PERE.L Regulatory News (PERE)

China Africa Resources PLC

1 February 2017

China Africa Resources plc

("China Africa" or "the Company" or "CAF")

Investment Agreement Botswana

China Africa Resources plc (LON:CAF) the London Stock Exchange AIM listed natural resource exploration and development company is pleased to announce it has signed an Investment Agreement with Global Exploration Technologies (Pty) Ltd ("GET"), a private Australian company, to acquire a 48.88% shareholding in GET.

GET has five exploration licences in the Kalahari Copper Belt in Botswana held through three Botswanan subsidiary companies. Further details in respect of GET and specifically its Botswanan interests are provided below.

Shareholders should note that this transaction does not constitute a reverse takeover under the AIM Rules and consequently China Africa must continue to seek to complete a reverse takeover or face suspension from trading on AIM.

In addition to this investment, the Board of CAF is actively advancing discussions in respect of various other investment and acquisition opportunities. This includes both project and corporate transactions and is principally although not entirely focused on Uranium, Lithium, Cobalt, Copper and Niobium commodities. Shareholders should note that there is no certainty that any of these discussions will lead to a successful conclusion however the Board of CAF hopes to be able to provide further updates to market in the near-term subject to the successful finalisation of commercial negotiations.

Paul Johnson, Chief Executive Officer of China Africa Resources plc commented "I am pleased to confirm to the market this investment in GET, a Company with interests in the Kalahari Copper Belt in Botswana.

The China Africa team have been highly proactive in the search for new potentially high value opportunities across the energy metals and minerals sector.

This acquisition represents a first step forward for the Company. Investors may be aware of the significant copper discovery recently made in the Kalahari Copper Belt by MOD Resources and we are delighted to be investing in the same region in Botswana through GET.

Clearly exploration projects of this nature carry material exploration risk, but this is countered by the exceptional operating environment that Botswana provides for diligent and professional operating companies.

GET has developed and is implementing a planned exploration programme and through our investment we are supporting that work. The principle objective for GET is to identify further economically viable copper deposits in the region."

Investment Agreement - Key Financial Terms

CAF to is to acquire a 48.88% holding in GET with consideration to comprise cash and CAF equity as follows:

A$75,000 payable in cash (£44,910) to GET to be applied to clear outstanding shareholder loans to GET;

A$150,000 payable in ordinary shares of 1p each in the Company ("Ordinary Shares") at 3p per share being the mid-market price of CAF stock on the date that the investment agreement was prepared. The sterling equivalent at the date of agreement is £89,888 equating to 2,996,266 CAF shares or 3.8% of CAF issued share capital post transaction.

The investment agreement provides for certain amendments to the Articles of Association of GET to ensure CAF's proportionate holding in GET is protected, notably the application of 75% shareholder approval for any issue of new equity or alteration to the capital structure of GET.

In addition, as part of the investment agreement CAF has committed to solely fund licencing and exploration costs in respect of the five licences for the first 12 months following signature of the investment agreement, including a guarantee to fund at least the minimum expenditure commitments on the licences during this 12 month period (the latter amounting to approximately £100,000 in total for the 12 month period in question). Expenditure budgets must be agreed by CAF prior to incurrence.

Further Summary Information

Global Exploration Technologies Pty Limited ("GET")

GET is an Australian private limited company which holds 100% of three Botswanan subsidiaries which in turn hold 100% of five exploration licences in good standing in the Kalahari Copper Belt, Botswana.

Botswanan Interests of GET

The GET Copper Project (the "Project") consists a portfolio of five exploration licences totalling 3,554.7 sq. km of prospective ground on the Kalahari Copper Belt ("KCB") in north-west Botswana. The KCB is a relatively underexplored emerging, sediment hosted stratiform, copper province with total reported Mineral Resources of over 5.5Mt contained copper metal and 170Moz silver within a 140km radius of the GET Project.

Geologically, the KCB is a constituent of a northeast-trending, tectonically inverted Mesoproterozoic and Neoproterozoic rift basin, which extends from central Namibia to northern Botswana. The KCB rock units extend over 1,000km in strike and are known to host at least 19 copper deposits across Namibia and Botswana. An extensive covering of Kalahari sands over much of the KCB has meant that there has been limited historical exploration over the belt. Airborne geophysical surveys combined with soil geochemical surveying, ground based geophysics and drilling are typically required to investigate the copper potential below the sand cover.

Through this investment the GET Project will become the third active player on the Botswanan KCM. Cupric Canyon Capital have completed a Feasibility Study and are currently looking to develop their Zone 5 Deposit (100.3Mt@1.95%Cu & 20g/t Ag). Whilst, in December 2016, MOD Resources Limited announced the results of a Scoping Study on their T3 Deposit for which a maiden Mineral Resource Estimate (28.36Mt @ 1.24%Cu and 15.7g/t Ag) was released in September 2016. The T3 Deposit was only discovered in March 2016.

The GET Project is made up of two groups of licences; Ghanzi West Group consisting three contiguous licences covering 2,724.2 sq. km at the western end of the KCB; and the Senyetse Group consisting two adjacent licences totalling 830.5 sq. km, located on the central KCB, 28km south of the MOD Resources T3 Deposit.

The Ghanzi West Group currently contains two soil anomalies, identified by soil geochemical sampling, each approximately 10km in strike length. Interpretation of geophysics data indicates over 200km of favourable geological contact within these licences. The previous licence holders drilled four shallow reverse circulation ("RC") drill holes on a small section of Soil Anomaly 1. Two of the four holes intersected zones of pyrite (

The Senyetse Group licences also contain surface copper anomalies identified by previous soil sampling work. Independent structural analysis of geophysics data has shown that the copper anomalies are coincident with an interpreted fold axis and a cross cutting structure. As at Ghanzi West these licences also contain many tens of kilometres of favourable geological contact.

GET's initial Project work programme will consist historical exploration data gathering and analysis followed by geological mapping and confirmatory and infill soil sampling programmes over the historically explored ground in both project areas. GET will also conduct a detailed review of geophysical data, including Induced Polarisation (IP) survey and geomagnetic data, to refine exploration targets and identify hitherto untested targets across the licences. Follow-up drilling will seek to test for copper zonation at Anomaly 1, whilst shallow drilling programmes will be planned for the other copper soil anomalies and promising structural targets.

Investors wishing to see a graphic detailing the physical location of the licences and the proximity to other projects and landholdings should follow the link below:

http://www.rns-pdf.londonstockexchange.com/rns/6514V_-2017-1-31.pdf

Investors wishing to see the location of the exploration region within Botswana and Africa should click the following link:

http://www.rns-pdf.londonstockexchange.com/rns/6514V_1-2017-1-31.pdf

Total Voting Rights

As a result of this investment, 2,996,266 new Ordinary Shares are expected to be admitted to trading on or around 10 February 2017 ("Admission"). Following Admission the total issued share capital of the Company will consist of 78,835,862 Ordinary Shares. As such the total number of voting rights in the Company will be 78,835,862 Ordinary Shares. This number may be used by shareholders 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, the Company under the FCA's Disclosure and Transparency Rules.

AIM Rule 15 Cash Shell Status

On 14th December shareholders in CAF approved at General Meeting the distribution of shares in the Company's 100% owned China Africa Namibia Pty Limited to then shareholders. This distribution was completed as announced to market on 11 January 2017. As a result of the distribution China Africa Resources became a Rule 15 Cash Shell with six months to complete a reverse takeover or face suspension from trading on AIM.

Shareholders should note that this transaction, being an investment to secure a 49% holding in GET, does not represent a reverse takeover under the AIM rules. Consequently, China Africa continues to be required to complete a reverse takeover within six month of 11 January 2017 or face suspension from trading on AIM.

Competent Person

The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MAusIMM, FGS), a Director of China Africa, who is a qualified geologist who meets the criteria of a qualified person under the AIM Rules - Note for Mining and Oil & Gas Companies. 

For further information on the Company, visit: http://www.chinaafricares.com/.

China Africa Resources Investing Policy:

Under the AIM Rules for Companies, CAF is required to complete an acquisition or acquisitions that constitutes a reverse takeover within six months of becoming an AIM Rule 15 Cash Shell or it will face suspension from trading on AIM. The Directors intend to apply the investing policy set out below in seeking an acquisition or acquisitions that will constitute a reverse takeover but there can be no certainty that they will be able to do this in the specified time frame.

The Board proposes to invest in and/or acquire companies and/or projects within the natural resource sector but with a particular interest in opportunities in the energy metal and minerals sector and with a key focus on opportunities in respect of uranium, lithium, cobalt, copper and coal. Each commodity has a specific relevance to the Energy space in terms of power generation, storage and distribution.

The Board considers that, as evidenced by the financial support provided by the new investors for the proposals outlined, there is a strong demand for energy metal and mineral opportunities on London's AIM.

The Board will not be limited to a specific geographic focus. In selecting investment opportunities, the Board will focus on businesses, assets and/or projects that are available at attractive valuations and hold opportunities to unlock embedded value or where, through efficient and focused work, there is the prospect of adding considerable value to each project, for the benefit of shareholders.

Where appropriate, the Board may seek to invest in businesses where it may influence the business at a board level, add their expertise to the management of the business, and utilise their industry relationships and access to finance.

The Company's interests in a proposed investment and/or acquisition may range from a minority position to full ownership and may comprise one investment or multiple investments. The proposed investments may be in quoted or unquoted companies; be made by direct acquisitions or farm-ins; and may be in companies, partnerships, earn-in joint ventures, debt or other loan structures, joint ventures or direct or indirect interests in assets or projects. The new Board may focus on investments where intrinsic value can be achieved from the restructuring of investments or merger of complementary businesses.

The Board expects that investments will typically be held for the medium to long term, although short term disposal of assets cannot be ruled out if there is an opportunity to generate an attractive return for Shareholders. The Board will place no minimum or maximum limit on the length of time that any investment may be held.

The Board will conduct initial due diligence appraisals of potential businesses or projects and, where they believe further investigation is warranted, intend to appoint appropriately qualified persons to assist.

The Board believes it has a broad range of contacts through which it is likely to identify various opportunities which may prove suitable. The Board believes its expertise will enable it to determine quickly which opportunities could be viable and so progress quickly to formal due diligence.

The Company will not have a separate investment manager. The Board proposes to carry out a comprehensive and thorough project review process in which all material aspects of a potential project or business will be subject to rigorous due diligence, as appropriate. Due to the nature of the sector in which the Company is focused the Company expects a focus on capital returns over the medium to long term. Should opportunities arise for an early cash return to investors, this will be considered by the Board.

It is emphasised that there is no certainty that the Company will be able to secure an acquisition or Reverse Takeover as set out above.