Katoro Gold Regulatory News (KAT)

Katoro Gold plc (Incorporated in England and Wales)

(Registration Number: 9306219)

Share code on AIM: KAT

ISIN: GB00BSNBL022

("Katoro" or "the Company")

30 September 2019

Katoro Gold plc ('Katoro' or the 'Company')

Imweru Gold Project Transaction Update

Katoro Gold plc (AIM:KAT), the Tanzanian focussed exploration and development company, provides the following update in respect of the proposed disposal of its Imweru gold project ('Imweru' or the 'Project') to Lake Victoria Gold Limited ('LVG') for a total staged cash consideration of up to US$1.0 million and a 1.5% Net Smelter Royalty ('NSR') (the 'Proposed Disposal'), as announced on 22 August 2019.

The Proposed Disposal is reflective of Katoro's evolved strategy to develop a portfolio of assets focused on the battery metals sector. The Board believes that the Proposed Disposal will enable the Company to build on its acquisition of the Haneti Nickel Project, which has attracted significant interest from investors and has resulted in AIM quoted Power Metal Resources plc ('POW') investing in the project to become the Company's JV partner in Haneti. The Company also continues to evaluate further opportunities in the sector as it looks to capitalise on the battery metal demand fundamentals and deliver value for its shareholders. Please see below for further information on the background to and rationale for the Proposed Disposal.

Update

As detailed in the Company's interim results for the six months ended 30 June 2019 ('Interims'), announced on 13 September 2019, the Company and LVG agreed an extension to the payment of the first tranche of monies due to Katoro under the term sheet of US$50,000 (the 'First Payment'), to 27 September 2019.

Katoro announces that it has agreed to a further extension of the First Payment to 31 October 2019. Katoro understands from LVG that they have completed their due diligence investigations and the parties have subsequently agreed to the extension to allow the sale and purchase agreement for Imweru (the 'SPA') to be completed and entered into by no later than 31 October 2019. As set out previously, the Proposed Disposal is conditional, inter alia, on the approval of the Company's shareholders and on entering into the SPA, the Company will issue a circular to shareholders convening a general meeting to approve the Proposed Disposal.  The Company's majority shareholder, Kibo Energy plc ('Kibo'), which is currently interested in approximately 54.6% of the Company's issued share capital, has indicated in writing to the Board of Katoro that it will vote in favour of the Proposed Disposal. Accordingly, it is expected that the Proposed Disposal, should it be proposed at a general meeting of the Company, would be approved and therefore would proceed.

In recognition of Katoro granting this extension, it is intended that LVG will issue Katoro with shares in LVG with a value of up to US$50,000. A further announcement will be made as necessary in this regard.

As a result of the extension to the receipt of the First Payment and further to the disclosure in the Interims, having identified further cost savings, the Group's current cash resources are sufficient into November. In the event that the First Payment is not received as currently expected, the Company will then need to secure funding without delay and there is no guarantee that such funding will be available or if funding is available, the terms of such funding

Louis Coetzee, Executive Chairman of Katoro Gold, said, "We continue to believe that the Proposed Disposal provides the Company with significant upside and brings accelerated development potential to our Imweru gold project in Tanzania.

"The Proposed Disposal is structured to provide a number of benefits to Katoro in the form of initial cash payments to support our working capital position, deferred cash payments, which we may exchange some or all for shares in LVG, thus buying back into the equity ownership in the Imweru gold project, and a 1.5% NSR to provide ongoing exposure to Imweru.

"The Company may, in addition, vend its Lubando gold project and other gold interests to LVG, subject to additional terms and that remains under discussion.

"To be able to reinvigorate and monetise our gold portfolio is a positive step, allowing us to benefit from our gold interests whilst building our activities in the battery metal sector, including the accelerated development of our highly strategic Haneti nickel-PGM project, held in joint venture with POW.

"I look forward to keeping shareholders update on our progress going forward, as we look to create significant shareholder value from our projects."

Background and Rationale to the Proposed Disposal

The Proposed Disposal was originally announced on 22 August 2019 and that announcement may be viewed through the following link:

https://polaris.brighterir.com/public/katoro_gold/news/rns/story/wk08kox

The transaction sees the potential sale of the Company's Imweru gold project in Tanzania to LVG, a private Australian company that has an existing gold exploration and development project in Tanzania, for a total staged cash consideration of up to US$1.0 million and a 1.5% NSR.

Katoro's 100% owned Imerwu gold project hosts 515,110 ounces of JORC compliant gold. LVG's 100% owned Imwelo project, which is adjacent to Katoro's Imweru project, hosts 291,600 ounces of JORC compliant gold and by bring the two gold projects together, they will have a combined gold resource of approximately 806,710 ounces.

Importantly, LVG also holds a mining licence and environmental permit for Imwelo, enabling them to commence gold mining at Imwelo. LVG intends to bring Imwelo into production in 2020, targeting an initial 30,000 ounces of gold production per annum from an open pit operation.

With the addition of Katoro's Imweru project the number of ounces produced per annum by LVG, and the longevity of mining operations, can increase substantially, with regulatory approval of an extension of the existing mining licence and environmental permit to include the adjacent Imweru project area.

For Katoro, considerable work has gone into the development of Imweru to a point of a substantial JORC compliant Resource and in 2017 Katoro had initiated a pre-feasibility study ('PFS') to consider the potential development of Imweru into a 50,000 ounce per annum gold production project.

Changes in Tanzanian mining legislation in early 2018 though caused Katoro to suspend the PFS process whilst assessing the impact of the legislative change in respect of the granting of new licences and tax/royalties on newly licenced operations.

By injecting Imweru into LVG, Katoro believes that it could allow for Imweru to be advanced and brought into production on an accelerated timescale and the Proposed Disposal, through the ability to accept shares in LVG for the deferred consideration and the1.5% NSR, allows for Katoro to retain an economic interest in Imweru going forward.

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.

**ENDS**

For further information please visit www.katorogold.com or contact: