REG-Conroy Gold & Natural Resources Plc: Agreement on Joint Venture Partnership

Conroy Gold and Natural ResourcesAnnouncement

30/11/2021 17:15

The information contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Regulation 11 of the Market
Abuse (Amendment) (EU Exit) Regulations 2019/310. Upon the publication of this
announcement via a Regulatory Information Service ("RIS"), this inside
information is now considered to be in the public domain.

30 November 2021

Conroy Gold and Natural Resources plc

(“Conroy Gold” or “the Company”)

AGREEMENT ON JOINT VENTURE PARTNERSHIP
* Terms for definitive agreement for proposed joint venture with Demir Export
A.S. agreed
* Letter of intent terms form the basis of definitive agreement
* Extraordinary General Meeting (“EGM”) being convened to seek shareholder
approval for joint venture agreement
Conroy Gold and Natural Resources plc (AIM: CGNR), the gold exploration and
development company focused on Ireland and Finland, is pleased to announce
that agreement has been reached on the main terms for a definitive agreement
for the proposed Joint Venture with Demir Export A.S. (“Demir Export”)
over the licences held by Conroy Gold along its 65km district scale gold trend
in the Longford-Down Massif in Ireland.

The Letter of Intent (“LOI”) terms (announced on 25 February 2021) form
the basis for the definitive agreement, the main terms of which have now been
agreed in principle between Conroy Gold and Demir Export but the definitive
agreement has not yet been entered into by either party.

An EGM is being convened for 12 noon on 22 December 2021 at The Alex Hotel,
41-47 Fenian Street, Dublin, D02 H678 Ireland. The Company will be sending a
circular containing the notice of EGM to shareholders shortly to seek their
formal approval to proceed with the transaction and this circular will be made
available on the Company’s website (www.conroygold.com).

The primary focus of the joint venture project (the “Demir Export JV” or
“Project Inis”) is the development of the gold deposit in the Clontibret
licence to construction ready status and bringing it into operation as a gold
mine.

The parties further aim is to also develop the Company’s Northern Ireland
Licences and other licences within the Longford –Down Zone to construction
ready status.

Demir Export is a long established mining company with interests in iron,
coal, gold and base metals, including zinc and copper, in Turkey (Demir is the
Turkish for iron), and has a strong in-house technical team with mining and
exploration expertise. It brings over 60 years of mine operating experience to
bear on the project and places a strong emphasis on the adoption of
international environmental, and health and safety management standards.

The Demir Export JV is deemed to be a fundamental change of business pursuant
to AIM Rule 15 and accordingly is conditional on the consent of Conroy
Gold’s shareholders being given in an extraordinary general meeting of the
Company (“EGM”). Completion of the Joint Venture agreement is also
conditional on the necessary regulatory consents being granted in the Republic
of Ireland and Northern Ireland for the transfer of the licences to the
respective joint venture companies. The definitive agreement is expected to be
entered into by both parties prior to the EGM and would become unconditional
upon satisfaction of the outstanding conditions.

For the avoidance of doubt, Conroy Gold will, on completion, continue to be
classified as an operating company and not as an AIM cash shell pursuant to
AIM Rule 15.

Given the need for binding contractual documentation to be executed and
satisfaction of other conditions to be contained in the definitive agreement,
including approval from shareholders of Conroy Gold being given at the EGM and
applicable regulatory consents, there can be no guarantee at this stage that
the Demir Export JV agreement will become unconditional.

A further announcement will be made by the Company at the time the circular is
published and posted to shareholders and this announcement will contain full
extracts from this circular.

Professor Richard Conroy, Chairman, commented: 

“I look forward to seeking shareholder approval at the EGM and to, following
conclusion of the necessary steps to complete the joint venture agreement,
working with Demir Export in this joint venture partnership-Project Inis.”

Key Terms of the JV and further information as required under the AIM Rules

The investment by Demir Export will be directly into three special purpose
companies (currently wholly owned subsidiaries of the Company) each holding
the relevant licence or group of licences.

The Earn-in Period will be divided into three phases:
* Phase 1: Investment in the joint venture companies by Demir Export in work
commitments (except Demir in-house costs and operator fees) for an aggregate
amount of expenditure of €5.5 million plus the costs to the JV Companies of
the minimum regulatory work commitments, will earn a 25% interest in each of
the JV Companies.
* Phase 2: Investment in the joint venture companies by Demir Export in work
commitments (except Demir in-house costs and operator fees) for an aggregate
amount of expenditure of €4.5 million plus the costs to the JV Companies of
the minimum regulatory work commitments will earn an additional 15% in each of
the JV Companies.
* Phase 3: Investment in the joint venture companies by Demir Export for the
additional funds required to reach Construction Ready Status will earn an
additional 17.5% interest in the JV Company which has reached Construction
Ready Status in respect of any Licence thus increasing  Demir Export’s
holding to a total of 57.5% in that JV Company.
Conroy, after Construction Ready Status is achieved, may either retain its
42.5% interest in that JV Company by participating pro rata in the
expenditures for mine construction, or avail itself of a number of options
including diluting its interest being carried for the expenditures through to
commercial production with a “Carry Loan” for a 25% interest with pay back
on 50% of the net profits due to Conroy within a maximum payback period of six
years or having its interest in such JV Company converted into a 2% net
smelter revenue royalty.

The licences in the JV will be divided into three Licence Groups, namely the
Clontibret Licence, the two Northern Ireland Licences, and the nine Other
Irish Licences with the Joint Venture Companies (being currently wholly owned
subsidiaries of Conroy), each owning a different Licence Group.

The aggregate compensation for the transfer of the Licenses to the joint
venture companies will be €1,000,000 which will be paid to Conroy on
completion under the Agreement as part of Phase 1. These funds will be used
by Conroy to support activities in relation to the Company’s other licences
outside of the scope of the Joint Venture, to discharge its fees incurred in
respect of the Joint Venture and for general working capital purposes.

A joint management committee (“JMC”) will be established to oversee, plan
and execute the various plans, in the work programme of the JV. The JMC will
be comprised of four members, two from each party, but with a Demir Export
representative having a casting vote, with minority protection rights
contained in a shareholders agreement to be entered into on completion of the
Agreement. It is anticipated that Conroy will be appointed as operator for an
initial two year period after which the matter of operatorship will be
reviewed. 

As the Longford-Down Zone assets are not currently producing and the structure
of the JV involves no immediate reduction in Conroy’s interest, the moving
of the assets into the Joint Venture Companies will result in no immediate
change in either the net assets or financial performance of Conroy.  Longer
term, it is hoped that the JV will have a positive impact on both the net
assets and the financial performance of Conroy, however that cannot be
assured.

In the year to 31 May 2021, Conroy had total assets of €24,970,503 (2020 -
€22,548,653), net assets of €19,987,222 (2020 - €17,645,315) and
generated a profit before taxation of €211,010 (2020 - loss before taxation
of €677,380).  Approximately 90% of these numbers relate to the
Longford-Down Zone and the licences subject to the Agreement. The
Longford-Down Zone forms the majority of the expenditure on intangible assets
in Ireland during the financial year to 31 May 2021. The total direct
expenditure on the Longford-Down Zone in that period was €586,512 (2020 -
€494,006) of which licence and appraisal costs represented €281,261 (2020
- €180,265) and operating costs represented €305,251 (2020 - €313,741).

For further information please contact:

 Conroy Gold and Natural Resources PLC  Tel: +353-1-479-6180   
 Professor Richard Conroy, Chairman                            
 Allenby Capital Limited (Nomad)        Tel: +44-20-3328-5656  
 Nick Athanas/Nick Harriss                                     
 First Equity Limited (Broker)          Tel: +44-20-7330-1883  
 Jason Robertson                                               
 Lothbury Financial Services            Tel: +44-20-3290-0707  
 Michael Padley                                                
 Hall Communications                    Tel : +353-1-660-9377  
 Don Hall                                                      
                                                               



Copyright (c) 2021 PR Newswire Association,LLC. All Rights Reserved