Power Metal Regulatory News (POW)

12 January 2022

Power Metal Resources PLC

("Power Metal" or the "Company")

Tati Project Botswana - Prospecting Licences Received

Prospecting Licences Covering the Tati Project Successfully Transferred to Power Metal's 100% Subsidiary Tati Greenstone Resources Pty Limited - Issue of Equity to Vendors

Power Metal Resources plc (LON:POW), the London listed exploration company seeking large-scale metal discoveries across its global project portfolio, announces that the two Prospecting Licences ("PLs") comprising the Tati Project ("Project") have now been successfully transferred into Tati Greenstone Resources Pty Ltd ("TGR"), a wholly-owned private Botswana-based subsidiary of Power Metal.

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

"This is an extremely poignant moment for Power Metal, with the successful transfer of PLs securing Power Metal's first 100% owned project in mining friendly Botswana.

We are grateful for the support of the Vendors and the local authorities in Botswana during this transfer process and also to our in-Country team members who have been key to the establishment of our local holding company and to various operations on the ground.

We have been highly proactive at the Tati Project, with multiple 2021 exploration programmes implemented which have identified multiple large-scale gold and nickel-in-soil anomalies, some of which we targeted during the recent reverse circulation drilling programme.

We very much look forward to the receipt of the assay results from the drilling programme and further steps with this exciting 100% owned opportunity."

BACKGROUND

On 28 July 2021 Power Metal exercised an option (the "Option") to acquire a 100% interest in the Tati Project, and the process was commenced to transfer the two Project PLs (PL 126/2019 and PL 127/2019), into Power Metal's wholly owned Botswana subsidiary.

The Option exercise announcement may be viewed through the following link:

https://www.londonstockexchange.com/news-article/POW/tati-project-botswana-option-exercised/15075700

HIGHLIGHTS

· Power Metal, through its wholly-owned subsidiary, TGR, now has a 100% interest in the Tati Project with the successful transfer of PL 126/2019 and PL 127/2019 to TGR from the Vendors.

· The district-scale PL126/2019 and PL127/2019 licences cover an area of 35km2 and 89km2 respectively; the PLs were established 10 October 2019 and grant an exclusive prospecting right to the owner for a period of 3 years ending 30 September 2022. Power Metal intends to satisfy the third-year expenditure requirements and seek renewals for both licences later in the year.

· With the PLs transferred the Tati Project becomes the Company's first wholly-owned Botswana based project where large-scale gold and nickel discoveries are being targeted.

· The successful transfer triggers certain share and warrant issuances to the Vendors, further details of which are provided below.

· Initial exploration conducted by the Company in 2021 highlighted five target areas across the two PLs which are defined by kilometre-scale geochemical anomalies that are coincident with various geological structures that were highlighted by ground geophysical surveys.

· Following successful initial exploration, the Company recently completed a maiden drill programme at the Tati Project comprising 23 reverse circulation ("RC") drillholes for a total 1,092m drilled. The RC holes tested multiple nickel and gold targets across the PLs.

· RC samples were shipped to Johannesburg for sample preparation at Intertek Genalysis ("Intertek") preparatory facility, and have since been shipped and received in Perth, Australia, at Intertek's laboratory where they are undergoing analysis. Results from all RC samples are still pending and are expected in the near term.

LICENCE TRANSFER - TRANSACTION TERMS

Vendor:

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

Terms:

Note the Option fee in respect of this transaction was a cash payment of £50,000 to the Vendors as originally announced on 6 May 2021 which has been paid. The full amount of £50,000 paid (the "Offset Payment") may be credited and offset from the cost of the drilling undertaken by Equity Drilling Limited (100% owner of VC) who have a right to quote for drilling work on the PLs until 30 September 2022 or at other Power Metal held interests in Botswana. 

Following transfer of PL 126/2019 and PL 127/2019 into Power Metal's Botswana wholly-owned subsidiary TGR the following consideration shares and warrants have become due and payable:

- Power Metal will now pay 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").

- Power Metal has also elected to proceed with the year 3 exploration spend programme (for the year ending 30 September 2022) and will now pay a further consideration of £50,000, to the Vendors through the issue of 833,333 New Ordinary Shares at an issue price of 3.0p each for each licence, resulting in 1,666,666 New Ordinary Shares to be issued (the "Further Exercise Shares").

Additionally, the Company shall now issue to the Vendors 5,833,332 warrants over New Ordinary Shares (the "Vendor Warrants") in two separate tranches of 2,916,666 warrants each as follows:

- 2,916,666 Vendor Warrants shall be issued enabling the Vendors to acquire 2,916,666 New Ordinary Shares at an exercise price of 5p per share, exercisable over a 2-year period from 6 May 2021 and which are only exercisable on completion of exploration drilling against which the £50,000 Offset Payment has been credited (the "5p Vendor Warrants"). To date, £25,000 of the £50,000 Offset Payment has been credited.

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.

- 2,916,666 Vendor Warrants shall also be issued enabling the Vendors to acquire 2,916,666 New Ordinary Shares at an exercise price of 7.5p per share, exercisable over a 2-year period from 6 May 2021 and which are only exercisable on completion of exploration drilling against which the £50,000 Offset Payment has been credited (the "7.5p Vendor Warrants").

The 7.5p Vendor Warrants shall be subject to a 5-day volume-weighted average price ("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.

In addition to the above, Power Metal will pay a single further deferred consideration payment of £100,000 through the issue to 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 Au 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.

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 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.

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 operated until 2016, including the former Tati Nickel Mining's Selkirk underground mine which commenced production in 1989 and the Phoenix open pit which started 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 believes it to be under explored 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.

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. 

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

Mafic Intrusive Unit - Igneous rock that is dominated by magnesium and iron rich silicate minerals including pyroxene, amphibole, olivine, and mica.

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the 2,499,999 Initial and Further Exercise Shares to be admitted to trading on AIM which is expected to occur on or around 19 January 2022 ("Admission"). The Initial and Further Exercise Shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

Following Admission, the Company's issued share capital will comprise 1,444,339,986 ordinary shares of 0.1p each. This number will represent the total voting rights in the Company and 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.

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 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:

1 should Kavango exercise their option to acquire Kalahari Key, Power Metal interest would reduce to 40% of the Molopo Farms Complex project

2 assuming all licences held by URE Metals Pty Limited are granted as outlined in the Company's announcement of 19.11.21 resulting in the issue of First Development Resources Ltd shares to URE vendors