TIDMPOW
RNS Number : 9170Y
Power Metal Resources PLC
14 September 2020
14 September 2020
Power Metal Resources plc ("Power Metal" or the "Company")
Canadian Silver Project - Option Exercised
Power Metal Resources plc (LON:POW) the AIM listed metals
exploration and development company is pleased to announce the
Company has exercised its option (the "Option") to earn-in to the
Silver Peak Project (the "Silver Peak Project" or the "Project") in
British Columbia, Canada. The Project includes the Eureka-Victoria
Silver Mine, the first Crown-granted mineral property in British
Columbia.
HIGHLIGHTS:
-- Review of Project data, including a recently conducted due
diligence exploration programme, has provided positive outcomes
enabling Power Metal to exercise the Option within the 30-day
Option period;
-- Exercise of the Option enables Power Metal to earn-in to a
30% interest in the Project on terms outlined below and including
an additional CAD$225,000 committed by POW on ground
exploration;
-- Power Metal are now working with the Project vendors to
continue a technical review focused on launching next stage
exploration work including a Project drilling programme;
-- The Project earn-in, when complete, will provide Power Metal
with an interest in a high-grade silver exploration property in
Canada, including a former working silver mine;
-- Further updates to the market are anticipated in the near
term in respect of the ongoing technical review and further
exploration programme.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Paul Johnson Chief Executive Officer of Power Metal Resources
plc commented "The decision to exercise this Option, on schedule,
provides Power Metal with its first, potentially high impact,
silver exploration project interest.
The cash component costs of earn-in exploration and Option
exercise payments are fully covered by recent warrant exercises
that have brought additional cash into Power Metal, meaning the
exercise of warrants and the money generated has been applied to
the expansion of our business. This is a theme we intend to
continue with warrant monies enabling growth in the Power Metal
business model.
The Silver Peak project is a material addition to the Power
Metal portfolio, bringing a strategic silver project into our
business, and one that offers much potential upside from positive
future exploration work.
Power Metal, alongside the vendors, intend to push ahead
expeditiously with exploration on the ground.
I would like to thank the vendors and the ground operational
team for their work and commitment and it is a pleasure to work
with proactive and supportive partners. We have achieved much in
just a month and look forward to continuing progress as we gather
more Project knowledge through imminent planned exploration."
FURTHER INFORMATION
Option Agreement and Due Diligence Exploration Programme
Background On 17 August 2020 the Company announced it
had entered into an option agreement (the "Option
Agreement") in respect of the Project.
The Option Agreement provided Power Metal the
Option of a 30-day exclusivity period for due
diligence in respect of the Project providing
Power Metal, on Option exercise, with a right
to earn-in to a 30% interest in the Project.
As part of this due diligence process the Company
undertook an exploration programme at the Project
to gather further information and to assist
the Company in its assessment of project prospectivity
and potential.
Project Overview The Silver Peak Project consists of a portfolio
of mineral claims (the "claims") over a system
of high grade, intrusion related, polymetallic
Ag-Pb-Zn-Cu veins, part of the historical Eureka-Victoria
Silver Mine, at Silver Peak in southern British
Columbia, Canada.
-----------------------------------------------------------
Due Diligence The work programme included various elements
Exploration Programme including channel sampling at close intervals
perpendicular to the existing known high-grade
veins and grab samples from a main target area
between the lower elevations and the Victoria
Adit.
The work also included enhancement of road
accessibility to the exploration area, and
the collation of detailed photographic and
video evidence of the project area for cross
referencing to existing project technical information.
A portable X-ray fluorescence analyser (pXRF)
was utilised to provide in-field, geochemical
analyses, in conjunction with confirmatory
laboratory assay testing where appropriate.
The work programme cost totalled C$25,000 (GBP14,512)
and the amount expended will be deducted from
the C$250,000 12-month project exploration
spend as Power Metal has exercised the Option.
-----------------------------------------------------------
Option Exercise Power Metal has now exercised the Option and
can earn-in to a 30% Project interest. The
transaction costs relating to Option exercise
and the earn-in to the Project interests are
outlined below.
-----------------------------------------------------------
Next Steps Continue ongoing technical review and plan,
prepare and launch an exploration drilling
programme at the project, subject to the receipt
of relevant approvals and permits.
-----------------------------------------------------------
THE TRANSACTION TERMS
The Vendor
The Project is currently 100% owned by private vendors Michael
Nugent and Jo Shearer (the "Vendors").
Right to Earn-in
Power Metal will now make a payment of GBP129,683 to the Vendors
comprising CAD$30,000 (GBP17,183) cash and GBP112,500 through the
issue of 9,000,000 new Ordinary Shares (the "Option Exercise
Shares") at a price of 1.25p per Option Exercise Share.
In addition, the Vendors will be granted 9,000,000 warrants to
subscribe for new Ordinary Shares in the Company at a price of
1.75p with a three-year life to expiry.
Power Metal must then spend CAD$250,000 (GBP143,193) on Project
exploration, within 12 months (the "Exploration Spend") and of this
amount CAD$25,000 has already been expended on the due diligence
exploration programme, leaving CAD$225,000 (GBP128,874)
outstanding.
Acquisition of Project Interest
Subject to meeting the Exploration Spend and the receipt of
satisfactory findings from exploration work, and by 31 August 2021,
Power Metal may elect to acquire a 30% interest in the Project by
making a final payment of CAD$200,000 (GBP114,554 and the "Final
Payment") with Power Metal having a choice to pay this in cash, or
in Company shares, as follows.
Final Payment payable in cash:
- Power Metal can make a final cash payment of CAD$200,000.
- Should Power Metal make the Final Payment as cash, warrants
will also be issued to the Vendors in such volume as equates to
CAD$100,000 divided by the 7-trading day volume weighted average
price of ("VWAP") of Power Metal shares immediately preceding the
day of announcing the acquisition of the Project interest and at a
price that equates to a 30% premium to the 7-day VWAP and with a
three year life to expiry.
Note: by way of example if the Acquisition of Project Interest
Final Payment is paid as cash.
If the CAD/GBP translation rate on the acquisition date is
0.57277 then CAD$100,000 equals c.GBP57,277. If at that time the
7-day VWAP of Power Metal is 3.0p, then GBP57,277 divided by 3.0p
would equate to 1,909,233 warrants to be issued, and the warrant
exercise price would be 3.9p.
Final Payment payable in shares:
- By payment of CAD$200,000 (GBP114,554) through the issue of
Power Metal shares at a price based on the 7-trading day VWAP
preceding the date of announcing the acquisition of the Project
interest ("Final Payment Shares").
- Should Power Metal elect to make the Final Payment in Power
Metal shares then the Vendors will be granted warrants to subscribe
for new Ordinary Shares in such volume as equates to 50% of the
Final Payment Shares and at an exercise price equating to a 30%
premium of the issue price of the Final Payment Shares and with a
three year life to expiry.
Note: by way of example if the Acquisition of Project Interest
Final Payment is paid as shares.
If the CAD/GBP translation rate on the acquisition date is
0.57277 then CAD$200,000 equals GBP114,554. If at that time the
7-day VWAP of Power Metal is 3.0p, then GBP114,554 divided by 3.0p
would equate to 3,818,467 new Ordinary Shares being issued to the
Vendors.
In addition, 50% of the new Ordinary Shares would equate to
1,909,233 warrants to be issued, and the warrant exercise price
would be 3.9p.
After the Acquisition of Project Interest
After completion of the Final Payment the ownership structure
will be the Project Vendors 70% and Power Metal 30%. Both parties
must contribute to exploration costs thereafter, in line with their
ownership percentage, or dilute in accordance with standard
industry dilution provisions.
The Vendors will retain a 2% Net Smelter Royalty over the total
Project.
Summary of Transaction Costs
For ease of reference the Option exercise and earn-in costs are
summarised below:
When payable Benefit Earnt Vendor Exploration Overall %
Payments Spend Total of
GBP GBP GBP Total
Option Exercise Right to Earn-in 129,683 129,683 33.5
Within 12 months Right to Earn-in 143,193 143,193 37.0
On acquisition 30% Project
of Interest Interest 114,554 114,554 29.5
Overall Total
(1) 244,237 143,193 387,430 100%
(1) Excluding warrants issued in respect of the transaction,
further details of which are provided above.
NEXT STEPS
Continue review of Project technical information, leading into
an exploration drill programme at the Project.
COMPETENT PERSON STATEMENT
The technical information contained in this disclosure has been
read and approved by Mr Nick O'Reilly (MSc, DIC, MAusIMM, FGS), who
is a qualified geologist and acts as the Competent Person under the
AIM Rules - Note for Mining and Oil & Gas Companies. Mr
O'Reilly is a Principal consultant working for Mining Analyst
Consulting Ltd which has been retained by Power Metal Resources PLC
to provide technical support.
ADMISSION AND TOTAL VOTING RIGHTS
Application will be made for the 9,000,000 Option Exercise
Shares to be admitted to trading on AIM which is expected to occur
on or around 21 September 2020 ("Admission"). Following Admission
of the Option Exercise Shares, POW's ordinary issued share capital
will comprise 810,066,542 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/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 and development company seeking a large scale metal
discovery.
The Company has a global portfolio of project interests
including precious metal exploration in North America and Australia
together with base metal exploration in Africa. Project interests
range from early stage greenfield exploration to later stage drill
ready prospects.
The Board and its team of advisors have expertise in project
generation, exploration and development and have identified an
opportunity to utilise the Company's position to become a leader in
the London market for investors wishing to gain exposure to
proactive global metals exploration.
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END
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