Operational update

Praetorian Resources Limited ("Praetorian" or the "Company")

Operational update

Despite the challenging environment that continues to weigh on the junior resource sector, Praetorian (AIM: PRAE) has continued to take an active approach towards its investment portfolio. This approach has allowed Praetorian to work closely with the management teams of its underlying investee companies to assist them in adopting the right strategies and in procuring the necessary funding in order to continue their development. The current Praetorian portfolio has been concentrated into a total of ten individual positions of which the top six holdings currently represent approximately 83% of the Company's NAV.

Highlights of some the recent activity from the Praetorian investment portfolio includes:

A Cap Resources Limited (ASX/BSE. ACB) ("A-Cap") - in April 2014, A-Cap announced an AUD 5.8m fundraising by way of a fully subscribed private placement and underwritten rights issue. This new infusion of capital will allow A-Cap to complete all of the feasibility work necessary to allow it to apply for a formal mining licence on its strategic Botswana uranium asset, Letlhakane. Additional work is also continuing on the development of its promising Botswana coal assets and in this regard Sedgeman recently completed a positive independent report on both A-Cap's Mea and Bolau coal projects.

Ausgold Limited (ASX. AUC) ("Ausgold") - in February 2014, Ausgold raised AUD 1.2m by way of a rights issue, with the funds being allocated towards the drilling of some new high grade gold targets at Katanning, WA and also to advance the exploration efforts over its other material mining assets including Cracow and Yamarna.

Equatorial Palm Oil plc (AIM. PAL) ("EPO") - in Q4 2013, Kuala Lumpur Kepong Berhad ("KLK"), one of the largest plantation companies in Malaysia, acquired a 63.18% direct equity interest in EPO as well as a 50% interest in EPO's Liberian palm oil subsidiary, Liberian Palm Developments Limited ("LPD"). In April 2014, EPO announced that it had signed a JV with a subsidiary of KLK that will provide up to USD 35.5m in non-dilutive cash and funding commitments to LPD. An additional USD 20.5m line of finance is also available to LPD at the discretion of KLK. 

Maya Gold & Silver Inc. (TSXV. MYA) ("Maya") - in March 2014, Maya raised CAD 10m by way of an unsecured loan note. The funds will be allocated towards the purchase of the underground mining equipment and chemicals needed to ramp up production at its Zgounder silver mine in Morocco. This fundraising will also allow Maya to accelerate its exploration and development work at both Zgounder and at its second development asset, the Morocco poly-metallic Boumaadine project.

Polar Star Mining Corporation (TSX. PSR) ("Polar") - in January 2014, Polar raised CAD 2m via a private placement with Newmont Mining Corporation ("Newmont") at 18 Canadian dollar cents per share. This placing was completed alongside a JV agreement with Newmont over Polar's Montezuma copper project in Northern Chile. The main terms of this JV were a three staged earn-in agreement for a total investment of CAD 20.5m over a seven year period. In addition, during March 2014 Polar announced the sale of its Chepica gold mine and Mejillones phosphate project to AIM listed Xtract Resources plc ("Xtract") for a scrip value of GBP 1.25m plus the assumption by Xtract of certain liabilities owned by Polar.

Savannah Resources plc (AIM. SAV) ("Savannah") - in March 2014, Savannah raised GBP 1.5m by way of an equity placing to fund its planned 2014 exploration programme over its flagship Jangamo mineral sands project in Southern Mozambique. During April 2014, the company raised an additional USD 6.3m by way of a private placement and unsecured convertible debenture to fund the acquisition of a new Oman copper asset.

The Directors of Praetorian will continue to focus on maximising the value of its underlying portfolio and work proactively with its investee companies to ensure that they remain well funded and strategically positioned to capitalise as and when market conditions improve. The Directors however are cognisant that Praetorian remains undercapitalised in its current form and through its advisors are actively searching for opportunities to bring renewed positive momentum and scale to Praetorian.

In this regard, the Directors believe that it is prudent and beneficial to all shareholders to reduce the Company's cash commitments and to reduce the level of cash outflows wherever possible. It has therefore been agreed by the Board that Arlington Group Asset Management Limited's ("Arlington") service agreement is cancelled with immediate effect. The contract had a fixed five year term from the date of the IPO and therefore has an expiry date of 9 July 2017. The monetary value of the remaining life of the contract is GBP 523,945 and the proposal is to pay out the term of the contract for a non-cash consideration of 2,400,000 newly issued Praetorian ordinary shares (the "New Shares").

Furthermore, the Directors are looking at other ways to maximise shareholder value. Specifically, we will examine the merits of strategic share buy backs in cases where the effects will be accretive for shareholders. These buy backs will also be targeted to try to reduce any potential overhang in the Company's share register and to close the discount between the Company's share price and NAV per share.

Admission of New Shares

Application has been made for the New Shares to be admitted to AIM. It anticipated that admission will occur on or around 1 May 2014.

Notifiable holdings and Total Voting Rights

The issue of the New Shares will result in the following changes to the notifable holders' interests in the Company's shares:

*Each of Messrs Lockwood and Brookes own more than 20% of Arlington and as a consequence Arlington's interest in the Company is aggregated with each of the their holdings under the AIM definition of directors' family.

Following the issue of the New Shares there will be a total of 52,493,951 ordinary shares in issue of which 1,000,000 million will be held in treasury. The Company will therefore have 51,493,951 ordinary shares in issue (excluding treasury shares). This figure 51,493,951 represents the total voting rights in the Company and may be used by shareholders as the denominator for the calculations by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company.

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