Conversion of Convertible Loan Notes

Ortac Resources Ltd / Epic: OTC / Market: AIM / Sector: Mining & Exploration

14 June 2017

ORTAC RESOURCES LTD

("ORTAC" OR THE "COMPANY")

Conversion of Convertible Loan Notes into equity of Zamsort Limited

Ortac Resources Ltd, the AIM listed mineral exploration company operating in Europe and Africa reports that is has agreed to convert the Secured Convertible Loan Note ("the Convertible") and to partially convert the Call Option Agreement ("the Option") into an equity position of 14% in Zamsort Limited ("Zamsort"), with the remaining balance on the loan notes being extended to the 31st December 2018.

Vassilios Carellas, Ortac's CEO, commented: "We are pleased to be converting the majority of the loan notes we hold in Zamsort into equity and look forward to helping Zamsort transition from a license holder to explorer and producer."

Background to the Convertible Loan Notes

On 30th March 2015 Ortac subscribed for US$600,000 of secured convertible loan notes, convertible into a 10.71% stake in Zamsort and entered into the Option entitling Ortac to subscribe for further US$600,000 secured convertible loan notes (the "No.2 Loan Notes") for an additional 8.64% stake in Zamsort.

On the 25th August 2015 the Company exercised the Option by way of a further investment of US$600,000 in the No.2 Loan Notes, which took the total invested by Ortac in Zamsort to US$1.2 million and, upon conversion of both loan notes, Ortac's potential shareholding in Zamsort would be 19.35% of the issued share capital of Zamsort. 

On 9th August 2016 the Company announced that it had exercised its right and issued a request to Zamsort to convert the Convertible and the No.2 Loan Notes, into 19.35% of the issued share capital of Zamsort.

At the time Zamsort advised the Company that it may wish to make changes to its share capital structure in order to facilitate further funding. Ortac advised Zamsort that it would be cooperative should a reorganisation be of benefit to the financing of Zamsort, and in the best interests of Ortac and its shareholders, if Ortac's Convertible was converted into equity.

The Company has today agreed that it will convert loan notes to the value of USD $828,472, which will result in Ortac being issued 2,100 shares by Zamsort, which represents 14% of Zamsort's issued share capital.

Following the conversion of loan notes, Zamsort will remain indebted to Ortac to the amount of $371,528, being the remaining balance under the No.2 Loan Notes excluding accrued interest (the "Outstanding Principal"). The redemption date for such loan notes shall be extended to 31st December 2018. All other terms of the No.2 Loan Notes will remain unchanged.

Interest on the amount of the loan notes that have been converted shall cease from the 1st December 2016 (the "Conversion Interest"). Interest on the Outstanding Principal continues to accrue from 30th March 2015 until its redemption or conversion at a rate of 8% per annum ("Outstanding Interest").

The Conversion Interest and Outstanding Interest (together the "Total Interest") will be added to the Outstanding Principal. The Total Interest shall be payable on the date of the redemption or conversion of the Outstanding Principal.

Following the Conversion, Mr Nick von Schirnding will be appointed to the Board of Zamsort as Ortac's representative on the Board, replacing Mr Vassilios Carellas, who will be resigning from the Board of Zamsort.

About Zamsort Limited

Zamsort is a private Zambian registered company. The Kalaba Cu-Co Project, 100% owned by Zamsort and located approximately 900 km from Lusaka, in Mwinilunga, North Western Province, is well within the trending arm of the major geological structure known as the Lufilian Arc (copper belt), on the western flank of the Kabompo Dome.

The project consists of a 4km2 Small-Scale Mining Licence ('SML') over the Kalaba Cu-Co mineral resource enclosed within a 999.28km2 Large Scale Prospecting Licence ('LPL'). This was previously explored by Equinox Minerals Limited ('Equinox') and Anglo American Prospecting Services ('AAPS') by way of the Zambezi Joint Venture ('JV') through AAPS's affiliate Zamanglo Prospecting Ltd ('Anglo American') during the late 1990s as part of the Kabompo Property. The current LPL encompasses 7 of the top 10 high priority exploration targets identified through the JV prior to Anglo American exiting the country in 2001.

In order for Zamsort to maintain the SML in good standing it has undertaken seasonal mining from the oxide copper resource exposed on surface. Zamsort has estimated that approximately 70,000 tonnes of material has been mined to date from Kalaba. At present, it has estimated that it has approximately 33,000 tonnes of screened ore grading at 3.5% ASCu stockpiled on site and ready to be shipped and toll treated at one of the local facilities in the copper belt where non-exclusive off-take agreements are already in place.

The estimated Kalaba Cu-Co oxide resource of 16.59Mt @ 0.94% Cu equivalent is exposed on surface and has been generated in-house by Zamsort's Chief Geologist. Although the resource has been registered by Zamsort with the Geological Survey and Ministry of Mines in Zambia, at present it is not considered to be compliant with the JORC code.

Zamsort is in the process of sourcing additional debt finance to complete the construction of a commercial scale demonstration plant expected to produce copper and cobalt hydroxide filter cake from the Kalaba Cu-Co resource in the SML.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

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