Investment and Option Agreement

Katoro Gold plc (Incorporated in England and Wales)

(Registration Number: 9306219) 

Share code on AIM: KAT

ISIN: GB00BSNBL022

("Katoro" or "the Company") 

Dated: 15 March 2019

Katoro Gold PLC ('Katoro' or the 'Company')

Investment and Option Agreement with African Battery Metals

Katoro Gold PLC (AIM: KAT), the Tanzanian focused exploration and development company, is pleased to announce that it has entered into an investment and option agreement (the "Agreement") with AIM quoted African Battery Minerals Plc ("ABM") (LON:ABM).

Under the Agreement ABM will be able to acquire up to 10 million new ordinary shares of 1.0 pence each in the capital of the Company ("Ordinary Shares"), together with up to 10 million warrants over Ordinary Shares, and an option to acquire, subject to the completion of due diligence by ABM, up to a 35% interest in Company's 100% owned Haneti Nickel Project ("Haneti") in Tanzania (the "Option") for a total consideration of up to £125,000.

Highlights:

·        For a consideration of £25,000, ABM will acquire 2,500,000 new Ordinary Shares (the "Tranche 1 Shares"), equating to an issue price of 1.0 pence per share.  On admission of such shares, ABM will be interested in 1.56% of Katoro's then enlarged issued share capital;

-   ABM will also be granted 2,500,000 warrants to subscribe for 2,500,000 new Ordinary Shares at a price of 1.25 pence per share with a three year expiry term from today's date;

·        Under the Agreement, ABM has been granted the Option, a period of 60 days in which to undertake due diligence on Katoro and its projects, in particular Haneti.  If ABM exercises the Option, ABM will invest a further £75,000 to acquire an additional 7,500,000 new Ordinary Shares at a price of 1.0 pence per share (the "Tranche 2 Shares") and

-   Together with the Tranche 1 Share, on admission of the Tranche 2 Shares, ABM will then be interested in 5.95% of Katoro's then enlarged share capital;

-   ABM will also be granted a further 7,500,000 warrants to subscribe for 7,500,000 new Ordinary Shares at a price of 1.25 pence per share with a three year expiry term from the date of the exercise of the Option;

·        On exercise of the Option, ABM will also acquire a 25% interest in the Company's wholly owned subsidiary, Kibo Nickel Limited ("Kibo Nickel"), which, through its wholly owned subsidiary, Eagle Exploration Limited ("Eagle"), holds a 100% interest in Haneti.  Following the Option exercise, Katoro will retain a 75% interest in Kibo Nickel;

-   Following the Option exercise, ABM will be required to fund its 25% share of Haneti costs, or will dilute in accordance with standard industry fund or dilute provisions;

·        In the event the Option is exercised, ABM will have the right, for 12 months after the Option exercise date, to acquire a further 10% interest in Kibo Nickel for a further payment to Katoro of £25,000 in cash.

Louis Coetzee, Executive Chairman of Katoro, commented: "We are very pleased with the interest ABM has acquired in Katoro and the Agreement holds the promise of establishing a strategic partnership with ABM, with whom we can explore and ultimately hopefully develop the full potential of Haneti.

The investment by ABM announced today, fits perfectly with Katoro's development strategy for Haneti and will enable the Company to execute its exploration program for Haneti quicker and with significant more effectiveness and efficiency.

We are looking forward to working with ABM on an accelerated exploration programme at Haneti, that builds on the extensive existing knowledge that Katoro, and Kibo Energy plc, its prior owner and majority shareholder of Katoro, have gathered.  This includes data demonstrating 13.59% nickel in sampling of outcrops."

Further information on the Agreement

Katoro is required to allocate the monies received pursuant to the issue of the Tranche 1 Shares, the potential issue of the Tranche 2 Shares and the potential receipt of a further £25,000 from ABM to the maintenance, exploration and development of Haneti.

In the event the Option is exercised, Katoro and ABM will establish within one month a written Joint Venture Agreement and associated Shareholder Agreement in respect of Kibo Nickel, Eagle and Haneti.

Save for certain circumstances, the warrants issued pursuant to the Agreement may, until 1 July 2019, only be exercised by ABM if such exercise does not dilute Kibo Energy plc ("Kibo"), the Company's major shareholder, to less than 50.5% of the issued share capital of the Company at that time.

Further information on the Haneti Nickel Project

The 5,000 sq. km polymetallic Haneti Nickel Project in Tanzania is a highly prospective, high-grade nickel sulphide asset.  Previous work, totalling approximately US$1.5 million, has identified grades of up to 13.59% nickel with additional gold, cobalt, platinum credits and some significant lithium anomalies.  Additionally, independent work, undertaken by Western Geophysics Pty, underlines the potential of Haneti to host a substantial nickel sulphide deposit.

The Company acquired Haneti in November 2018 and immediately commenced a review and analysis of all historic work completed on the project.  Based on the review of historic exploration work on the project, the Company believes that it could host a chonolith type nickel sulphide deposit and that Mihanza Hill, one of several high priority exploration targets within Haneti, is the most prospective target identified to date and this will be the initial focus for the Company.

The main objective of the 2019 exploration work programme will be to ascertain the existence of disseminated (or massive) sulphide mineralisation at the identified high priority exploration targets, including Mihanza Hill.  Using a variety of exploration techniques, the programme will seek to define a future drilling programme.  Work has already commenced in this regard, with the Company having completed a soil sampling programme of 1,300 samples which have now been submitted for laboratory analysis.

For the year ended 31 December 2017, Kibo Nickel reported net liabilities of €11,620, nil revenue and a loss for the year of €3,300.  For the year ended 31 December 2017, Eagle reported net liabilities of US$891,968, nil revenue and a loss for the year of US$33,989.  Kibo Nickel does not consolidate the results of Eagle and Eagle's only liability, is an inter-company loan of US$957,621 was transferred to Katoro on completion of the acquisition in November 2018.

Admission to Trading and Total Voting Rights

Application will be made for the admission to trading on AIM of the Tranche 1 Shares ("Admission"), with such Admission expected to become effective on or around 22 March 2019.  Following Admission, the share capital of the Company will comprise 160,462,477 Ordinary Shares.

Each Ordinary Share has one voting right.  No Ordinary Shares are held in treasury.  Accordingly, the total number of voting rights will be 160,462,477 and this figure may be used by Shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, Katoro Gold PLC under the FCA's Disclosure Guidance and Transparency Rules.

Following the Admission of the Tranche 1 Shares, Kibo will be interested, in aggregate, in 90,945,754 Ordinary Shares representing approximately 56.7% of the Company's then issued share capital.

**ENDS**

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.

For further information please visit www.katorogold.com or contact: