Fourth Quarter Report 2017

Interim Consolidated Financial Statements

Highlights of the quarter and subsequent events

• The Group entered into a Terms of Agreement with Harmonychain AS for the purpose of exploring

issuance of an asset-backed crypto currency, and is continuing to develop the legal framework for the

initial token offering (ITO). The Group also became a member of the Ethereum alliance, and is continuing

to develop the structure and the marketing materials for the ITO.

• The Group entered into investment- and shareholders agreement for Ambershaw Metallics Inc (AMI),

outlining the investment schedule and cooperation with Legacy Hill Resources (LHR) under which the

Group will become owner of 51% of the shares of AMI.

• The MNOK 50 Convertible Loan Facility with Warrants with Blue Ocean Advisors Inc. was signed and

approved by the Extraordinary General meeting. During the fourth quarter, the Group has raised NOK

25 million under the facility, and outstanding notes were converted prior to 31 December 2017.

• The Group has raised additional funding through warrant exercises both during and following the fourth

quarter.

• The Group completed a rebranding, and changed its name to Element ASA. Following the rebranding, the

new ticker for the Group is ELE, and a new web site has been launched at www.elementasa.com

• On 15 November 2017, Cecilie Grue, previously interim CEO, was employed as CEO on a permanent basis.

Financial Results

(All numbers in brackets refer to comparable 2016 figures; profit and loss related figures compares to same period

2016 while balance sheet figures compare to figures as at 31 December 2016).

Based on the Group’s accounting principles the Mindoro Nickel Project has from December 2015 been classified

as “Asset held for sale”, and is recorded as “discontinued operations” according to IFRS. The group has maintained

this classification to date, due to several events in the Philippines with adverse effects on the sales process, in the

period since initial classification.

There was no exploration activity in Q4 of 2017 or 2016. Exploration expenses were limited to license fees.

Net loss from continued operations before and after-tax amount to USD 1,967 thousand for the quarter (loss of

USD 653 thousand). Both the warrants issued in relation to the GEM equity facility, and the conversion option

attached to the notes issued to Blue Ocean Investment Group contain an adjustment to the strike or conversion

price. In accordance with IFRS, the Group is recording the change in fair value of the derivatives outstanding to

Year end

(USD '000) 12/31/2017 12/31/2016 12/31/2017 12/31/2016 12/31/2016

Loss from continuing operations -1,967 -545 -3,276 -1,943 -1,943

Loss from discontinued operations -269 -406 -644 -825 -1,100

Loss for the period -2,236 -951 -3,920 -3,043 -3,043

Fourth Quarter Year to Date

the statement of profit and loss. This value has an inverse relationship with the share price of the Group. As of 31

December 2017, the Group has recorded expenses USD 950 thousand arising from the changing value of

derivatives outstanding.

At 31 December 2017, cash and cash equivalents amount to USD 2,619 thousand (USD 706 thousand). Given the

Group’s current investment plans, this is not sufficient to finance the Group’s cash requirements for the 12-month

period following 31 December 2017. The Board of Directors will at all time consider different alternatives to secure

sufficient funding and have an action plan with respect to how the funding will be obtained. The Board is

continuously evaluating the optimal method to raise such capital.

Book equity as at 31 December 2017 was USD 6,440 thousand or USD 0.10 per outstanding share (USD 3,953

thousand or USD 0.11 per share). The equity ratio was 63.7 per cent as at 31 December 2017 (57.3 per cent).

Review of project portfolio

The Group has a portfolio of assets with substantial economic potential. The portfolio consists of Mindoro Nickel

in the Philippines and right to become the owner of 51% of the issued shares in Ambershaw Metallics Inc (AMI) in

Canada. The Group also holds licenses for the Nordli Molybdenum project in Norway.

Asset-backed Token Project

On 27 October 2017, the Group announced that it had entered into a Terms of Agreement with Harmonychain AS

to explore the issuance of asset-backed Tokens. The Tokens will be based on blockchain technology and specifically

using the Ethereum EC20 token chain. The Tokens will give the tokenholders the right to delivery of Iron -ore on

certain conditions which will be outlined in the Whitepaper.

In a rapid changing world of technology there have been a lot of developments in token- and blockchain based

solutions. This technology provides a fast and secure transaction structure with a verifiable, publicly available audit

trail. Almost all tokens and "coins", like Bitcoin, are not backed, directly or indirectly by any physical assets in

comparison to the Tokens Element is contemplating to issue.

The Group is currently working on structuring the issuance of Tokens. Estonia has been chosen as the jurisdiction

of the token issuing entity. Estonia is one of the leading jurisdictions within the EU with regard to ITO’s. The Group

will update the market on the progress as soon as possible.

Ambershaw Metallics Inc – Canada

AMI is a metals and mining company incorporated under the laws of the Province of British Columbia, Canada.

AMI is controlled by LHR and it has specific experience in magnetite mining and pelletizing technology. AMI intends

to provide the North American and international steel industry with DR-grade magnetite pellets suitable for DRI

(Direct Reduced Iron) production and Iron Ore condensate.

DRI is used by EAFs as a substitute for scrap steel trading in excess of US$ 280/t. It commands a significant premium

to standard iron ore. DRI production is heavily dependent on the supply of high quality iron ore pellets, which are

currently in short supply. End-users have to pay premiums for pellets with a higher Fe content and a further

premium for magnetite. DRI production is forecast to grow to 200Mt by 2030, up from 73Mt produced in 2015.

There is an acute shortage of DR-grade pellets in the North American Steel market.

AMI holds the Bending Lake iron deposit in NW Ontario, Canada, which hosts a NI 43-101 compliant and valuable

resource of 336 Mt magnetite ore upgradable to 68% Fe. The NPV (10) of the asset is USD 499 million. Comparable

iron ore producers in Canada are currently valued at ca. USD 1/ton.

In AMI’s mining plan the ore is made into concentrate, which in turn may be pelletized and shipped to customers.

With the rise of 65% Fe concentrate prices in the US steel market, it has become attractive to start production of

both concentrate for sale, as well as pellets. AMI expect to be able to sell concentrate by the end of H1 2018, given

sufficient financing. The Group is providing financing and thus gradually increasing its ownership in AMI.

For further information about AMI see http://ambershaw.ca/

In February the Group entered into an Investment- and Shareholders Agreement ("SHA") with LHR and AMI setting

out the details of Element's right to become the owner of 51% of the shares in AMI on a fully diluted basis. The

investment will be made through the following three tranches: -

• 1st payment of 0.35 MUSD: 8 February 2018 ("First Tranche"). The First Tranche will be made through

subscription of new shares in AMI. –

• 2nd payment of 1.50 MUSD: 1 March 2018 ("Second Tranche"). The Second Tranche will be made through

subscription of new shares in AMI. –

• 3rd payment of 4.85 MUSD: 15 June 2018 (USD 4.95 if settled by 15 July 2018) ("Third Tranche"). The

Third Tranche will be made through a new convertible bond ("New Convertible Bond").

Element and LHR have also agreed to pursue a public initial offering ('IPO') of AMI no later than 31 December

2020, which is also the latest maturity date for the New Convertible Bond.

The New Convertible Bond to be issued in the Third Tranche will have a first fixed and floating charge over the

business and assets of AMI and will have a coupon of 7%. The maturity date will be the earlier of the listing of AMI

or 31 December 2020, but Element may convert the bonds at any time prior to maturity. Assuming that the

principal amount of 4.85 MUSD and accrued interests thereon is converted into shares in AMI as of 31 December

2020, Element's ownership will be increased from 26.7% to approximately 50% of the shares of AMI on a fully

diluted basis, and the total investment by the Group in AMI will in aggregate amount to 7.8 MUSD.

The payments under the convertible bonds are aligned with the equity needs of AMI towards production of Super

Premium DR grade Pellets in Q3-2018. Remaining funding needs in AMI are intended as debt funding. As the major

shareholders in AMI, the Group and LHR are working on a strategic plan for AMI, as well as annual business plans

and budgets. If Element and LHR have not reached an agreement prior to the funding date for each of the Second

Tranche and Third Tranche, Element may elect to withdraw from the Second and Third Tranche. In such event,

both of Tranches will lapse. The Group expect to reach an agreement with regard to the strategic plan and annual

budget shortly.

If the New Convertible Loan under the Third Tranche is converted by Element, Element has the right to swap the

required number of AMI shares in a transaction with LHR under which LHR will receive Element shares as

settlement, should Element require to do so, in order to reach 51% ownership on a fully diluted basis in AMI. The

price payable for such AMI shares is set to the same price as in the other three Tranches and the Element shares

will be calculated on the basis of a 60 day trailing Volume Weighted Average Price following Element exercising

the option. Element and LHR have agreed to terms in the SHA making the parties equal partners in the project

through provisions giving veto rights effective from signing of the SHA covering all major decisions, thereunder

equity- and debt funding of AMI, strategic plans and budgets, dividends and distributions amongst other.

Element will initially be entitled to appoint one board member or observer to the AMI board. When Element

becomes the owner of 51% or more of the shares in AMI, both Element and LHR are entitled to appoint three

board members each to AMI. The SHA will inter alia terminate upon an IPO of AMI or on 31 December 2020,

whatever is the earlier. It has also been agreed that LHR shall be the manager of AMI during the life of the SHA.

Mindoro Nickel project – The Philippines

According to reports by Bloomberg, Reuters, and the London Metal Exchange several blue-chip firms started to

absorb the changes taking place in the nickel market during the fall of 2017. UBS Bank is expecting 15 million

electric vehicles by 2025. Porsche states that electric cars with high-driving ranges are fueling demand for nickel-

rich batteries. Trafigura & Glencore claim that nickel production will increase by 1.2 million tons by 2030, equal to

more than half of current global output, to keep up with demand from the battery industry. Nickel currently trades

at $13,910 per ton, up 17 percent from the third quarter report. The previous peak in nickel was $51,600 per ton

in 2007. With the stockpiles gone the upside seems substantial.

Mindoro Nickel is a nickel-laterite deposit, which originally was discovered by the Group in 1996. It is one of the

largest undeveloped nickel deposits in the world, with more than 350 million tonnes mineral resources defined,

holding 3 million tonnes nickel. A Definitive Feasibility Study concluded that Mindoro Nickel could be a substantial

low-cost producer of nickel for more than 100 years.

During 2017 Sunbright Consulting has performed several laboratory tests with a CRSM technology, which is a low

energy consumption, low Opex and CapEx technology, which indicate that it is capable of upgrading the existing

grade of the Mindoro ore into concentrate. Upgrading tests of the limonite and saprolite ore showed significant

upgrades to the Nickel ratio. The laboratory reports indicate that the Mindoro Nickel deposit may produce 600,000

tonnes of nickel concentrate per module with a capex of USD 26-35 million. The results show profitability with a

nickel price at 2.85 USD/lb and an EBITDA (before royalties) of USD 28-32 million p.a. with the current market

price of 6,3 USD/lb and mining only 0.5% of the total recorded resources p.a. Pending pilot testing and subsequent

full scale testing of the CRSM technology the Group expect that the annual production can be increased by

investing in several modules.

The Group is experiencing interest from various parties showing interest in Mindoro Nickel and continues to have

an open approach to divestment of the asset, through sale or other forms of partnerships.

The Group is working on increasing the potential of its Mindoro Nickel asset through realization or otherwise. The

Group interprets the political climate to be changing in a positive direction following the appointment of the new

Secretary of Environment and Natural Resources in May 2017.

Nordli Molybdenum – Norway

The Nordli molybdenum project is a porphyry-style molybdenum deposit which is considered the largest

undeveloped molybdenum deposit in mainland Europe known today, having inferred resources of over 200 million

tonnes at 0.13 per cent MoS2. The Group maintains its licenses for exploration but due to market pricing of

molybdenum there is no ongoing activity in the project.

Outlook

The key focus of the Group is to progress with issuing its asset-backed Tokens. The Group is currently working on

the structuring of the Token issue, and the Whitepaper in cooperation with its advisors. The goal of the Group is

to complete the Whitepaper during Q1 2018 or shortly thereafter following which the Group intend to initiate an

ITO process at the appropriate time, pending amongst other market conditions.

The Group continues its cooperation with Legacy Hill and AMI for the development of the Bending Lake Iron-ore

resource. Currently the permitting process is the key focus of AMI.

The Group is working to increase the potential of its Mindoro Nickel asset through realization or other forms of

partnerships. The Group view the political climate to be changing in a positive direction following the appointment

of the new Secretary of Environment and Natural Resources in May 2017.

Interim consolidated statement of profit and loss and other comprehensive

income

(USD '000) Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016

Other Revenue 0 53 0 211

Net income/loss from equity accounted investments -10 - -10 -

Exploration and evaluation costs 0 2 -3 -3

Sa lary and socia l securi ty cost -264 - -482 -508

Other Operating expenses -700 -600 -1,520 -1,477

Operating loss -973 -545 -2,014 -1,777

Financia l income 53 1 53 3

Financia l costs -1,047 - -1,315 -170

Net financial items -994 1 -1,262 -166

Loss before tax -1,967 -545 -3,276 -1,943

Loss after tax -1,967 -545 -3,276 -1,943

Loss discontinued operations , after tax 10 -98 -406 -644 -1,100

Loss for the period -2,065 -951 -3,920 -3,043

-0.04 -0.03 -0.08 -0.09

-0.04 -0.01 -0.06 -0.05

-0.01 -0.01 -0.01 -0.03

121 1,078 21 -178

-505 -505

Total comprehensive income -2,449 128 -4,404 -3,691

Bas ic and di luted earnings per share -

discontinued operations

Other comprehensive income:

Currency trans lation adjustments

Other comprehens ive income:

Year to DateFourth Quarter

Bas ic and di luted earnings per share

Bas ic and di luted earnings per share -

continued operations

Interim consolidated statement of financial position

Fourth Quarter Year end

(USD '000) Note 12/31/2017 12/31/2016

ASSETS

Exploration and evaluation assets

Property, plant and equipment 9 3 9

Equity accounted investments 9 429 0

Total non-current assets 432 9

Other receivables 74 27

Financia l investments 9 1,153 192

Cash and cash equiva lents 5 2,619 706

Total current assets 3,845 925

Assets class i fied as held for sa le 10 5,837 5,956

Assets classified as held for sale 5,837 5,956

TOTAL ASSETS 10,114 6,890

EQUITY

Share capita l 640 339

Other pa id-in-capita l 78,925 69,599

Cumulative trans lation adjustments 10,514 14,015

Other equity -83,639 -80,000

Total equity 8 6,440 3,953

LIABILITIES

Other long term l iabi l i ties 0 317

Total long term liabilities 0 317

Trade payables 247 19

Other current l iabi l i ties 1,223 208

Total current liabilities 1,470 227

Liabi l i ties associated with assets class i fied as held for sa le 10 2,204 2,393

Liabilities associated with assets classified as held for sale 2,204 2,393

TOTAL EQUITY AND LIABILITIES 10,114 6,890

Interim consolidated statement of cash flow

Full year Year end

(USD '000) 12/31/2017 12/31/2016

Profi t/-loss for the year, continued operations -3,267 -1,943

Profi t/-loss for the year, discontinued operations -644 -1,100

Operating activities

Non-cash expenses 228 -6

Change in trade and other receivables -46 129

Change in trade payables and other current l iabi l i ties 187 -112

Changes in other long term l iabi l i ties 729 6

Change in financia l assets - -

Change in assets held for sa le 44 277

Cash flow from operating activities -2,769 -2,749

Investment activities

Net expenditure on property, plant and equipment 12 15

Investment in other financia l assets 9 -1,400 -192

Cash flow from investment activities -949 -177

Financing activities

Capita l increase 6,009 3,414

Cash flow from financing activities 5,570 3,414

Net change in cash and cash equiva lents 1,853 488

Cash and cash equiva lents at the s tart of the period 834 527

Sum trans lation effects 21 -181

Cash and cash equivlents at the end of the period/year 2,708 834

Interim consolidated statement of changes in equity

(USD '000)

Share

capital

Other paid-

in capital

Cumulative

translation

adjustments Other equity

Held for

sale Total

Equity 1 January 2016 208 64,953 15,546 -11,502 -65,420 3,785

Loss for the period -3,043 -3,043

Other comprehens ive income 5 1,415 -1,531 170 -237 -178

Total comprehensive income 5 1,415 -1,531 -2,873 -237 -3,221

-

Capita l increase 126 3,231 3,357

Share option costs 32 32

Total transactions with owners 126 3,231 - 32 - 3,389

Equity 31 December 2016 339 69,599 14,015 -13,243 -66,757 3,953

(USD 1 000)

Share

capital

Other paid-

in capital

Cumulative

translation

adjustments Other equity

Held for

sale Total

Equity 1 January 2017 339 69,599 14,015 -13,243 -66,757 3,953

Loss for the period - - - -3,920 - -3,920

Other comprehens ive income 17 3,601 -3,501 - -98 19

Total comprehensive income 17 3,601 -3,501 -3,920 -98 -3,901

Capita l increase 284 5,725 - - - 6,009

Share options cost - - - 145 - 145

Converted warrants - - - 234 - 234

Total transactions with owners 284 5,725 - 379 - 6,388

Equity 31 December 2017 640 78,925 10,514 -16,784 -66,855 6,440

Notes to the consolidated statements

1 Information about the Group

2 Basis for preparation of the interim financial statements

3 Accounting principles

4 Estimates

5 Financial risk management

6 Segment information

7 Related parties

8 Shareholder value and stock value

9 Assets

10 Discontinued operations

11 Subsequent events

1 Information about the Group

Element ASA is a public limited liability company incorporated and domiciled in Norway. The Group’s office address

is Karenslyst Allé 53, 0279 Oslo, Norway. The Group’s shares are listed on the Oslo Stock Exchange.

As at 31 December 2017, the Group’s main activity is to identify assets close to or in production for investment.

Current projects are related to Ambershaw Metallics Inc (AMI) in Canada, and the Mindoro Nickel Project in the

Philippines. Based on pure accounting principles the Mindoro Nickel Project is classified as “Asset held for sale”.

2 Basis for preparation of the financial statements

This condensed consolidated interim financial information has been prepared in accordance with IAS 34, ’Interim

financial reporting’. The condensed consolidated interim financial information should be read in conjunction with

the annual financial statements for the year ended 31 December 2016, which have prepared in accordance with

International Financial Reporting Standards (IFRS) as adopted by the EU.

3 Accounting principles

The same accounting principles and methods of calculation have been applied as in the Annual Report for 2016.

Future effects of new accounting standards were described in the Consolidated Financial Statements for 2016.

4 Estimates

The preparation of interim financial statements requires management to make judgements, estimates and

assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,

income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by

management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the

same as those that applied to the consolidated financial statements for the year ended 31 December 2016.

5 Financial risk management

General

The Group is exposed to a number of types of financial market risk arising from its normal business activities:

• Credit risk

• Liquidity risk

• Currency risk

The corporate management monitors the Group’s most important financial risks and assesses whether measures

are required to reduce a specific risk if a need to do so is identified.

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its

contractual obligations. Most of the Group’s financial assets are bank deposits and other receivables.

Credit risk related to bank deposits is considered limited as the Group uses only banks that international credit

rating firms consider having high creditworthiness. A large proportion of the Group’s cash is placed on high-

interest-bearing account with DNB Bank in Norway.

Liquidity risk

Liquidity risk is the risk that the Group being unable to fulfil its financial obligations when they fall due. Cash

management will ensure there is sufficient available cash to fulfil the Group’s obligations without involving

unacceptable losses or a risk of damaging the Group‘s reputation.

Given the Group’s current investment plan, the Group does not have sufficient cash to fund the Group for 12

months following 31 December 2017. Throughout, the fourth quarter, the group raised NOK 25 million through

the convertible bond facility with Blue Ocean Investment Group, and a further NOK 5 million through the exercise

of outstanding warrants. As of 31 December 2017, the group has 7,200,510 readily exercisable share options and

warrants which would raise NOK 16.5 million if exercised. All the outstanding share options and warrants were in-

the-money as of 31 December 2017, and a further 1,340,000 warrants have been exercised as of the date of this

report. In addition, the Group is still able to draw NOK 25 million on the convertible bond facility with the Blue

Ocean Investment Group.

Under the Convertible Note Facility Element may draw ten (10) tranches (each a “Tranche”) of 5 MNOK in

convertible bonds over a period of three years. The Tranches may be drawn following a “cool down period” of

maximum 30 days following issuance of any single Tranche. Each Tranche entitles Blue Ocean to warrants, as set

out below.

The conversion price of the Convertible bonds shall equal 90% of the lowest daily VWAP of the ten (10) trading

days preceding the notice of drawdown given by the Group. The convertible bonds are convertible at the option

of Blue Ocean, but will automatically convert twelve (12) months after the issue date if not already converted at

that point in time. Each Tranche triggers payment of a cash fee of 5% of the amount drawn.

The Group shall issue Warrants in respect of each Tranche giving Blue Ocean the right to a number of shares

equaling 50% of the shares the convertible bonds of such Tranche entitles them to. The exercise price for the

Warrants shall equal 120% of the lowest daily VWAP during the ten (10) trading days preceding the notice of

drawdown by the Group. 50% of the Warrants of each Tranche shall not be more than 130% in the money at any

given time. The exercise period for the Warrants is three (3) years from the date of issue.

In addition, the Group has a share subscription facility with GEM Global Yield Fund in the amount of NOK 80 million.

Under the share subscription facility, and subject to its terms, GEM Global Yield Fund undertakes to subscribe to

the Group’s ordinary shares upon the Group’s exercise of a Draw Down Notice. The Group will control the timing

and maximum amount of any Draw Down, and has the right, not the obligation, to draw down on the full

commitment amount up to NOK 80 million.

GEM Global Yield Fund is obliged to honor the draw down request from the Group based upon a subscription price

per share equal to 90% of the volume weighted average price ("VWAP") of the shares during a pricing period of

15 consecutive trading days following the draw down notice (the “Pricing Period”). The Group shall set a minimum

subscription price for which the shares will be issued. The Group may change the minimum subscription price at

every draw down. The draw down amount in each subscription notice shall not exceed 1,000 per cent of the

average daily trading volume during the fifteen trading days immediately preceding the date of the relevant

subscription notice, and as such there are risks associated with using the facility to raise cash.

As a part of the share subscription agreement with GEM Global Yield Fund, Group has issued 2 125 000 warrants

to GEM Global Yield Fund with a strike price of NOK 2.80 per share. The Group recorded a financial cost related to

the warrant issue amounting to USD 715 thousand due to the subsequent increase in share price for Element ASA.

The Warrants are outstanding and readily exercisable as of 31 December 2017.

As a condition for entering into the convertible bond arrangement with Blue Ocean Investment Group, the share

subscription facility provided by GEM Global Yield Fund was replaced in its entirety and on the same terms by Blue

Ocean Investment Group, without any additional cost to the Group.

Currency risk

The Group is exposed to currency risk relating to costs, receivables and liabilities in currency other than the

functional currencies for its entities, which are NOK and PHP. Foreign exchange transactions are mainly in USD. At

present, the Group does not utilize financial instruments to handle its currency risk. However, the Group regularly

assesses whether there is a need to convert currency in order reduce any currency risk that may arise.

In addition, the Group‘s balance sheet is exposed to exchange rate movements between the functional currencies

and the presentation currency (USD). The majority of the Group’s cash and cash equivalents are in NOK.

The following table shows the exposure of the group’s main financial assets in currencies other than the

presentation currency.

The tables show the effect on the Group’s equity as at 31 December 2017 if the specified currencies had

appreciated/depreciated by 10% and all other variables remained constant.

6 Segment Information

Management considers that the Group has three business segments: Exploration and evaluation of mineral

resources in the Philippines, Canada and Norway. The Group’s primary activity is the Mindoro Nickel project in the

Philippines and Ambershaw Metallics Inc in Canada. The Group also has the Hurdal Molybdenum project in

Norway.

('000)

Amount in

currency

Exchange

rate

31.12.2017

Carrying

amount in

USD

Effect of a

10% change

in exchange

rates

Cash and cash equivalents denominated in NOK 21,425 8.20 2,614 261

Since 31 December 2015, the Group has classified the segment Exploration and evaluation of mineral resources

in the Philippines as “Asset held for sale”. Loss before and after tax for the segment is the same as for the

continuing operation in the Statement of profit and loss and other comprehensive income. Further, see note 10

Discontinued operation for further information.

7 Related parties

As of 31 December 2017, the number of shares held by directors and management of Element ASA are:

The shares controlled by Mr. Frode Aschim are held by Hannibal AS, a company owned by closely related

persons to Mr. Frode Aschim

Service Agreement with Global Vision Trading Limited

With effect from 30 June 2017, the Group extended the service agreement with Global Vision Trading Limited for

providing administrative and consultancy services to the Group. The services from Global Vision Limited are

provided by Mr. Lars C. Beitnes, Chairman of the Board of Element ASA. The services provided under this

agreement are those over and above those duties normally covered by a non-executive Chairman. The agreement

is in effect until 30 June 2018, and the monthly fee amounts to NOK 70,000 per month.

Service Agreement with Ether Capital Ltd

With effect from 30 June 2017, the Group extended the service agreement with Ether Capital Ltd for providing

administrative and consultancy services to the Group. The services from Ether Capital Ltd are provided by Mr.

Frode Aschim, a Board Member of Element ASA. The services provided under this agreement are those over and

above those duties normally covered by a non-executive Board Member. The agreement is in effect until 30 June

2018, and the monthly fee amounts to NOK 75,000 per month.

Stock options

In the fourth quarter of 2017, the Group has expensed USD 145 thousand as personnel cost, based on option

incentive programs to employees.

8 Shareholder value and stock value

As at 31 December 2017, Element ASA had a share capital of NOK 5,251,236,80 comprising 65,640,460 shares

with a par value of NOK 0.08. All shares have equal voting rights and rights to dividends from the Group. All shares

are fully paid. As at 31 December 2017 the Group held 87,927 treasury shares. From which the Group cannot vote

and have no right to dividends.

The share price at 31 December 2017 was NOK 4.25, up NOK 2.52 compared to the closing price at the end of

2016. Total shares were 65,640,460, fully diluted 73,340,970. The Group’s market capitalization amounted to USD

34,021 thousand/ NOK 278,972 thousand

Name Position Shares Options Warrants CFDs

Lars Chris tian Beitnes Chairman of the board 25,000 182,578 - 180,000

Frode Aschim Member of the board 65,562 182,578 - -

Mona Lynne Ei tzen Member of the board - 182,578 - -

Ceci l ie Grue CEO 119,000 - 600,000 -

Kim Andre Evensen VP Finance and Accounting - - 400,000 -

Total 209,562 730,312 1,000,000 180,000

9 Assets

As of 31 December 2017, the Group owned 5% of Ambershaw Metallics Inc (AMI), and held convertible notes in AMI in the amount of USD 1,100 thousand, and held an option to acquire 51% of the through a direct cash injection to AMI of USD 7 million. During the fourth quarter, it became increasingly likely that the Group would be able to exercise this option, and the Group executed an investment- and shareholding agreement for Ambershaw Metallics Inc following the end of the quarter. On 5 February 2018, the group entered into an investment- and shareholding agreement for Ambershaw Metallics Inc setting out the details of Element ASA’s right to become the owner of 51% of the shares in AMI on a fully diluted basis. The investment will be made in 3 tranches:

• 1st payment of USD 350 thousand was made on 8 February 2018 ("First Tranche"). The First Tranche

was made through subscription of new shares in AMI.

• 2nd payment of USD 1,500 thousand on 1 March 2018 ("Second Tranche"). The Second Tranche will be

made through subscription of new shares in AMI.

• 3rd payment of USD 4,850 thousand on 15 June 2018 (USD 4,950 thousand if settled by 15 July 2018)

("Third Tranche"). The Third Tranche will be made through a new convertible bond ("New Convertible

Bond")

The Group and Legacy Hill Resources have agreed to terms in the SHA making the parties equal partners in the project through provisions giving veto rights effective from signing of the SHA covering all major decisions, thereunder equity- and debt funding of AMI, strategic plans and budgets, dividends and distributions amongst other. As a result, the Group considers the investment in AMI to be in an associated company, and will account for the investment under the equity method. The Group and Legacy Hill Resources have also agreed to pursue a public initial offering ('IPO') of AMI no later than 31 December 2020, which is also the latest maturity date for the New Convertible Bond.

Number of

shares

Ownership

in % of total

shares

PASCHI INTERNATIONAL LIMITED 5,208,167 7.93%

SIX-SEVEN AS 2,332,244 3.55%

LEGACY HILL RESOURCES 2,134,993 3.25%

DEDEKAM HOLDING AS 1,543,500 2.35%

SILVERCOIN INDUSTRIES AS 1,543,323 2.35%

PRO AS 1,441,807 2.20%

RUNNING RIGS AS 1,181,927 1.80%

NORDNET LIVSFORSIKRING AS 1,169,354 1.78%

NIMECO AS 1,150,000 1.75%

SVENSK HYDRO AS 1,110,000 1.69%

STAVANGER KARTING AS 986,878 1.50%

FRANKPLADS 935,000 1.42%

WIPS AS 855,000 1.30%

NORDNET BANK AB 801,248 1.22%

ZAIM 800,000 1.22%

NETFONDS LIVSFORSIKRING AS 785,327 1.20%

NORDEA BANK AB 713,678 1.09%

LINDFORS 651,000 0.99%

J.P. MORGAN BANK LUXEMBOURG S.A. 639,542 0.97%

STA-FONDET 629,842 0.96%

Other 39,027,630 59.46%

Total shares 65,640,460 100.00%

20 largest shareholders 31.12.2017

10 Discontinued operations

The Group has sharpened its strategy and focused its financial- and management resources to pursue the realization of the Mindoro Nickel Project. From this, it is considered that the carrying amount will be recovered through a sale transaction. As a result of this and from December 2015, the Mindoro Nickel Project is considered as held-for-sale. Further, as this represent a major line of business, this will be classified as Discontinued operation. The classification as Discontinued operation changes the measurement basis of any non-current assets included in the segment. On initial classification, any such assets are measured to the lower of carrying amount and fair value less costs to sell. Statement of profit and loss for Discontinued operation:

Year end

(USD '000) Note 12/31/2017 12/31/2016 12/31/2017 12/31/2016 12/31/2016

Other Revenue - - - 6 6

Exploration and evaluation costs -92 -52 -246 -238 -238

Sa lary and socia l securi ty cost -90 - -329 -578 -578

Other Operating expenses -87 -354 -240 -290 -290

Operating loss -269 -406 -815 -1,100 -1,100

Financia l income - - - - -

Financia l costs - - - - -

Net financial items - - - - -

Loss before tax -269 -406 -815 -1,100 -1,100

Deferred tax expense 171 171

Loss after tax -98 -406 -644 -1,100 -1,100

Loss for the period -98 -406 -644 -1,100 -1,100

Fourth Quarter Year to date

Assets and liability related to Discontinued operation:

Fourth Quarter Year end

(USD '000) 12/31/2017 12/31/2016

ASSETS

Exploration and evaluation assets 5,610 5,674

Property, pland and equipment 2 12

Total non-current assets 5,613 5,686

Other receivables 27 66

Other financia l assets 108 76

Cash and cash equiva lents 89 128

Total current assets 224 270

TOTAL ASSETS 5,837 5,956

LIABILITIES

Deferred tax 47 193

Other long term l iabi l i ties 0 196

Total long term liabilities 47 389

Trade payables 230 103

Other current l iabi l i ties 1,927 1,901

Total current liabilities 2,157 2,004

TOTAL EQUITY AND LIABILITIES 2,204 2,393