, under an agreement which included Allied Copper committing to exploration expenditure and the Alliance retaining a 2% net smelter royalty ("NSR"), split equally between the parties.

The Group has been active in expanding its portfolio across several jurisdictions and commodities throughout the year. In April 2022, Cloudbreak marked its transition into the energy sector by entering into two separate partnerships working towards submitting applications to acquire onshore petroleum exploration licenses in Namibia. These partnerships offer an exciting opportunity to participate in new generative initiatives in Namibia, where exploration for hydrocarbons is at an early stage.

Furthermore, the Group entered into its first royalty agreement with G2 Energy Corp in May 2022. As part of the agreement, Cloudbreak will provide a portion of the acquisition financing for the Masten Unit Energy Project, located in Cochran County Texas, by way of debenture and a 3.25% overriding royalty interest ("ORI") in the project. Through this and similar transactions, we see an opportunity to create significant shareholder value by growing Cloudbreak's cashflow through structured deals and royalty acquisitions.

Towards the end of the year, Cloudbreak announced Norseman Silver Inc completed the acquisition of the Caribou property, ratifying Cloudbreak's 2% NSR. This transaction exemplifies our business model and how Cloudbreak can generate accretive opportunities with significant exploration upside for our partners.

Post year end, the Group entered into an agreement with Legado Oil & Gas Limited (formerly Iron Forge Holdings (III) Limited) to provide development capital for the Butte Strawn Energy Project in Irion County, Texas. The capital is being deployed as a convertible debenture which can be converted into a 6% ORI.

Progress has continued at Foggy Mountain as the team completed a reconnaissance surface programme in October 2022 which confirmed three of the four historic mineral occurrences (the fourth minfile area was not visited in 2022). At our Northern Treasure project, an airborne magnetic survey was also completed in October 2022, identifying several structures that are coincident with minfile occurrences.

Outlook

The year ended 30 June 2022 was active for the Group, having hit a number of operational milestones. We further diversified our portfolio with projects in the energy sector and in new jurisdictions, as well as acquiring our first royalty bringing near-term cashflow.

Despite the global macroeconomic climate, the outlook for the natural resources sector looks robust. Our focus on commodities key to the energy transition movement offers an attractive opportunity for significant shareholder returns as demand, and therefore prices, are set to remain high. Our project generator model allows us to diversify our portfolio across the resource sector, building value while minimizing risk and cost. This helps build cashflow for our shareholders.

We are starting to see some projects reach a point where we could potentially begin receiving royalty payments further underpinning the benefit of our business model. It is down to the depth of experience within our team that we are able to execute this model successfully.

We look forward to keeping investors updated over the next year and beyond as we generate and pursue new ideas, including lithium assets and bauxite projects, while continuing to diversify into energy royalties and attracting new partnerships.

3

CLOUDBREAK DISCOVERY PLC

CHAIRMAN'S REPORT

Financial Review

During the year ended 30 June 2022, the Group earned £559,523 (2021: £2,560,070) in revenue from property option sale agreements. At the end of the fiscal year, there was £310,578 in cash on hand with the cash reserves to be used in the short term to cover compliance costs, initial mineral property due diligence and other costs incidental to the identification and development of mineral acquisition opportunities.

In March 2022, the Company completed a fundraising of £1,469,770 by issuing 19,596,931 ordinary shares at £0.075 per share. In March 2022, the Company drew down £750,000 of the Crescita Capital LLC facility for an issue of 12,000,000 ordinary shares at £0.0625 per share.

Subsequent to the year end, in July 2022 the Group raised £585,625 through the issue of new ordinary shares and has continued to review and acquire mineral and energy projects and generate revenue through optioning these assets to exploration partners. The buying and selling or optioning of its projects will continue as the core of the Company as we build a new, growth-focused diversified project generator, supported with a natural resource royalty business.

The loss for the year was £5,557,029 (2021: £902,060 loss) was predominantly made up of administrative expenses and fair value loss on investments. The result for the year ended 30 June 2022 consisted mainly of income from property option payments, expenses from professional and consulting fees and fair value adjustments. The fair value loss of £2.83 million on both listed and unlisted investments held in the Canadian subsidiary is an unrealised loss but has contributed negatively to the Company's 2022 year. For a further breakdown on expenses, please refer to note 23 and for further breakdown on fair value of investments, please refer to note 6.

Financial Position

The Group's Statement of Financial Position as at 30 June 2022 and comparatives at 30 June 2021 are summarised below:

	2022	2021
	£	£
Current assets	1,611,212	1,799,847
Non-current assets	3,805,897	4,383,998
Total assets	5,417,109	6,183,845
Current liabilities	1,395,910	895,264
Total liabilities	1,395,910	895,264
Net assets	4,021,199	5,288,581

On behalf of the Board, I would like to record our thanks to those who have helped the Company throughout the year.

Samuel Hardy

Kyler Hardy

Chairman and Chief Executive Officer

28 October 2022

4