Notice of General Meeting

Cradle Arc Plc / EPIC: CRA.L / Market: AIM / Sector: Mining

26 February 2018

Cradle Arc plc

("Cradle Arc" or the "Company")

Notice of General Meeting

Cradle Arc, the African focused base and precious metals exploration and production company, announces that a Circular containing a Notice of General Meeting, to be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH at 11.00 a.m. on 14 March 2018, has today been sent to Shareholders. The purpose of the General Meeting is to seek Shareholder approval to update the relevant Board authorities to allot the Company's Ordinary Shares.

The Notice of General Meeting and Form of Proxy, together with an explanatory covering letter from the Company's Non-Executive Chairman, will be available for download from the Company's website at www.cradlearc.com.

Unless otherwise defined, capitalised terms in this announcement have the same meaning ascribed to them in the Circular.

Introduction

On 18 January 2018, the Company published its Admission Document in connection with its admission to trading on AIM, which included details of a Placing of 24 million new Ordinary Shares at a price of 10 pence per share to certain existing and new institutional and other investors to raise £2.4 million (before expenses). The Company's ordinary share capital was admitted to trading on AIM on 24 January 2018.

Following the admission to trading on AIM, the Company has almost fully utilised both the Directors' existing general authorities to allot Ordinary Shares and existing authorities to allot Ordinary Shares for cash on a non pre-emptive basis that were granted at the last general meeting of the Company, held on 13 November 2017. It is now proposed to convene a General Meeting to seek shareholder approval to update the relevant Board authorities to allot Ordinary Shares. In addition, the Company intends to seek Shareholder approval to grant the Directors the necessary share capital authorities in relation to the potential future exercise of the 21,666,666 warrants granted in connection with the unsecured convertible loan notes in October 2017, all of such loan notes having been converted into Ordinary Shares on admission to trading on AIM, and the 480,000 warrants granted to certain advisers in connection with the Placing.

The purpose of the Circular is to provide Shareholders with details of the Resolutions to be proposed at the General Meeting. The Board considers that the Resolutions are in the best interests of the Company and its Shareholders taken as a whole and unanimously recommends that Shareholders vote in favour of these Resolutions. The formal Notice of General Meeting is set out at the end of the Circular and a Form of Proxy is also enclosed for Shareholders to complete, sign and return.

Current Trading

Mowana continues to operate in line with management's expectations with ramp-up to the name plate, pre- DMS installation, processing rate of 1.2Mtpa ongoing. In aggregate, approximately 10,500 tonnes of copper concentrate has been produced, from recommencement of the mine in March 2017 to the date of this announcement. As announced on 31 January 2018, the Company continues to assess a proposed DMS installation at Mowana following receipt of an independent test report from SGS. Accordingly, it remains the Board's intention to pursue a DMS installation in due course and further updates will be provided as appropriate as the development plan for the upgrades to the existing Mowana processing plant progresses. The Board believes that such upgrades could potentially increase the Mowana mine's nameplate capacity from 12,000 tonnes Cu per annum to more than 20,000 tonnes Cu per annum. Such an increase would significantly improve cash flows and the net present value of the Mowana Project. The Company currently anticipates that the initial phase of the DMS preparatory work will be completed by the end of Q1 2018.

In addition, Wardell Armstrong has been appointed to re-model Mowana's mineral resource. Such modelling exercise includes the re-logging of drill core and confirmatory assay on selected samples enabling a fuller interpretation of the data base. As a result of this re-modelling and the abovementioned SGS test work, the Company anticipates that it will then be able to update the existing mineral resource statement for Mowana.

Since its admission to trading on AIM on 24 January 2018, the Company has issued, in aggregate, 4,536,379 new Ordinary Shares to the holders of, in aggregate, £400,000 of the convertible loan notes issued by the Company on 2 June 2017 (the "June 2017 Notes") with the balance of £400,000 of such notes remaining outstanding. In addition, since its admission to trading on AIM, the Company has issued, in aggregate, 1,403,509 new Ordinary Shares to the holders of, in aggregate, £75,000 of the convertible loan notes issued by the Company on 16 January 2017 (the "January 2017 Notes") with the balance of £925,000 remaining outstanding.

Offer to Shareholders 

As previously announced and as set out in the Admission Document, in recognition of Shareholders' continued loyalty and valuable support, the Board was intending to offer those Shareholders (save for restricted overseas Shareholders) who held shares as at the date of the Company's suspension from trading on AIM in December 2016 and who continue to hold their Ordinary Shares, the opportunity in Q1 2018 to participate in an equity fundraising, at the price of 10 pence per share, being the same price as the Placing.

However, in light of the disappointing performance of the Company's share price since Admission, as at 23 February 2018 (being the latest practicable date prior to the date of this announcement) the prevailing mid-market price of an Ordinary Shares was 6.62 pence, representing a significant discount to the Placing price of 10 pence per share. Accordingly, the Board is cognisant of the fact that Shareholders have had the opportunity to purchase Ordinary Shares in the market below 10 pence per share, and it is highly unlikely that any Shareholders would be minded to take up an offer at 10 pence per share if it were to be made at the current time. In addition, the costs associated with implementing such an offer would, in the Board's view, likely exceed any amount raised. As a consequence, the Board has decided not to proceed with the proposed offer.

General Meeting

A General Meeting of the Company, notice of which is set out at the end of the Circular, is to be held at 11.00 a.m. on 14 March 2018 at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, EC2M 7SH. The General Meeting is being held for the purpose of considering and, if thought fit, passing the Resolutions which are summarised below:

1. Resolution 1 is to be proposed as an ordinary resolution, to authorise the Directors under section 551 of the Act to allot (i) equity securities in connection with the Warrants and (ii) equity securities generally up to a maximum nominal amount of £6,839.89 (representing approximately one third of the Company's issued ordinary share capital) and, to be passed, more than half of the votes cast must be in favour of the resolution; and

2. Resolution 2 is to be proposed as a special resolution to authorise the Directors, under section 570(1) of the Act to allot (i) equity securities in connection with the Warrants and (ii) equity securities generally up to a maximum nominal amount of £4,145.39 (representing approximately 20 per cent. of the Company's issued ordinary share capital) for cash on a non-pre-emptive basis and, to be passed, at least three quarters of the votes cast must be in favour of the resolution.

Save for the issue of shares pursuant to the potential future exercise of the Warrants and the allotment of Ordinary Shares arising from the potential exercise of convertible securities outstanding as at the date of this announcement, the Directors have no current intention to allot new Ordinary Shares, or rights to subscribe for or convert into Ordinary Shares, in the capital of the Company. Further details of the convertible securities outstanding as at the date of this announcement are set out in paragraph 3 of Part VII of the Admission Document save that, as mentioned in paragraph 2 of the Circular, certain of the January 2017 Notes and the June 2017 Notes have been converted.

Recommendation

The Directors believe that the passing of the Resolutions is in the best interests of the Company and Shareholders, taken as a whole. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolutions, as they intend so to do in respect of their holdings of Ordinary Shares in the Company, representing, in aggregate, approximately 55.9 per cent. of the Existing Ordinary Shares.

For further information, please visit www.cradlearc.com or contact:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.