ALO.L Regulatory News (ALO)

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

22 August 2013

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

Acquisition of AME West Africa, Placing of £250,000, £350,000 Convertible loan issue and Proposed New Chief Executive Officer

Alecto Minerals plc, the AIM listed African focussed multi-commodity exploration and development company, is pleased to announce that it has signed a binding agreement with AIM quoted African Mining & Exploration plc ('AME') to acquire its subsidiary AME West Africa Ltd ('AME West Africa') (the 'Acquisition'). AME West Africa owns, through its wholly owned subsidiary Caracal Gold Mali SARL ('Caracal'), 100% of the Kossanto Gold Project, as well as two further exploration licences in south-west Mali (together 'the Malian Gold Projects'). In connection to the Acquisition, Alecto has secured a further £600,000 of additional funding through a £250,000 placing and issue of convertible loan from AME and an Alecto cornerstone investor, Tamimi Investments and Mining Co. ('TIMCO'). The above is conditional on a general meeting to be held by Alecto.

Highlights

· The 207 sq km Kossanto Gold Project has a JORC Inferred resource of 107,000 ounces (2.35Mt @ 1.42 g/t) Au, defined at the Gourbassi East target

· Additional resource potential - current resource based on only part of a 500m section of a 900m mineralised strike length, which remains open at both ends, and two further target areas have been identified within the licence

· Drilling rig and associated ancillary exploration equipment currently held by AME West Africa is included in the Acquisition

· AME's in-country exploration team will be engaged to advance the project and Alecto intends to appoint Mark Jones, currently CEO of AME, as CEO of Alecto upon completion of the Acquisition

· Operations in south-west Mali were unaffected by recent political changes and the country has recently completed its elections which were deemed free and fair by the African Union

· Consideration for the Acquisition satisfied through the issue of 108,695,652 Alecto shares priced at 1.15p with an aggregate value of £1.25 million with further deferred payments to be made dependent on progress on proving up the resources

· Bolstered financial position by raising £600,000 comprising £500,000 from AME (£250,000 in new shares at 1.15p and £250,000 in a loan convertible at the same price) and £100,000 from TIMCO. in the form of a loan to be converted into shares at 1.15p on completion of the Acquisition

Alecto Chairman Michael Johnson said, "This is a transformational acquisition for Alecto which delivers new advanced West African gold exploration assets, drilling equipment and management expertise to the Company. In particular, the addition of these highly prospective licences, including Kossanto, which already has a JORC compliant Inferred Resource of over 100,000oz of gold, represents a huge step forward in terms of Alecto's development. Also, with significant resource potential available through the future development of this, we look forward to commencing work on the ground with the aid of AME's experienced team led by our proposed new CEO, Mark Jones. I am confident that their proven knowledge of the project, along with the £600,000 raised, will be invaluable as we look to further unlock the value of our licence areas.

"Alecto now has an excellent portfolio across three countries and in the coming months will seek to finalise its Heads of Terms with Centamin plc regarding the Ethiopian gold project, which is progressing well. With this in mind, we look forward to updating shareholders in due course as we successfully build Alecto's profile as a multi-commodity exploration and development company in Africa."

AME West Africa

AME West Africa owns, through its 100% owned subsidiary Caracal, 100% of the Kossanto Gold Project. Caracal owns three project areas in Mali, including the 207 sq km Kossanto Gold Project, which consists of five contiguous licences and has a JORC Inferred resource of 107,000 ounces (2.35Mt @ 1.42 g/t using a 0.5 g/t cut off). The resource was delineated from the Gourbassi East target, which is one of a number of prospective targets within the tenure; significant upside potential remains at the Kossanto Gold Project. Additionally, Caracal owns a RAB drilling rig and associated ancillary exploration equipment. Alecto will also engage the in-country exploration team, currently employed by AME, which has a strong understanding of the mineralisation, to advance the project. AME West Africa reported gross assets of £991,653 for the six months to 30 June 2013 (unaudited).

Caracal - The Malian Gold Projects

The Caracal exploration licences encompass approximately 376 sq km. Two of the licences, Donbaleya and Daounabere, are separate licences in south and west Mali respectively. Four licences are contiguous and collectively known as the 'Kossanto' permits (Kobokoto, Gourbassi, Farikounda, Koussikoto and Kobokoto-East). These permits lie in the centre of the Kenieba inlier in western Mali, a block of ancient greenstones and granites hosting many significant gold deposits in Senegal and Mali, making it one of the most important gold regions in Africa.

Kossanto's geology includes all the key rock units that host the gold mineralisation in the major gold producing mines of Sadiola, Yatela, Loulo and Sabodala. They consist of a mix of basic and acidic volcanics with turbidites, and pervasive shearing and fracturing.

Figure 1 - Map of Malian Gold Assets (Please view the associated PDF document) 

There are extensive artisanal workings all over this region and the structure indicated by airborne geophysics places Kossanto on the same major fracture system which controls the Sadiola mineralisation.

Site visits and analysis of the substantial historical exploration data enabled AME's geologists to integrate all of the available geological, geochemical and geophysical information on the Kossanto area. This has resulted in the identification of a total of 11 potential target areas over 41 sq km on the entire permit blocks. Eight of these are new targets and three target areas were drilled by the previous owners.

The three previously drilled targets, Gourbassi East, Gourbassi West and Massakama, intersected mineralisation of various grades and widths. However there was no follow-up drilling to test for lower grade bulk tonnage, which is warranted considering the much wider halos of potassium and magnetic alteration that are associated with these targets, especially at Massakama and Gourbassi East and West. So far the IP surveys completed over the three drilled targets show that the mineralisation is associated in both cases to a resistive and chargeable, silicified and sulphide rich sheared contact zone. Follow up drilling has been confined to establishing an initial resource at Gourbassi East and second phase exploratory drilling at Gourbassi West. Opportunity still exists for economic mineralisation along strike of the IP anomalies and along the sheared contact zones. These are potential future drill targets for Alecto.

A 3,126 m reverse circulation ('RC') resource drilling programme was completed by AME at the Gourbassi East and West targets in December 2012 which identified a series of mineralised intercepts including:

· 75m @ 2.04 g/t Au

· 46m @ 2.16 g/t Au

· 17m @ 3.86 g/t Au

· 11m @ 6.16 g/t Au

Wardell Armstrong International were contracted to produce a resource estimate. The conclusion of their review was that, based on the exploration work completed, there is an Inferred Resource of 2.35 million tonnes at a grade of 1.42 g/t, giving 107,000 oz Au at a cut off grade of 0.5 g/t Au. The resource was calculated using mineralised intercepts from the central part, which was the most intensively drilled part, of the 500m section of the drilling at Gourbassi East. Additional drilling will be required to include the remaining part of the block into a potentially enlarged mineral resource. This area will be a key focus for Alecto, where infill drilling to establish additional resources can be started before the end of the year.

Substantial transaction

The acquisition of AME West Africa constitutes a substantial transaction under AIM Rule 12. Disclosures relating to Schedule Four of the AIM Rules are included within this announcement.

Consideration for AME West Africa

The acquisition price for AME West Africa will be 108,695,652 Alecto shares priced at 1.15p, having an aggregate value of £1.25 million. AME will retain a net smelter royalty of 1% on the first 300,000 ounces of gold produced from the Malian Gold Licences. In addition, deferred consideration payments to Electrum Ltd (the previous owners of the Malian Gold Projects) will be payable by Alecto as follows: £1.25 million in January 2014 in cash or shares at the Company's election and £1.25 million in cash or shares at the Company's election in the event of a JORC compliant Reserve of 500,000 ounces gold being achieved.

Placing of Alecto Shares to AME and Convertible Loan

Simultaneously AME will (1) invest £250,000 in to Alecto via a placing of new shares at a share price of 1.15p and (2) provide Alecto with a 12 month convertible loan facility of £250,000. The loan is convertible at either party's option at a price of 1.15p per share and will bear interest of 7 per cent. payable at expiry or conversion. (Note: the convertible may not be exercised in shares if such conversion would lead to AME holding more than 29.9% of Alecto's ordinary shares).

Details of the EGM along with any required circular will be notified by a separate announcement.

Proposed Chief Executive Officer

Upon completion of the Acquisition, Alecto intends to appoint Mark Jones as Chief Executive Officer. Mark Jones is currently CEO of AME. The nominated adviser of Alecto, Fox-Davies has completed its due diligence and upon completion of the Acquisition the Company will release a full statement in compliance with the AIM Rules. Details relating to his service contract have not been finalised but will be agreed ahead of the general meeting to be convened and duly announced.

Further Investment by Cornerstone Investor

TIMCO - a company controlled by Fahad Al-Tamimi has provided the Company with a 12 month convertible loan facility of £100,000 (the "TIMCO Loan"). The TIMCO Loan which bears interest at 5% per annum will be automatically converted in to ordinary shares in the Company at a price of 1.15p per share upon the Completion of the Acquisition. Until the event of conversion occurs the TIMCO loan will be secured on the shares of Alecto's subsidiary Nubian Gold Exploration Limited which owns the Aysid Metekel exploration permit in Ethiopia.

Transaction Timing

The Acquisition agreement is legally binding and completion is subject to certain administrative conditions including:

i. Alecto will require a general meeting to be held by the end of September 2013 in order to approve the increase in share capital, the disapplication of pre-emption rights and the allotment for non-cash consideration. Alecto has received an irrevocable undertaking from Fahad Al Tamimi who currently holds 100,051,000 shares representing 27.9% of the Company to vote in favour of the resolutions. In addition the directors of Alecto, who hold shares representing 4.25% of the Company, have also committed to vote in favour of the resolutions; and

ii. The Directors of AME and Alecto are currently consulting with their advisers regarding matters in connection with the Takeover Code.

**ENDS**

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