Rio Tinto : Power Metal Resources PLC - Option Signed - Australia Copper-Gold Acquisition

Power Metal Resources PLC (LON:POW) the AIM listed metals exploration and development company is pleased to announce the Company has secured an exclusive 60-day option (the 'Option') in respect of a potential new acquisition of copper-gold focused exploration interests in the Paterson Province in the eastern Pilbara Region of Western Australia (the 'Project').

The Paterson Province is considered highly prospective for gold-copper and base metal mineral systems and is currently of particular focus for resource companies with a significant level of exploration activity underway across the region. This level of interest follows recent high-profile copper and gold discoveries by Rio Tinto at their Winu property1 and by Greatland Gold plc (LON:GGP) with the Havieron discovery2. Notably, several major groups in search of Tier 1 deposits have entered into joint-venture / farm-in deals with junior explorers to expedite exploratory work.

The area also has developed mine and processing infrastructure due to the presence of established mining operations, including Newcrest Mining's Telfer Mine3 and the X-Metals Nifty Copper Operation4 (planned as a mine restart).

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:

'Power Metal is keen to build its exposure to Australian base and precious metals exploration where there is, in our view, the potential for large scale metal discoveries in a secure and stable operating environment.

Through our joint venture in the Victoria Goldfields, and subject to due diligence, through this acquisition, we will have operating interests in two of the major centres for exploration activity in Australia.

The level of interest in the Paterson Province has been somewhat dramatic after the Winu and Havieron discoveries, much as the success of the Fosterville gold mine in the State of Victoria led to a surge in exploration activity in 2020.

Power Metal is positioning itself to develop a diverse and expansive exploration business in Australia, and this is another important step forward.'

The Option:

Power Metal has signed an Option agreement (the 'Option Agreement') to acquire a 100% interest in First Development Resources PTY Ltd ('FDR'), an Australian private company holding the Wallal Project and an option to acquire the Ripon Hills Project, (ownership structure as outlined below).

The Option Agreement provides a 60 business-day option period, during which Power Metal may undertake due diligence, and the terms for option exercise to acquire 100% of FDR from its current shareholders (the 'Vendors').

The Option Agreement fee of GBP30,000 is to be satisfied through the issue to the Vendors of one million Power Metal new ordinary shares of 0.1p each in the Company ('Ordinary Shares') at an issue price of 3p per share (the 'Option Shares').

FDR and its Business Interests:

FDR holds two projects interests; the Wallal Project and the Ripon Hills Project.

The Wallal Project currently 100% owned by FDR comprises E45/5816 an exploration licence application covering 390km2 in the western quadrant of the Paterson Province with a favourable lithospheric setting for substantial base metal deposits consistent with Rio Tinto's (ASX: RIO) Winu discovery - predominantly copper-gold-silver with a JORC compliant Inferred Resource of 503Mt @ 0.45% Cu equivalent.

FDR also has a right to acquire 100% of the Ripon Hills Project from Great Sandy Pty Ltd ('Great Sandy') a private Australian Company, (with consideration for the transfer being satisfied by Great Sandy nominees receiving a proportion of consideration outlined below under 'Upon Option Exercise'.) The Ripon Hills Project comprises E45/5088 a granted exploration licence covering 4 2km2 prospective for base metal-gold mineralisation and is proximal to Rumble Resources' (ASX: RTR) Braeside Project where significant new base metal discoveries have been made.

Upon Option Exercise:

Should Power Metal at its sole volition exercise the Option for the acquisition of FDR the Company will pay initial consideration of A$50,000 in cash (circa GBP28,304) and GBP150,000 payable through issue to the Vendors of 5 million new Ordinary Shares at an issue price of 3.0 pence per share ('Initial Exercise Shares') (note: A$20,000 (circa GBP11,322) will be used to eliminate shareholder loans in the accounts of FDR and therefore on acquisition FDR will carry no liabilities). The cash component of the consideration above will be funded from Power Metal existing Australian Dollar cash resources.

In addition, Power Metal will issue the Vendors 5 million warrants with an exercise price of 4.5p per new Ordinary Share and life to expiry of 3 years from the date of Option exercise ('Initial Exercise Warrants'). Should the volume weighted average price ('VWAP') of Power Metal shares meet or exceed 7.0 (seven) pence for a 5 consecutive trading days Power Metal may serve notice on the Vendors providing 10 trading days to exercise and pay for the Initial Exercise Warrants.

Upon grant of exploration license application E45/5816 (Wallal Project) and the transfer of the granted exploration license E45/5088 (Ripon Hills Project) into FDR a further GBP100,000 consideration is payable through the issue of 2,857,143 new Ordinary Shares at an issue price of 3.5p each.

In addition, upon the grant of exploration license application E45/5816 (Wallal Project) and the transfer of the granted exploration license E45/5088 (Ripon Hills Project) into FDR, Power Metal will issue the Vendors 2,857,143 warrants with an exercise price of 5p per new Ordinary Share and life to expiry of 3 years from the date of Option exercise ('Grant Warrants'). Should the volume weighted average price ('VWAP') of Power Metal shares meet or exceed 10.0 (ten) pence for a 5 consecutive trading days Power Metal may serve notice on the Vendors providing 10 trading days to exercise and pay for the Grant Warrants.

The Vendors will retain a 2% net smelter royalty ('NSR') over the licence application E45/5816 and granted licence E45/5088 and Power Metal will have the right to purchase 1% of this NSR for A$1,000,000 payable as cash or in full or part (and at Power Metal's election) by the issue of new Ordinary Shares based on the Power Metal share volume weighted average price in the 7 trading days prior to date of notification to the Vendors of the NSR purchase.

The consideration items outlined above, on Option exercise, will not be paid until the regulatory approvals have been received including any such approval required from the Foreign Investment Review Board, Australia.

The Vendors and their professional licensing and geological teams will continue to work with Power Metal following Option exercise to undertake ground exploration and to further build the licence footprint in the Paterson Province.

FURTHER INFORMATION

Wallal Project - E45/5816 - Exploration Licence Application

The Wallal Project comprises a large, well located 390km2 area, in the western quadrant of the Paterson Province. Notably, the Wallal Project has a favourable lithospheric setting for substantial base metal deposits consistent with Rio Tinto's (ASX: RIO) Winu discovery - predominantly copper-gold-silver with a JORC (2012) compliant Inferred Resource of 503Mt @ 0.45% Cu equivalent1.

The tenure covers an area of transported sand cover including linear north west-south east trending aeolian dunes. Furthermore, the Wallal Project is located on an interpreted basin bounding structure known as the Wallal embayment.

Interestingly, the geology on the eastern boundary of the Wallal Project - associated with a 'gravity ridge' geophysical anomaly - is similar to the structural setting of Rio Tinto's Winu discovery (the Anketell Regional Gravity Ridge). Notably, at Wallal there is a 46km strike feature, which is part of a geological structure called the Vines Fault, that is considered highly prospective copper-gold mineralisation.

It is envisaged that potential drilling targets might be identified utilising high precision gravity, seismic and magnetic survey techniques focussing on specific zones within the apparent gravity ridge.

Ripon Hills Project - E45/5088 - Granted Exploration Licence

The Ripon Hills Project (42km2) contains outcropping Carawine Dolomite rocks of the Archaean Hamersley Group overlying rocks of the Fortescue Group. Furthermore, the Ripon Hills Project is considered prospective for base metal-gold mineralisation associated with deep seated north to north west trending fault structures, as they have the potential to be conduits for various styles of hydrothermal mineralisation.

Ripon Hills is proximal to Rumble Resources' (ASX: RTR) Braeside Project where significant new base metal discoveries have been made5. Specifically, this is a regional scale, 60km long, fracture zone containing porphyry to epithermal mineralised systems with 45 priority Cu-Au-Zn-Pb-Ag targets and five deposit types delineated. Encouragingly, this materially enhances the prospectivity of the Ripon Hills Project, which is largely under-explored, as the underlying geology is similar.

Notably, the priority exploration targets within the Ripon Hills Project are interpreted north to north westerly striking deep seated fault structures. Further, these targets have the potential to host various styles of hydrothermal base metal and gold mineralisation, similar to what is apparent in the Braeside Project. Interestingly, mineralisation can occur in the underlying Fortescue Group rocks as well as the Carawine Dolomite.

Exploration Rationale

Having a footprint in the world class Paterson Province in Western Australia has the potential to deliver significant value for shareholders. While the area has excellent mining infrastructure, there are many parts of the region - highly prospective for copper-gold mineralisation - which are under-explored. In turn, this significantly enhances the upside potential as much of the area is masked by surficial cover.

Using an array of modern exploration techniques, comprising reconciling geophysics and geochemical surveys, the exploration would seek to efficiently and cost effectively identify priority test-drill targets.

Additional Disclosure

In the 6 months ended 31 December 2020 FDR made an operating loss of A$18,914 (circa GBP10,707) and as at 31 December 2020 FDR had net liabilities of A$19,939 (circa GBP11,287).

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the 1,000,000 Option Shares to be admitted to trading on AIM, which is expected to occur on or around 26 January 2021 ('Admission'). The Option Shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

Following Admission, the Company's issued share capital will comprise 1,056,218,972 ordinary shares of 0.1p each. This number will represent the total voting rights in the Company and 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.

COMPETENT PERSON STATEMENT

The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, 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.

References:

Source 1: Rio Tinto PLC announcement https://www.riotinto.com/en/news/releases/2020/Rio-Tinto-reveals-maiden-Resource-at-Winu-and-new-discovery

Source 2: Greatland Gold PLC announcement https://polaris.brighterir.com/public/greatland_gold/news/rns/story/wkqm9ow

Source 3: Newcrest Mining Ltd : https://www.newcrest.com/our-assets/telfer

Source 4: Metals X Ltd: https://www.metalsx.com.au/copper/

Source 5 : Rumble Resources Ltd: http://rumbleresources.com.au/braeside_project.php

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/

Contact:

Power Metal Resources plc

Paul Johnson

(Chief Executive Officer)

[phone]

SP Angel Corporate Finance (Nomad and Joint Broker)

Ewan Leggat/Charlie Bouverat

[phone]

SI Capital Limited (Joint Broker)

Nick Emerson

[phone]

First Equity Limited (Joint Broker)

David Cockbill/Jason Robertson

[phone]

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.

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