Acquisition of Minto Mine from Capstone Mining

THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

4th June 2019

Fully Funded Acquisition of Minto Copper-Gold-Silver Mine

from Capstone Mining Corp

London, United Kingdom - Pembridge Resources plc (LSE:PERE) ("Pembridge" or the "Company"), a mining-focused special purpose acquisition company, is pleased to announce that it has signed a definitive share purchase agreement dated 3rd June 2019 (the "SPA") with Capstone Mining Corp. ("Capstone") and closed the acquisition of 100% of Minto Explorations Ltd. ("Minto") (the "Acquisition"). The SPA replaces the agreement signed between the parties and first announced on 15 February 2018.

The consideration for the Acquisition, which is unconditional, comprises up to US$20 million in total payments due to Capstone payable out of future cash flows and realisations from Minto and based on certain hurdles linked to production levels at Minto as well as future copper prices.

In addition, financing of US$10 million to fund the recommencement of operations has been secured from Copper Holdings, LLC ("Copper Holdings"), a New York based private equity group and Cedro Holdings I, LLC, an entity managed by Lion Point Capital, L.P. ("Lion Point"), a New York based asset manager, pursuant to a shareholder and financing agreement between the Company, Copper Holdings and Lion Point dated 3rd June 2019 (the "Shareholder and Financing Agreement", together with the Acquisition, the "Transaction").

The Company expects to recommence commercial production at Minto during the fourth quarter 2019.

Key highlights

· Staged payment structure of the Acquisition will allow Minto to achieve a cash generative operating state before any payments are made to Capstone

· The first payment from Minto to Capstone of US$5 million will be due once production at Minto has reached a steady state 60% of mill capacity

· A second payment from Minto to Capstone of US$5 million will be due once production at Minto has reached 60% of mill capacity and the copper price has averaged over US$3.00/lb (US$6,615/t) for two consecutive quarters

· A final payment from Minto to Capstone of US$10 million will be due upon the copper price achieving an average of US$3.50/lb (US$7,717/t) for two consecutive quarters

· The Financing Agreement allows Pembridge to immediately commence the restart process at Minto

· Initiatives have been identified by the Company to seek to extend mine life and significantly improve on previous operating margins at Minto

· Pembridge, Minto, Copper Holdings and Lion Point have entered into the Shareholder and Financing Agreement, under which:

o Copper Holdings and Lion Point will provide, in aggregate, US$10 million to Minto with an 8% coupon (the "Debt")

o Copper Holdings and Lion Point will acquire non-voting B shares in Minto which will represent a one third economic interest each in Minto once the Debt has been repaid

o Pembridge has right of first refusal to buy out Copper Holdings' and Lion Point's respective interests in Minto

o Copper Holdings and Lion Point have no voting rights in Pembridge

· The Transaction assumes economic benefits only from Minto, not from any further transactions that may be entered into by Pembridge

· Concurrent with signing of the SPA, £400,000 of working capital for Pembridge has been raised at 16 pence per ordinary share of nominal value 1 pence each in the capital of the Company (each, an "Ordinary Share"), an approximate 25% premium to the price per Ordinary share at which the Ordinary Shares were suspended on 15 February 2018

· An updated investor presentation is available on the Company's website www.pembridgeresources.com

David Linsley, Chief Executive Officer commented:

"We have said all along that the acquisition of Minto represents a transformational opportunity for Pembridge and its shareholders which is why we continued to pursue the Transaction despite last year's downturn in commodity markets and the challenging environment for raising capital. While market conditions impacted closing of the Transaction, we were able to use this time to achieve a deal and financing package which we expect to be value accretive for Pembridge shareholders. 

We welcome our new partners, Copper Holdings and Lion Point, and look forward to commencing the restart process at Minto and executing our initiatives to seek to extend mine life and significantly improve on previous operating margins at Minto."

Frank McAllister, Chairman said: 

"I congratulate the Pembridge management team who have persevered throughout the past 12 months to complete the Transaction. It was vital to ensure that the Company achieved favourable deal terms rather than pursuing a deal at any cost regardless of the time it may take to complete. 

The opportunity offered by Minto aligns with our goal of acquiring a producing or near production mining operation, to which we can add value. While we very much see Minto as a cornerstone asset, the Pembridge management team and board of directors continue to evaluate further acquisition and investment opportunities, consistent with our strategy to build Pembridge into a mid-tier mining company."

A prospectus, which details the terms of the Transaction, will shortly be re-submitted to the UK Financial Conduct Authority and we will update the market in due course in that regard. 

The person who arranged for the release of this announcement on behalf of the Company was David Linsley, Chief Executive Officer. 

ENDS

NOTES TO EDITORS

About Pembridge Resources plc

Pembridge is a mining-focused special purpose acquisition company admitted to listing on the standard segment of the Official List of the FCA and to trading on the main market for listed securities of London Stock Exchange plc.

The Company's management is composed of a team of senior leaders with experience in various board and executive positions with a complementary mix of expertise in geology, engineering, project appraisal, and commercial development across a wide range of commodity groups and mining jurisdictions.

About Minto

Minto is an open pit and underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse along the Klondike Highway. The Minto mine has been in continuous production since 2007 and is presently the only operating mine in Yukon territory. In excess of US$350 million of capital expenditure has been invested into Minto operations since site construction began some 12 years ago.

About Copper Holdings

Copper Holdings is a private investment vehicle based in New York run by a team of experienced mining investors.

About Lion Point

Lion Point Capital is a global special situations investment adviser based in New York that seeks to invest in equity and debt securities of public and private companies.

Enquiries:

Pembridge Resources plc: +44 20 7917 2968

David Linsley, Chief Executive Officer

Paul Fenby, Chief Financial Officer

Brandon Hill Securities - United Kingdom: +44 (0)20 3463 5016

Jonathan Evans

SI Capital - United Kingdom: +44 14 8341 3500

Nick Emerson

Tavistock Communications - United Kingdom: +44 20 7920 3150

Charles Vivian

Gareth Tredway