Arc Minerals Regulatory News (ARCM)

Arc Minerals Ltd / Epic: ARCM / Market: AIM / Sector: Mining & Exploration

15 May 2018

Arc Minerals Ltd 

('Arc' or the 'Company')

Acquisition and Placing of Equity

Arc Minerals is pleased to announce the execution today of a binding sale and purchase agreement to significantly increase Arc's interest in Zamsort Limited ('Zamsort'), a private company developing the highly attractive Zamsort Copper-Cobalt Project in north-west Zambia.

Arc Minerals has increased its stake in Zamsort from 14% to 49% by acquiring 35% of Terra Metals Limited's ('Terra Metals') shares in Zamsort in exchange for 102,083,333 new ordinary shares of no par value in Arc Minerals ("Consideration Shares"). In addition, Arc announces it has raised £2.5m before expenses through the placing of 104,166,667 new ordinary shares of no par value ("Placing Shares") at 2.4 pence per share (the "Placing"). The proceeds from the Placing will be used to initiate a comprehensive exploration programme at Zamsort and to complete the Resource upgrade at Casa. The New Ordinary Shares have been placed by Optiva Securities Limited with new and existing investors.

Arc holds a convertible loan note in Zamsort which is convertible into an additional 5.34% interest in the share capital of Zamsort, so Arc's interest in the share capital of Zamsort could potentially be increased to 54.34%. The Company has commenced discussions with the Zambian Competition and Consumer Protection Commission to increase its stake in Zamsort to over 50%, subject to such a conversion not triggering any obligations under AIM Rule 14 of the AIM Rules for Companies.

The Terra shareholding in Arc Minerals is subject to a 12-month hard lock-in period.

Highlights

· Transformational event for Arc providing exposure to the most prospective ground in the 'Domes' region of the Zambian Copperbelt - now a world-class province hosting three major producing copper mines

· The Zamsort large scale exploration license encompasses 9 of the 30 high priority targets ranked by the Anglo American/Equinox Minerals joint venture over the area in the late-90's of which the top 7 targets fall within Zamsort's licenses

· Existing near surface estimated Copper-Cobalt oxide Resource of 16.59Mt @ 0.94% Cu (non-JORC code compliant) with a historical exploration target of 150Mt

· Production of Copper and Cobalt hydroxide cake from commercial scale demonstration plant ("CSD plant") anticipated within six months with 10,000 tonnes of screened ore grading 2.08% Copper and 0.29% Cobalt stockpiled on site

· New management team in place at Zamsort

Nick von Schirnding, Executive Chairman of Arc Minerals commented:

"This transaction is highly attractive for Arc Minerals and makes us the largest shareholder in Zamsort. We consider Zamsort to be one of the most exciting polymetallic assets in the Zambian Copperbelt. The combination of near-term production from the plant as well as the exploration potential is very exciting.

Given that this asset continues to be coveted by numerous interested parties, I believe there will be no shortage of strategic partnerships that potentially could emerge. I believe this chapter represents a transformation for Arc Minerals in line with our revised strategy. I look forward to an exciting future with strong newsflow both from Zamsort as well as our Casa gold project." 

The Zamsort Copper-Cobalt Project

The Zamsort Copper-Cobalt project, located approximately 900 km from Lusaka (see Figure 1), in Mwinilunga, North Western Province, is well within the trending arm of the major geological structure known as the Lufilian Arc (Copperbelt), on the western flank of the Kabompo Dome. The Copperbelt is home to all the major copper mines in Zambia and Zamsort represents one of the last prospect areas with near surface mineralisation in Zambia.

Over the last 13 years, three new major copper mines have been discovered and constructed to exploit the mineral resources in the new western part of the Domes region of the Zambian Copperbelt. This region now accounts for more than 80% of Zambian copper production and Zamsort is in close proximity to large operations such as First Quantum Minerals' Sentinel and Kansanshi mines and Barrick Gold's Lumwana mine.

The Zamsort Project consists of two licences - a 4km² Small-Scale Mining License ('SML') enclosed by a Large Prospecting License ('LPL') area of c. 1000km². Zamsort was previously explored by Equinox Minerals Limited ('Equinox') and Anglo American Prospecting Services ('AAPS') by way of the 'Zambezi Joint Venture' ('JV') through AAPS's affiliate Zamanglo Prospecting Ltd ('Anglo American') during the late 1990s as part of the Kabompo Project.

The current LPL encompasses 9 of 30 exploration targets that were ranked in the late-90's by the JV over the Kabompo Project, which include the top 7 ranked targets. First Quantum Minerals' Kalumbila property better known as the Trident Project, developed to become the Sentinel copper and Enterprise nickel mines and is forecasted to produce approximately 220,000 tonnes of copper in 2018. Its Enterprise Nickel project, is, like Zamsort, also located at the flanks of the Kabompo dome and approximately 40km to the east of Zamsort's licenses.

At the time of the JV, Kalumbila was originally ranked number 22 out of JV's top 30 Kabompo Project targets with an original exploration target size of 6 million tonnes of ore; eventually a copper Resource in excess of 1 billion tonnes of ore (one of the largest in Zambia) was demonstrated - during this same period the initial Anglo-American exploration target for Zamsort exploration target was 150 million tonnes of ore.

Previous limited exploration work at Zamsort has resulted in the delineation of a non JORC-code compliant in-house copper-cobalt Resource estimate of 16.59Mt @ 0.94% Cu Eq., Arc Minerals firmly believe that Zamsort's Kalaba prospect located in the SML along with the exploration targets in the LPL hosts significant potential for proving a major tier-one copper-cobalt discovery.

The most recent trenching results completed in the Zamsort open pit include:

· 95m @ 2.08% Copper and 0.26% Cobalt in pit trench line 3,

· 30m @ 2.10% Copper and 0.24% Cobalt in pit trench line 4,

· 20m @ 1.73% Copper and 0.25% Cobalt in pit trench line 7,

· 15m @ 0.72% Copper and 0.38% Cobalt in pit trench line 6. 

Zamsort have advanced the construction of a CSD plant (see Figure 2), with the plant being approximately 75% complete. It is anticipated that the plant could potentially begin production of copper and cobalt within the next six months. Arc is also presently in the process of building a new management team at Zamsort who will be undertaking a full assessment of current operations including historical exploration data as well as optimising the plant. At present, it is estimated that Zamsort has approximately 10,000 tonnes of screened ore grading 2.08% Cu and 0.29% Co stockpiled on site and ready to be processed through the CSD plant. 

Acquisition of Zamsort / Terra Metals shares

In addition to the receipt of 102,083,333 Consideration Shares by Terra Metals in exchange for 35% of its shares in Zamsort, Terra Metals has the right to nominate one non-executive director to the board of Arc Minerals. Terra Metals' shareholding in Arc is subject to a 12-month hard lock-in period.

Placing

The company announces that it has raised £2.5 million before expenses from a placing of 104,166,667 Placing Shares at 2.4 pence per share.

The Placing, which was oversubscribed, was supported by both new and existing investors and a number of the Company's Directors and management, who also participated in the Placing.

Mr Nick von Schirnding, Executive Chairman of Arc, purchased 4,166,667 Placing Shares at a price of 2.4 pence per share. Following this transaction, Nick von Schirnding will have a beneficial interest in 7,160,000 ordinary shares of no par value in the Company ("Ordinary Shares"), representing approximately 1.33 per cent. of the enlarged Ordinary Share capital of the Company.

Mr Jonathan de Thierry, Non-Executive Director of Arc, purchased 208,333 Placing Shares at a price of 2.4 pence per share. Following this transaction, Jonathan de Thierry will have a beneficial interest in 13,701,221 Placing Shares, representing approximately 2.54 per cent. of the enlarged Ordinary Share capital of the Company.

Mr Vassilios Carellas, Chief Operating Officer of Arc, purchased 208,333 Placing Shares at a price of 2.4 pence per share. Following this transaction, Vassilios Carellas will have a beneficial interest in 1,145,000 Ordinary Shares, representing approximately 0.21 per cent. of the enlarged Ordinary Share capital of the Company.

Application has been made for the 102,083,333 Consideration Shares and 104,166,667 Placing Shares to be admitted to trading on the AIM market of the London Stock Exchange ('Admission'). Admission is expected to occur on or around 21 May 2018.

Total Voting Rights

Following the issue of the Consideration Shares and Placing Shares, the total issued share capital of the Company consists of 539,040,600 Ordinary Shares of no par value with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company is 539,040,600 and this figure may 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 FCA's Disclosure and Transparency Rules.

Notes:

1) Terra Metals has signed a lock-in agreement for a period of 12 months from date of receipt of Arc Minerals shares.

2) Zamsort has recently completed an audit of its 2017 financial year by PKF, Arc Minerals' auditors.

3) Arc Minerals has implemented best practice financial controls and procedures at Zamsort, Casa and Slovakia (PFFF).

4) Zamsort has settled in full two historic cases in respect of a $35,000 and $23,100 debt dating back to 2015. This case is being dealt with in the Zambian courts to finalise the matter.

Figure 1. Location Map

http://www.rns-pdf.londonstockexchange.com/rns/0422O_-2018-5-14.pdf

Figure 2. CDS Plant

http://www.rns-pdf.londonstockexchange.com/rns/0422O_1-2018-5-14.pdf

**ENDS**

Contacts

Forward-looking Statements

This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterised by words such as 'plan', 'expect', 'project', 'intend', 'believe', 'anticipate', 'estimate', 'suggest', 'indicate' and other similar words or statements that certain events or conditions 'may' or 'will' occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

Notes to the Editors

Arc Minerals is an AIM listed exploration and mine development company focused on a diversified portfolio of mining projects with interests in Slovakia, Eritrea, the Democratic Republic of the Congo and Zambia. 

ARC Minerals current holdings include:

· 99% interest in CASA Mining Limited, a private company that has a 71.25% interest in the 1.5-million-ounce inferred Resource Akyanga gold deposit in the DRC.

· A 14% interest in Zamsort Limited, a private company focused on a prospective copper and cobalt licence in the Zambia Copperbelt, with approximately a five percent balance and interest (convertible note) being rolled forward to the end of 2018;

· 100% ownership of the Kremnica Mining Licence Area in Slovakia which host the 1.3Moz AuEq Au PFS stage Ṧturec Gold Project;

· A 18.48% interest in Andiamo Exploration Limited, a private company exploring for gold and base metals VMS targets in Eritrea.

For more information visit www.arcminerals.com

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

The notifications below, made in accordance with the requirements of the EU Market Abuse Regulation, provide further detail on the director's share dealing.

NOTIFICATION AND PUBLIC DISCLOSURE OF TRANSACTIONS BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM