Katoro Gold plc (Incorporated in England and Wales) (Registration Number: 9306219) Share code on AIM: KAT ISIN: GB00BSNBL022 ( Katoro or the Company ) Dated: 22 June 2018 Katoro Gold PLC ( Katoro or the Company ) Conditional Acquisition of High Grade Nickel Sulphide Project & Placing Katoro Gold PLC (AIM: KAT), the Tanzanian focused exploration and development company is pleased to announce that it has entered into a conditional agreement to acquire Kibo Nickel Limited and its wholly owned subsidiary, Eagle Exploration Limited (the Kibo Nickel Group ), from the Company s majority shareholder, Kibo Mining plc ( Kibo ) (the Acquisition ), which is the 100% owner of the polymetallic Haneti Nickel Project ( Haneti or the Project ) in Tanzania. Additionally, the Company announces that it has raised 325,000 via a placing ( the Placing ) of 25,000,000 new ordinary shares of 0.01 each in the Company ( Ordinary Shares ) (the Placing Shares ) at a price of 1.30 pence (the Placing Price ). Overview Conditional acquisition of 100% interest in the Kibo Nickel Group from Kibo Mining (Cyprus) Limited (the Seller ), a wholly owned subsidiary of Kibo, for 200,000, payable through the issue of 15,384,615 new Ordinary Shares to Kibo at the Placing Price, together with a 2% royalty payable on any sales revenue (less transportation and refining costs) in respect to nickel or nickel concentrates Completed a placing to raise 325,000 (before expenses) from new and existing shareholders to further develop the Company s existing gold projects in Tanzania, develop Haneti and for general working capital purposes Kibo, the Company s majority shareholder, to invest 75,000 in the Placing Following receipt of the net proceeds of the Placing, Katoro will have cash resources of approximately 705,000 The Acquisition is part of Katoro s commodity diversification strategy The Kibo Nickel Group controls 100% of Haneti, which covers an area of approximately 5,000 sq. km and forms a near contiguous project block, with approximately US$1.5 million spent on exploration to date by the Seller Previous values, internally estimated by Kibo, include 13.59% nickel, 0.25% Cobalt, 78 ppb (parts per billion) gold, 413 ppb platinum, 1930 ppb palladium and 927 ppm (parts per million) copper, as well interesting Lithium anomalies
Independent work, undertaken by Western Geophysics Pty, underlines potential for substantial nickel sulphide deposit Strong market fundamentals with demand for nickel expected to grow exponentially, driven by electric vehicle ( EV ) sales Haneti to be advanced in tandem with Katoro s Imweru Project, subject to outcome of ongoing consultation with Tanzanian Government on the latter, as previously announced Louis Coetzee, Katoro s Executive Chairman said, Haneti is a highly prospective high-grade nickel sulphide asset and is a great addition to Katoro s portfolio. Historic work has already yielded exceptional high grades of up to 13.59% nickel as well as discoveries of gold, cobalt and platinum and some significant lithium anomalies. With independent work already outlining the potential for a significant nickel deposit, we are excited about initiating an exploration and development plan. This in tandem with the strong market fundamentals for nickel; annual demand from the EV sector is currently approximately 36,000 tonnes, and forecast to surge to 350,000-500,000 tonnes by 2025, makes Haneti an exciting prospect which we hope will add significant value to the Company. Our confidence in Tanzania has been underpinned recently by the positive messages from the country s new Mining Commission, indicating that it is open to cooperation in the development of highly prospective projects. With decades of cumulative experience in developing projects in Tanzania and experience through the development of the Imweru and Lubando gold projects in the Lake Victoria Goldfields region of northern Tanzania, we look forward to advancing our key projects. I d like to take this opportunity to thank shareholders for their support and hope that the portfolio will deliver shareholder value as we advance them up the development curve. Acquisition Katoro has entered into a conditional acquisition agreement with Kibo and Kibo Mining (Cyprus) Limited (the Seller ), a private company incorporated in the Republic of Cyprus and a wholly owned subsidiary of Kibo. Under the terms of the acquisition agreement, Katoro will satisfy the consideration payable to Kibo of 200,000 by way of an issue to Kibo of 15,384,615 new Ordinary Shares at the Placing Price ( Consideration Shares ). The Consideration Shares will rank pari passu with the existing Ordinary Shares. Furthermore, Katoro will pay the Seller a 2% royalty on any sales revenue (less transportation and refining costs) in respect to nickel or nickel concentrates. The Acquisition is conditional, inter alia, on the completion of due diligence on the Kibo Nickel Group to the satisfaction of Paul Dudley and Myles Campion, being the independent directors of Katoro overseeing the Acquisition (the Independent Directors ). The Consideration Shares will only be issued to Kibo once this has been confirmed and a further announcement will be made on this as and when appropriate. The acquisition agreement contains the normal representations and warranties from the Seller that are expected to be provided in a transaction of this nature.
For the year ended 31 December 2017, Kibo Nickel Limited ( 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 Exploration Limited ( Eagle Exploration ) 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 Exploration and Eagle Exploration s only liability, is an inter-company loan of US$957,621 which will be transferred to Katoro on completion of the Acquisition. After completion of the Placing, and assuming the Acquisition completes and the Consideration Shares are issued, Kibo will hold 82,987,179 Ordinary Shares, which would represent 55.53% of the then enlarged share capital of the Company (assuming no further Ordinary Shares have been issued in the interim). The Project is expected to benefit from increased visibility in Katoro s portfolio, as Kibo repositions itself as a major regional energy player, changing its focus from exploration and development activities to developing three power projects in Tanzania, Botswana and Mozambique. Katoro will prioritise developing an exploration programme for Haneti, utilising the decades of experience that it has in developing projects in Tanzania in the same way as has been used to develop Katoro s two gold projects in development Imweru and Lubando located in Lake Victoria Goldfields region of northern Tanzania. As announced on 24 May 2018, Katoro recently completed its assessment of the economic feasibility of Imweru and based on the preliminary pre-feasibility results and the new mining legislation and regulations in Tanzania, it believes there is good upside exploration and development potential for the further development of Imweru. The Company looks forward to continuing its engagement with the Ministry of Minerals to determine the next steps with regards to the development of Imweru. Background on the Haneti Project Haneti comprises tenements (prospecting licences, offers and applications) prospective for nickel, platinum-group-elements, copper, gold and Lithium. Located in the Dodoma region in central Tanzania, the tenements cover an area of approximately 5,000 sq. km and form a near contiguous project block. The Project area straddles the Dodoma, Kondoa and Manyoni districts all within the Dodoma (Administrative) region. The main prospective belt of rocks within the Project, the Hanet-Itiso Ultramafic Cemplex ( HIUC ), sporadically crop out over a strike length of 80 km. Exploration by Kibo up to the end of 2012 over the HIUC comprised, rock sampling soil sampling, geological mapping, trenching, geophysical surveys and petrographic analyses. Rock samples taken from outcrop, spoil heaps, trenches and pits produced numerous high nickel values with the highest values seen in saprolite developed on serpentinite. The best multi-metal rock sample result came from a magnetite rich rock outcrop in an old prospecting pit on Mihanza Hill with values of 13.59% nickel, 0.25% Cobalt, 78 ppb (parts per billion) gold, 413 ppb platinum, 1930 ppb palladium
and 927 ppm (parts per million) copper. The high nickel associated with platinum, palladium and copper made this a priority area for follow-up work. Soil geochemical sampling on 400m X 200m centres covering an area of 38 sq. km was carried out between 2012-2014 also over an area broadly coincident with the rock sampling areas. Geochemical analyses were carried out for a number of metals and results showed significant nickel enrichment in regolith above serpentinites on the hilltops. There was good correlation between nickel, cobalt, copper, gold and arsenic. The independent geochemical assessment report by Australian consultants, Western Geophysics Pty, concluded that the Mihanza Hill soil and rock anomaly shows strong geochemical characteristics to those that may be expected to overlie a chondrite type Ni-Cu-PGM sulphide target. This result significantly improved the quality of the target for nickel sulphide mineralisation as well as validating the prospectivity of the rest of the HIUC for this style of nickel sulphide mineralisation. The geophysical interpretation revealed that the target nickel sulphide potential rocks on the Project were much more extensive than previously thought. With part of the net proceeds of the Placing, the Company plans to initiate further field exploration at Haneti, which is anticipated to include drilling of the highly prospective Mihanza and the Mwaka Hill targets. A further update regarding the development plans for Haneti will be announced in due course. Placing In addition, the Company is pleased to announce the Placing, which has raised 325,000 (before expenses) by way of the issue of the Placing Shares at the Placing Price. Kibo, the Company s majority shareholder, has invested 75,000 in the Placing and will be issued 5,769,231 Placing Shares. On admission of the Placing Shares, Kibo will be interested in 67,602,564 Ordinary Shares, representing 50.43% of the Company s share capital as enlarged by the Placing, but before the issue of the Consideration Shares. Following receipt of the net proceeds of the Placing, Katoro will have cash resources of approximately 705,000. The net proceeds of the Placing will be used for the development of the Company s existing gold projects in Tanzania, the development of Haneti and for general working capital purposes. Related Party Transactions Kibo is a substantial shareholder and therefore a related party of the Company as defined in the AIM Rules for Companies (the AIM Rules ). Accordingly, the Acquisition and Kibo s participation in the Placing are deemed related party transactions under Rule 13 of the AIM Rules. The Independent Directors consider, having consulted with the Company s nominated adviser, Strand Hanson Limited, that the terms of the Acquisition and the terms of Kibo s participation in the Placing are fair and reasonable insofar as the Company s shareholders are concerned. Total Voting Rights
Application will be made for the Placing Shares to be admitted to trading on AIM. Trading in the Placing Shares is expected to commence on AIM on or around 7 July 2018 ( Admission ). Following Admission, the Company shall have 134,063,210 Ordinary Shares in issue and this figure may be used by shareholders as the denominator for the calculations to determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA s Disclosure Guidance and Transparency Rules. **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: Louis Coetzee louisc@katorogold.com Katoro Gold plc Executive Chairman Richard Tulloch Ritchie Balmer Frederick Twist +44 (0) 20 7409 3494 Strand Hanson Limited Nominated Adviser Ben Tadd Tom Curran +44 (0) 203 7000 093 SVS Securities Broker Isabel de Salis Priit Piip +44 (0) 207 236 1177 St Brides Partners Ltd Investor and Media Relations Adviser