Power Metal Regulatory News (POW)

18 May 2022

Power Metal Resources PLC ("Power Metal" or the "Company")

Kalahari Key Botswana - Acquisition

Power Metal Resources Signs Conditional Agreement to Acquire Additional 58.7% interest in Kalahari Key Mineral Exploration Pty Limited and Become Operator of the Molopo Farms Complex Project

Power Metal Resources PLC (LON:POW) the London listed exploration company seeking large-scale metal discoveries across its global project portfolio announces an acquisition update in respect of Kalahari Key Mineral Exploration (Pty) Limited ("Kalahari Key" or "KKME").

Kalahari Key has a single project 60% interest in the Molopo Farms Complex Project (the "Project' or the "MFC Project") targeting a large-scale nickel - platinum group metal ("PGM") discovery in southwest Botswana. 

HIGHLIGHTS:

§ Power Metal has signed a conditional agreement to acquire an additional 58.7% interest in the share capital of Kalahari Key.

§ Power Metal to acquire a further 15,002 Kalahari Key shares for £807,348 payable through the issue of 46,134,171 new ordinary shares of 0.1 pence each in the Company ("Ordinary Shares") shares at a price of 1.75p per new Ordinary Share. Full transaction details below).

§ Following completion and a restructuring of the MFC Project interest Power Metal will hold 87.71% of Kalahari Key which will wholly own the Molopo Farms Complex Project on completion (an increase of approx. 35% from the current circa 53% MFC Project effective economic interest held by Power Metal).

§ Power Metal will become operator of the Project with immediate effect and will look to accelerate exploration, including a next stage drill programme.

Paul Johnson, Chief Executive Officer of Power Metal Resources PLC, commented: "We have today conditionally secured an increase to an 87.71% interest in Kalahari Key, which on completion will have a 100% ownership interest in the Molopo Farms Complex Project in Botswana.

The MFC project delivered excellent initial drill results last year, which we now intend to follow up at some pace as the operator of the Project.

Our target remains a large-scale nickel sulphide discovery and should we successfully move along that pathway, we are confident the MFC Project will continue to draw interest from investors and potential operational partners."

TRANSACTION TERMS - ACQUISITION OF KKME SHARES

Power Metal is to acquire 15,002 Kalahari Key shares from current KKME shareholders (the "Vendors") (the "Acquisition").

Initial Consideration:

The £807,348 consideration is to be satisfied through the issue of 46,134,171 new Ordinary Shares at an issue price of 1.75p ("Consideration Shares") and warrants over 46,134,171 new Ordinary Shares at a 3.5p exercise price with a 2-year life from today's date ("Consideration Warrants").

With respect to the Consideration Warrants Power Metal will hold an acceleration right, whereby should the volume weighted average Power Metal share price exceed 7.0p for 5 trading days, Power Metal has the right to serve written notice to the Vendors of 14 days to exercise and pay for the Consideration Warrants or they may be cancelled.

Further Consideration:

Additionally, in the event, within 2 years of today's date, that Kalahari Key or the MFC Project is sold for US$10million or greater, or a joint venture (or earn-in) agreement is signed with a potential third party where the potential project spend is US$10million or greater, Power Metal will issue the Vendors with further warrants over 46,134,171 new Ordinary Shares at an exercise price of 5.0p with a 2 year life to expiry from today's date ("Further Consideration Warrants").

In respect of the Further Consideration Warrants Power Metal will hold an acceleration right, whereby should the volume weighted average Power Metal share price exceed 10.0p for 5 trading days, Power Metal has the right to serve written notice to the Vendors of 14 days to exercise and pay for the Further Consideration Warrants or they may be cancelled.

Conditions and Timing of Issue of Shares and Warrants

No Consideration Shares, Consideration Warrants and Further Consideration Warrants will be payable or issuable until:

- The completion of fully signed legal agreements and stock transfer forms by all Vendors; and

- Receipt of all Botswana regulatory approvals have been received enabling this transaction to be implemented in full.

Lock-In

Unless otherwise agreed in writing with Power Metal the Vendors agree individually to a Lock-In arrangement as outlined below.

The Vendors agree to hold the Consideration Shares subject to a Lock-In whereby 50% shall be tradable after 6 months from today's date, with the balancing 50% tradable after 12 months from today's date.

Conversion of Project Earn-in

Following or concurrent with the issue of Consideration under this Agreement, KKME will issue a further 17,033 KKME shares to Power Metal to extinguish the 40% earn-in to the MFC Project and restore KKME to an effective 100% interest in the MFC Project. 

Kalahari Key Shareholding Analysis

Reflecting the above the proposed movements in the Kalahari Key capital structure are outlined below:

After the above Power Metal will hold an 87.71% interest in Kalahari Key which will hold a 100% interest in a single project, the MFC Project.

Ongoing Shareholders' Agreement

Two shareholders will retain their holding in KKME which after completion will amount to a combined 12.29% interest in Kalahari Key.

All remaining shareholders are to sign an agreement to govern the ongoing relationship in relation to their shareholding in Kalahari Key and funding of its operations ("Shareholders' Agreement") on completion of the transaction. In this regard a number of elements have been agreed to date, covering the key areas going forward. These include:

- Acknowledgement of the Acquisition Agreement and waiver of pre-emption rights

- Implementation of a Shareholders' Agreement

- Operator Status (whereby Power Metal determines the operational and corporate actions of Kalahari Key

- Kalahari Key Board composition

- Kalahari Key budgets and cash calls

- Fund or dilute provisions

- Drag along terms to ensure all remaining shareholders are required to proceed with material offers from third parties to acquire, or invest in, Kalahari Key

Additional Note:

In the year ended 30 June 2021, Kalahari Key reported a loss of Pula zero (£0) and as at 30 June 2021 reported net assets of Pula 11,688,230 (circa £774,752).

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

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

NOTES TO EDITORS

Power Metal Resources PLC - Background

Power Metal Resources PLC (LON:POW) is an AIM listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa and Australia.

Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint ventures until a project becomes ready for disposal through outright sale or separate listing on a recognised stock exchange thereby crystallising the value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the Company's growth or may be returned to shareholders through share buy backs, dividends or in-specie distributions of assets.

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results awaited, as outlined below: