MTR.L Regulatory News (MTR)

Metal Tiger plc (MTR)

29 December, 2017

Metal Tiger Plc

("Metal Tiger" or the "Company")

Kingsgate Consolidated Limited - Response to the Shareholder Letter dated December 27, 2017

Metal Tiger Plc (LON:MTR) would like to clarify certain facts relating to the shareholder letter issued by Kingsgate Consolidated Limited on 27 December 2017.

Kingsgate made the following statements which are misleading and do not reflect the Proposed New Board's strategy:

"Metal Tiger has no credible operating plan for Kingsgate and could make an agreement with the Thai Government without any compensation"

The proposed new board intends to restart the Chatree Gold Mine ("Chatree" or "the Mine") through the application for the renewal and granting of mining, processing and exploration licences by the Government of Thailand. Discussions with the Thai Government have been initiated. Metal Tiger expects the Thai Government to be responsive to the positive proposals of the proposed Board of Kingsgate. Substantial value can be created for Kingsgate shareholders through the mining of remaining gold reserves at Chatree and through the pursuit of exploration of highly prospective gold properties previously drilled by Kingsgate. 

In addition, the proposed new board will seek to negotiate favourable terms with the Government of Thailand relating to the restart of Chatree given the circumstances surrounding the recent closure, which may include a compensation claim for loss of earnings. Metal Tiger, as the largest shareholder of Kingsgate, is aligned with all shareholders and incentivised to support the new board of Kingsgate so that it may pursue the best financial outcome for Kingsgate shareholders.

"No mainstream lender would lend money to re-open Chatree after it has been arbitrarily closed"

During the course of November and December, Metal Tiger had several meetings with highly credible financial advisors. These advisers were extremely confident that, subsequent to the renewal of and granting of new mining, processing and exploration licences, they would be able to run a competitive process with a number of Asian lending banks and private debt funds to raise the necessary debt finance to restart the Chatree Gold Mine.

In addition, in December 2017 a number of potential strategic equity investors commenced detailed due diligence on the Chatree Gold Mine based on publicly available information and have indicated an interest to the proposed new board of Kingsgate in pursuing further due diligence based on non-public information, once the new board has been appointed, with a view of making a substantial equity investment. These investors include sovereign wealth funds, private equity funds, major family offices and brokers.

"No competent board would borrow money to do so after what has happened"

The Chatree Gold Mine will comfortably support a conservative debt and equity financing package to restart the Mine. This is due to the limited estimated restart capex requirement of US$50m as stated by Kingsgate's Board at the latest AGM (although the proposed Board expects the restart costs will need to be higher than US$50m to adhere to the recent gold policy), the expected high free cash flow generation and the relatively short payback period, based on financial due diligence from publicly available information on Chatree. 

In addition, any debt financing provided by Thai lending banks will further align the interests of Kingsgate shareholders and other Thai stakeholders with the Government of Thailand, something which the existing Kingsgate Board has been unable to achieve.

The proposed new board of Kingsgate is highly competent and has a strong track record of raising finance for mining companies. The new board will only pursue appropriate financing solutions that are in the best interest of all Kingsgate shareholders.

"Although Metal Tiger has no definable plan, it almost certainly would resort to what it has done before, and issue hundreds of millions of shares to the point where your shares would have very little value"

The proposed new board of Kingsgate intends to pursue financing solutions for the restart of the Chatree Gold Mine that will limit dilution of value for existing Kingsgate shareholders, including Metal Tiger. Equity finance will be required and this can be raised at both the asset and corporate level, subject to the most competitive financing terms. In addition, non-dilutive forms of financing will be solicited including gold streaming.

"Metal Tiger has made claims about the near term development of Nueva Esperanza citing a high capex and low economic returns which are completely unsubstantiated, and with which the numerous entities that are vying to participate in it and/or finance it would clearly disagree"

We refer Kingsgate shareholders to the Nueva Esperanza fact sheet on the Saving Kingsgate website: http://savekingsgate.com/fact-sheets/

The proposed new board of Kingsgate will seek to maximise the value of Nueva Esperanza for the benefit of Kingsgate shareholders and will consider all options.

"Metal Tiger intends replacing Peter Alexander on the Kingsgate Board with an un-named, unidentified director."

The proposed new board wishes Peter Alexander to continue to serve on the Kingsgate board and does not intend to replace him and has clearly made this point. However, if Peter Alexander does wish to resign from the Kingsgate board, then, due to the importance placed on good corporate governance, the new proposed board will appoint another new independent director with appropriate skills and experience.

Metal Tiger urges that shareholders vote FOR all the motions at the General Meeting onJanuary 9, 2018.

For further information on the Company, visit: www.metaltigerplc.com and http://savekingsgate.com