Business Financial Review and Warrant Update
13 January 2021
Power Metal Resources PLC
("Power Metal" or the "Company")
Business Financial Review and Warrant Update
Power Metal Resources PLC (LON:POW) the AIM listed metals exploration and development company is pleased to announce a business financial review and warrant update for shareholders.
Paul Johnson, Chief Executive Officer of Power Metal Resources commented:
"Power Metal has multiple exploration programmes underway alongside significant corporate activities in and around certain of our projects.
Given the extent of our activities I would like shareholders to also know that your Company is in a strong financial position and is well funded to complete all its currently planned exploration work, including drilling programmes underway at present.
Moreover, after the current programme of extensive exploration activities to 31 March 2021 are complete and paid for, the Company will still have significant financial resources and remain in a strong position. This is further explained below with information regarding where we are with business operations, key financial exploration commitments and our underlying financial position.
In addition, I would draw shareholders attention to the "Warrant Update" section below which confirms Power Metal has successfully exceeded the price hurdle to enable acceleration of certain warrants. Recognising Power Metal's strong financial position we consider there is no requirement to exercise any right to accelerate warrants at this time.
Finally, the Company notes that in the Final Results for the year ended 30 September 2019 (announced 20 May 2020) reference was made to a planned fundraising in November 2020. Given the £1 million raised in July 2020 and the receipt of warrant exercise monies since August, there was no need to undertake a fundraising in November 2020."
BUSINESS AND FINANCIAL REVIEW
Power Metal's working capital position as at 12 January 2021 was circa £2.72 million including Pounds Sterling, US Dollars, Australian Dollars and Canadian Dollars and the current value of the Company's listed investments. Power Metal has no debt, and all trade creditor invoices received by 12 January 2021 have been deducted from the working capital figure above.
The Company's anticipated exploration and corporate spending for the period to 31 March 2021 is currently estimated at circa £0.6 million and as a result following the completion of the period to 31 March 2021 the Company expects to still hold a robust working capital position.
The table below provides a further breakdown of the current operational and the cash funding position of each project in the Power Metal portfolio. For specific larger expenditure items we provide information of the cash commitments expected in the period to 31.3.21.
The inclusion of the table below is designed to increase transparency and detailed disclosure for shareholders enabling a fuller understanding of the cash requirements of the business in the coming months and helping to validate the strength of the Company's underlying financial position as outlined above.
The assumptions underlying ongoing exploration and corporate costs are subject to change and are provided for guidance only.
Furthermore, should there be additional receipts of warrant monies the Company would be in an increasingly strong financial position and able to further accelerate project activities if deemed appropriate.
Table: Power Metal Detailed 2021 Project Operational and Financial Breakdown:
PROJECT FINANCIAL INFORMATION (Cash Costs)
JV with Red Rock Resources plc (LON:RRR)
13 licence applications covering a footprint of 2,336 km2.. Prepared 11 historic project reports including exploration planning and a National Instrument NI 43-101 technical report covering 8 applications. Awaiting initial licence grants for 3 priority licence applications (EL007271/7281/7285) and progressing potential listing plans on a North American stock exchange and other possible joint venture initiatives.
Power Metal has paid in full all contributory costs into the Joint Venture ("JV") to date. In the period to 31.3.21 we have provided for general cash costs to run the JV Ballarat office and for a step up in exploration activities in Q1 2021 subject to the receipt of granted licences.
Ditau Camp Project
SJV with Kavango Resources plc (LON:KAV)
2 licences (1,386km2) with Rare earths potential established from recent exploration work. First stage orientation work complete and follow up work announced 4.1.21.
Power Metal has made advance payments of US$150,000 to cover its 2-year sole exploration commitment under the strategic joint venture ("SJV") agreement ahead of schedule. Power Metal has also paid its £10,000 initial contribution to corporate restructuring costs for the SJV, with the intention of initiating the process for a potential listing of the SJV in 2021.
Kalahari Copper Belt Project
(SJV with Kavango Resources plc (LON:KAV)
2 licences (1,294km2) directly to the southwest of Sandfire Resources' T3 and A4 Dome copper-silver discoveries. Soil sampling programme underway with initial samples identifying zinc pathfinder in x-ray fluorescence ("XRF") analysis. Follow up work announced 23.12.20.
Molopo Farms Complex Project
Up to 50.96%
3 licences (1,780km2) with multiple targets identified from electromagnetic survey and ground geophysics. Drilling of four high profile targets underway with two holes complete and extensive technical analysis underway. Thick ultramafic zones have been intersected and in hole KKME 1-6 visible sulphides have been identified as announced 11.1.21.
Power Metal is spending US$500,000 to earn into a 40% direct project ownership which along with its 18.26% project holding company interest, will give a 50.96% effective economic project interest to Power Metal. To date circa US$292,641 has been paid with a further US$207,359 (circa £151,952) included in cash costs to 31.3.21.
Cobalt Blue Project
4 licences adjacent to, or within 50km of the Nkamouna/Nada cobalt/nickel deposit. Review of exploration and commercialisation options reaching an advanced stage.
Further update to follow regarding the Company's plans and financial commitment.
Silver Peak Project
Earn -in to 30%
Mineral claims over historical Eureka-Victoria Silver Mine and high grade, intrusion related, polymetallic Ag-Pb-Zn-Cu veins.
Summer 2020 channel sample programme included a delineated bonanza grade silver up to 0.50m @ 14,937 g/t Ag, 3.05 % Cu & 11.95 % Pb. In November, drill hole SP2020-01 intersected a rubbly vein zone between 1.52m to 1.83m which assayed 0.31m @ 5,270 g/t (169.5 troy oz/tonne) silver as announced 29.12.20.
Planned recommencement of drilling in Spring 2021.
As part of the earn-in to 30% Power Metal has committed to cover CAD$250,000 on exploration in the period to September 2021. To date CAD $141,048 has been paid covering expected spend to 31.3.21 and leaving CAD$108,952 remaining later in 2021.
THE DEMOCRATIC REPUBLIC OF THE CONGO
Exploration licence of 41 carrés miniers (each 84.95 ha) with a 6.8km copper/cobalt anomaly identified.
Geophysics programme launched in late 2020 (as announced 15.12.20) and finalising the conversion of the licence to a Permis d'Exploitation (production license) with a 25-year life.
Advance payments made to cover geophysical programme costs. Further costs of circa US$30,000 are expected in the period to 31.3.21.
JV with Katoro Gold plc (LON:KAT)
Platinum Group Metals ('PGM')
Large polymetallic land package of c.5,000 km2 including 80km long ultramafic complex with drill ready nickel sulphide/PGM targets. Currently undertaking Rotary Air Blast drill programme at Haneti (as announced 30.12.20).
Power Metals has already made advance payments towards maiden drill programme costs. Balancing Power Metal drill costs are expected to be circa US$55,000 in the period to 31.3.21.
Alamo Gold Project
Earn-in up to 75%
Package of mining claims covering c.946 acres prospective for gold following the discovery of native gold nuggets near surface. Follow on work underway (as announced 11.12.20 and after completion of the reconnaissance survey in summer 2020) with further update to market expected shortly.
Power Metal has committed to minimum exploration spend in the 12 months to July 2021 of US$100,000, of which US$50,000 has been paid and a further US$50,000 is expected in the period to 31.3.21. In addition, a further US$25,000 of property payments to the vendor were made in December 2020 in accordance with the earn-in commitment.
On 10 December 2019 Power Metal announced an Equity Placing and Subscription which included the grant of 175,000,000 warrants exercisable at a price of at 0.70p per new ordinary share of 0.1 pence each in the Company with an exercise period ending on 10 December 2021, (the "Financing Warrants").
The Financing Warrants were subject to an acceleration clause whereby should the volume weighted average share price ("VWAP") 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.
The Company can confirm that in the 10 consecutive trading day period of 24 December 2020 to 11 January 2021 the Power Metal VWAP exceeded 2.25p and therefore the Company has the right to accelerate any unexercised Financing Warrants.
For the avoidance of doubt Power Metal is not at this time proposing to utilise the above acceleration clause.
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)
+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 and strategic metal exploration in Africa. Project interests range from early stage greenfield exploration to later stage prospects currently the subject of drill programmes.
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.