Jangada Mines Regulatory News (JAN)

Jangada Mines plc / EPIC: JAN.L / Market: AIM / Sector: Mining

28 May 2019

 Jangada Mines plc ('Jangada' or the 'Company')

Proposed Disposal of the Pedra Branca Project

Jangada Mines plc, a natural resources company developing the Pedra Branca project, South America's largest and most advanced platinum group metals ('PGM') and nickel project ("Pedra Branca"), and the Ptombeiras West vanadium project ("Ptombeiras"), in north eastern Brazil, is pleased to announce that it has entered into a binding letter agreement (the "Agreement") with a TSX-V listed entity, ValOre Metals Corp. ("ValOre"), for the sale, subject to satisfaction of a number of conditions (set out further below), of 100% of Pedra Branca do Brasil Mineracao Ltda., the entity that holds Pedra Branca, to ValOre (the "Proposed Transaction").

As part of the Proposed Transaction, the Ptombeiras project remains 100% owned by Jangada.

The Proposed Transaction

The Agreement sets out that the following consideration is payable to Jangada pursuant to the Proposed Transaction:

a) issuance and allotment of 25,000,000 ValOre common shares ("Consideration Shares") on the date of closing of the Proposed Transaction; and

b) cash payments to Jangada in the aggregate of C$3,000,000, as follows:

(i) an exclusivity payment of C$250,000, which has been received by the Company. C$200,000 of this amount is refundable only in the event that Jangada breaches the exclusivity covenant set out in the Agreement, which runs for the next 100 days;

(ii) C$750,000 payable on closing of the Proposed Transaction;

(iii) C$1,000,000 on, or before, 3 months after the closing of the Proposed Transaction; and

(iv) C$1,000,000 on, or before, 6 months after the closing of the Proposed Transaction.

As such, the total consideration payable to Jangada, based on the closing price of a ValOre common share on 23 May 2019, is approximately £4.1 million.

The issue of the Consideration Shares would give Jangada an interest of approximately 33 per cent. in the current share capital of ValOre as enlarged by the issue of the Consideration Shares, but prior to the issue of the new common shares in ValOre pursuant to the VO Equity Raise (as defined below). Assuming completion of the Proposed Transaction, Jangada would also have the right to nominate one individual to the Board of Directors of ValOre and one observer to the Board, with the intention that such observer shall be appointed to the Board of Directors of ValOre at the next annual general meeting of ValOre following the closing of the Proposed Transaction. Jangada's right to nominate up to 2 directors may be extended if mutually agreed in writing by ValOre, Jangada and each of the nominee board members.

Conditions precedent

The Proposed Transaction is subject to normal commercial conditions of a transaction of this nature including, inter alia, completion of due diligence by both parties (a process which is currently ongoing) and definitive and binding documentation being negotiated and agreed within the next 100 days. The Proposed Transaction constitutes a fundamental change of business of the Company pursuant to Rule 15 of the AIM Rules for Companies. Accordingly, completion of the Proposed Transaction is also conditional on the approval of the Company's shareholders at a general meeting that is to be convened once the above conditions on due diligence and documentation, and the below condition on funding, have been satisfied.

As part of the Proposed Transaction, ValOre is required to undertake an equity raise of at least C$3 million (the "VO Equity Raise") and seek shareholder approval to issue, inter alia, the Consideration Shares.

The Proposed Transaction provides for an exclusivity period of 100 days for completion of the various conditions precedent set out above and therefore, until these conditions precedent have been satisfied in full, Shareholders should be aware there is no guarantee the Proposed Transaction will proceed.

Rationale for the Proposed Transaction and Future Focus on Ptombeiras

The Board of Directors of Jangada are aware that this announcement may come as a surprise to some shareholders and seem to be conflicting with the Company's promoted views of the technical and economic prospects of Pedra Branca. This is not the case. The Board continues to believe very strongly in Pedra Branca and its prospects, which is evidenced by Jangada remaining a substantial shareholder of ValOre going forward, and the appointment of two Jangada nominees to ValOre's board.

Since the Company's IPO in June 2017, the Jangada Board has found there to be limited support in the UK financial markets for financing a PGM project. The support that Jangada has experienced is diametrically opposite to both the independent experts' value of the underlying assets and the level of support given to projects with similar asset suites on other bourses. Notwithstanding Jangada's success at developing its two projects, the UK financial markets have not responded as expected. The Jangada Board believes that Pedra Branca will continue to develop strongly as a project, but, in order to continue that development, the project requires stronger financial market support, which the Jangada Board believes ValOre will experience in Canada. It is for this reason that Jangada has made the decision to proceed with the Proposed Transaction which will see ValOre raising finance to continue the development of Pedra Branca and allow the Company to maintain an interest in a project that will be funded through to its next stage of development.

Recognising the difficulties of financing PGM projects in the UK markets, since October 2017, the Board has increasingly focused its efforts on proving up the vanadium potential of Ptombeiras, and on 5 February 2019, reported the results of its vanadium drilling campaign, which confirmed the presence of a high-grade deposit with the potential for significant resource delineation.

The Board believes there is a strong appetite amongst UK and international investors for vanadium as an asset class, primarily driven by its importance as an input to battery metals, and assuming completion of the Proposed Transaction, the Board considers that it's in the best interests of shareholders to focus the Company's resources on pursuing the development of Ptombeiras. In the near term, this would involve further drilling and metallurgical work, the results of which would then dictate the path forward for development. A NI 43-101 compliant CPR is already underway, which is expected to be completed by the Company during Q3 2019. The Proposed Transaction includes a cash consideration component allowing Jangada to substantially progress the development of Ptombeiras.

Information on ValOre

ValOre Metals Corp. (TSX‐V: VO) is a Vancouver based company with a portfolio of high‐quality uranium and precious metal exploration projects in Canada. In addition to the Baffin Gold Property, ValOre holds Canada's highest‐grade uranium resource outside of Saskatchewan. ValOre's 89,852 hectare Angilak Property in Nunavut Territory, hosts the Lac 50 Trend with a NI 43‐101 Inferred Resource of 2,831,000 tonnes grading 0.69% U3O8, totalling 43.3 million pounds U3O8. ValOre's comprehensive exploration programs have demonstrated the "District Scale" potential of the Angilak Property. For disclosure related to the inferred resource for the Lac 50 Trend uranium deposits, please refer to ValOre's news release of 1 March 2013.

In Saskatchewan, ValOre holds a 100% interest in the 13,711 hectare Hatchet Lake Property and a 50% interest in the 131,412 hectare Genesis Property, both located northeast of the north‐eastern margin of the uranium‐producing Athabasca Basin.

ValOre's team has forged strong relationships with sophisticated resource sector investors and partner Nunavut Tunngavik Inc. (NTI) on both the Angilak and Baffin Gold Properties. ValOre was the first company to sign a comprehensive agreement to explore for uranium on Inuit Owned Lands in Nunavut Territory, Canada and is committed to building shareholder value while adhering to high levels of environmental and safety standards and proactive local community engagement.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

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