18 December 2015 Company Announcements Office Australian Securities Exchange LITHIUM PROJECT TRANSACTION AND $3.6M CAPITAL RAISING Dakota Minerals Limited (ASX:DKO) ( Dakota or the Company ) has entered into an agreement to acquire a package of tenements and interests in tenements in the Pilbara region of Western Australia from Asgard Metals Pty. Ltd. ( Asgard ), an 86%-owned Australian subsidiary of Ariana Resources plc (AIM:AUU) "Ariana") and Slipstream Resources Group ( Slipstream ). This package of tenements contains part of an extensive lithium-tantalum bearing pegmatitic dyke swarm, which was recognised recently as containing the second-largest hard-rock spodumene (lithium-tantalum) deposit in the world 1. Highlights: Dakota will acquire from Asgard and Slipstream interests in six tenements in the Pilgangoora area of Western Australia ( Pilgangoora Project ). Consideration for the transaction comprises a cash payment of $300,000 payable in two tranches and the issue of 50,000,000 fully paid ordinary shares in Dakota. A further 60,000,000 shares will be issued to Slipstream and Asgard upon the achievement of certain project milestones. Dakota is undertaking a A$3.6 million capital raising by way a share placement to raise up to A$3.6 million in two tranches through Argonaut Securities Pty Ltd( Argonaut ), to fund acquisition costs and exploration on the tenements. Argonaut has received irrevocable commitments for the full amount of $3.6m, to be split into a first tranche of approximately $525,000, which is due to settle on 24 December, and a second tranche of approximately $3.075m, which is due to settle in February 2016 after Dakota shareholders approve the issue and the transaction. David Frances will be appointed as Chief Executive Officer of Dakota and Dr. Francis Wedin will be appointed as Technical Director. The Board will be further enhanced through the appointment of experienced mining company director John Fitzgerald as Chairman. Completion of the transaction is subject to various conditions, including the grant of the core tenement, Dakota shareholder approval and Dakota completing the capital raising. Pilgangoora Project The Pilgangoora Project is located on and in the vicinity of an extensive lithium-tantalum bearing pegmatitic dyke swarm. Peer activity in the immediate area includes Pilbara Minerals Limited and Altura Mining Limited, which have both discovered significant lithium and tantalum resources in 1 Pilbara Minerals ASX announcement, 1 st October 2015
recent times. Pilbara Minerals has identified a total Indicated and Inferred resource 2 of 52.2Mt @ 1.28% Li 2O and 32.9Mt @ 0.022% Ta 2O 5. On a neighbouring property, Altura Mining has identified an Indicated and Inferred resource 3 of 26.1Mt @ 1.20% Li 2O. Following recent exploration activity, the Pilgangoora area has been confirmed to contain one of the world s largest hard-rock lithium deposits, mostly in the form of the mineral spodumene. The identification of resources on neighbouring properties provides no assurance that any resource will be identified on the Pilgangoora Project tenements. The Pilgangoora Project tenements and interests proposed to be acquired from Asgard and Slipstream comprise: exploration licence E45/3648 (from Asgard Metals Pty Ltd); prospecting licence P45/2783 (from Asgard Metals Pty Ltd); a contractual right, upon the grant of exploration licence application E45/4523 to Wildviper Pty Ltd, to acquire a 100% legal and beneficial interest in E45/4523, subject to Ministerial consent to the transfer under the Mining Act 1978 (WA) if the transfer is to occur before the first anniversary of grant; and all of the shares in Slipstream LP Pty Ltd, which holds a contractual right, upon the grant of exploration licence applications E45/4624, E45/4633 and E45/4640 to Slipstream Resources Investments Pty Ltd, to acquire a 100% legal and beneficial interest in E45/4624, E45/4633 and E45/4640, subject to Ministerial consent to the transfers under the Mining Act in respect of any transfer that is to occur before the first anniversary of grant. 2 Pilbara Minerals ASX announcement, 24 th September 2015 3 Altura Mining ASX announcement, 14 th September 2015
Figure 1: Location of Dakota Pilgangoora tenements in relation to recent lithium discoveries in the Pilbara Region of Western Australia
Summary of Agreement Asgard and Slipstream have agreed to jointly sell their interests in their interests in the Pilgangoora Project to Dakota, in consideration for: a cash payment of A$300,000, to be split between Asgard and Slipstream on a 49:51 basis; and the issue of 50,000,000 fully paid Dakota shares, to be issued to Asgard and Slipstream on a 45:55 basis. Completion of the acquisition is subject to satisfaction of various conditions, including the grant of E45/4523 (presently the subject of an application for grant), Dakota shareholder approval for the purposes of ASX listing rule requirements and Dakota completing a share placement of up to A$3.6 million in two tranches to fund the acquisition of the tenements and their exploration. Completion of the acquisition will occur 5 business days after satisfaction of the conditions to completion. The cash payment is to be made in two tranches, as follows: A$125,000 to be paid within 5 business days of completion of the first tranche of the Dakota share placement; and A$175,000 to be paid at the later of completion or within 10 business days after the grant of E45/4523. The issue of 50,000,000 Dakota shares to Asgard and Slipstream will occur at the later of completion of the acquisition or within 10 business days after the grant of E45/4523 ( Completion Shares ). Asgard and Slipstream may also be issued the following further ordinary shares in Dakota ( Milestone Shares ), on the basis of a 49:51 split respectively, subject to the achievement of the following milestones: 30,000,000 shares upon an Inferred Mineral Resource of 5 Mt at 1.2% Li 2O being identified on any or all of the Asgard and Slipstream tenements and announced to the ASX by Dakota in accordance with the requirements of the JORC Code; and 30,000,000 shares upon an Inferred Mineral Resource of 15 Mt at 1.2% Li 2O being identified on any or all of the Asgard and Slipstream tenements and announced to the ASX by Dakota in accordance with the requirements of the JORC Code. Asgard and Slipstream will also enter in to a consultancy services agreement with Dakota for a fixed term of 12 months to provide geological and exploration consultancy services for the introduction of new projects to Dakota. Consideration for the consultancy services agreement will be A$200,000 payable per annum in monthly instalments to Asgard and Slipstream on the basis of a 49:51 split respectively.
Board and Management Changes It is proposed that the following changes to the Dakota Board and management will be made upon the issue of the first tranche of Placement shares: Mr David Frances will be appointed as Chief Executive Officer. Mr Frances has considerable experience in successfully exploring, funding and developing projects as well as proven corporate strategic and capital markets skills. He was recently President and CEO of Mawson West Ltd (TSX: MWE), where during his seven year tenure, he led Mawson through the transition from a Western Australian gold explorer to an international copper producer, developer, and explorer in the Democratic Republic of Congo. Mr John Fitzgerald will be appointed as non executive Chairman. Mr Fitzgerald is an experienced mining and finance executive and is also a non-executive director of Northern Star Resources Limited and Danakali Resources Limited. He was previously Chairman of Integra Mines and Atherton Resources. As part of this transaction, Ariana is assigning its Exploration Manager, Dr. Francis Wedin to Dakota where he will take up the position of Technical Director. In his previous role Dr. Wedin was focused on lithium exploration opportunities In Australia and Europe and was instrumental in Asgard acquiring an interest in the tenements that are being vended into Dakota. He is very well placed to develop the lithium strategy for Dakota. Mr Wade Guo and Mr Joshua Wellisch will remain on the Board as non-executive directors and Mr Anthony Rechner and Mr Timothy Neesham will resign from the Board. The Company would like to thank Mr Rechner and Mr Neesham for their contribution during their tenures as Directors and in particular their work in facilitating the current project acquisition. Capital Raising Dakota has entered into a Mandate with Argonaut as lead manager to raise up to A$3.6 million in a 2 tranche share placement to fund acquisition costs and exploration on the tenements, as follows: The Placement will be conducted in two tranches: 1. Tranche 1: Placement of up to 17,483,000 shares at $0.03 per share to raise $524,490 (before costs) without Dakota shareholder approval under Dakota s existing placement capacity under ASX Listing Rule 7.1; and 2. Tranche 2: Placement of up to 102,517,000 shares at $0.03 per share to raise $3,075,510 (before costs). Subject to Dakota obtaining prior shareholder approval under ASX Listing Rule 7.1, the cleared Tranche 2 funds must be received by DKO within 5 business days of grant of E45/4523 occurring and the Tranche 2 shares must be issued by Dakota within 10 business days of grant of E45/4523 occurring. Argonaut will receive a fee of 6% of funds raised under the placement and, subject to shareholder approval, Dakota will issue 40 million unquoted options to Argonaut (or its nominees) to subscribe for Dakota shares as follows: 10,000,000 options exercisable at $0.035 expiring on 31 December 2017; 20,000,000 options exercisable at $0.06 expiring on 31 December 2017; and
10,000,000 options exercisable at $0.09 expiring on 31 December 2017. The proposed Capital Structure of the Company after completion of the transaction is set out in Annexure A Regulatory Approvals and General Meeting Completion of the acquisition of the Pilgangoora Project is subject to Dakota obtaining all required third party, regulatory and shareholder approvals and ASX waivers necessary to effect the transaction, including the grant by ASX of waivers from the listing rules to permit: 1. the issue of the Completion Shares within one year following the Dakota shareholder meeting; and 2. the issue of the Milestone Shares within 5 years following the shareholder meeting. ASX has informed the Company that the acquisition of the Pilgangoora Project will require shareholder approval for the purposes of ASX listing rule 11.1.2. Dakota proposes to convene a General Meeting of Shareholders on or around 12 February 2015 to consider and approve: the acquisition of the Pilgangoora Project; the issue of the Completion Shares and the Milestone Shares; the issue of the Tranche 2 Placement shares; and the grant of 40,000,000 options to Argonaut or its nominees. The current Directors have advised the Company that they intend to vote in favour of the transaction in respect of any Dakota shares held or controlled by them at the date of the General Meeting. Competent Persons Statement The information in this document that relates to exploration results is based upon information compiled by Dr Francis Wedin, who will become a fulltime employee of Dakota Minerals Limited. Dr Wedin is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Dr Wedin consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears. Contacts: Dakota Minerals Limited Tel: +61 (8) 9336 6619 David Frances, Chief Executive Officer Mathew Whyte, Company Secretary
ANNEXURE A PROPOSED CAPITAL STRUCTURE DKO Capital structure SHARES Current shares on issue 69,933,906 Proposed placement of shares @ $0.03 to raise $524,490 (Tranche 1) 17,483,000 Proposed placement of shares@ $0.03 to raise $3,075,510 (Tranche 2) 102,517,000 Proposed issue of shares to Vendors (Vendor Shares) 50,000,000 Proposed maximum total shares on issue after Settlement 239,933,906 Milestone Shares- Tranche 1 30,000,000 Milestone Shares- Tranche 2 30,000,000 Proposed maximum total shares on issue if Milestones are met 299,933,906 OPTIONS : Current Options on Issue (DKOAA) Unlisted Options exercisable at $0.016 (1.6 cents) on or before 31 December 2018 Proposed issue of Unquoted DKO Options exercisable: 10,000,000 40,000,000 10,000,000 at 3.5 cents on or before December 31, 2017 20,000,000 at 6 cents on or before December 31, 2017 10,000,000 at 9 cents on or before December 31, 2017 Proposed total Options on issue after settlement 50,000,000 The above is indicative only and can be varied by mutual agreement of both parties in writing.