CRA.L Regulatory News (CRA)

Cradle Arc plc / EPIC: CRA.L / Market: AIM / Sector: Mining

16 April 2018

Cradle Arc plc

("Cradle Arc", the "Company" or, together with its subsidiaries, the "Group")

Option Agreement for a Joint Venture and/or Sale of Luiri Gold Mines Limited

Cradle Arc (AIM: CRA), the African focused base and precious metals exploration and production company, is pleased to announce that it has today entered into an option agreement (the "Agreement") pursuant to which it has granted Singa Holdings Zambia Private Limited ("Singa") an option to establish a joint venture and/or an option to acquire the entire issued share capital of Luiri Gold Mines Limited ("Luiri"), the Company's wholly owned subsidiary, which holds the Matala and Dunrobin gold assets in Zambia.

Highlights:

· Cradle Arc has granted Singa an exclusive option to acquire the entire issued share capital of Luiri for a total cash consideration of US$2.5 million (the "Share Option"), which expires on 1 July 2018, unless otherwise extended.

· In the event the Share Option is exercised and with effect from completion of the acquisition of Luiri, Cradle Arc will receive a royalty of 1.5% of gross revenue generated from the Matala and Dunrobin gold assets, up to a maximum aggregate amount of the Net Present Value of US$2.5 million discounted at 8%.

· Cradle Arc has also granted Singa an exclusive option which expires on 30 June 2018, unless otherwise extended, to form a joint venture for the operation of the Matala and Dunrobin gold assets (the "JV Option"). In the event the JV Option is exercised, any such joint venture terminates upon the commencement of commercial gold production. In the event that Singa elects to exercise the JV option, Cradle Arc has the right to require Singa to exercise the Share Option.

· An option fee of US$30,000 (the "Option Fee") is payable by Singa to Cradle Arc in three equal monthly tranches, commencing on the date of the Agreement.

Kevin van Wouw, CEO of Cradle Arc, said:

"The development of our Zambian gold assets has long been an important goal for the Company. We are, however, extremely mindful of the potential dilution that raising equity funds for the development of Matala could have on existing shareholders at the Company's current share price, and we therefore consider that this partnership with Singa represents the best path towards potential production in the near to mid-term.

"Should the Share Option be exercised, the total amount payable to Cradle Arc would, in our view, represent fair value given the project's current stage of development and will support the Company's future strategy. On exercise of the Share Option, the Company will receive US$2.5 million, which will contribute towards the cost of the planned Dense Media Separation (DMS) upgrades at the Group's Mowana Copper Mine, together with the potential future royalty stream."

Further Information

Pursuant to the Agreement, the Company has granted Singa an exclusive option to acquire the entire issued share capital of Luiri (the "Shares") for a total cash consideration of US$2.5 million. The Share Option expires on 1 July 2018, however, Singa may extend the Share Option period for up to two months by paying to the Company US$50,000 for each month that the Option Period is extended.

Singa will utilise the Share Option period to complete its formal legal and technical due diligence.

Upon exercise of the Share Option, the cash consideration of US$2.5 million (the "Cash Consideration") is payable by Singa to the Company. On receipt of the Cash Consideration, the Company will transfer to Singa 75% of the Shares, with the remaining 25% of the Shares being transferred to Singa upon commencement of commercial production of gold ("Second Completion"), at which point the joint venture will terminate.

With effect from Second Completion, a royalty of up to a maximum amount of the Net Present Value of US$2.5 million discounted at 8% per annum (the "Royalty") is payable by Singa to the Company. The Royalty shall be calculated as 1.5% of the gross revenue generated from any mining operations on the HQ-8074-LML mining licence, which hosts, inter alia, the Matala and Dunrobin gold deposits.

At any time following the first royalty payment (the "Redemption Date"), Singa has the right to accelerate the payment of the royalty, by making a one-off payment to the Company. If the Redemption Date is a date which falls less than 48 months from the date of Second Completion, an additional discount of US$500,000 will be applied.

Pursuant to the Agreement, the Company has also granted Singa an exclusive option to form a joint venture for the operation of the Matala and Dunrobin gold assets. The JV Option expires on 30 June 2018, unless otherwise extended. In the event the Share Option period is extended, the JV Option period will automatically extend for an equivalent period of time. The JV Option period may also be extended by agreement between the parties.

On exercise of the JV Option, Singa will assume full operational management, control, risk, benefit and funding of the Matala and Dunrobin gold assets. In the event the JV Option is exercised, the Company has the right to require Singa to exercise the Share Option.

Pursuant to the Agreement, the parties have agreed to use reasonable endeavours to resolve certain issues to the reasonable satisfaction of Singa including, inter alia, any restrictions and impediments in respect of the Luiri licence, adherence to the terms of the Consent Settlement Order in respect of the licence and Luiri's existing legal matters, further details of which are set out on pages 46-47 of the Company's AIM admission document dated 18 January 2018.

The Agreement contains customary warranties and undertakings.

**ENDS**

For further information on the Company, please visit www.cradlearc.com or contact:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.