REG - Power Metal - Transaction Update - Pilot Mountain Project

Power Metal ResourcesAnnouncement

24/01/2022 12:00

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RNS Number : 3961Z  Power Metal Resources PLC  24 January 2022

24 January 2022

Power Metal Resources PLC

("Power Metal" or the "Company")

 Transaction Update - Pilot Mountain Project

Transaction Complete and Power Metal Agrees Terms for the Early Clearance of
the Tail Benefit Held by Thor Mining on the Pilot Mountain Project, Nevada,
USA

 

Power Metal Resources PLC (LON:POW) the London AIM listed company which
finances and manages global resource exploration projects, announces a
transaction update following the exercise of the option (the "Option") on the
Pilot Mountain Project ("Pilot Mountain" or the "Project") located in Nevada,
United States of America ("USA") (the "Transaction").

 

The Company's announcement in respect of the Transaction of 1 November 2021
may be viewed through the following link:
https://www.londonstockexchange.com/news-article/POW/acquisition-of-pilot-mountain-project/15193667
(https://www.londonstockexchange.com/news-article/POW/acquisition-of-pilot-mountain-project/15193667)
 

 

 

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

"I am pleased to confirm completion of the Pilot Mountain transaction and the
further signing of a Variation Agreement enabling Power Metal to secure early
clearance of the tail benefit.

Our ongoing technical work in respect of the Pilot Mountain project has
increasingly demonstrated significant upside potential within the existing
2018 Mineral Resource Estimate and we considered there was a reasonable
likelihood that the tail benefit would become payable within the 2 year
payment period.

The early clearance of the tail benefit also frees Power Metal from any future
contractual financial encumbrance in respect of the Project.

The recent classification of tungsten as a critical mineral from the United
States Geological Survey, and the lack of primary domestic tungsten production
makes the Project in our view highly strategic, both now, and potentially much
more so in the future with successful further exploration work which will be
undertaken by Golden Metal Resources."

 

HIGHLIGHTS

 

Transaction Completion

 

Power Metal subsidiary Golden Metal Resources Limited ("Golden Metal UK") has
established a new wholly owned subsidiary Golden Metal Resources Australia Pty
Limited ("Golden Metal Australia") which has now completed the 100%
acquisition of the Pilot Mountain project.

 

Variation Agreement

 

The terms of the Transaction are outlined below, and included the Tail Benefit
of deferred consideration of US$500,000 (c£368,000)  payable to Thor Mining
plc (the "Vendor" or "Thor Mining") in the event that Golden Metal UK
publishes a JORC or 43-101 compliant resource at Pilot Mountain which
increases against current declared levels by 25% across total indicated and
inferred categories within two years after the Transaction agreement date.

 

Power Metal has now agreed terms to secure the early clearance of this Tail
Benefit through the payment of £50,000 cash and issue to Thor Mining of 4
million Power Metal new ordinary shares of 0.1p each in the Company at an
issue price of 2.5p per share (£100,000) ("Variation Shares").

 

Power Metal and Thor Mining plc have signed a Variation Agreement to effect
the above.  Following completion of the payments due under the Variation
Agreement, all amounts due or potentially due under the Transaction have now
been settled in full and no further consideration is due.

 

Listing of Golden Metal

 

Golden Metal UK is making good progress with its proposed listing process and
a further update will be provided in the near future.

 

TRANSACTION INFORMATION

Power Metal subsidiary Golden Metal Resources Limited ("Golden Metal UK") has
established a new wholly owned subsidiary Golden Metal Resources Pty Limited
("Golden Metal Australia") which has now completed the 100% acquisition of the
Pilot Mountain Project.

Power Metal has paid US$115,000 in cash consideration to Thor Mining and
US$1,650,000 of consideration through the issue to Thor Mining of 48,118,920
new Ordinary Shares at an issue price of 2.5 pence per share ("Initial
Consideration Shares").

Thor Mining will hold the Initial Consideration Shares in full for a minimum
of 6 months after the Option Exercise date and thereafter the Initial
Consideration Shares will become freely tradable in 25% instalments (25%
tradable 6 months after Option Exercise date, 50% - 9 months after Option
Exercise date, 75% - 12 months after Option Exercise date and 100% - 15 months
after Option Exercise date.)  This trading restriction period may be varied
with the written agreement of both parties.

 

In addition, Power Metal have issued to Thor Mining 12.5 million warrants to
subscribe for Ordinary Shares with an exercise price of 4p per Ordinary Share
and life to expiry of 3 years from the Option Exercise date ("Initial
Consideration Warrants").  Should the volume weighted average price ("VWAP")
of Power Metal shares meet or exceed 10 (ten) pence for 5 consecutive trading
days Power Metal may serve notice on Thor Mining providing 14 calendar days to
exercise and pay for the Initial Consideration Warrants or the Initial
Consideration Warrants will be cancelled.

 

Should Thor Mining exercise the Initial Consideration Warrants above within 12
months from the Option Exercise date, Thor Mining will receive one for one
replacement warrants to subscribe for Ordinary Shares at a fixed price of 8p
per Ordinary Share, and life to expiry ending 3 years from the date of Option
Exercise ("Super Warrants"). Should the Power Metal volume weighted average
share price meet or exceed 20p for five consecutive trading days Power Metal
may at any time issue Thor Mining with a written notice providing 14 days to
exercise and pay for the Super Warrants or the Super Warrant will be
cancelled.

 

All Option Exercise Consideration items outlined above have now been paid or
issued in full.

 

Tail Benefit

 

Power Metal was to issue Thor Mining with a further US$500,000 of
consideration in new Ordinary Shares if Golden Metal UK publishes a JORC or
43-101 compliant resource at Pilot Mountain which increases against current
declared levels by 25% across total indicated and inferred categories within
two years after the Agreement date.  The number of Ordinary Shares to be
issued was to be calculated based on the volume weighted average Power Metal
share price in the ten trading days immediately preceding the announcement by
Golden Metal of the JORC or 43-101 compliant increase.

 

With the Variation Agreement announced today, the above Tail Benefit is now
eliminated.

 

Additional Terms

Thor Mining and their professional corporate, licensing and geological teams
will continue to work with Power Metal and Golden Metal to assist with Pilot
Mountain ownership transfer and to manage local corporate &
exploration/development operations in the 12 months following the Option
Exercise date. Power Metal and Golden Metal will pay for any assistance
provided post Transaction on reasonable commercial terms to be agreed.

 

PILOT MOUNTAIN OWNERSHIP STRUCTURE

Wholly owned(1) Power Metal subsidiary Golden Metal Resources UK through its
wholly owned subsidiary Golden Metal Resources Australia Pty Ltd., now holds
100% of Black Fire Industrial Minerals Pty Ltd., (Australian private company)
which owns 100% of Industrial Minerals (USA) Pty Ltd., (Australian private
company) which owns 100% of: BFM Resources Inc., and Pilot Metals Inc., (USA
private companies) which own tenements covering the entire Pilot Mountain
Project and the 2018 Mineral Resource Estimate.(2)

Further disclosures

As at the date of option announcement on 31.08.21 the following disclosures
were made:

As at 30 June 2020 BFM Resources Inc had Gross Assets of AUD$21,449 (circa
£11,317) and incurred no profit or loss (AUD$Nil) for the year ended 30 June
2020.

As at 30 June 2020 Pilot Metals Inc had Gross Assets of US$3,055,411 (circa
£2,226,602) and a loss of US$106,164 (circa £77,366) for the year ended 30
June 2020.

As at 30 June 2020 Black Fire Industrial Minerals Pty Ltd on a consolidated
basis had Gross Assets of AUD$5,181,951 (circa £2,738,397) and a loss of
AUD$154,690 (circa £81,746) for the year ended 30 June 2020.

It is further noted that since the announcement of the Pilot Mountain option,
Thor Mining plc transferred the Pilot Mountain project and all holding
companies to "Held for Sale Assets" with a written down value of £1,050,000
as at 30 June 2021 their reported financial year end.

 

ADMISSION AND VOTING RIGHTS

Application will be made for the 4,000,000 Tail Benefit Shares to be admitted
to trading on AIM which is expected to occur on or around 31 January 2022
("Admission"). The Tail Benefit Shares will rank pari passu in all respects
with the Ordinary Shares of the Company currently traded on AIM.

Following Admission, the Company's issued share capital will
comprise 1,448,339,986 ordinary shares of 0.1p each. This number will
represent the total voting rights in the Company and may be used by
shareholders as the denominator for the calculation by which they can
determine if they are required to notify their interest in, or a change to
their interest in, the Company under the Financial Conduct Authority's
Disclosure and Transparency Rules.

Reference Notes:

(1 )( )As announced on 9.12.21 Golden Metal Resources Limited has undertaken
a pre-IPO financing raising £750,000.  Following the issue of shares in
respect of this financing Power Metal will hold 83.13% of Golden Metal
Resources Limited.

(2) https://www.thormining.com/sites/thormining/media/pdf/asx-announcements/20182019/20181214-pilot-mountain-resource-update.pdf
(https://www.thormining.com/sites/thormining/media/pdf/asx-announcements/20182019/20181214-pilot-mountain-resource-update.pdf)

 

 

 

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 (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.
 Authier North Lithium       Canada     Earn-in to 100%  Soil & rock sampling completed                                                Interpretation of laboratory assay results of samples collected.
 Ditau Project               Botswana   50%              Preparatory exploration work underway on target I10 leading to planned        Field programme findings and defined drill targets for near term drilling.
                                                         accelerated drilling targeting rare-earth elements and base metals

 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%(A)           Kavango Option to acquire an interest in local project holding company.       Results from various work activities underway as part of the Kavango Option
                                                         Option fee payable through defined work programme
 Tati Gold/Nickel            Botswana   100%             Reverse circulation drill programme completed                                 Laboratory assay results awaited
 Haneti Project              Tanzania   35%              Diamon drill programme underway                                               Results from field programme including drill programme underway
 Victoria Goldfields         Australia  49.9%            Ongoing exploration across 848km(2) of granted exploration licences           Results from field programme including drill programme underway

 Wallal Gold/Copper Project  Australia  83.33%(B)        Passive seismic and 2D seismic processing work programme completed.           Results awaited

                                                         Ground reconnaissance work underway.

( )

(A) should Kavango exercise their option to acquire Kalahari Key, Power Metal
interest would reduce to 40% of the Molopo Farms Complex project

(B) assuming all licences held by URE Metals Pty Limited are granted as
outlined in the Company's announcement of 19.11.21 resulting in the issue of
First Development Resources Ltd shares to URE vendors

 

 

 

 

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