REG-Conroy Gold & Natural Resources Plc: Update on Proposals for Joint Venture Partnership

Conroy Gold and Natural ResourcesAnnouncement

25/02/2021 16:05

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

25 February 2021

Conroy Gold and Natural Resources plc

(“Conroy Gold” or “the Company”)

UPDATE ON PROPOSALS FOR JOINT VENTURE PARTNERSHIP
* Approach by Demir Export A.S. proposing Joint Venture Partnership
* Letter of intent signed with Demir Export
* Discussions with Anglo Asian Mining plc ended
* Demir Export to expend in work commitments (except Demir Export in-house
costs, Operator fees and Minimum Regulatory Work Commitments) of €4.5
million to earn-in 25% option in the project in first phase of earn-in period
* Demir Export to expend in work commitments (except Demir Export in-house
costs, Operator fees and Minimum Regulatory Work Commitments) of an additional
€4.5 million to earn an additional 15% option in second phase of earn-in
period, again in the project
* Expenditure by Demir Export of the additional funds required to reach
construction-ready status to earn-in an additional 17.5% option in third phase
of the earn-in period of a given development thus increasing Demir Export’s
holding to a total of 57.5% in that development  
* At construction-ready status at Clontibret and /or other developments,
Conroy Gold to retain 42.5% interest with various options including a “Carry
Loan” on capital expenditure to commercial production whilst still retaining
25% interest
* Under the terms of the letter of intent, Demir Export to make cash payment
of €1 million to Conroy Gold on final approval of the definitive 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 it has, on 25 February 2021, signed a Letter of Intent (“LOI”) with
Demir Export A.S. (“Demir Export”) for a proposed joint venture on an
earn-in basis over the twelve licences held by Conroy Gold along its 65km
district scale gold trend in the Longford-Down Massif in Ireland.

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.

Demir Export belongs to the Koç Family who also own the largest industrial
conglomerate in Turkey, a Fortune Global 500 Company and Turkey’s leading
investment holding company.

In conjunction with the signing of the LOI with Demir Export, the Company has
today terminated discussions with Anglo Asian Mining plc (“Anglo Asian”)
in respect of the previously announced proposed joint venture agreement.
Details of the heads of terms signed on a proposed joint venture with Anglo
Asian were announced by the Company on 21 July 2020.

The Company’s eight gold exploration licences in Finland and one other
licence owned by Conroy Gold in Ireland are not subject to the proposed joint
venture partnership with Demir Export and will remain 100% owned by Conroy
Gold.  Demir Export has been granted a right of first refusal over these
other licences in connection with any potential joint venture arrangements
until 31 December 2021.

The Joint Venture Project

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 have the other licences given the same
status one after the other, hence providing a foundation for a long-term
relationship between the parties.

The parties will carry on discussions for the transaction on an exclusive
basis and it is acknowledged by both Conroy Gold and Demir Export that time
shall be of the essence in finalising a definitive agreement between the
parties.

Key Terms

The LOI sets out the key commercial terms and conditions that Conroy Gold and
Demir Export have negotiated and agreed on in relation to the Demir Export JV.
The document addresses in detail the key terms and proposed structure of the
earn-in together with setting out the respective responsibilities of the
parties in relation to operatorship and the functions of the Joint Management
Committee.   Investment by Demir Export will be directly into special
purpose companies holding each licence or group of licences.

Demir Export will make a cash payment of €1 million to the Company upon
final approval of the Definitive Agreement in recognition of prior work
carried out in relation to the project. 

The Earn-in Period will be divided into three phases:

For phase 1: expenditure by Demir Export in work commitments (except Demir
Export in-house costs, Operator fees and Minimum Regulatory Work Commitments)
of €4.5 million will earn a 25% interest in the project.

For phase 2: expenditure by Demir Export in work commitments (except Demir
Export in-house costs, Operator fees and Minimum Regulatory Work Commitments)
of €4.5 million will earn an additional 15%.

For phase 3: expenditure by Demir Export of the additional funds required to
reach declaration of construction-ready status (i.e. a bankable feasibility
study or equivalent) -  for Clontibret and/or other mine developments will
earn an additional 17.5% interest thus increasing  Demir Export’s holding
 to a total of  57.5% in the development(s).

Conroy Gold, after construction ready status is achieved, may either retain
its 42.5% interest in Clontibret and /or other mine developments by
participating pro rata in the expenditures for mine construction, or avail
itself of a number of options including diluting its interest or being carried
for the expenditures through to commercial production with a “Carry Loan”
for a 25% interest with pay back on 50% or greater portion of the net profits
due to Conroy Gold within a maximum payback period of six years.

It is envisaged that initially the licences in the Demir Export JV may be
divided into three Licence Groups, namely the Clontibret Licence, the two
Northern Ireland Licences, and the remaining nine licences in the Republic of
Ireland, with separate jointly owned companies, the Joint Venture Companies,
owning the Licences or Licence Groups.

A Joint Management Committee (the “JMC”) will be set up to oversee, plan
and execute the various plans, in the work programme of Demir Export JV. The
JMC will be comprised of four members, two from each party, but with a Demir
Export representative having a casting vote, with appropriate minority
protection rights. It is anticipated that Conroy Gold will be appointed as
operator for an initial two year period after which the matter of operatorship
will be reviewed.

The Demir Export JV remains subject to, inter alia, the completion of due
diligence and the entering into of definitive documentation including the
final joint venture agreement. In addition, the proposed joint venture, should
it proceed on the basis anticipated under the LOI, will be subject to the
Company seeking shareholder approval as it would be classified as a
fundamental change of business pursuant to Rule 15 of the AIM Rules for
Companies. For the avoidance of doubt, Conroy Gold would, on completion,
continue to be classified as an operating company and not a cash shell
pursuant to AIM Rule 15. Furthermore, the proposed joint venture will be
subject to any other relevant Stock Exchange requirements, and to government
or any other regulatory approvals. As such there can be no guarantee that the
proposed joint venture will complete nor as to the final terms or timing of
the Demir Export JV however that it is agreed between the parties that the
terms of the LOI will form the basis for the definitive agreement.

Professor Richard Conroy, Chairman, commented: 

“My colleagues and I look forward very much to working with the Demir Export
team on the joint venture partnership-Project Inis, and building the
foundations for a long term, successful relationship. The comprehensive nature
of this Letter of Intent should facilitate us progressing through the next
stage of the transaction.

Demir Export has the mining expertise and the financial resources not only to
bring the Clontibret gold deposit to construction ready status and into
operation as a mine, but also to advance the significant gold potential of the
other licences along the gold trend to the same status.”

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                                            
 Brandon Hill Capital Limited (Joint Broker)   Tel: +44-20-3463-5000  
 Jonathan Evans                                                       
 First Equity Limited (Joint Broker)           Tel: +44-20-7330-1883  
 Jason Robertson                                                      
 Lothbury Financial Services                  T el: +44-20-3290-0707  
 Michael Padley                                                       
 Hall Communications                           Tel : +353-1-660-9377  
 Don Hall                                                             

Visit the website at: www.conroygold.com



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