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")

22 August 2019

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

Term Sheet regarding potential US$1.0 million Disposal of Imweru Gold Project

Katoro Gold plc (AIM:KAT), the Tanzanian focussed gold and nickel exploration and development company, is pleased to announce that it has agreed a term sheet ('the Term Sheet') with Lake Victoria Gold Limited ('LVG' or the 'Purchaser') covering the disposal of 100% of the Company's wholly owned subsidiary, Reef Miners Limited, which owns the Imweru gold project ('Imweru' or the 'Project') and the Lubando gold project in northern Tanzania to 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').

The Proposed Disposal is reflective of Katoro's evolved strategy to develop a portfolio of assets focused on the battery metals sector. The recent acquisition of the Haneti Nickel Project has attracted significant interest from investors and the Company has been involved in the evaluation of further opportunities as it looks to capitalise on the battery metal demand fundamentals and deliver value for its shareholders.

Louis Coetzee, Executive Chairman of Katoro Gold, said, "We remain confident in the significant potential value of Imweru and believe that LVG is well positioned to develop the Project so that this potential can be fully realised. To this end, the optionality within the Term Sheet enables us to have the ability to retrieve equity in the Project by retaining the option to, at our sole discretion, accept LVG shares in lieu of cash for payments subsequent to an initial US$50K payment as well as retaining a 1.5% NSR. It also releases our resources so that we can focus on our highly prospective nickel, platinum-group-elements and lithium asset, Haneti, as well as exploring other value driving opportunities."

Further Details on the Term Sheet and Proposed Disposal

Imweru is in the Lake Victoria Goldfields region of northern Tanzania and forms part of the Imweru Licence Portfolio owned by Reef Miners Limited ('Reef Miners' or 'the Subsidiary'), a 100% Tanzanian registered subsidiary of Kibo Gold Ltd, which is a 100% owned Cypriot subsidiary of the Company. Imweru is approximately 120 km directly southwest of the city of Mwanza in northern Tanzania and the towns of Geita and Katoro lie respectively 33 km to the east and 13 km to the south.

The Subsidiary is also the 100% owner of the Company's earlier stage Lubando gold project ('Lubando') and Katoro's other gold prospecting licences in Tanzania, all of which may be included, subject to agreement on additional terms, in the Proposed Disposal. Together, Imweru and Lubando have a combined JORC compliant gold resource of 754,980 ounces of gold.

Under the Term Sheet, LVG, an unlisted public company limited by shares, incorporated in Australia, has agreed to acquire Reef Miners for a total consideration of up to US$1.0 million and a 1.5% NSR (as further described below), subject to due diligence and agreement on definitive documentation. LVG is focused on identifying significant gold resources in mineral-rich Tanzania. To this end, it operates multiple exploration licenses including its key project, the Imwelu Gold Project, which is located adjacent to Imweru and holds a mining licence. Following the acquisition of Imweru, LVG will be well positioned to develop a large potential gold resource consisting of both Imweru and Imwelu.

Completion of the Proposed Disposal will enable Katoro to focus its resources on other projects in its portfolio, including the highly prospective Haneti Nickel Project, and explore new opportunities, whilst still providing the Company with the option to maintain an exposure to Imweru through a shareholding in LVG.

Subject to completion of due diligence by LVG on Reef Miners and its assets, and agreement on the terms of a binding Sale and Purchase Agreement ('SPA'), the Term Sheet sets out that the following consideration is payable to Katoro:

1. US$50,000, in cash, upon the earlier of the following two dates; within 21 days of the date of signing the Term Sheet, or upon the date of signing the SPA and fulfilment of the conditions precedent (as described below);

2. US$100,000, in cash, on transfer of the shares of the Subsidiary into the name of the Purchaser;

3. US$150,000, in cash, 4 months after the signing of the SPA;

4. US$200,000, in cash, 9 months after the signing of the SPA; and

5. US$500,000, in cash, upon the commissioning of the first producing mine of the Purchaser in the United Republic of Tanzania, but not later than 24 months after the signing of the SPA.

The Purchaser may offer Katoro shares in the Purchaser in lieu of part, or all, of the cash payments detailed in 3, 4 or 5 above (the 'Share Offer'). The price applied to the shares offered in the Share Offer will be based on a valuation to be agreed between Katoro and the Purchaser at the time of making the Share Offer.

The acceptance of shares in the Purchaser in lieu of cash payment will be at the sole discretion of Katoro.

If the Purchaser does not make the payments detailed in 3 or 4, and does not offer shares in lieu of the payments, or Katoro does not accept the Purchasers shares in lieu of payment, then 100% of the ownership of the Subsidiary will revert to Katoro.

If the Purchaser does not make the payment detailed in 5 above, and does not offer shares in lieu of the payment, or Katoro does not accept the Purchasers shares in lieu of payment, then 50% of the ownership of the Subsidiary will revert to Katoro.

A 1.5% NSR shall also be paid on gold produced from the licences the subject of the Proposed Disposal.

The SPA will be subject to certain conditions precedent, including receipt of any governmental, regulatory and/or shareholder approvals.

Requirement for Katoro Shareholder approval for the Proposed Disposal

The Proposed Disposal constitutes a fundamental change of business of the Company pursuant to Rule 15 of the AIM Rules for Companies. Accordingly, in the event that Katoro and LVG enter into the SPA, completion of the Proposed Disposal will be conditional, inter alia, on the approval of the Company's shareholders at a general meeting that will need to be convened by publication of a shareholder circular and notice of general meeting at the appropriate time.

The necessary threshold to approve the resolution (which would be proposed as an ordinary resolution) to approve the Proposed Disposal (the "Resolution") is more than 50 per cent. of the votes validly cast being in favour of the Resolution. 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 Resolution. Accordingly, it is expected that the Resolution, should it be proposed, at a general meeting of the Company to be convened, would be approved and therefore the Proposed Disposal would proceed.

Further announcements will be made as appropriate.

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: