TIDMPOW
RNS Number : 4866V
Power Metal Resources PLC
03 December 2019
3 December 2019
Power Metal Resources plc ("POW" or the "Company")
Arizona USA - Alamo Project Opportunity
Power Metal Resources plc (LON:POW) the AIM listed metals
exploration and development company is pleased to announce the
signing of an agreement in respect of the Alamo project in Arizona,
USA.
HIGHLIGHTS:
-- The Alamo project is a package of mining claims covering an
area of approximately 340 acres and is situated in west-central
Arizona (the "Alamo Project" or the "Project"). The Project was
originally identified as prospective for gold following the
discovery of native gold nuggets (the "Nuggets") near surface in
numerous locations within the Project boundaries.
-- The geological environment supports further exploration to
investigate the source of the nugget gold and the potential for a
large mineralised gold system.
-- In addition, the region in which the Project is situated is
prospective for precious and base metals, with regional mines that
have produced silver, lead, gold, zinc and copper.
-- POW has signed an agreement providing an opportunity to
acquire a Right to Earn In ("RTEI") to a 60% interest in the Alamo
Project, subject to due diligence.
-- Vendors include Joe Carrabba, a former board director of
Newmont Goldcorp and Murray Nye, the CEO of Winston Gold Corp,
(together the "Vendors") who on successful completion of project
due diligence will join POW on a special advisory committee.
Paul Johnson Chief Executive Officer of Power Metal Resources
plc commented "POW is making great progress in Africa across its
power metal projects, and shareholders should expect further
updates in the near term covering operational and corporate
activities.
As a Company we have remained open to the review of new
additional opportunities and stated we may move ahead with
compelling projects, including new jurisdictions outside Africa and
in new commodities.
We have conducted a comprehensive review of opportunities that
will complement the Company's mandate of securing interests that
offer considerable upside potential through the implementation of
disciplined programmes of exploration.
The Alamo Project provides access to a package of claims with
notable native gold nugget finds at surface, and a geological
backdrop that encourages us to search for the source of the Nuggets
in the bedrock where, it is postulated, the potential for a large
gold system exists.
The Project has a rich story and one in which we are excited to
have the opportunity to play a part. We will provide further
information to market as we proceed through the site visit and due
diligence processes in the near term.
The Project opportunity appears compelling in itself and will be
made more so with Joe Carrabba and Murray Nye working alongside us
in an advisory capacity and adding to our confidence."
BACKGROUND
The Company issued an announcement on 20 August 2019 entitled
"Completion of the Company's Strategic and Operational Review",
which may be viewed through the following link:
https://www.powermetalresources.com/n/n142/completion-of-strategic-and-operational-review
In that update POW stated its key strategic objective as being
to make large scale metal discoveries in Africa in the power metal
commodities, principally nickel, copper and cobalt. POW also stated
it would be open to the acquisition of interests outside Africa,
including in commodities less central to the power metal story,
should project opportunities prove compelling. The Company has now
identified a potentially compelling opportunity, focused on gold in
the USA.
THE ALAMO PROJECT
The Alamo Project is located in west-central Arizona, USA and
represents a package of mining claims covering an area of
approximately 340 acres, focused on the core area of identified
gold mineralisation. The Project was originally identified as
prospective for gold following the discovery of native gold nuggets
near surface in numerous locations within the Project
boundaries.
The native gold nuggets at the Project occur in shallow arroyos
(a steep-sided gully formed by the action of fast-flowing water in
an arid or semi-arid region) and on hill-side occurrences. The
arroyos are generally shallow depressions with sediment fill of up
to one metre.
We understand that circa 60 ounces of gold Nuggets have already
been found on the project area, by prospectors using metal
detectors, with the largest Nugget weighing in at 5 ounces.
Nuggets have been obtained from the arroyo sediments by metal
detecting and by small-scale dry washer mining methods. The
composition of the nuggets is of particular geological interest in
that both smooth/rounded and crystalline nuggets have been
recovered, which suggests some difference in the distance of travel
from their bedrock source (rounded nuggets having typically
travelled some distance whereas the source of crystalline nuggets
would be more proximal) pointing to potential scale and further
prospectivity.
There is much debate in geological literature regarding nugget
formation and there is work to undertake on the ground in Arizona
to build the technical understanding of the Project including
nugget identification, distribution and investigation of the
bedrock source.
Some of this initial work will be undertaken during the due
diligence period of 45 days (as described below) and some will
naturally take a longer period of investigation should the Company
decide to exercise the right to earn-in to the Alamo Project.
VORS AND FORMATION OF SPECIAL ADVISORY COMMITTEE
The right to earnin to the Alamo Project is held by the
Vendors.
Subject to successful completion of project due diligence and
POW exercising the right to earn in to the Alamo Project, the
Company will form an advisory committee on which the Vendors will
collaboratively work alongside POW in the development of the
Project.
The respective experience of the Vendors in both operating and
developing mining projects through all phases of the development
curve, as outlined below, will prove valuable when assessing how
best to augment value in the Alamo Project.
Joe Carrabba
Mr Carrabba is a seasoned mining executive, who has held senior
positions in the industry including as a director of Newmont
Goldcorp Corp and as former President and Chief Operating Officer
of the largest independent iron ore producer in the U.S., Cliffs
Natural Resources Inc.
Murray Nye
Mr Nye has extensive experience in international corporate
finance and currently serves as the Chief Executive Officer of
Winston Gold Corp (CSE: WGC). Prior to Winston, Mr Nye was the
former CEO of RX Exploration Inc. ("RX") where he brought the
historic Drumlummon Gold/Silver mine back into production. During
Mr Nye's tenure, the market valuation of RX increased from a base
of circa $1.5m to circa $80m
TRANSACTION TERMS
The Project is currently 100% owned by Frisco Gold Corporation,
Bullhead City, Arizona, USA.
The Vendors currently hold an option for a right to earn in to
60% of the Project by covering property payments over a four-year
period and exploration expenditure over a three year period, (the
"Option") as outlined below. POW has signed an agreement to acquire
the Option, subject to the satisfactory completion of due
diligence.
-- POW has entered into a 45-day due diligence period to enable
Project inspection and an initial work programme including Nugget
verification and geochemical sampling to validate Project
prospectivity (the "Due Diligence Period"). The fee payable to the
Vendors to enter into the Due Diligence Period is US$25,000 payable
through the issue of 4,852,125 new ordinary shares of 0.1 pence
each ("New Ordinary Shares") (the "Due Diligence Shares") at price
of 0.4p per share (GBP19,409).
-- The Due Diligence Period may be extended by a further 30 days
through the payment of a further US$15,000 that would be satisfied
through the issue of 2,911,387 New Ordinary Shares to the Vendors
at a price of 0.4p per share (GBP11,646)( the "Additional Due
Diligence Shares")).
-- The Due Diligence Shares and Additional Due Diligence Shares
are subject to a period of 4 months, where they may not be sold
without the written approval of the Company. Should POW shares
trade at a volume weighted average price ("VWAP") of 1.5p or more
for seven consecutive trading days, or should POW decide not to
acquire the Vendors' Option, the Due Diligence Shares and
Additional Due Diligence Shares would become freely tradable.
-- To acquire the Option from the Vendors, on satisfactory
completion of due diligence, POW would pay the Vendors a further
US$250,000 payable through the issue of 38,814,500 New Ordinary
Shares (the "Consideration Shares") at a price of 0.5p per share
(GBP194,073) and grant a warrant over 38,814,500 New Ordinary
Shares (the "Consideration Warrants") at an exercise price of 1.0p
per share and with a three year life to expiry.
-- The Consideration Shares shall also be subject to a period of
four months where they may not be sold without the express written
approval of the Company. Should POW shares trade at a VWAP of 1.5p
or more for seven consecutive trading days, the Consideration
Shares would become freely tradable.
-- Upon acquiring the Vendors' Option POW will be the operator
of the Project, working in conjunction with a newly appointed
advisory committee including Joe Carrabba and Murray Nye, and will
seek to form an Operating Committee with the current project
owners.
-- Upon acquiring the Vendors' Option and establishment of the
advisory committee POW will award share options over 2,500,000 New
Ordinary Shares to Joe Carrabba and Murray Nye respectively (5
million options in total). The share options will be awarded for
advisory committee services and will be exercisable at 1.0p per New
Ordinary Share and have a life to expiry of three years. These
share options may however only be exercised if the share price of
POW exceeds a VWAP of 1.5p for seven consecutive trading days.
-- After acquiring the Vendors' Option, POW can earn into a 60%
interest in the Alamo Project by expending US$1,100,000 (circa
GBP850,000) on property payments over a four year period and
exploration work costs over a three year period. First year costs
are modest and would amount to US$150,000 (circa GBP116,232).
-- Upon completion of the earn into the Project, POW must
contribute to 60% of ongoing Project expenditure to maintain its
60% interest. Likewise, following the POW earn in, Frisco Gold
Corporation must contribute to 40% of Project expenditure to
maintain their 40% holding. If either party does not contribute in
line with their percentage ownership they will dilute their
ownership percentage in line with a standard industry dilution
formula.
ADMISSION AND TOTAL VOTING RIGHTS
Application will be made for the admission to trading of the Due
Diligence Shares which is expected to occur on or around 10
December 2019 ("Admission"). Following Admission of the Due
Diligence Shares, POW's ordinary issued share capital will comprise
377,690,226 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.
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) +44 (0) 7766 465 617
SP Angel Corporate Finance (Nomad and Joint Broker)
Ewan Leggat +44 (0) 20 3470 0470
SI Capital Limited (Joint Broker)
Nick Emerson +44 (0) 1483 413 500
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCTJBMTMBBMBFL
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December 03, 2019 05:20 ET (10:20 GMT)
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