Equity Placing and Subscription for £700,000

RNS Number : 3908W

Power Metal Resources PLC

10 December 2019

 

10 December 2019

Power Metal Resources plc ("POW" or the "Company")

Equity Placing and Subscription for £700,000

Power Metal Resources plc (LON:POW) the AIM listed metals exploration and development company is pleased to announce that it has raised £700,000 through a placing and subscription (the "Financing")  at price of 0.40p per share through the issue of 175,000,000 new ordinary shares of 0.1 pence each in the Company (the "Placing and Subscription Shares").

HIGHLIGHTS:

·    Of the funds raised, £400,000 is allocated to enable the Company to exercise, should it decide to do so, POW's earn-in to the Molopo Farms Complex project ("Project" or "MFC Project") in Botswana, further details of which are provided below;

·    The MFC Project earn-in will see a drilling programme launched to test key drill targets prospective for nickel-copper-PGMs in south west Botswana;

·   By allocating funds raised to enable exercise of the MFC Project earn-in, POW is demonstrating to shareholders that today's financing will secure material progression of the Company through exploration in Botswana, rather than to cover general corporate and business overheads;

·     The balance of the placing proceeds will be mainly applied to the advancement of the Company's other African power metal interests and work undertaken in relation to the Alamo Project under due diligence currently;

·     Each Placing and Subscription Share will have an attaching warrant with an exercise period of two years and exercisable at 0.70p per new ordinary share of the Company, creating 175,000,000 new warrants (the "Financing Warrants") which are subject to an acceleration clause whereby should the volume weighted average share price exceed 2.25p for 10 consecutive trading days, the Company may write to warrant holders providing 10 working days' notice of accelerated exercise, with 15 working days thereafter for payment;

·    Paul Johnson, POW CEO and Andrew Bell Chairman, have subscribed for £25,000 each in the Financing on the same terms as other investors;

·    Subject to the satisfactory completion of due diligence, the Company intends to appoint an additional non-executive director to the Board;

·    First Equity Limited, who exclusively raised funds in respect of the Financing are to be appointed as Joint Brokers to the Company with effect from admission of the Placing and Subscription Shares to trading on the AIM market of the London Stock Exchange.

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented: "The Financing raised today, together with existing working capital, provides a considerable cash runway for the Company.

Importantly, the Financing was undertaken at the market offer price for ordinary shares of the Company, protecting our existing shareholders from the now common practice of raising funds at a discount, something we are keen to avoid.

Importantly £400,000 (circa US$500,000) of this money is allocated to provide funding to allow the Company to exercise its earn-in option over the Molopo Farms Complex project in Botswana or make another strategic investment, with the funds to be applied to drilling of key targets for nickel-copper-PGMs, planned to commence early in the new year. Further work is also planned across the Company's other interests in Cameroon, the DRC and Tanzania, with the underlying objective being the discovery of large-scale metal deposits.

We will also be continuing with due diligence in respect of the Alamo Project in Arizona, to assess the project, which already shows evidence of extensive gold nuggets at surface and the potential for a large mineralised gold system.

The junior resource sector is showing strong signs of a recovery and we believe this is likely to continue.  POW remains well financed, with access to sensibly priced working capital and with a proactive exploration approach across its interests.

I would like to thank existing and new incoming shareholders for their support. The challenging market conditions of recent times have tested the most stoical of investors, and I trust those investors that remain focused on the junior resource space, and POW within it, are able to secure the considerable potential gains that a recovering market may deliver."

BACKGROUND

The Company issued an announcement on 13 May 2019 entitled "Acquisition and Earn-in Agreement - Botswana Project", which may be viewed through the following link:

https://www.powermetalresources.com/n/n104/acquisition-and-earn-in-agreement-botswana-project

In that update POW outlined the terms of an acquisition and earn-in securing an 18.26% shareholding in Kalahari Key Mineral Exploration Pty Limited ("KKME" or "Kalahari Key") and a right, by 31 December 2019 to elect to earn-in to a 40% direct interest in KKME's Molopo Farms Complex Project by expending US$500,000 by 31 December 2020.

KKME AND MFC PROJECT BACKGROUND

KKME, registered in Botswana, is a mineral exploration and geological consultancy company.

The MFC Project consists of three licenses covering an area of 2,725 square kilometres that are considered prospective for nickel-copper-PGMs mineralisation and are 100% owned by Kalahari Key.

In November 2016 the company acquired two mineral exploration licences (PL310/2016 and PL311/2016) from the Botswana Government. The licences cover the eastern and central parts of a shear/feeder zone through the centre of the Bushveld-related Molopo Farms Complex in southern Botswana. A third licence (PL202/2018) was acquired in early 2018 immediately to the south of PL311/2016.

LATEST INFORMATION ON THE MFC PROJECT

The latest update on progress at the MFC project was provided in the Company's announcement of 29 October 2019, highlights from which are provided below, and which may be viewed through the following link:

https://www.powermetalresources.com/n/n163/botswana-nickel-project-progress-update

A helicopter-borne electro-magnetic ("EM") survey over the Molopo Farms Feeder Zone project area completed in Q2 2019 identified 17 sub-surface conductor targets and follow up ground EM surveys over 14 of the targets produced at least 6 high priority targets of considerable size and scale for which 8 drill holes have been designed to penetrate all targets.

The targets are highly conductive bodies which could potentially be host to massive nickel sulphides due to the spatial location, particular geological setting and associated magnetic response.

Further work has been undertaken to select the top priority targets and 5 were selected as a focus for the initial drilling programme.

Kalahari Key appointed consultants Wellfields Consulting Services in Gaborone, Botswana to complete a pre-drilling Environmental Management Plan ("EMP") and fieldwork in respect of this EMP has now been completed and Kalahari Key await receipt of the EMP report.

Kalahari Key are implementing gravity surveys over 5 drill targets, to eliminate as far as possible any chance that the targets are graphite rather than sulphide bodies, since the former although conductive would not be of interest, although this is considered unlikely given the geological setting.

Further liaison with drilling contractors is underway, including some who have expressed a willingness to consider equity in lieu of cash for a portion of their drilling costs in respect of the initial programme.

There is interest in the MFC Project from third parties and Kalahari Key are maintaining liaison with external organisations.

Given the potential valuation uplift on a positive initial drill results the preference at this stage would be to undertake the initial drilling programme before formalising any agreement with a third party in respect of project or company disposal, farm-in or joint venture; however all options remain open to discussion.

FURTHER INFORMATION ON THE POW PROJECT LEVEL EARN-IN TO THE MFC PROJECT

Not later than 31 December 2019 POW may elect, at its sole discretion, to earn-in to 40% of the MFC Project by entering into and then fulfilling a commitment to spend US$500,000 ("Committed Spend") during the period to 31 December 2020.

Upon POW entering into the earn-in (or earlier with the agreement of all parties) an MFC Project operational committee (the "Committee") will be established comprising members Roger Key (Kalahari Key Director), Andrew Bell (POW Director) and Andrew Moore (Kalahari Key Director).  The Committee will determine the allocation of the Committed Spend and management of operational activities.  Upon completion of the Earn-in expenditure requirement POW will hold 40% of the MFC Project.

The Committed Spend will be applied primarily to the completion of drilling of four targets at the MFC Project.

Also, upon POW entering into the Earn-in (or earlier if agreed by all parties) Paul Johnson (POW Director) will join the Board of Kalahari Key.

Neither the Committee members nor the existing or new directors of Kalahari Key will be remunerated for their services.

Also, upon the Company entering into the earn-in, a joint venture agreement will be established between the parties which will determine strategy, operational management and corporate structuring.  This will include the usual fund or dilute provisions unless an alternate structure is agreed by the parties.

APPOINTMENT OF NEW DIRECTOR

Recognising the growth in the POW business model and the need for expanding oversight of business operations, and in conjunction with this Financing, the Company plans to appoint an additional non-executive director. A further announcement regarding the appointment of additional non-executive director in due course.

APPOINTMENT OF JOINT BROKER

The Financing was conducted by First Equity Limited   who have been appointed as joint broker to the Company with effect from Admission.

In conjunction with their appointment and their participation in the Placing and Subscription, First Equity will be awarded 17,500,000 warrants to subscribe for new POW ordinary shares on the same terms as the Financing Warrants.

RELATED PARTY DISCLOSURE

The subscriptions by each of Andrew Bell and Paul Johnson in the Financing constitute related party transactions under Rule 13 of the AIM Rules for Companies. The Directors (other than Paul Johnson and Andrew Bell) consider that, having consulted with the Company's nominated adviser, the subscription by Paul Johnson and Andrew Bell is fair and reasonable in so far as shareholders are concerned.

The shareholdings of Paul Johnson and Andrew Bell on  Admission will be as follows:

Director	Shares Currently Held	Subscription Shares	Total Shares After Admission of Subscription Shares	% of Total Issued Share Capital
Paul Johnson	18,850,000	6,250,000	25,100,000	4.54%
Andrew Bell	11,520,000	6,250,000	17,770,000	3.22%

The warrant holdings of Paul Johnson and Andrew Bell on Admission will be as follows:

Director	Number of Warrants	Warrant Exercise Price	Expiry Date
Paul Johnson	10,000,000	1.00p	15/02/2021
	6,250,000	0.70p	17/12/2021
Andrew Bell	10,000,000	1.00p	15/02/2021
	6,250,000	0.70p	17/12/2021

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the Placing and Subscription Shares to be admitted to trading on AIM which is expected to occur on or around 17 December 2019 ("Admission"). Following Admission of the Placing and Subscription Shares, POW's ordinary issued share capital will comprise 552,690,226 ordinary shares of 0.1 pence each.

This number will represent the total voting rights in the Company, and following Admission, 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. The new shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

PDMR Disclosure

The notifications below, made in accordance with the requirements of the EU Market Abuse Regulation, provide further detail on the director's share dealing.

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	1.    Andrew Bell
2	Reason for the notification
a)	Position/status	1.    Executive Chairman
b)	Initial notification /Amendment	Initial Notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Power Metal Resources Plc
b)	LEI	213800VNXOUPHTX53686
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	ordinary shares of 0.1p each
	Identification code	ISIN: GB00BYWJZ743
b)	Nature of the transaction	1.    Subscription for shares 2.    Grant of Warrants pursuant to the Fundraising
c)	Price(s) and volume(s)
			Price(s)	Volume(s)
			1.    0.40 pence	6,250,000
			2.    0.70 pence	6,250,000
d)	Aggregated information
	- Aggregated volume	Price(s) Volume(s) 1.    0.40 pence 6,250,000 2.    0.70 pence 6,250,000
	- Price
e)	Date of the transaction	10 December 2019
f)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	1.    Paul Johnson
2	Reason for the notification
a)	Position/status	1.    Chief Executive Officer
b)	Initial notification /Amendment	Initial Notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Power Metal Resources Plc
b)	LEI	213800VNXOUPHTX53686
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	ordinary shares of 0.1p each
	Identification code	ISIN: GB00BYWJZ743
b)	Nature of the transaction	1.    Subscription for Shares 2.    Grant of Warrants pursuant to the Fundraising
c)	Price(s) and volume(s)
			Price(s)	Volume(s)
			1.    0.40 pence	6,250,000
			2.    0.70 pence	6,250,000
d)	Aggregated information
	- Aggregated volume	Price(s) Volume(s) 1.    0.40 pence 6,250,000 2.    0.70 pence 6,250,000
	- Price
e)	Date of the transaction	10 December 2019
f)	Place of the transaction	XLON

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

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

Power Metal Resources plc
Paul Johnson (Chief Executive Officer)	[phone]
SP Angel Corporate Finance (Nomad and Joint Broker)
Ewan Leggat	[phone]

SI Capital Limited (Joint Broker)

Nick Emerson                                                                                                           [phone]

Notes to Editors:

Power Metal Resources plc (LON:POW) is an AIM listed African focused metals exploration and development company exploring for the key metals used in power generation, transmission, storage and utilisation. The Board and team of advisors, who have proven expertise in exploration, mining and project generation, have identified an opportunity to utilise the Company's position to become a leader in the London market for investors to gain exposure to the power metal commodity suite, particularly cobalt, lithium, copper and nickel. 

 

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