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")

25 February 2020

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

UPDATE RE BLYVOOR JV AND DRAW DOWN OF THE SANDERSON FACILITY

Katoro Gold plc (AIM: KAT), the AIM listed gold and nickel exploration and development company, is pleased to provide a progress and financing update in respect of the Company's Blyvoor JV (the 'JV'), a near term gold production opportunity announced on 30 January 2020 ('the Announcement').

Further details on the Agreement, the JV, the Tailings and the funding are set out in the Announcement, which can be viewed at the following link:

https://polaris.brighterir.com/public/katoro_gold/news/rns/story/x43nzkw

Highlights:

·; Commercial and technical development of the Blyvoor Project progressing well, with work done to date achieving successful outcomes and validating the JV business plan

- good progress has been made in respect of the feasibility work, definitive plant design and related test work to update and optimise historical work

·; JV management committee and newly appointed JV Manager, Graham Briggs, are fully operational and overseeing progress

·; Pursuant to the Agreement, Katoro to provide a ZAR15.0 million (approximately £790,000) loan to the JV to fund ongoing development work ('the Loan Facility')

- ZAR5.0 million (approximately £263,000) has already been advanced

- to fund accelerated Project development activities, Katoro expects to advance the remaining ZAR10.0 million (approximately £527,000) in the near term

·; To fund the Loan Facility, and as previously announced, Katoro issued a convertible loan note to SI Capital clients for £397,000 and secured the right to an additional £400,000 through Sanderson Capital Partners Ltd ('Sanderson')

·; Katoro has now issued notice to Sanderson to draw down the additional £400,000 in full, from which Katoro will provide further funding to the JV (through the Loan Facility)

Louis Coetzee, Executive Chairman of Katoro commented: "The Katoro team have been very pleased with the progress being made at the Project, co-ordinated by the JV management committee and led by the recently appointed JV Manager, Graham Briggs.

Pleasingly, the Project is proceeding more rapidly than anticipated and the drawn down of the Sanderson CLN will enable us to fund the ongoing work programme.

The Board of Katoro notes the strengthening gold price which further bolsters, what we consider to be very robust project economics, as previously announced."

Unless otherwise defined herein, capitalised terms used in this announcement shall have the same meaning as those used in the Announcement of 30 January 2020.

FURTHER INFORMATION

Katoro confirms that in addition to the £397,000 convertible loan note (the 'CLN') secured from clients of SI Capital, the Company's broker, it has now completed the second tranche of convertible loan note funding from Sanderson, initial details of which were announced on 30 January 2020.

Sanderson is to subscribe for £400,000 in the form of a convertible loan note ('the Sanderson CLN'), which, together with the unallocated proceeds from the CLN, the Katoro Board expects will fund the further Katoro advances to the JV pursuant to the Loan Facility.

Katoro Loan to the JV

Pursuant to the Agreement, Katoro is to provide the ZAR15.0 million (approximately £790,000) Loan Facility to the JV, which will fund ongoing development work on the Project, with the initial tranches of ZAR5.0 million (approximately £263,000) ('the Initial Tranche') having already been provided.

Given the good progress being made in respect of the commercial and technical development of the Blyvoor Project, the Board of Katoro believes that it is likely that the JV Partners will, in accordance with the terms of the Agreement, seek to draw down the remaining balance of the Loan Facility, being ZAR10.0 million (approximately £527,000) ('the Additional Tranches'), to enable the continued advancement of the Project prior to completion of the Project level financing. All amounts drawn down constitute a loan to the JV by Katoro and are provided on the terms as outlined in the Announcement.

In order to finance the Additional Tranches, the Company has decided to utilise the additional funding by way of the Sanderson CLN.

Sanderson CLN Terms

As set out in the Announcement, in addition to the CLN, the Company had put in place the Sanderson CLN, which, if drawn down, would be on substantially similar terms as the CLN, and no less favourable to the Company than the CLN. Under the terms of the Sanderson CLN, the Company needed to confirm to Sanderson the quantum to be drawn down on or before 24 February 2020.

Accordingly, the Company has given notice to Sanderson to draw the Sanderson CLN in full. In line with the CLN, the Sanderson CLN will accrue interest at 20% per annum on a daily basis, and the principal plus accrued interest is repayable in full on or before 24 February 2021.

The Sanderson CLN is convertible into Ordinary Shares at a conversion price of 1.5 pence (being a slight premium to the conversion price of the CLN's of 1.4 pence) at any time prior to repayment and/or 17 February 2021, at the sole election of Sanderson, upon submission by Sanderson of a completed conversion notice to the Company ('Conversion Notice').

Sanderson has elected to immediately convert an initial £100,000 of the £400,000 drawn under the Sanderson CLN at the conversion price of 1.5 pence, and as a result the Company will issue Sanderson with 6,666,667 new Ordinary Shares ('Conversion Shares'). The remaining balance outstanding pursuant to the Sanderson CLN after the foregoing amounts will be £300,000 (the 'Remaining Balance').

For illustrative purposes only, if Sanderson sought conversion of the Remaining Balance of the Sanderson CLN in full on 17 February 2021, being the last practicable date to convert, and elected to receive such number of Ordinary Shares based on the outstanding principal plus accrued interest (approximately £359,178) divided by 1.5 pence, then the Company would issue 23,945,205 new Ordinary Shares, representing approximately 12.54% of the Company's issued share capital of 191,022,129 shares after taking into account the Conversion Shares.

On 17 February 2021, if Sanderson has not converted all of the Sanderson CLN, it may elect to receive:

·; such number of new Ordinary Shares as is equal to:

- (the outstanding principal plus accrued interest) / (90% * the average of the previous 10 days volume weighted average share price for an Ordinary Share so calculated not being less than 1.0 pence, being the nominal value of an Ordinary Share); or

·; cash equal to the outstanding principal plus accrued interest.

As with the CLN, the Sanderson CLN is not tradeable and is non-transferable.

Admission and Total Voting Rights

Application will be made for the Conversion Shares to be admitted to trading on AIM, and dealings are expected to commence on or around 2 March 2020 ('Admission'). Following Admission, the share capital of the Company will comprise 191,022,129 Ordinary Shares.

Each Ordinary Share has one voting right and no Ordinary Shares are held in treasury. Accordingly, the total number of voting rights will be 191,022,129 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 to their interest in, Katoro under the FCA's Disclosure Guidance and Transparency Rules.

Following the issue of the Conversion Shares and Admission, Kibo Energy PLC will be interested in, in aggregate, 96,138,738 Ordinary Shares representing approximately 50.33% of the Company's then issued share capital, and Sanderson will be interested in 6,666,667 Ordinary Shares representing approximately 3.49% of the Company's then issued share capital.

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: