Current Status of Project

Cadence holds an interest in the Sonora Lithium Project through a 30% stake in the joint venture interests in Mexalit S.A. de CV (“Mexalit”) and Megalit S.A. de CV (“Megalit).

In April 2022 and May 2023, the Mexican Government made changes to its Mining Law, which included prohibiting lithium concessions, declaring lithium a strategic sector, and giving a state-owned entity exclusive rights for lithium mining operations.

Despite existing concessions, including those held by Mexilit and Megalit, being supposedly unaffected, the General Directorate of Mines (“DGM”) started reviewing nine lithium concessions held by Mexican subsidiaries. Mexilit and Megalit submitted evidence of compliance with minimum investment obligations, but these concessions were still cancelled.

Ganfeng and Cadence believe the cancellations violate Mexican and international law and have filed administrative review recourses. Cadence also issued a Request for Consultations and Negotiations to the Government of Mexico under the United Kingdom-Mexico Bilateral Investment Treaty regarding the revocation of mining concessions for the Sonora
Lithium Project.

In their Request, Cadence and REMML have identified various BIT obligations that Mexico has breached, including Mexico’s obligation not to unlawfully expropriate the investments of UK investors such as Cadence and REMML and its obligation to treat such investments fairly and equitably.

In accordance with Article 10 of the BIT, Cadence and REMML have requested consultations and negotiations with Mexico to resolve the dispute amicably. The BIT provides for disputes to be resolved by international arbitration if they cannot be resolved through consultation and negotiation.

The affected concessions include those granted to Mexilit S.A. de CV (“Mexilit”) and Minera Megalit S.A. de CV (“Megalit”), which are joint venture companies in which Cadence holds a 30% stake through REMML.