Power Metal Regulatory News (POW)

3 December 2019

Power Metal Resources plc ("POW" or the "Company")

Arizona USA - Alamo Project Opportunity

Power Metal Resources plc (LON:POW) the AIM listed metals exploration and development company is pleased to announce the signing of an agreement in respect of the Alamo project in Arizona, USA.

HIGHLIGHTS:

·; The Alamo project is a package of mining claims covering an area of approximately 340 acres and is situated in west-central Arizona (the "Alamo Project" or the "Project"). The Project was originally identified as prospective for gold following the discovery of native gold nuggets (the "Nuggets") near surface in numerous locations within the Project boundaries.

·; The geological environment supports further exploration to investigate the source of the nugget gold and the potential for a large mineralised gold system.

·; In addition, the region in which the Project is situated is prospective for precious and base metals, with regional mines that have produced silver, lead, gold, zinc and copper.

·; POW has signed an agreement providing an opportunity to acquire a Right to Earn In ("RTEI") to a 60% interest in the Alamo Project, subject to due diligence.

·; Vendors include Joe Carrabba, a former board director of Newmont Goldcorp and Murray Nye, the CEO of Winston Gold Corp, (together the "Vendors") who on successful completion of project due diligence will join POW on a special advisory committee.

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented "POW is making great progress in Africa across its power metal projects, and shareholders should expect further updates in the near term covering operational and corporate activities.

As a Company we have remained open to the review of new additional opportunities and stated we may move ahead with compelling projects, including new jurisdictions outside Africa and in new commodities.

We have conducted a comprehensive review of opportunities that will complement the Company's mandate of securing interests that offer considerable upside potential through the implementation of disciplined programmes of exploration. 

The Alamo Project provides access to a package of claims with notable native gold nugget finds at surface, and a geological backdrop that encourages us to search for the source of the Nuggets in the bedrock where, it is postulated, the potential for a large gold system exists.

The Project has a rich story and one in which we are excited to have the opportunity to play a part. We will provide further information to market as we proceed through the site visit and due diligence processes in the near term.

The Project opportunity appears compelling in itself and will be made more so with Joe Carrabba and Murray Nye working alongside us in an advisory capacity and adding to our confidence."

BACKGROUND

The Company issued an announcement on 20 August 2019 entitled "Completion of the Company's Strategic and Operational Review", which may be viewed through the following link:

https://www.powermetalresources.com/n/n142/completion-of-strategic-and-operational-review

In that update POW stated its key strategic objective as being to make large scale metal discoveries in Africa in the power metal commodities, principally nickel, copper and cobalt. POW also stated it would be open to the acquisition of interests outside Africa, including in commodities less central to the power metal story, should project opportunities prove compelling. The Company has now identified a potentially compelling opportunity, focused on gold in the USA.

THE ALAMO PROJECT

The Alamo Project is located in west-central Arizona, USA and represents a package of mining claims covering an area of approximately 340 acres, focused on the core area of identified gold mineralisation. The Project was originally identified as prospective for gold following the discovery of native gold nuggets near surface in numerous locations within the Project boundaries.

The native gold nuggets at the Project occur in shallow arroyos (a steep-sided gully formed by the action of fast-flowing water in an arid or semi-arid region) and on hill-side occurrences. The arroyos are generally shallow depressions with sediment fill of up to one metre.

We understand that circa 60 ounces of gold Nuggets have already been found on the project area, by prospectors using metal detectors, with the largest Nugget weighing in at 5 ounces.

Nuggets have been obtained from the arroyo sediments by metal detecting and by small-scale dry washer mining methods. The composition of the nuggets is of particular geological interest in that both smooth/rounded and crystalline nuggets have been recovered, which suggests some difference in the distance of travel from their bedrock source (rounded nuggets having typically travelled some distance whereas the source of crystalline nuggets would be more proximal) pointing to potential scale and further prospectivity.

There is much debate in geological literature regarding nugget formation and there is work to undertake on the ground in Arizona to build the technical understanding of the Project including nugget identification, distribution and investigation of the bedrock source.

Some of this initial work will be undertaken during the due diligence period of 45 days (as described below) and some will naturally take a longer period of investigation should the Company decide to exercise the right to earn-in to the Alamo Project.

VENDORS AND FORMATION OF SPECIAL ADVISORY COMMITTEE

The right to earnin to the Alamo Project is held by the Vendors.

Subject to successful completion of project due diligence and POW exercising the right to earn in to the Alamo Project, the Company will form an advisory committee on which the Vendors will collaboratively work alongside POW in the development of the Project.

The respective experience of the Vendors in both operating and developing mining projects through all phases of the development curve, as outlined below, will prove valuable when assessing how best to augment value in the Alamo Project.

Joe Carrabba

Mr Carrabba is a seasoned mining executive, who has held senior positions in the industry including as a director of Newmont Goldcorp Corp and as former President and Chief Operating Officer of the largest independent iron ore producer in the U.S., Cliffs Natural Resources Inc.

Murray Nye 

Mr Nye has extensive experience in international corporate finance and currently serves as the Chief Executive Officer of Winston Gold Corp (CSE: WGC). Prior to Winston, Mr Nye was the former CEO of RX Exploration Inc. ("RX") where he brought the historic Drumlummon Gold/Silver mine back into production. During Mr Nye's tenure, the market valuation of RX increased from a base of circa $1.5m to circa $80m

TRANSACTION TERMS

The Project is currently 100% owned by Frisco Gold Corporation, Bullhead City, Arizona, USA.

The Vendors currently hold an option for a right to earn in to 60% of the Project by covering property payments over a four-year period and exploration expenditure over a three year period, (the "Option") as outlined below. POW has signed an agreement to acquire the Option, subject to the satisfactory completion of due diligence.

·; POW has entered into a 45-day due diligence period to enable Project inspection and an initial work programme including Nugget verification and geochemical sampling to validate Project prospectivity (the "Due Diligence Period"). The fee payable to the Vendors to enter into the Due Diligence Period is US$25,000 payable through the issue of 4,852,125 new ordinary shares of 0.1 pence each ("New Ordinary Shares") (the "Due Diligence Shares") at price of 0.4p per share (£19,409).

·; The Due Diligence Period may be extended by a further 30 days through the payment of a further US$15,000 that would be satisfied through the issue of 2,911,387 New Ordinary Shares to the Vendors at a price of 0.4p per share (£11,646)( the "Additional Due Diligence Shares")).

·; The Due Diligence Shares and Additional Due Diligence Shares are subject to a period of 4 months, where they may not be sold without the written approval of the Company. Should POW shares trade at a volume weighted average price ("VWAP") of 1.5p or more for seven consecutive trading days, or should POW decide not to acquire the Vendors' Option, the Due Diligence Shares and Additional Due Diligence Shares would become freely tradable.

·; To acquire the Option from the Vendors, on satisfactory completion of due diligence, POW would pay the Vendors a further US$250,000 payable through the issue of 38,814,500 New Ordinary Shares (the "Consideration Shares") at a price of 0.5p per share (£194,073) and grant a warrant over 38,814,500 New Ordinary Shares (the "Consideration Warrants") at an exercise price of 1.0p per share and with a three year life to expiry.

·; The Consideration Shares shall also be subject to a period of four months where they may not be sold without the express written approval of the Company. Should POW shares trade at a VWAP of 1.5p or more for seven consecutive trading days, the Consideration Shares would become freely tradable.

·; Upon acquiring the Vendors' Option POW will be the operator of the Project, working in conjunction with a newly appointed advisory committee including Joe Carrabba and Murray Nye, and will seek to form an Operating Committee with the current project owners.

·; Upon acquiring the Vendors' Option and establishment of the advisory committee POW will award share options over 2,500,000 New Ordinary Shares to Joe Carrabba and Murray Nye respectively (5 million options in total). The share options will be awarded for advisory committee services and will be exercisable at 1.0p per New Ordinary Share and have a life to expiry of three years. These share options may however only be exercised if the share price of POW exceeds a VWAP of 1.5p for seven consecutive trading days.

·; After acquiring the Vendors' Option, POW can earn into a 60% interest in the Alamo Project by expending US$1,100,000 (circa £850,000) on property payments over a four year period and exploration work costs over a three year period. First year costs are modest and would amount to US$150,000 (circa £116,232).

·; Upon completion of the earn into the Project, POW must contribute to 60% of ongoing Project expenditure to maintain its 60% interest. Likewise, following the POW earn in, Frisco Gold Corporation must contribute to 40% of Project expenditure to maintain their 40% holding. If either party does not contribute in line with their percentage ownership they will dilute their ownership percentage in line with a standard industry dilution formula.

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the admission to trading of the Due Diligence Shares which is expected to occur on or around 10 December 2019 ("Admission"). Following Admission of the Due Diligence Shares, POW's ordinary issued share capital will comprise 377,690,226 ordinary shares of 0.1 pence each.

This number will represent the total voting rights in the Company, and following Admission, may be used by shareholders as the denominator for the calculation by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules. The new shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information please visit https://www.powermetalresources.com/ or contact:

SI Capital Limited (Joint Broker)

Nick Emerson +44 (0) 1483 413 500

Notes to Editors:

Power Metal Resources plc (LON:POW) is an AIM listed African focused metals exploration and development company exploring for the key metals used in power generation, transmission, storage and utilisation. The Board and team of advisors, who have proven expertise in exploration, mining and project generation, have identified an opportunity to utilise the Company's position to become a leader in the London market for investors to gain exposure to the power metal commodity suite, particularly cobalt, lithium, copper and nickel.