REG - Power Metal - Kalahari Key Botswana – Acquisition

Power Metal ResourcesAnnouncement

18/05/2022 16:30

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RNS Number : 9984L  Power Metal Resources PLC  18 May 2022

18 May 2022

Power Metal Resources PLC ("Power Metal" or the "Company")

Kalahari Key Botswana - Acquisition

Power Metal Resources Signs Conditional Agreement to Acquire Additional 58.7%
interest in Kalahari Key Mineral Exploration Pty Limited and Become Operator
of the Molopo Farms Complex Project

 

Power Metal Resources PLC (LON:POW) the London listed exploration company
seeking large-scale metal discoveries across its global project
portfolio announces an acquisition update in respect of Kalahari Key Mineral
Exploration (Pty) Limited ("Kalahari Key" or "KKME").

Kalahari Key has a single project 60% interest in the Molopo Farms Complex
Project (the "Project' or the "MFC Project") targeting a large-scale nickel -
platinum group metal ("PGM") discovery in southwest Botswana.

HIGHLIGHTS:

§ Power Metal has signed a conditional agreement to acquire an additional
58.7% interest in the  share capital of Kalahari Key.

§ Power Metal to acquire a further 15,002 Kalahari Key shares for £807,348
payable through the issue of 46,134,171 new ordinary shares of 0.1 pence each
in the Company ("Ordinary Shares") shares at a price of 1.75p per new Ordinary
Share.  Full transaction details below).

§ Following completion and a restructuring of the MFC Project interest Power
Metal will hold 87.71% of Kalahari Key which will wholly own the Molopo Farms
Complex Project on completion (an increase of approx. 35% from the current
circa 53% MFC Project effective economic interest held by Power Metal).

§ Power Metal will become operator of the Project with immediate effect and
will look to accelerate exploration, including a next stage drill programme.

Paul Johnson, Chief Executive Officer of Power Metal Resources PLC, commented:
"We have today conditionally secured an increase to an 87.71% interest in
Kalahari Key, which on completion will have a 100% ownership interest in the
Molopo Farms Complex Project in Botswana.

The MFC project delivered excellent initial drill results last year, which we
now intend to follow up at some pace as the operator of the Project.

Our target remains a large-scale nickel sulphide discovery and should we
successfully move along that pathway, we are confident the MFC Project will
continue to draw interest from investors and potential operational partners."

TRANSACTION TERMS - ACQUISITION OF KKME SHARES

Power Metal is to acquire 15,002 Kalahari Key shares from current KKME
shareholders (the "Vendors") (the "Acquisition").

 

Initial Consideration:

 

The £807,348 consideration is to be satisfied through the issue of 46,134,171
new Ordinary Shares at an issue price of 1.75p ("Consideration Shares") and
warrants over 46,134,171 new Ordinary Shares at a 3.5p exercise price with a
2-year life from today's date ("Consideration Warrants").

 

With respect to the Consideration Warrants Power Metal will hold an
acceleration right, whereby should the volume weighted average Power Metal
share price exceed 7.0p for 5 trading days, Power Metal has the right to serve
written notice to the Vendors of 14 days to exercise and pay for the
Consideration Warrants or they may be cancelled.

 

Further Consideration:

 

Additionally,  in the event, within 2 years of today's date, that Kalahari
Key or the MFC Project is sold for US$10million or greater, or a joint venture
(or earn-in) agreement is signed with a potential third party where the
potential project spend is US$10million or greater, Power Metal will issue the
Vendors with further warrants over 46,134,171 new Ordinary Shares at an
exercise price of 5.0p with a 2 year life to expiry from today's date
("Further Consideration Warrants").

 

In respect of the Further Consideration Warrants Power Metal will hold an
acceleration right, whereby should the volume weighted average Power Metal
share price exceed 10.0p for 5 trading days, Power Metal has the right to
serve written notice to the Vendors of 14 days to exercise and pay for the
Further Consideration Warrants or they may be cancelled.

 

Conditions and Timing of Issue of Shares and Warrants

 

No Consideration Shares, Consideration Warrants and Further Consideration
Warrants will be payable or issuable until:

 

-     The completion of fully signed legal agreements and stock transfer
forms by all Vendors; and

-     Receipt of all Botswana regulatory approvals have been received
enabling this transaction to be implemented in full.

 

 

Lock-In

 

Unless otherwise agreed in writing with Power Metal the Vendors agree
individually to a Lock-In arrangement as outlined below.

 

The Vendors agree to hold the Consideration Shares subject to a Lock-In
whereby 50% shall be tradable after 6 months from today's date, with the
balancing 50% tradable after 12 months from today's date.

 

Conversion of Project Earn-in

 

Following or concurrent with the issue of Consideration under this Agreement,
KKME will issue a further 17,033 KKME shares to Power Metal to extinguish the
40% earn-in to the MFC Project and restore KKME to an effective 100% interest
in the MFC Project.

 

Kalahari Key Shareholding Analysis

 

Reflecting the above the proposed movements in the Kalahari Key capital
structure are outlined below:

 

                                                          Shares  % KKME

 Power Metal Original Holding                             5,313   20.79

 Shares Acquired by Power Metal in KKME                   15,002  58.72

 Remaining KKME Shareholders                              5,235   20.49

 Interim Total                                            25,550  100.00

 Shares Issued to Power Metal re Molopo 40% Earn-in       17,033

 Power Metal Final KKME Shareholding                      37,348  87.71

 Remaining KKME Shareholders                              5,235   12.29

 Total Kalahari Key Shares in Issue on Completion         42,583  100.00

 

 

After the above Power Metal will hold an 87.71% interest in Kalahari Key which
will hold a 100% interest in a single project, the MFC Project.

 

Ongoing Shareholders' Agreement

 

Two shareholders will retain their holding in KKME which after completion will
amount to a combined 12.29% interest in Kalahari Key.

 

All remaining shareholders are to sign an agreement to govern the ongoing
relationship in relation to their shareholding in Kalahari Key and funding of
its operations ("Shareholders' Agreement") on completion of the transaction.
In this regard a number of elements have been agreed to date, covering the key
areas going forward.  These include:

 

-      Acknowledgement of the Acquisition Agreement and waiver of
pre-emption rights

-      Implementation of a Shareholders' Agreement

-      Operator Status (whereby Power Metal determines the operational
and corporate actions of Kalahari Key

-      Kalahari Key Board composition

-      Kalahari Key budgets and cash calls

-      Fund or dilute provisions

-      Drag along terms to ensure all remaining shareholders are required
to proceed with material offers from third parties to acquire, or invest in,
Kalahari Key

Additional Note:

 

In the year ended 30 June 2021, Kalahari Key reported a loss of Pula zero
(£0) and as at 30 June 2021 reported net assets of Pula 11,688,230 (circa
£774,752).

 

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   POW %            Work Completed or Underway                                                    Results Awaited

 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.
 Ditau Project          Botswana   50%              Drill programme focused on key targets notably drilling of potential          Field updates and receipt & review of laboratory assay results.
                                                    carbonatites and targeting rare-earth elements.
 Kalahari Copper Belt   Botswana   50%              Exploration programme underway across the South Ghanzi Project and further    Field programme findings and defined drill targets for near term drilling.
                                                    exploration at the more recently acquired South Ghanzi Extension and Mamuno
                                                    licence areas
 Molopo Farms           Botswana   53%              Review of recent exploration findings.                                        Determine next exploration steps and action plan.
 Haneti Project         Tanzania   35%              Diamond drill programme completed                                             Receipt & review of laboratory assay results.
 Victoria Goldfields    Australia  49.9%            Diamond drill programme underway                                              Field updates and receipt & review of laboratory assay results.

 Paterson Projects      Australia  83.33%           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.
                                                    Review of historical data and target generation for Ripon Hills &
                                                    Braeside West projects.

 Selta Project          Australia  83.33%           Field reconnaissance work complete, which included mapping and sampling.      Finalising data review from field programmes.

 

 

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