REG - Power Metal Res. - Disposal of Victoria Goldfields JV Interest

Power Metal ResourcesAnnouncement

13/03/2024 07:00

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RNS Number : 6040G  Power Metal Resources PLC  13 March 2024

13 March 2024

Power Metal Resources PLC

("Power Metal" or the "Company")

Disposal of Victoria Goldfields Joint Venture Interest

Heads of Agreement Signed for Disposal of Interest to JV Partner

Power Metal Resources PLC (AIM:POW), the London listed exploration company
with a global project portfolio, announces the signing of a Heads of Terms
Agreement ("HoT" or the "Agreement") to conditionally dispose of the Company's
entire 49.9% interest in New Ballarat Gold Corporation plc ("NBGC") (the
"Transaction") which wholly owns Red Rock Australasia Pty Limited ("RRAL"),
the local operating company holding exploration interests in the Victoria
Goldfields, Australia and in South Australia.

Sean Wade, Chief Executive Officer of Power Metal Resources plc, commented:

"Power Metal has now agreed to dispose of its interest in NBGC to joint
venture partner Red Rock Resources plc.

"The Transaction enables the ownership of NBGC to be focused in one entity
which is the optimal holding structure for its continuing development.  It is
also part of a streamlining process of the Power Metal portfolio converting
the NBGC interest into a balance sheet investment holding and additional
incoming cash.

"The Transaction is the fourth undertaken by Power Metal in various structures
over the last two years and which have together significantly built the
underlying working capital of the Company and its overall balance sheet
strength.

"This disposal will further enable Power Metal to concentrate its managerial,
operational and financial resources on retained high value business interests
and new opportunities."

HoT HIGHLIGHTS

The Transaction

Power Metal to conditionally dispose of its 49.9% interest in NBGC and, POW's
interest in loans to NBGC and RRAL (together the "Interests"), to joint
venture ("JV") partner Red Rock Resources plc ("RRR") for consideration up to
£1,500,000 potentially payable in cash, RRR ordinary shares and RRR warrants,
and other items of contingent consideration (the "Consideration").

The Transaction is conditional upon the completion of due diligence by RRR (to
be completed by 19 April 2024), funding, the approval of RRR shareholders at
any General Meeting called to approve the issue of the initial RRR share and
warrant consideration, relevant board and regulatory approvals, and completion
of final documentation (the "Conditions Precedent").

Subject to the Conditions Precedent being satisfied, the transaction will
complete ("Completion"). Completion must occur within 13 weeks of 8 March
2024, being the date of the HoT, or the Agreement will be terminated (the
"Long Stop Date").

The Consideration

The Consideration of up to £1,500,000 is payable as follows:

-      Upon Completion, £250,000 in convertible loan notes ("CLNs") with
a conversion price equal to the price of any placement of new ordinary shares
of RRR raising proceeds of over £200,000.  Should conversion not be
undertaken within 6 months of the HoT date, the CLNs of £250,000 are
repayable immediately as cash.

 

-      Upon RRR shareholder approval for this item within the
Consideration, £250,000 payable through the issue of 166,666,667 RRR new
ordinary shares ("RRR Shares") at a price of 0.15 pence per Share (or by cash
at RRR's election) and 166,666,667 warrants to subscribe for RRR Shares each
exercisable into one new RRR Share at a price of 0.25p and exercisable during
a period expiring 3 years after the date of their issue.

 

-      £250,000 payable in cash two months after Completion.

 

-      £250,000 payable in cash nine months after Completion or, at
RRR's election, through the issue of RRR Shares equal to the value of
£250,000, the price of which to be calculated by reference to the last 10
trading days' volume-weighted average price ("VWAP") immediately prior to the
date nine months after Completion, provided that if RRR Shares are issued then
accompanying warrants with a three year life to expiry and each converting
into one RRR Share at a 50% premium to the price of issue of the RRR Shares
will also be issued on the basis of one warrant for every two RRR Shares
issued.

 

-      £250,000 payable on an announcement by RRR via a regulatory news
service, or a declaration by a Qualified or Competent person (as those terms
are defined in the AIM Note for Mining Companies), of a 20,000 oz gold or gold
equivalent JORC Resource according to the JORC 2012 Code (or any applicable
similar standard or replacement JORC standard) from within the boundaries of
the current licence area.  The £250,000 is payable in cash or at RRR's
election, through the issue of RRR shares to the value of £250,000,
calculated by reference to the last 10 trading days' VWAP immediately prior to
the trigger for this payment, provided that if RRR Shares are issued then
accompanying warrants with a three year life to expiry and each converting
into one RRR Share at a 50% premium to the price of issue of the RRR Shares
will also be issued on the basis of one warrant for every two RRR Shares
issued.

 

-      £250,000 payable on an announcement by RRR via a regulatory news
service, or a declaration by a Qualified or Competent person (as those terms
are defined in the AIM Note for Mining Companies), of a 200,000 oz gold or
gold equivalent JORC Resource according to the JORC 2012 Code (or any
applicable similar standard or replacement JORC standard) from within the
boundaries of the current licence area.  The £250,000 is payable in cash or
at RRR's election, through the issue of RRR shares to the value of £250,000,
calculated by reference to the last 10 trading days' VWAP immediately prior to
the trigger for this payment, provided that if RRR Shares are issued then
accompanying warrants with a three year life to expiry and each converting
into one RRR Share at a 50% premium to the price of issue of the RRR Shares
will also be issued on the basis of one warrant for every two RRR Shares
issued.

Additional HoT terms

The HoT contains additional terms including, inter alia:

-      POW will retain its existing Gross Production Royalty ("GPR") of
0.75% over the footprint covered by RRAL exploration interests.

-      RRR will ensure key licence retention and specifically those
licences containing the Ajax and Berringa mines.

-      POW will retain the right to purchase any individual exploration
licences that are to be surrendered by RRAL or where expenditure commitments
will not be satisfied and a reduced expenditure has not been agreed, for
consideration of A$1 per licence.

-      From the date of the Agreement until Completion or the Long Stop
Date, whichever shall be sooner, POW and RRR commit to contribute A$20,000 per
month towards the costs of RRAL, with any further costs to that date being met
by RRR.

-      RRR has committed that no significant exploration interests of, or
controlling interest in, NBGC/RRAL may be transferred out, or disposed of, or
agreed to be so transferred or disposed by NBGC/RRAL, to another party without
an opportunity being given to POW to match the terms offered by such other
party; and

-      Should RRR dispose in whole or part of any of the Interests within
12 months of the HoT, 15% of disposal proceeds after agreed costs will be
payable to POW, or 5% in months 13-24 (the "Disposal Premium").  (Note: any
amount payable under the Disposal Premium is capped such that the total
aggregate Consideration for the Transaction shall not exceed 74.9% of Power
Metal's market capitalisation as at the date of the Agreement, using the
mid-market closing price of Power Metal ordinary shares on the trading day
immediately prior to the date of the HoT).

 

-      POW retains certain buyback rights in respect of its 49.9% holding
in the event of a payment default by RRR exceeding 60 days from due date, save
as caused by force majeure.

 

-      POW holds a separate convertible loan note which together with
interest and charges amounts to £94,400 of which £50,000 is payable in cash
upon Completion and the remaining £44,400 is payable in cash two months after
Completion, as part of the HoT.

The Interests

The Power Metal book value of NBGC/RRAL Interests at the current date is
£870,784.

The Interests include the following licenses (granted and in application) held
by RRAL:

 License Number               Project Name       Area (km(2))
 EL007271                     Buninyong          133
 EL007281                     Blue Chip          74
 EL007282                     Blue Sky           489
 EL007285                     Blue Ribbon        8
 EL007327                     Dereel             60
 EL007385                     Sardinia           4
 EL007329                     Kilmore            484
 EL007301                     Pitfield/Mt. Bute  85
 EL007328                     Blue Yonder        164
 State land within EL007271

 EL007505                     -

 EL007506                                        9

 EL007507                                        9

                                                 8
 EL007460                     Kilmore West       325
 EL007330                     Daylesford         202
 EL007294                     Talbot             129
 EL005535                     Berringa           9 (228 net ha)
 EL007756                     Monmouth           22
 State land within EL007327

 EL007799                     Dereel (2)

                                                 3
 EL007826                     Ballarat East      4
 EL007460                     Kilmore West       325
 ELA2023/00017 (SA)           Upalinna           560
 EL007540                     Outer Ballarat     142

 (3 competing applications)

 

 

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
 Sean Wade (Chief Executive Officer)                                             +44 (0) 20 3778 1396

 SP Angel Corporate Finance (Nomad and Joint Broker)
 Ewan Leggat/Caroline Rowe/Harry Davies-Ball                                     +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

SP Angel Corporate Finance (Nomad and Joint Broker)

Ewan Leggat/Caroline Rowe/Harry Davies-Ball

+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

 

 BlytheRay (PR Advisors)                            +44 (0) 20 7138 3204
 Tim Blythe
 Megan Ray

 

 

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.

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 grow the
Company, or may be returned to shareholders through share buy backs, dividends
or in-specie distributions of assets.

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