ALO.L Regulatory News (ALO)

Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: General Financial

19 September 2013

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

Confirmation of joint venture with Centamin plc

Alecto Minerals plc, the AIM listed multi-commodity exploration and development company with projects in Ethiopia and Mauritania, is delighted to announce that it has entered into a joint venture ('the Joint Venture') with Centamin plc ('Centamin').

Highlights

· Joint Venture is to pursue existing and new opportunities identified by Alecto in the Federal Democratic Republic of Ethiopia

· Centamin will have the right to farm-in to up to a 70 per cent. interest in Joint Venture projects, subject to sole-funding agreed milestones

· Two exploration licences in Ethiopia, Wayu Boda and Aysid-Meketel, currently owned 100 per cent. by Alecto, will be the initial Joint Venture projects

· At Wayu Boda, Centamin is required to fund US$1.8 million to maintain an initial 51% interest, and a shall have the option to fund up to a further US$6 million to increase its interest to 70 per cent

· At Aysid-Meketel, Centamin is required to fund US$1.2 million to maintain an initial 51% interest, and shall have the option to fund up to a further US$5 million to increase its interest to 70 per cent

· Both companies will participate in selecting future targets, identified by Alecto for development, through a Joint Venture Committee

Commenting on the Joint Venture, Alecto Minerals Chairman Michael Johnson said: "We are delighted to have concluded this joint venture with Centamin. The funding they will provide, together with their expertise in Africa, and operating and technical know how, will prove vital in making these projects successful and will enable us to return value to our shareholders with minimal expenditure by the Company. We look forward to commencing work and rapidly developing our Aysid-Metekel and Wayu Boda projects with Centamin."

The Joint Venture

The Company and Centamin have executed a joint venture agreement ('the Joint Venture Agreement') setting out how Alecto and Centamin will operate and develop the existing Wayu Boda Licence and Aysid-Meketel Licences, as well as the basis on which the Joint Venture will evaluate, and pursue together, future opportunities and projects identified by Alecto within the Federal Democratic Republic of Ethiopia.

Following completion of the Joint Venture, Centamin will be appointed as the operator of the Joint Venture projects and shall be responsible for preparing the Joint Venture's budget and technical work programme in relation to each project. The Joint Venture will be managed by a joint venture committee, comprising two Alecto representatives and two Centamin representatives and will be chaired by Centamin. In the event of a deadlock the Chairman of the Joint Venture Committee shall have the casting vote.

Conditions

In order for the provisions in respect of the Aysid-Metekel Licence to apply, the terms of the Joint Venture Agreement require the security granted by Alecto over the Aysid-Metejel licence, pursuant to the £100,000 loan advanced to Alecto by Mr Tamimi on 21 August 2013 ('the Tamimi Loan') to be released . Further details regarding the Tamimi Loan and the terms of the security for such loan are set out in the Company's announcement on 22 August 2013 and the circular to shareholders published by the Company on 17 September 2013, both of which are available on the Company's website at www.alectominerals.com.

Joint Venture Projects

Under the Joint Venture Agreement, Centamin has agreed to make certain commitments to farm-in for a 51 per cent controlling interest in each of the current Wayu Boda and Aysid-Metekel projects of respectively US$1.8 million and US$1.2 million. On future projects, Centamin shall commit to farm-in US$1 million for a 51 per cent controlling interest (in each case, the 'Initial Expenditure Commitment').

Following the completion of the Initial Expenditure Commitment in relation to each project, Centamin has the option to increase its ownership of the Wayu Boda, Aysid-Meketel and all new Joint Venture projects to 70 per cent ('Expenditure Option'). To exercise the Expenditure Option Centamin is required to commit respectively US$6 million, US$5 million and US$4 million to each project ('Second Commitment Expenditure').

Failure to contribute

Failure by Centamin to contribute the Initial Expenditure Commitment to any Joint Venture projects risks Centamin forfeiting their interest in the relevant project.

Buy-out Right

If, having funded the Initial Expenditure Commitment, Centamin elects not to exercise the Expenditure Option in respect of any Joint Venture project, Alecto shall be granted 180 days to purchase Centamin's 51 per cent interest in the relevant project for a cash amount equal to the Initial Expenditure Commitment. If Alecto fails to, or elects not to exercise its right to acquire Centamin's 51 per cent. interest, the parties shall contribute to such project pro rata to their respective interests or face dilution.

Dilution

Following satisfaction of the Initial Expenditure Commitment and, subject to the Expenditure Option being exercised, the Second Commitment Expenditure, the further funding of each Joint Venture project will be pro-rata to Alecto's and Centamin's respective participating interests in the Joint Venture project. If a party fails to contribute some or all of such funding ("Diluted Party") then the Diluted Party will have its interest diluted in accordance with industry standard terms.

Pre-emption, drag and tag along rights

The Joint Venture Agreement contains customary pre-emption and drag and tag along rights on a sale of participating interests in a Joint Venture project. However, Alecto shall have the right, for a period of 6 months from the date of the Joint Venture Agreement, to grant Fahad Al-Tamimi a right of option over a maximum of 49.99 per cent. of Alecto's interest (from time-to-time) in the Aysid-Metekel licence, subject to certain conditions, including the exercise of such option within 12 months of the date of the Joint Venture Agreement.

Right of Buy-out (post-feasibility study)

Once Centamin has satisfied its funding obligations and has acquired a 70 per cent interest in a Joint Venture project, it shall have the right to acquire Alecto's remaining share of a Joint Venture project for cash or shares of Centamin, subject to agreement between the parties on price, or otherwise calculated in accordance with agreed industry parameters by an independent expert, once a feasibility study has been conducted on the project.

Wayu Boda

The 945.5 sq km Wayu Boda project is located on the Adola Greenstone belt in southern Ethiopia, which is known to host significant deposits of gold including Midroc's Lega Dembi mine, which has an annual production in excess of 100,000 ounces, 83km to the North East.

Alecto conducted the first systematic exploration campaign in Q4 2012 which involved trenching, geophysics, and geological mapping. The programme focused on the northern 15% of the licence areas where extensive artisanal workings occur in three locations of 2km of strike targeting quartz vein swarms and larger individual quartz veins hosted in metavolcanics. Occasional pits target the host rock itself and notably grades of up to 47.4 g/t of gold have been reported from rock chip sampling and trenching in these areas.

Trenching demonstrated that although the grade is lower at surface, the high grades recovered by the artisanal miners from the deeper working are encouraging and will be investigated further through drilling. In terms of the wider licence area, the Company plans to broaden its exploration activities going forward to identify further possible targets.

Importantly, the project is 24km south of the privately owned National Mining Corporations 'Dawa' discovery which has recently undergone a primary economic assessment by independent consultants Venmyn and is reported to contain reserves of over 17Moz of gold (Addis Fortune. 2012).

Aysid-Metekel

The 1,953 sq km Aysid-Metekel gold exploration licence is located in a mineral rich region and approximately 80km from the Fiti skarn gold deposit discovered by MIDROC Gold Mine plc. There are significant artisanal workings throughout the tenement.

During Q4 2012, Alecto conducted an in-depth review of both historic and company derived data resulting in the delineation of five high priority target areas for follow up work during 2013. During Q1 2013, geochemical sampling (soil, stream and rock chip) and mapping was conducted on the Beles North, Beles Central and Bogiz targets. Assay results are not yet available but areas of significant gold-in-pan concentrates were identified. Work on the remaining Beles South and Gorshi North targets is planned after the cessation of the wet season as well as follow up work on the Beles North, Beles Central and Bogiz targets based on results from the Q1 2013 work.

**ENDS**

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