Power Metal Regulatory News (POW)

06 May 2021

Power Metal Resources PLC

("Power Metal" or the "Company")

Option Agreement - Botswana Gold-Nickel Properties

Company has Signed an Option Agreement to Acquire a 100% Interest in Two Gold - Nickel Prospecting Licences in the Tati Greenstone Belt, Botswana, with a down payment on drilling

Power Metal Resources PLC (LON:POW) the AIM listed metals exploration and development company is pleased to announce it has secured an option (the "Option") to acquire two prospecting licences ("PLs") prospective for gold and nickel and located upon the Tati Greenstone Belt, Botswana.

The Option allows for a 60 business day due diligence period, and should Power Metal exercise the Option, it will undertake the licence acquisitions through its newly formed 100% owned subsidiary Power Metal Resources Botswana (Pty) Limited ("Power Metal Botswana").

Paul Johnson, Chief Executive Officer of Power Metal Resources, commented:

"We recently formed Power Metal Botswana to provide a holding company for new acquisitions in Botswana and I am pleased to announce this first transaction. Subject to due diligence, this acquisition would give the Company exposure to a new strategic project in the heart of the Tati Greenstone Belt, an under explored area which we believe holds considerable potential for new gold and nickel discoveries.

This announcement further confirms the Company's commitment to expanding our operational interests in Botswana, which is a first class destination for responsible exploration companies. Uniquely, the transaction incorporates an Option fee that is convertible into a down payment against project drilling in Botswana.

I look forward to providing further information as our due diligence work progresses."

Vendor and Prospecting Licence Information

Vital Commodities Pty Ltd, a company registered and Incorporated in Botswana ("VC") VC is a private Botswana company that owns two prospecting licences in Botswana, (the "Vendors"). VC is 100% owned by Equity Drilling Limited, a company registered and incorporated in Guernsey.

The PLs owned by the Vendors and the subject of this transaction are as follows:

PL127/2019

PL127/2019 is located near the southern extent of the north-northwest striking Tati Greenstone Belt, roughly 40km southwest of Francistown, Botswana, and less than 7km from the Mupane underground gold mine.

PL127/2019 covers a total area of 89km2 and is prospective for orogenic gold and intrusive magmatic nickel mineralisation.

Several untested kilometre-scale Arsenic ('As')- and Gold ('Au')-in-soil anomalies extend onto PL127/2019 from the northeast and southeast.

The licence is also believed to cover the southern extent of prolific gabbroic-troctolitic intrusions which host the Phoenix, Selkirk and Tekwane Ni-Cu-PGE rich deposits located along the periphery of the Tati Greenstone Belt less than 7km from the licence. The magmatic Ni-Cu-PGE potential the licence possesses has been generally overlooked by previous operators.

PL126/2019

PL126/2019 is located near the northern extent of the Tati Greenstone Belt, less than 10km southeast of Francistown and is adjacent to the Golden Eagle deposit (Shashe Mining Licence).

PL126/2019 covers a total area of 35km2 and is prospective for orogenic gold mineralisation. The licence hosts several untested arsenic and gold in-soil anomalies as well as a large historic mine dump which has received little known follow up or modern exploration.

Tati-Greenstone Belt Information

The Tati Greenstone Belt ("TGB") is located in the vicinity of Francistown, adjacent to the Zimbabwe border, in north-eastern Botswana. With a total strike length of 65km and up to 20km in width the TGB hosts a large number of orogenic style gold deposits and several economically significant intrusive magmatic Nickel-Copper-Platinum Group Elements ("Ni-Cu-PGE") rich sulphide deposits.

A gold rush started at Tati in 1867 leading to the establishment of Francistown and over 70 reported small scale gold mining operations. 

The TGB is Botswana's only gold producing region with the Mupane gold mine (held by Galane Gold Ltd) being the country's only major gold producer. Mupane was formerly an open-pit operation and is now an underground mine. It is located in the southern part of the TGB.

The known nickel deposits on the greenstone belt consist almost entirely of disseminated to semi massive sulphide bodies hosted by a series of late stage gabbroic-troctolitic intrusive bodies. Significant nickel operations which operated until 2016, included the former Tati Nickel Mining's Selkirk underground mine which commenced production in 1989 and the Phoenix open pit which started in in 1995. Both deposits are located in the south-central portion of the TGB.

Geologically the TGB is part of the Francistown Arc Complex within the southern margin of the Archean age Zimbabwe Craton in the northern contact zone of the Limpopo Belt. The principal lithologies of the TGB are lower greenschist to lower amphibolite facies volcanic and sedimentary rocks, constrained by three fault-bounded volcano-plutonic sequences which are intruded by granitoids.

Whilst there is a long history of small scale gold mining on the TGB, the Company believe it to be underexplored by modern standards and systematic exploration focussing on areas with sand cover and geophysics targeting greater depths, are likely to yield further gold and nickel discoveries.

Option Agreement Information

The Option:

- Power Metal has signed an option agreement to acquire a 100% interest in PL 126/2019 and PL 127/2019, being two granted prospecting licences in Botswana within the Tati Greenstone Belt and held by the Vendors.

- The Option provides a 60 business-day period, during which Power Metal may undertake due diligence and notify the Vendors of Option exercise to acquire 100% of PL 126/2019 and PL 127/2019 from the owner of the said prospecting licences.

- The Option fee is to be satisfied through a cash payment of £50,000 to the Vendors. The full amount of £50,000 paid may be credited and offset from the cost of the drilling undertaken by Equity Drilling Limited (100% owner of VC) at the two PLs which are the subject of this Option or at other Power Metal interests in Botswana. The payment will be made using existing Power Metal cash resources.

Upon Option Exercise:

- VC will subject, to local authority approvals, arrange immediate transfer PL 126/2019 and PL 127/2019 into Power Metal Botswana.

- The consideration items outlined below, following Option exercise, will not become due and payable until the necessary local authority approvals for the transfer to Power Metal Botswana have been received and the transfer completed.

- Should Power Metal at its sole volition exercise the Option for the acquisition of PL 126/2019 and PL 127/2019, the Company will pay an initial consideration of £25,000, payable through the issue to the Vendors of 833,333 new ordinary Shares of 0.1p each in the Company ("New Ordinary Shares") at an issue price of 3.0 pence per New Ordinary Share ("Initial Exercise Shares").

- Thereafter should Power Metal elect to proceed with the year 3 exploration spend programme (for the year ending 30 September 2022) it will pay a further consideration of £50,000, payable to the Vendors through the issue of 833,333 New Ordinary Shares at an issue price of 3.0p each for each licence where such spending is confirmed, thereby if both confirmed then 1,666,666 New Ordinary Shares would be issued (the "Further Exercise Shares").

- In addition, Power Metal will pay a single further consideration payment of £100,000 through the issue the Vendors of 3,333,333 New Ordinary Shares at an issue price of 3.0p ("Final Exercise Shares") if either of the two following conditions are met:

- (1) Confirmation of a 250,000 oz JORC (2012) compliant gold Mineral Resource across the two prospecting licences

- (2) Confirmation of a 5,000,000 tonne economic nickel deposit at a grade of >1.5% nickel.

- Additionally, the Company shall issue to VC 5,833,332 warrants (the "Vendor Warrants") in two separate tranches of 2,916,666 warrants each:

o 2,916,666 Vendor Warrants shall be issued to acquire New Ordinary Shares at an exercise price of 5p per share, exercisable over a 2-year period from today's date and which are only exercisable on completion of drilling against which the £50,000 offset payment has been made and successful transfer of PLs 126/2019 and 127/2019 to Power Metal Botswana (the "5p Vendor Warrants"). The 5p Vendor Warrants shall be subject to a 5-day VWAP accelerator, by which should Power Metal shares trade above 10p for 5 trading days then the Company shall have the right to serve notice on VC that it must exercise and pay for the exercised 5p Vendor Warrants within 14 calendar days or the 5p Vendor Warrants shall be cancelled.

o 2,916,666 Vendor Warrants shall be issued to acquire New Ordinary Shares at an exercise price of 7.5p per share, exercisable over a 2-year period from today's date and which are only exercisable on completion of drilling against which the £50,000 offset payment has been made and successful transfer of PLs 126/2019 and 127/2019 to Power Metal Botswana (the "7.5p Vendor Warrants"). The 7.5p Vendor Warrants shall be subject to a 5-day VWAP accelerator, by which should Power Metal shares trade above 15p for 5 trading days then the Company shall have the right to serve notice on VC that it must exercise and pay for the exercised 7.5p Vendor Warrants within 14 calendar days or the 7.5p Vendor Warrants shall be cancelled.

- Up to 30 September 2022 Power Metal will engage VC to quote for all drilling activities undertaken on PL 126/2019 and PL 127/2019.

- The Vendors and their professional licensing and geological teams will continue to work with Power Metal following Option exercise to manage licences and third party relationships, undertake ground exploration and to help where appropriate to further build the licence footprint in Botswana. Reasonable commercial terms will be agreed for any additional work undertaken.

Glossary:

Orogenic Gold (Deposits) - Gold deposits found within metamorphic belts which form as a result of major crustal deformation events.

Intrusive Magmatic Nickel (Deposits) - Nickel deposits found at the base of large mafic and ultramafic intrusive bodies.

Arsenic-in-soil anomaly - Geochemical anomaly defined by increased arsenic levels over background.

Gold-in-soil anomaly - Geochemical anomaly defined by increased gold levels over background.

PGE - Platinum group elements (ruthenium, rhodium, palladium, osmium, iridium, and platinum)

Gabbroic-troctolitic intrusives - Coarse grained, dark coloured, intrusive rocks composed mainly of pyroxene, plagioclase and minor amounts of amphibole and olivine.

Lower greenschist to amphibolite facies - Metamorphic rocks with increased chlorite, serpentine, and epidote (greenschist), or amphibole and plagioclase (amphibolite) which are indicative of a high degree of metamorphism caused my intense heat and pressure in the subsurface.

Granitoids - Coarse grained igneous rock composed mostly of quartz, alkali-feldspar and plagioclase.

COMPETENT PERSON STATEMENT

The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Mr O'Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Power Metal Resources PLC to provide technical support.

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 (LON:POW) is an AIM listed metals exploration and development company seeking a large scale metal discovery.

The Company has a global portfolio of project interests including precious and base 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.

The Board and its team of advisors have expertise in project generation, exploration and development and have identified an opportunity to utilise the Company's position to become a leader in the London market for investors wishing to gain exposure to proactive global metals exploration.