Mr. Robert Butchart reports

CADAN ANNOUNCES MINING GROUP LIMITED SIGNS FORMAL AGREEMENTS FOR 80% INTEREST IN COMVAL PROJECT

Cadan Resources Corp., further to its announcement of Nov. 7, 2011, has signed a formal share purchase agreement and facilitation agreement with Mining Group Limited whereby Mining Group may acquire an 80-per-cent interest in the Comval copper-gold project located in the Compostella valley, Philippines. Cadan will retain a 20-per-cent equity interest in the project, which is free carried until the Mining Group has incurred a minimum of $48-million (Australian) of expenditures on the Comval project.

The formal agreements provide Cadan with the right to acquire up to a 17-per-cent equity position in the Mining Group on a fully diluted basis, and the right to nominate two directors to MGL's board for so long as it holds at least 10 per cent of the issued shares in MGL, below which it shall be entitled to nominate one director to MGL's board.

The terms of the formal agreements provide that Mining Group will acquire an 80-per-cent interest in Philco Mining Corporation (PMC), being Cadan's Philippine-based affiliate which holds exploration permits 000001-XI and 000002-09-XI, comprising the Comval project. Unless otherwise mutually agreed, closing is scheduled for Jan. 17, 2012.

Terms for the acquisition of 80 per cent of the Comval project

The formal agreements contemplate that among other items, the following will occur at closing:

• MGL will pay to Cadan a facilitation fee of $3-million (Australian) and issue of 2.6 million fully paid ordinary shares in MGL; $1-million (Australian) of the cash payment will be satisfied by applying the proceeds of a prior loan from MGL to Cadan in the same amount, and deeming the loan repaid.

• Cadan will be issued two million ASX-listed options in MGL, with an exercise price of 20 Australian cents each, subject only to Cadan paying to MGL an aggregate issue price for the options of one Australian cent per option ($20,000 (Australian)), which may be offset against the facilitation fee.

• Cadan will be issued 500,000 ordinary shares in MGL at a price of 20 Australian cents per share subject only to Cadan paying to MGL the subscription price for the shares of $100,000 (Australian), which may be offset against the facilitation fee;

• MGL and Cadan will enter into a shareholder agreement setting out their respective rights as co-owners of PMC and certain provisions governing the management of the project. The shareholder agreement will include the following key terms:

• MGL must incur $48-million (Australian) in qualifying expenditures over a period of five years, and conduct required minimum activities in years one and two of the sole financing period, as summarized below:

A. The qualifying activities for years one and two of the sole financing period are as follows:

Year one

• No less than 10,000 metres of drilling on the project tenements;

• The completion of an initial JORC-compliant statement of mineral resources (with an obligation to provide same in an NI 43-101-compliant format;

• The completion of a scoping study, relogging of existing data and reconfiguration of existing sampling.

Year two:

• No less than 12,500 metres of drilling on the project tenements;

• Commencement or procurement of commencement of a definitive feasibility study relating to the project.

B. Annual qualifying expenditures on the project must comply with a minimum expenditure condition, as seen in the larger table.

            Qualifying      Cumulative qualifying 
Year     expenditure (AUD$)   expenditure (AUD$)

1           5,000,000                  None 
2           5,000,000                  None 
3           5,000,000               15,000,000 
4           15,000,000              30,000,000 
5           18,000,000              48,000,000 

The cumulative qualifying exploration expenditures must be incurred, or paid for in cash contribution to PMC in lieu thereof, within the time frames provided above, failing which MGL's interest will be diluted at the rate of 1.1 per cent per $1-million (Australian) in deficiency or part thereof. The time frames for incurring the cumulative qualifying expenditures may be extended by an additional year in certain limited circumstances related to delays in approvals or permits to the extent they are beyond the control of MGL.

Following the sole financing period, Cadan and MGL will be required to contribute to further costs in proportion to their interests or their equity interest will be subject to dilution on a straight-line basis.

• Cadan will be initially entitled to nominate one director to the board of PMC (in addition to its right to nominate two directors to the board of MGL); Various pre-emptive rights on sale or transfer of shares and minority shareholder protections relating to certain project decisions.

The formal agreements also provide that the following additional payments will apply:

• When (and if) MGL's share price trades at or above $1 (Australian) for 30 consecutive days, MGL will pay a further facilitation fee to Cadan of 2.6 million shares.

• Subject to certain conditions being met within 24 months of closing (which period may be extended by up to a further 24 months), MGL will pay a further facilitation fee of $1-million (Australian) to Cadan.

Closing of the transactions contemplated in the formal agreements is subject to various conditions precedents, including transferring certain assets of PMC to other Philippine entities affiliated with Cadan.

Option to acquire 80 per cent of the Batoto gold/silver project

The formal agreements provide that on closing Cadan will grant MGL an option to acquire an 80-per-cent interest in the Batoto gold/silver project held by Cadan on the following terms:

• MGL must exercise the option within nine months of closing.

• If MGL exercises the option to acquire an 80-per-cent interest in the Batoto project, it must pay to Cadan $3-million (Australian) and issue a further 5.2 million shares of MGL to Cadan.

• If MGL exercises the option, it must also incur qualifying exploration expenditures of $30-million (Australian) or have its interest diluted at the rate of 1.5 per cent for each $1-million (Australian) shortfall (or part thereof). MGL will free carry Cadan's 20-per-cent interest in Batoto until it has spent expended the qualifying exploration expenditures as outlined in the smaller table.

Year         (AUD$)
             
1          3,000,000 
2          5,000,000 
3          6,000,000 
4          8,000,000 
5          8,000,000 

The parties have agreed to prepare and execute a separate agreement in relation to the Batoto option.

We seek Safe Harbor.