ALO.L Regulatory News (ALO)

Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: Exploration & Development

 28 March 2014 

Alecto Minerals plc ('Alecto' or the 'Company')

Acquisition of Additional Malian Gold Projects from Savannah Resources plc

Alecto Minerals plc (AIM: ALO), the AIM quoted mineral exploration company focussed on West and East Africa, is pleased to announce that it has enhanced its existing Malian gold portfolio, which includes its flagship Kossanto Gold Project, through the acquisition of all of the issued share capital of NewMines Holdings Limited ('NewMines') (the 'Transaction') from Savannah Resources plc ('Savannah'). NewMines controls, through its wholly owned subsidiary Tobon Tondo s.u.a.r.l. ('Tobon Tondo'), the prospective 250 sq. km. Karan gold project (the 'Karan Project') and the 16 sq. km. Diatissan gold project in western Mali.

Highlights:

· The Transaction is in line with the Company's strategy to build on its existing portfolio of prospective African gold projects which have the potential to deliver shareholder value through exploration

· The Karan Project is located in a proven gold producing region, in close proximity to significant gold resources, and both historical and current extensive artisanal mining activities underpin the likelihood of the presence of gold within the project's licence area

· The Karan Project is an advanced exploration project with eight currently defined target areas, two of which are drill ready

o The Company has identified that Rotary Air Blast ('RAB') drilling would be ideal to advance its understanding of these target areas

o The RAB drill, owned by Alecto, has proven low cost capabilities, with recent drilling at the Kossanto Gold Project in Mali having been completed at a drilling cost of below US$6 per metre

· A 12,400 metre Reverse Circulation ('RC') drill programme completed at the Karan Project, in 2011, reported extensive low grade gold halos along with high grade intercepts of up to 11 g/t gold ('Au') and identified mineralised structures associated with a regional shear zone

· Strong management understanding of the Karan Project will facilitate its potential future development

· Low cost acquisition price of £250,000 to be satisfied wholly through the issue of 20,000,000 new ordinary shares of 0.01 pence each in the capital of Alecto ('Ordinary Shares') at a price of 1.25 pence per Ordinary Share

Mark Jones, CEO of Alecto, commented:

"The acquisition of the Karan Project bolsters our existing African gold portfolio, which includes our flagship Kossanto Gold Project in the same country. At 250 sq. km., the Karan Project is a large tenement with excellent geophysical and solid gold anomalies as well as widespread artisanal mining operations. In 2011, Newmont Mining Corporation obtained its highest Bulk Leach Extractable Gold ('BLEG') results on the Karan Project when it undertook regional exploration. Multiple targets have been identified, with two positioned for near term drilling.

"Our existing knowledge of the area, obtained from the management team's previous role in its development, will be highly beneficial and we have identified that RAB drilling, utilising our in-house equipment will best uncover the Karan Project's wider potential. In light of Mali having put its recent political challenges behind it, interest in Malian gold assets is now growing and JV opportunities on greenfield projects are improving. Accordingly, we look forward to advancing both projects in tandem with Kossanto to best deliver long-term shareholder value."

Information on NewMines

NewMines holds, through its wholly owned subsidiary Tobon Tondo, the prospective 250 sq. km. Karan Project and the 16 sq. km. Diatissan gold project in western Mali. In line with the Company's strategy to build upon its portfolio of prospective African gold projects which have the potential to deliver shareholder value through exploration, the Transaction enables Alecto to enhance its Malian gold exposure, which includes the Company's flagship Kossanto Gold Project.

The draft unaudited loss for NewMines, following an impairment charge of EUR1,605,095 (approximately £1,337,579), was EUR1,618,866 (approximately £1,349,055) for the year ended 31 December 2013.

The Karan Gold Project

The 250 sq. km. project area is located approximately 90km southwest of the Malian capital Bamako. There is a high proliferation of artisanal mining activity throughout the permit area with significant potential for several bedrock and associated eluvial deposits.

Work to date has consisted of 12,400 metres of RC drilling and ground geophysics. The RC drill programme, conducted in 2011, reported that low grade gold halos had been intersected along with high grade intercepts of up to 11 g/t Au and identified mineralised structures associated with a regional shear zone. There are eight defined target areas, two of which are drill ready.

The Company has identified that RAB drilling would best advance its understanding of these anomalous areas. Importantly, the Alecto-owned RAB drill has proven its low cost capabilities with recent drilling at the Kossanto Gold Project in Mali undertaken at a drilling cost of below US$6 per metre.

Consideration for NewMines& Related Party Transaction

The consideration for NewMines comprises the issue of 20,000,000 new Ordinary Shares ('Consideration Shares'), having an aggregate value of £250,000, based on the 15 day volume weighted average price of 1.25 pence per Ordinary Share. The Consideration Shares to be issued to Savannah will on issue rank pari passu with the Company's existing Ordinary Shares.

Savannah, which is currently interested in 121,739,130 Ordinary Shares, representing approximately 15.75 per cent. of Alecto's current issued Ordinary Shares, is a substantial shareholder of the Company and therefore a related party to Alecto as defined in the AIM Rules for Companies. In addition, Michael Johnson, who is Chairman of Alecto, is also Chairman of Savannah.

The Company's board of directors (excluding Michael Johnson, who is the Non-executive Chairman of Savannah and Mark Jones who was, until October 2013, CEO of Savannah, and who are therefore deemed to be related parties) consider, having consulted with Alecto's Nominated Adviser, Strand Hanson Limited, that the terms of the Transaction are fair and reasonable insofar as the shareholders of Alecto are concerned.

Lock-in and Orderly Market Provisions

Under the terms of the Transaction, Savannah has agreed that it shall not, during the period until 4 October 2014 ('the Lock-in Period'), sell, transfer or otherwise dispose of, or create any encumbrance over any of the Consideration Shares. In addition, Savannah has agreed that for a further period of 12 months following the Lock-in Period, it shall not sell, transfer or otherwise dispose of, or create any encumbrance over any of the Consideration Shares in a manner that would be prejudicial to the Company maintaining an orderly market in the Ordinary shares.

Application for Trading on AIM and Total Voting Rights

Application will be made for the 20,000,000 Consideration Shares to be admitted to trading on AIM. Admission is expected to become effective and dealings to commence at 8.00 a.m. on 3 April 2014 ('Admission'). On Admission, the Company will have in issue 793,032,699 Ordinary Shares.

The Company has no Ordinary Shares held in treasury. The above figure may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

Following this Transaction, Savannah is now interested in, in aggregate, 141,739,130 Ordinary Shares, representing approximately 17.87 per cent. of the enlarged issued ordinary share capital.

**ENDS**

For further information, please visit www.alectominerals.com or contact:

Notes to editors:

Alecto Minerals plc is an African focussed, gold and base metal exploration and development company quoted on AIM.

The on-going development of the Kossanto Gold Project in Mali is the Company's predominant focus and with significant value upside potential evident across the tenure, the Board plans to build on its current gold resource estimate of 107,000 ounces in the near term. Alecto also has a joint venture with Centamin plc over two prospective gold exploration licences in Ethiopia, under which Alecto retains exposure to the assets with no capital expenditure, as well as the wholly owned Wad Amour IOCG Project in Mauritania which is at an exploration stage. Combined, these projects provide the Company with a strong, diversified portfolio with exciting exploration upside potential.