Kazera Global Regulatory News (KZG)

04 June 2020

Kazera Global plc

Acquisition of interest in Diamond Mine and Heavy Mineral Sand Opportunity

Kazera Global plc ("Kazera Global", "Kazera" or "the Company"), the AIM quoted investment company, is pleased to announce the conditional acquisition of a controlling interest in a near-term producing diamond mine and in a heavy mineral sands (HMS) opportunity in South Africa.

Furthermore, the Company is pleased to update investors on ongoing drilling activity at TVM.

Highlights:

Acquisition of stake in DBM

· Kazera to acquire a 90% stake in Deep Blue Minerals (Pty) Limited ("DBM") and a stake in Whale Head Minerals (Pty) Limited ("WHM") (the "Acquisitions")

· Acquisition cost of the stake in DBM is £600,000 funded via the issuance to Richard Jennings of 120,000,000 ordinary shares in the capital of Kazera ("Ordinary Shares" and these Ordinary Shares being the "Consideration Shares") at a price of 0.5p per Consideration Share (the "Issue Price")

· Near-term Diamond production via DBM:

o Historical production grades of 10ct/ht, producing over 10 million carats of gem grade diamonds since production began in 1928

o Timeline of 12 months to restarting production and revenue generation following completion of acquisition

o Inferred Mineral Resources of 208,000 carats at a grade of 6.0ct/100m²

Potential acquisition of stake in WHM

· Kazera to acquire a stake in WHM representing 90% of its current issued share capital or such percentage as is available once all necessary arrangements with Black Economic Empowerment partners under South African law are in place

· Kazera to assume $500,000 of liabilities from the vendor of the shares in WHM, subject to completion of certain milestones, to be satisfied through the issue of Ordinary Shares at the volume weighted average price of the Ordinary Shares at the time the milestones are met

· Completion of the Acquisition in the case of WHM is, inter alia, subject to receipt of a Competent Persons' Report in terms satisfactory to the Company and receipt of a Mining Permit in respect of heavy mineral sand deposits over the area known as Walviskop

· Heavy Mineral Sands ("HMS") potential:

o Work programme to be funded by diamond production revenue and will aim to produce over 6,000tpm, achieving an estimated gross revenue of US$600,000/month

o Possible partner identified to build a Processing Plant on site at their own cost and to greatly improve HMS's profit targets

Rationale for the Acquisitions

· Simple work programme required to start diamond production

· Staff and extremely experienced management team already in place to deliver growth at the field

· Both projects located on the border between South Africa and Namibia, within 450 kilometres of the TVM Mine

· Aligned with Kazera's investing policy of investing in high-impact commodities in the African mining sector at the bottom of their cycle

Equity Issuances

· The Company has also moved to strengthen its balance sheet and allow it to exploit the above opportunities by:

o Raising £750,000 through the issuance of 150,000,000 Ordinary Shares (the "Placing Shares") at the Issue Price (the "Placing")

o Issuing of warrants over 75,000,000 Ordinary Shares exercisable at 1p per Ordinary share within two years

o Issuing 49,199,999 Ordinary Shares (the "Fee Shares") to directors and contractors of the Company in lieu of fees and salaries accrued to 31 May 2020 amounting in aggregate to £156,000, with 19,199,999 of the Fee Shares being issued at the Issue Price and 30,000,000 of the Fee Shares being issued at a price of £0.002 (0.2p)

Appointment of Director

· Appointment of new Executive Director - Dennis Edmonds to take responsibility for the Diamond and HMS projects.

Larry Johnson, Chief Executive Officer of Kazera Global commented:

"We are very pleased to announce this transaction. With high growth potential and near-term revenue opportunities, leveraging on our Board expertise and flexibility, this investment is typical of the value we seek to create at Kazera. We are investing in a ready built team with bespoke experience for the geology on the licence. Kazera will be taking a majority interest in the JV and expects to enjoy near term revenue generation which will be a significant boost to our Company and will facilitate not just growth at our South African diamond and HMS fields but also at TVM, where we continue to unearth value.

"This is a highly exciting development for the Company, and I look forward to closing the acquisition and to updating shareholders on further developments in the near future."

Rationale and Background to the Acquisition

The Acquisitions represent an opportune time in the diamond pricing cycle with the bonus of a low cost, high grade HMS opportunity. The current owner, Tectonic Gold plc ("Tectonic" or "Tectonic Gold"), has spent 18 months on the ground, built a local team, tested the area extensively and is the first company to target securing a coincident HMS mining permit and diamond mining contract.

Kazera will upon Admission acquire a 90% stake in DBM (it should be noted that a further 26% of DBM may be acquired for value by Black Economic Empowerment partners as required by South African law) and, subject to certain milestones to be satisfied at a later date, a 64% stake in WHM (assuming 26% of WHM has been acquired for value by Black Economic Empowerment partners as required by South African law before completion of the purchase of the shares in WHM).

In the view of Kazera's board, this represents a low risk investment into a well understood resource and mining operation that is fully permitted to restart production within 12 months.

Cash flows from diamond production are expected within 12 months of completion of the Acquisition of the interest in DBM and are expected to deliver 300-500ct/month. At an average sales price of US$350/ct, DBM expects to achieve revenues of US$84,000 - US$140,000/month. Cash flow from this operation will, once the acquisition of the stake in WHM completes, then be used to facilitate production from the Heavy Mineral Sands opportunity and further develop Kazera's investment in its Namibian Tantalite mine.

The process will be simple on beach multi mesh separation before diamond gravels are directed to the Alexkor recovery plant. The cost of re-starting production is expected to be covered by the proceeds of the Placing and will be utilising the same technology as the Tormin field which is 200km south of the Deep Blue area of operations.

The workforce of Tectonic will remain in-situ at the mine to oversee restarting of and continuation of production, having worked for the last 18 months testing the area extensively.

Terms of the Acquisitions

DBM

Kazera has agreed to acquire shares in DBM representing 90% of its current issued share capital from Richard Jennings for £600,000 which will be satisfied by the Company issuing the Consideration Shares at the Issue Price. The balance of the shares in DBM will continue to be held by Tectonic and if shares in DBM need to be held by Black Economic Empowerment partners under South African law, Tectonic's interest in DBM will not be diluted.

WHM

Kazera has also agreed to acquire from Tectonic shares in WHM representing 90% of its current issued share capital or such percentage as is available once all necessary arrangements with Black Economic Empowerment partners under South African law are in place, provided that Tectonic remains holding 10% of WHM's issued share capital subsequent to any such arrangements, with such arrangements to be in place before completion of the acquisition by Kazera of the shares in WHM.

The consideration for the purchase of the shares in WHM from Tectonic is to be satisfied by Kazera assuming the liability of US$ 500,000 owed by Tectonic to Consolidated Minerals Pte Ltd ("CM") in respect of services rendered in relation to the heavy mineral sands project. Kazera has agreed with CM to satisfy such liability through the issue of Ordinary Shares worth $250,000 on completion of the purchase and through the issue of Ordinary Shares worth a further $250,000 on the construction and commissioning of a plant to process a minimum of 20,000 tpm of HMS in or near Port Nolloth.

In each case the value of such Ordinary Shares issued to CM will be determined by the 30 day volume weighted average price of the Company's Ordinary Shares as at close of the Business Day Prior to the date of the commissioning of the Processing Plant. The Company has also agreed to pay CM a 2.5% royalty on the gross receipts of WHM from the processing plant, assuming terms are agreed for this to be built and it is so built and commissioned on or before 31 October 2023.

The purchase of the shares in WHM is conditional on, inter alia, a competent person's report on WHM being received by the Company, a mining permit in respect of heavy mineral sand deposits at Walviskop being received by WHM, completion of due diligence and all necessary arrangements with a Black Economic Empowerment Partner being in place, in each case to the Company's satisfaction (acting reasonably) with such conditions to be satisfied on or before 31 December 2020 or such later date as is agreed by the Company with Tectonic.

Placing and Fee Shares

In order to provide the working capital necessary to bring the diamond project outlined above into production, the Company has raised £750,000 by the issue of the Placing Shares at the Issue Price. Pello Capital acted as placing agent in respect of the Placing.

Investors in the Placing will receive a warrant (the "Warrants") to subscribe for one further Ordinary Share for each two Placing Shares for which they subscribe. Each Warrant is exercisable at a price of 1p per Ordinary Share and must be exercised within two years of Admission. The Company has also granted 1,550,000 Warrants to certain brokers who facilitated the Placing.

The Company has also agreed to satisfy £190,000 of creditors through the issue of an aggregate of 55,999,998 ordinary shares in the capital of the Company, of which the Fee Shares will be issued and allotted on Admission with 19,199,998 Fee Shares being issued at the Issue Price and 30,000,000 of the Fee Shares being issued at a price of £0.002 (0.2p) to Align Research Limited, a company of which Richard Jennings is a director and shareholder and to whom the Consideration Shares are being issued. Subsequently, 800,000 ordinary shares will be issued on 1 July 2020 and 5,999,999 ordinary shares on 1 October 2020, all at the Issue Price, in satisfaction of the balance of amounts which will then be owed to creditors.

Furthermore, the Company has elected to cancel the Loan Facilities Agreements ("the Loans") as announced on 23 March 2020, with the lenders of the Loans electing to replace their commitments to provide the Loans into subscriptions in the Placing. For clarity, no tranches of the loan were drawn upon by the Company. The lenders of the Loans (being Giles Clarke and Nick Harrison, directors of the Company, and Align Research Limited) will retain their warrants over Ordinary Shares exercisable at £0.003 (0.3p) per Ordinary Share which were issued pursuant to the terms of the Loans.

Drilling Update

Following the highly encouraging results of the first phase of Kazera's planned drilling programme at TVM, and the recent success of the Company's contractors, Adamas Drilling, in operating the man-carry rig on the steep terrain, Kazera continues to embark upon the second exploration drill phase to further delineate the extent of Resources in the license in which phase the Company expects to identify further Mineral Resources.

So far, the Company has completed drilling at Homestead, Purple Haze and Snake and has now moved into position at Signaalberg, drilling the last hole, then moving to the final White City site. Initial results are positive and the Company anticipates completing the core drilling by the end of H1 2020.

So far the COVID-19 pandemic has had minimal impact on the Company's capability to operate at the Mine but has, however, impeded sending recovered cores to ALS for assaying. It is anticipated that this issue will be resolved shortly once the government re-open borders.

Admission

The issuance of the Consideration Shares, Placing Shares and Fee Shares (together the "New Ordinary Shares") is being made out of the authorities granted to the directors of the Company at the last Annual General Meeting.

Application has been made to the London Stock Exchange to admit the New Ordinary Shares to trading on AIM. Admission of the New Ordinary Shares is expected to occur on 17 June 2020 ("Admission"). The New Ordinary Shares will rank pari passu with the existing Ordinary Shares.

Following Admission, the issued share capital of the Company will be 675,427,873 Ordinary Shares and this figure may be used by shareholders as a denominator for the calculations by which they will determine if they are required to notify their interest in, or change to their interest in the Company under the Disclosure Guidance and Transparency Rules published by the UK Financial Conduct Authority. There are no Ordinary Shares held in treasury and each Ordinary Share entitles the holder to a single vote at general meetings of the Company. Therefore, the total number of voting rights in the Company will be 675,427,873.

180,000,000 New Ordinary Shares (consisting of 30,000,000 Placing Shares simultaneous with which Align Research Limited's obligation to advance sums pursuant to the Loans has been cancelled, 120,000,000 Consideration Shares and 30,000,000 Fee Shares) are to be issued to Richard Jennings and Align Research Limited which will equate to 26.38% of the Company entire issued share capital following Admission,

Related Party Transactions

Pursuant to the above arrangements, Giles Clarke and Nick Harrison, Chairman and Non-Executive Director of the Company and Westleigh Investments Holdings Ltd ("WIHL"), a company of which they are both directors and shareholders are to be issued New Ordinary Shares at the Issue Price as follows:

* The Placing Shares to be issued to Giles Clarke and Nick Harrison are pursuant to their subscriptions for £30,000 and £45,000 respectively in the Placing and simultaneously their respective commitments to advance £25,000 each pursuant to the Loans have been cancelled. Giles Clarke and Nick Harrison will receive 3,000,000 and 4,500,000 Warrants pursuant to the Placing and will retain the 8,333,333 warrants over Ordinary Shares exercisable at 0.3p per Ordinary Share granted pursuant to the entry into the Loans.

** The Fee Shares to be issued to Giles Clarke, Nick Harrison and WIHL relate to salary / fees accrued but not taken since for period from 1 February 2020 to 31 May 2020. Each of Giles Clarke and Nick Harrison have also agreed to accept Ordinary Shares in lieu of salary in respect of the period from 1 June 2020 to 30 September 2020 and WIHL has agreed to accept Ordinary Shares in lieu of fees in respect of the period from 1 June 2020 to 30 June 2020 amounting to 3,333,333, 2,666,666 and 800,000 Ordinary Shares respectively. These further Ordinary Shares will be issued in due course.

The issuance of these Ordinary Shares and Warrants to Giles Clarke, Nick Harrison and WIHL constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies. Larry Johnson, an independent director for these purposes, considers, having consulted with the Company's nominated adviser, that the issuance of these New Ordinary Shares is fair and reasonable insofar as the Company's shareholders are concerned.

Appointment of Director

The Board have also elected to appoint Mr Dennis Edmonds to the Board of Kazera Global as Non-Executive Director. Mr Edmonds will be the Director in charge of the newly acquired project having a wealth of commercial and corporate experience in southern Africa, having practiced as a corporate solicitor in South Africa - and subsequently in the United Kingdom, specialising in structuring and executing corporate transactions. He has also been employed at board level in the investment banking and venture capital industries. Over the past 15 years Mr Edmonds has been a director of public and private companies, including those operating within the mineral resources sectors in emerging markets. Most recently, Mr Edmonds was executive chairman of AIM-quoted Alien Metals Limited, a company with a portfolio of mineral assets in South America and is currently CEO of Pathfinder Minerals PLC which has an interest in a HMS deposit in Mozambique.

Grant of options

The Company has also granted options over 26,500,000 Ordinary Shares with an exercise price of £0.01 (1p) per Ordinary Share as follows:

The options are exercisable within five years of the date of grant and have no further conditions attached..

Disclosures under Schedule 2(g) of the AIM Rules for Companies

The information detailed below is disclosed in accordance with Rule 17 and paragraph (g) of Schedule Two of the AIM Rules for Companies. Except for the information disclosed below, there is no other information which is required to be disclosed under these rules.

Dennis Vernon Edmonds, aged 63, has or has in the last five years had, the following additional directorships:

Draganfly Investments Limited is an investing vehicle which failed to find a suitable investment for its criteria and has run out of capital to finance its ongoing costs. It is in the process of being placed into voluntary liquidation in Jersey with assets of approximately £80,000 and outstanding liabilities of approximately £260,000.

For further information on the Company, visit: www.kazeraglobal.com

**ENDS**