Power Metal Regulatory News (POW)

19 November 2021

Power Metal Resources plc

("Power Metal" or the "Company")

Acquisition of Uranium & Rare-Earth Element Project - Australia

Power Metal Acquires the Selta Uranium and Rare-Earth Element Project, Located in the Northern Territory, Australia, through Subsidiary First Development Resources Limited

Power Metal Resources plc (LON:POW), the London listed exploration company seeking large-scale metal discoveries across its global project portfolio, announces it has signed an Agreement ("Agreement") for the 100% acquisition (the "Acquisition") of the Selta Project ("Selta" or the "Project"), located in the Northern Territory, Australia.

A map showing the location of the Selta Project may be viewed through the following link:

https://www.powermetalresources.com/selta-project-overview-map-2/ 

The Acquisition will be undertaken by Power Metal subsidiary, First Development Resources Limited ("FDR"), in an all FDR share transaction to acquire a 100% interest in URE Metals Pty Limited ("URE"), a private Australian company which wholly-owns the Selta Project.

FDR is a special purpose company set up by Power Metal to act as a vehicle for a planned listing on the London capital markets; with a unique and high-impact portfolio of exploration interests.

FDR recently acquired outright First Development Resources Australia Pty Limited ("FDR Australia") and its interests in the Paterson Province of Western Australia. The announcement in respect of the acquisition of FDR Australia is accessible through the following link:

https://www.londonstockexchange.com/news-article/POW/power-metal-acquires-100-of-fdr-australia/15193248

FDR is seeking to acquire additional strategic exploration interests and the acquisition of the Selta Project announced today is an important step in the completion of that process.

Note: No Power Metal shares will be issued for this transaction with FDR utilising its own equity for the Acquisition.

HIGHLIGHTS

About the Selta Project

- The Selta Project, located in Australia's Northern Territory, is considered to be highly-prospective for uranium ("U") and rare-earth element ("REE") mineralisation. The Northern Territory hosts some of Australia's best known and high-grade U and REE deposits, including Arafura Resources' (ASX: ARU) world-class Nolans Bore REE deposit - which is located less than 70km away from the Selta Project. The State has a significant legacy of uranium mining and exploration.

- The Project comprises three exploration licence applications covering a total land area of 1,574.92km2, including EL 32737 - 780.85km2, EL 32738 - 312.17km2 and EL 32755 - 481.90km2.

- Previous surface sampling across the Selta Project has identified elevated uranium results up to 3.8 parts per million ("ppm") U in soil samples, stream sediment samples up to 27.2ppm U and rock chip samples up to 244ppm U.

- Assayed whole rock grab samples from the Selta Project have yielded highly anomalous rare-earth element mineralisation including 93ppm neodymium ("Nd") and 25ppm praseodymium ("Pr"), the presence of which highlight the exciting exploration potential of the Project. Encouraging historical results, combined with underlying geological similarities between the Selta Project and REE and uranium mineralisation at the nearby Nolans Bore deposit have led to the investment decision to acquire the Project outright.

- The Selta Project is also considered to be highly-prospective for base and precious-metal mineralisastion. Prodigy Gold's (ASX: PRX) Reynolds Range gold-copper project shares a 65km long contiguous border with Selta. Reynolds Range has recently delivered highly-encouraging drilling results, including 3.93g/t Au over 17m from borehole BRC1000023, which is located less than 8km from the Reynolds Range's claim border shared with the Selta Project.

The Key Agreement Terms

- FDR will acquire a 100% interest in URE for initial consideration of up to AUD$25,000 (£13,465) cash payable by 31/12/2021 to cover historic expenses and £100,000 payable through the issue of 1,499,250 FDR shares of one pence each in FDR at a price of 6.67 pence each ("FDR Shares") (post share issue 3.85% of FDR issued share capital).

- Additional consideration will be due as each of the three licence applications are granted, with an additional amount payable of £400,000 should all licences be granted, again payable through the issue of up to 5,997,001 FDR Shares.

- Should the total consideration of £513,465 be payable, 7,496,251 FDR Shares will be issued comprising 16.67% of FDR issued share capital. At that point, and subject to any further acquisitive transactions or events changing the share capital structure, Power Metal will hold the balancing 83.33% of FDR issued share capital.

- Detailed Agreement terms outlined below.

Next Steps

- FDR is planning to list on the London capital markets in Q1 2022.

- FDR is in late stage discussions to further expand its project portfolio in preparation for listing, including additional precious, base and strategic-metal opportunities.

- FDR is undertaking exploration work on its existing interests in the Paterson Province of Western Australia, and will now commence preparatory exploration work on the Selta Project in the Northern Territory in preparation for licence grants.

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

"This latest acquisition further builds the First Development Resources portfolio which now includes four distinct project interests. This dynamic portfolio includes the Wallal Project located in the prolific Paterson Province of Western Australia, with exciting magnetic bullseye gold-copper drill targets - and now the Selta Project, located in the Northern Territory, within a region highly prospective for U and REE mineralisation, evidenced by the nearby Nolans Bore deposit held by Arafura Resources.

We are seeking a listing of FDR on the London capital markets, and this latest acquisition is an important piece of the FDR portfolio which is being finalised in advance of that proposed listing. We intend to create a unique vehicle with a number of high-impact interests in top-tier mining jurisdictions, which on listing, will launch into multiple active exploration programmes where the results of such exploration may be transformational for shareholders.

Alongside the portfolio developments, we are working with some intensity on preparatory exploration, most significantly at the Wallal Project, where 2D seismic geophysics reprocessing and passive seismic results are awaited.

Further announcements in respect of ongoing exploration and the FDR portfolio build are expected in the near future."

ACQUISITION TERMS

FDR UK will acquire the entire share capital of URE Metals Pty Limited and all URE's interests from current URE shareholders.

Capital Restructuring FDR

Prior to the transaction, Power Metal has a 100% interest in FDR which currently has a single issued share owned by Power Metal.

A capital restructuring of FDR is to be undertaken to increase its authorised share capital in preparation for the listing process (the "Capital Restructuring"). After this capital restructuring, Power Metal's holding in FDR will be 37,481,259 FDR Shares. At this point the loans provided by Power Metal to acquire the interests of FDR UK will be written off into the Capital Restructuring.

Initial Consideration

For the immediate outright acquisition of a 100% interest in URE and all its interests FDR will pay consideration of up to AUD$25,000 cash (£13,465) payable by 31/12/2021 and £100,000 payable through the issue of 1,499,250 FDR Shares after completion of the Capital Restructuring equating to 3.85% of FDR ("Initial Consideration").

Additional Consideration

Additional consideration will be due as each of the three licence applications comprising the Selta Project are granted, with additional consideration of £400,000 should all licences be granted, again payable through the issue of up to 5,997,001 FDR shares after completion of the Capital Restructuring ("Additional Consideration").

This Additional Consideration is payable on licence grants as follows:

Should the Initial Consideration and all Additional Consideration of £513,465 be payable, 7,496,251 FDR Shares will be issued comprising 16.67% of FDR issued share capital. At that point, and subject to any further acquisitive transactions or events changing the share capital structure, Power Metal will hold the balancing 83.33% of FDR issued share capital.

Royalty

The Shareholders of URE will retain a 2% net smelter return royalty ("NSR") over all licences included in this transaction and FDR will have the right to purchase 1% of this NSR for A$1,000,000.

Note: For the period 1 July to 21 October 2021 URE had a loss from ordinary activities of AU$2,918 and as at 21 October 2021 had net liabilities of AU$9,745.

SELTA PROJECT - BACKGROUND

The Selta Project, considered to be prospective for uranium and rare-earth elements, is located in Australia's Northern Territory within the prospective but largely under-explored central Aileron Province, between the Georgia and Ngalia Basins, in a region the Northern Territory Government has declared prospective for uranium mineralisation.

The Project comprises three exploration licence applications covering a total land area of 1,574.92 km2 including EL 32737 - 780.85km2, EL 32738 - 312.17 km2 and EL 32755 - 481.90 km2.

The Northern Territory hosts some of Australia's best known and high-grade uranium deposits and has a long history of uranium mining. In addition, the Aileron Province is a major exploration target for base metals including nickel ("Ni") and copper ("Cu"), REE and orogenic gold ("Au") with numerous companies actively exploring within the region.

The Selta Project borders Prodigy Gold NL (ASX:PRX), IGO Ltd (ASX:IGO) and Canadian listed Megawatt Lithium and Battery Metals Corp (CSE:MEGA); and is less than 70km northwest of Arafura Resources (ASX:ARU) high-grade, world-class Nolans Bore REE deposit.

The Nolans Bore rare-earth elements-phosphate-uranium-thorium deposit is one of the largest deposits of its kind in the world with a JORC (2012) compliant Mineral Resource of 56 million tonnes at an average grade of 2.6% total rare-earth oxides and 11% phosphate (P2O5). Commercial production is targeted for late 2024, with the Feasibility Study considering a 4,440 tonne per annum NdPr oxide producing open pit mining operation with a 38 year mine-life and an NPV8% of US$1.011B.1

The Selta Project's southern claim boundary abuts the Megawatt landholding. Promising surface samples collected within the Megawatt property coupled with a known radiometric trend which links Megawatt with Arafura's ground to the south-east, are indicators of uranium mineralisation. The Selta Project area is currently located along strike to the NW of that radiometric trend and future work will seek to extend that trend within the property.

The underlying geology within the Selta Project is interpreted to be comparable to the Nolans Bore deposit with REE and U mineralisation at Nolans Bore being hosted within G6 granites which are compositionally similar to the G5 granite prevalent across the Selta Project.

Notably, within 5km of the Selta Project's eastern boundary are three REE occurrences up to 543ppm Nd and 148ppm Pr hosted within the G5 granite. Selta's exploration potential has been enhanced by encouraging historical surface sampling results of up to 3.8ppm U in soil samples, 27.2ppm U in stream sediment samples and up to 244ppm U in rock chip samples, all of which led to a study by The Australian Mineral Development Laboratories2 stating:

 "…the amount of uranium moved by solution or erosion is large enough for there to be several potentially economic orebodies."

In addition to uranium the Selta project has significant exploration potential for Cu, Au and silver (Ag).

Prodigy Gold's Reynold Range Gold Copper Project, which intersects the Selta Project's lease area, has delivered encouraging results across four prospects for Cu, Au and Ag with reverse circulation drilling intercepts yielding 29m @ 2.32g/t Au (Falchion Prospect) and 17m @ 3.93g/t Au (Sabre Prospect) and surface samples of up to 7.5g/t Au, 783g/t Ag and 19.3% Cu (Scimitar Prospect) and 0.55g/t Au, 271g/t Ag and 20.3% Cu at the Reward Prospect.3

NEXT STEPS

FDR will work with the Vendors to secure grant of the three licence applications comprising the Selta Project. The exploration work outlined below will be undertaken as appropriate, before or after granting of licences.

FDR will commence a review of all historic drilling and geophysics reports and where necessary reprocess the data to improve resolution in anticipation of initiating a targeted high resolution electromagnetic survey along with an airborne gamma-ray spectrometry survey.

The newly acquired geophysics combined with the validated historical data will enable the Company to identify priority targets for mineralisation that can potentially be drill-tested.

References:

1 Arafura Resources Limited Annual Geneeral Meeting Presentaion, 21/10/2021 . Available at: https://wcsecure.weblink.com.au/pdf/ARU/02438942.pdf 

2 The Australia Mineral Development Laboratories (CR 74/19) Sixth Progress Report MP 4976/73 Geochemical Survey, Arunta Area Amdel (December 1973)

3 PRX ASX Release - 20 May 2021. Available at: https://wcsecure.weblink.com.au/pdf/PRX/02376469.pdf

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 - 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: