REG - Power Metal - Conditional Disposal of Kanye Resources Interests

Power Metal ResourcesAnnouncement

08/07/2022 10:30

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RNS Number : 8320R  Power Metal Resources PLC  08 July 2022

8 July 2022

Power Metal Resources PLC

("Power Metal" or the "Company")

Disposal of Kanye Resources Interests - Botswana

 

Power Metal Resources plc (LON:POW), the London listed exploration company
seeking large-scale metal discoveries across its global project portfolio
announces the conditional disposal of its 50% interest in the Kanye Resources
Joint Venture which is comprised of Kanye Resources Pty Limited a Botswana
private company and Kanye Resources PLC a UK company, ("Kanye Resources JV" or
"Kanye JV") to JV partner Kavango Resources PLC (LON:KAV)("Kavango") (the
"Transaction").

Paul Johnson, Chief Executive Officer of Power Metal Resources PLC commented:

"Power Metal today announces a further step to crystallise value from its
expansive project portfolio - through the disposal of our interest in the
Kanye Resources JV back to partner Kavango.

"The crystallisation of value from various Power Metal interests is a process
we expect to continue. In doing so, we increase the financial strength of the
Company which will allow us to build a valuable and diverse portfolio of
financial assets focused on the natural resource sector.

"Importantly, streamlining of the Company in this way allows us to focus our
time and financial resources on a more targeted exploration portfolio.

"Our joint venture partnership with Kavango has continued for two years.  In
this time they have become, in our view, a Botswana junior resource powerhouse
and with this transaction will see 100% ownership of their Botswana portfolio
restored.

"The work to date on projects within the Kanye JV has demonstrated the
potential for major metal discoveries and if successful, the value of our
greatly expanded equity holding of Kavango will likely appreciate
significantly. Additionally, as a result of this transaction, we gain further
exposure to the upside potential of their work on the KSZ project where the
exploration findings are increasingly of interest.

"Power Metal's journey with Kavango continues, however now as a strategic
investor rather than JV partner.  I look forward to ongoing news flow from
Kavango and on behalf of all at Power Metal, wish the Kavango team well on
their exciting exploration endeavours."

Transaction Highlights:

Subject to the publication of a new prospectus(1) by Kavango including
provision for this Transaction,  Kavango will acquire all Power Metal
interests in the Kanye JV for the following consideration:

-      The issue to Power Metal of 60 million new ordinary shares of
Kavango (Share Value of £1,200,000 using the closing price of 2p of Kavango
shares on 07-07-2022) ("Consideration Shares"). The Consideration Shares will
be subject to a lock-in agreement whereby they may not be sold within 12
months of today's date without Kavango approval.

-      The issue to Power Metal of 60 million warrants to subscribe for
new Kavango ordinary shares with a 30 month life to expiry from today's date
(30 million at an exercise price of 4.25p and 30 million at an exercise price
of 5.5p) ("Consideration Warrants").

-      The issue to Power Metal of 15 million variable price warrants
("VP Warrants") with a six month life to expiry from today's date, with a
minimum exercise price of 3p and an actual exercise price at a 15% discount to
the volume weighted average share price on the date of exercise. Should all VP
Warrants be exercised within 6 months, Power Metal will receive 15 million
replacement warrants, on the same exercise terms and with a 12 month life to
expiry from issue date ("Super VP Warrants").

-     Power Metal will receive a 1% Net Smelter Return ("NSR") royalty
across all Kanye licence areas as at today's date.  In the event that Kavango
is able to secure, within two years of today's date, a greater than 2% NSR or
other royalty on any of the Kanye properties the total royalty above 2% would
be split equally Power Metal/Kavango (e.g. a 3% NSR would see KAV/POW each
receive a total 1.5% royalty).

 

-      In the event that Kavango sells all or part of Kanye for in excess
of £7.5 million, Power Metal will be paid a proportion of the gross excess
received by Kavango above £7.5 million (the "Sale Premium").  The Sale
Premium is 20% for 6 months from todays' date, 15% (7-12 months), 10% (13-18
months) and 5% (19-24 months).

 

Further Information

The Kanye Resources JV holds ten prospecting licences covering 4,257km(2) in
the Kalahari Copper Belt and 1,386km(2) of ground over two licences
representing the Ditau Camp Project.

 

Power Metal holds a current book value of £1,030,291 in respect of its 50%
interest in the Kanye Resources JV.

 

As at 31 March 2022 Power Metal held a book value of £836,487 in respect of
its 50% interest in the Kanye Resources JV.  In the year ended 30 September
2021 Power Metal recorded an attributable loss of £80,010 in respect of its
50% interest in the Kanye Resources JV.

 

Power Metal currently holds 9.5 million Kavango shares and 4.75 million
warrants to subscribe for new Kavango shares at an exercise price of 2.5p
(expiry April 2023).  On completion of this Transaction and issue of the
Consideration Shares Power Metal therefore expects to hold 69.5 million
Kavango shares.

Assuming the current published Kavango issued share capital (435,462,052
shares) is diluted only by the Consideration Shares (60,000,000 shares) the
total Kavango issued share capital would total 495,462,052 shares. In this
scenario and on the basis of Power Metal's current Kavango shareholding, Power
Metal would hold 14.03% of Kavango issued share capital.

Notes:

(1) A Prospectus is required to cover the Kavango shares and warrants included
as consideration in this transaction. The publication of the Prospectus
requires submission to, and approval of, the UK Listing Authority ("UKLA").
This submission is expected to take place shortly.  The timescale leading to
publication of the prospectus is not definitive, however the Company expects
this to by completed by early Q4 2022 at the latest.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

 

For further information please visit https://www.powermetalresources.com/
(https://www.powermetalresources.com/)  or contact:

 Power Metal Resources plc
 Paul Johnson (Chief Executive Officer)                                          +44 (0) 7766 465 617

 SP Angel Corporate Finance (Nomad and Joint Broker)
 Ewan Leggat/Charlie Bouverat                                                    +44 (0) 20 3470 0470

 SI Capital Limited (Joint Broker)
 Nick Emerson                                                                    +44 (0) 1483 413 500

 First Equity Limited (Joint Broker)
 David Cockbill/Jason Robertson                                                  +44 (0) 20 7330 1883

 

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration
company which finances and manages global resource projects and is seeking
large scale metal discoveries.

 

The Company has a principal focus on opportunities offering district scale
potential across a global portfolio including precious, base and strategic
metal exploration in North America, Africa and Australia.

 

Project interests range from early-stage greenfield exploration to later-stage
prospects currently subject to drill programmes.

 

Power Metal will develop projects internally or through strategic joint
ventures until a project becomes ready for disposal through outright sale or
separate listing on a recognised stock exchange thereby crystallising the
value generated from our internal exploration and development work.

 

Value generated through disposals will be deployed internally to drive the
Company's growth or may be returned to shareholders through share buy backs,
dividends or in-specie distributions of assets.

 

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results
awaited, as outlined below:

 

 Project                Location                      Current          Work Completed or Underway                                                  Results Awaited

                                                      POW %

 Alamo Gold Project     USA                           Earn-in to 75%   Excavation of multiple test pits and mapping & sampling.                    Field and assay results from on-site work programme.
 Athabasca Uranium      Canada                        100%             Data compilation across uranium properties.                                 Interpretation results from all Properties complete. Next steps upcoming.
 Authier North Lithium  Canada                        Earn-in to 100%  Soil & rock sampling completed                                              Technical Review of exploration results & define next exploration steps.
 Molopo Farms           Botswana                      53%(#)           Review of recent exploration findings.                                      Determine next exploration steps and action plan.
 Victoria Goldfields    Australia                     49.9%            Diamond drill programme completed.                                          Field updates and receipt & review of laboratory assay results.

 Paterson Projects      Western Australia             82.78%(*)        Wallal passive seismic and 2D seismic processing work programme completed.  Findings from multiple work programmes including final approvals and

                                                                           preparations for planned deep diamond drilling at Wallal.
                                                                       Review of historical data and target generation for Ripon Hills &
                                                                       Braeside West projects.

 Selta Project          Northern Territory Australia  82.78%*          Lithium review underway including desktop and field mapping and sampling.   Findings from lithium review exploration programme.

(*) reducing to 62.12% after Completion of the Pre-IPO Financing

(#) subject to completion of acquisition announced 18.5.22 interest will
increase to 87.71%

 

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