PERE.L Regulatory News (PERE)

China Africa Resources PLC

30 December 2016

China Africa Resources plc

("China Africa" or the "Company")

Strategic and Operational Update

China Africa Resources plc (LON:CAF) the London Stock Exchange AIM listed natural resource exploration and development company is pleased to announce an initial strategic and operational update with regard to the Company's overriding corporate strategy and implementation of operational plans.

Paul Johnson, Chief Executive officer of China Africa Resources plc, commented: "The China Africa team are committed to delivering value for shareholders expeditiously. With our focus on the resource sector, we have to work within a highly cyclical business environment and that means timing is an important element in the creation of value.

Opportunities come and go with the resource sector business cycle and at present the junior companies in the sector are still struggling with negative sentiment and very much in the doldrums. This presents a contrarian opportunity for China Africa and we intend to seize the moment. With cyclical sector downturns a wider range of opportunities become available and the cost of acquisition is materially lower than would be the case in more positive market conditions.

We are highly proactive and working to build the business quickly and whilst we can benefit from sector conditions. Our model is to undertake transactions on a fair basis for all parties, and to engage with those opportunities that offer the best upside potential for shareholders.

I look forward to updating the market on positive developments that may arise from the work we are undertaking at present. The market should be aware that until developments are released by market regulatory announcement, there can be no certainty that any particular transaction can be concluded."

Background to China Africa Resources

As previously outlined within the circular dated 21 November 2016 and approved by shareholders at the General Meeting on 14 December 2016, China Africa Resources became a Rule 15 cash shell with six months to complete a Reverse Takeover transaction.

For readers wishing to learn more about AIM rules relating to reverse takeovers we would suggest a review of the AIM Rules for Companies handbook (July 2016) which can be accessed through the following link:

http://www.lseg.com/sites/default/files/content/documents/aim/AIM_Rules_for_Companies_July16.pdf

In the process of becoming a Rule 15 cash shell the Company stated an investing policy within the circular of 21 November 2016 and this investing policy is reproduced at the bottom of this announcement and can be viewed directly on the Company website through the following link:

http://www.chinaafricares.com/about-us/investing-policy1

Strategic Planning

The Company's Investing Policy reproduced below confirms the primary initial strategic objective is to complete a Reverse Takeover within the six month period allowed by the London Stock Exchange AIM rules.

The six month period is considered sufficient provided the Company acts expeditiously to commence and complete the Reverse Takeover process.

The focus of the Company is energy metals and minerals, a subset of the wider natural resource sector and where the Board considers there is likely to be a favourable forward supply/demand dynamic, with positive commodity pricing and building investor interest in the coming months and years.

The Investing Policy is broad to reflect power generation, transmission and storage and the commodities utilised in each stage of the power process.

The Company has a broad pipeline of new opportunities identified from the management team's network. At present we have a potential pipeline of twelve opportunities which include African and South American uranium; North American lithium; European lithium and cobalt; and African and Australian copper.

The intention of the Company is to become an operating natural resource business following a Reverse Takeover. It is possible that the Company will seek to acquire more than one interest to provide diversification for investors and inherent risk management for the Company.

As part of the Company's development, working collaborations or joint venture agreements may be signed to enable the Company to share project costs and risks with third parties and to expose the Company to a even wider range of new opportunities.

At present the Company is working on numerous project review and commercial initiatives and information will be provided to the market at the earliest opportunity, but generally only when transactions or agreements are formalised.

Operational Progress

Office:

China Africa has now established a new operational office and as announced on 29 December 2016 changed its registered office to the same address. Previously the Company maintained a separate operational office and registered office. For operational and cost efficiencies we have brought all office operations under the same location.

The new office address is confirmed on our website and visitors are welcome. Should you wish to meet with the Company please email info@chinaafricares.com.

Staffing and support:

Previously the Company operated with skeletal staff base, due to the low levels of recent operational activity. This activity level has now materially changed and in light of this we have secured the staffing and support to allow a rapid growth in the Company's business activities.

This includes day-to-day managerial and administrative support to run an efficient office and the financial accounting support to complete audited full year accounts to 31 December 2016, a pre-requisite for us to move ahead with a Reverse Takeover transaction.

In respect of staffing and support our costs are flexible and undertaken through consultancy agreements meaning we only incur costs when there is work to do that can move us toward our strategic objectives.

Staff and partner options pool:

Recognising the importance of creating a focus around Company activities and to specifically reward staff and working/advisory partners who commit to the successful development of the Company, China Africa has created a pool of 6 million "Staff & Partner" options.

The options will follow the same terms as the previously announced director options confirmed at the General Meeting on 14 December 2016 and be priced at 4.34p with a three year longevity from the date of award.

This provision in particular enables the Company to reward team members who may not ordinarily have an equity position in the Company, but whose work is vital to the successful development of the business. The Board considers equity participation is ordinarily a significant motivator and it is morally positive to reward all important staff and partners for value creating work.

Distribution of the options pool will be agreed and implemented by the Board of the Company.

Reverse Takeover Transaction Advisory:

Completion of a Reverse Takeover transaction requires the input of various advisors and it is important that advisors are fully experienced in the transactional process and able to operate efficiently and cost effectively.

The Company has formally engaged with lawyers to undertake legal due diligence with regard to a Reverse Takeover transaction. Likewise we have engaged with Competent Persons able to undertake geological, mine engineering and other technical review of any proposed acquisitions. Working capital modelling & forecasting and financial accounting systems required as part of the Reverse Takeover will be handled by an experienced financial accountant who is, as outlined above, also preparing our full year end accounts.

The overall Reverse Takeover process will be project managed and implemented by the Company in conjunction with Nominated Advisor Spark Advisory Partners.

Media and Marketing:

The primary source of information relating to China Africa can be found on the Company's website at www.chinaafricares.com which has been prepared in line with AIM Rule 26 requirements.

The Company is open to enquiries and these should be directed to info@chinaafricares.com.

China Africa has established a Twitter feed @ChinaAfricaRes through which regulatory news links will be provided alongside articles of interest in the energy metals and minerals sector and generic commentary.

The Company will be undertaking various media interviews, links to which will be provided from the Company's website. The Company will also participate in investor seminars, presentations and exhibitions. China Africa's attendance at each event and the registration details thereof will be announced by the Company to enable interested investors to participate if desired.

Please be advised that in all cases media and marketing activities will only cover information published in regulatory announcements and thus already in the public domain.

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

China Africa Resources Investing Policy:

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 new 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 new 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 new 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.