TIDMPOW
RNS Number : 2315K
Power Metal Resources PLC
31 August 2021
31 August 2021
Power Metal Resources PLC
("Power Metal" or the "Company")
Strategic Option Agreement - Pilot Mountain Project Nevada
USA
Power Metal and Wholly Owned Subsidiary Golden Metal Resources
Ltd Signs Option Agreement to Acquire Pilot Mountain Project in
Nevada, USA
Power Metal Resources PLC (LON:POW) the London listed
exploration company seeking large-scale metal discoveries across
its global project portfolio, announces that the Company and its
wholly owned subsidiary Golden Metal Resources Ltd ("Golden Metal")
have signed a Strategic Option Agreement (the "Agreement") allowing
Golden Metal to acquire a 100% interest in the Pilot Mountain
Project ("Pilot Mountain" or the "Project"), in Nevada, United
States of America ("USA"), subject to completion of detailed due
diligence.
HIGHLIGHTS
Project:
-- The Pilot Mountain Tungsten-Copper-Silver-Zinc Project is
located approximately 200km southeast of Reno, in Nevada, USA
-- Pilot Mountain hosts a JORC (2012)(1) compliant Mineral
Resource Estimate of 12.53Mt @ 0.27% WO(3) for 34.3kt of contained
tungsten metal plus significant silver, copper and zinc.
-- The Project has undertaken metallurgical testwork and a 2018
Scoping Study for a conceptual open pit mining operation with an
8-year mine life.
-- There is a clear pathway for upgrading and supplementing the
scoping study work, addressing the permitting requirements and
advancing the Project towards a mining Feasibility Study.
-- Pilot Mountain has significant upside exploration potential.
The Option:
-- Power Metal and its wholly owned subsidiary Golden Metal have
secured an option (the "Option") to acquire a 100% interest in the
Pilot Mountain Project.
-- 60 day Option Period to undertake detailed Project due
diligence and during which it may exercise the Option.
Option Exercise:
-- Upon Option exercise, Golden Metal will acquire a 100%
interest in Pilot Mountain (the "Acquisition"), the consideration
for which will be paid by Power Metal, as outlined in detail below,
but principally including the issue of US$1.65million of Power
Metal new ordinary shares of 0.1p each at an issue price of 2.5p (
48,118,920 shares - equivalent to 3.88% of current Power Metal
issued share capital and subject to a minimum 6 month hold period
as outlined below).
Listing of Golden Metal:
-- Power Metal plans to spin-out Golden Metal into a new listing
on the London capital markets, and assuming Option exercise Golden
Metal will hold 100% interests in Pilot Mountain together with the
Garfield and Stonewall projects. Golden Metal will also hold the
right to earn-in to a 100% interest in the Golconda Summit project.
All projects are in Nevada USA.
-- Further announcements will be made to outline listing plans
and project exploration/development plans.
Paul Johnson, Chief Executive Officer of Power Metal Resources
plc commented:
"We plan to list our wholly owned subsidiary Golden Metal as
soon as possible in the London capital markets. The Pilot Mountain
project, subject to due diligence, will be an important strategic
interest embedded within that listing, and provide a significant
increase to the value of the Golden Metal listing proposition.
In addition to the JORC (2012) compliant Mineral Resource at
Pilot Mountain we are of the view that there is considerable
exploration upside potential.
Historic work undertaken, including a Scoping Study completed in
2018, has demonstrated the potential viability of production from
the Pilot Mountain deposit, further bolstered by strong
metallurgical test results.
On a standalone basis Pilot Mountain is a significant advanced
asset and complements the earlier stage exploration interests
currently held by Golden Metal.
Importantly on completion of the acquisition we believe the
Golden Metal portfolio will be one of the most exciting resource
exploration and development opportunities in Nevada, USA.
We are now working with advisers to complete Project due
diligence and undertake an accelerated listing process."
PILOT MOUNTAIN PROJECT BACKGROUND
The Pilot Mountain Tungsten-Copper-Silver-Zinc Project is
located approximately 200km southeast of Reno, in Nevada, USA,
ranked first in overall Investment Attractiveness Index by Fraser
Institute 2020 annual survey(2) , entirely on United States Bureau
of Land Management ("BLM") land.
The 5,908-acre Project is centered around four existing mineral
deposits including Garnet, Good Hope, Gunmetal and Desert Scheelite
all which possess significant skarn-style
tungsten-copper-silver-zinc mineralisation.
The Desert Scheelite and Garnet deposits host a combined JORC
(2012) compliant resource of 12.53Mt at 0.27% Tungsten Trioxide
("WO(3) ") with significant copper ("Cu"), silver ("Ag") and zinc
("Zn") credits (see Table 1).
Tabel 1: Pilot Mountain Project JORC (2012) compliant Mineral
Resource Estimate , dated 13 December 2018
http://www.rns-pdf.londonstockexchange.com/rns/2315K_1-2021-8-31.pdf
PILOT MOUNTAIN CURRENT OWNERSHIP STRUCTURE
Thor Mining plc holds 100% of Black Fire Industrial Minerals Pty
Ltd (Australian private company) which owns 100% of Industrial
Minerals Pty (USA) Pty Ltd (Australian private company) which owns
100% of: BFM Resources Inc and Pilot Metals Inc (USA private
companies) which own tenements representing the entire Pilot
Mountain Project.
As at 30 June 2020 BFM Resources Inc had Gross Assets of
AUD$21,449 (circa GBP11,317) and incurred no profit or loss
(AUD$Nil) for the year ended 30 June 2020.
As at 30 June 2020 Pilot Metals Inc had Gross Assets of
US$3,055,411 (circa GBP2,226,602) and a loss of US$106,164 (circa
GBP77,366) for the year ended 30 June 2020.
As at 30 June 2020 Black Fire Industrial Minerals Pty Ltd on a
consolidated basis had Gross Assets of AUD$5,181,951 (circa
GBP2,738,397) and a loss of AUD$154,690 (circa GBP81,746) for the
year ended 30 June 2020.
PROJECT STRATEGIC DEVELOPMENT POTENTIAL
There is currently no domestic United States primary tungsten
production, and Tungsten is classified as a strategic mineral by
the United States Department of the Interior. Set against this
backdrop, the Pilot Mountain project is potentially a key strategic
metal deposit in the United States.
Production Potential
Potential production viability was reinforced with a scoping
study completed in 2018 on the Project indicated the potential for
an inital 8-year mine life from an open pit at Desert Scheelite
supplemented by production from Garnet.
Furthermore 694kg of Pilot Mountain mineralised rock tested by
Guanzhou Research Institute highlighted strong metallurgical
results including the successful production of two saleable
concentrates (scheelite, and copper/silver) from a coarse grind
treated by floatation or by flotation and wet high-intensity
magnetic separators ("WHIMS").
Shallow JORC (2012) compliant deposits at the Desert Scheelite
and Garnet deposits may be amenable to shallow open-cut mining
methods (as modelled in the 2018 scoping study) which would allow
for rapid low-cost start-up costs.
Exploration Potential
The Company is of the view that there is the significant
potential to build on the current the Pilort Mountain Mineral
Resource through exploration. The Project hosts significant
resource upside through the upgrading of existing but under drilled
targets, as well as the potential for discovery of new zones of
skarn-style mineralisation located under post-mineral alluvial and
basaltic cover.
Additionally, widely-spaced drillholes recently completed
indicate that significant copper-rich zones at the Desert Scheelite
and Good Hope deposits remain largely untested, and will be a focus
of the of exploration going forward.
The exploration upside potential under post-mineral alluvial
cover includes:
-- The Desert Scheelite deposit remains open to the east, west
and at depth along its entire strike length. The furthest east hole
drilled into the Desert Scheelite intersected a copper-rich zone
which assayed 17.5m averaging 1.80% Cu. A 2013 geophysical survey
completed east of Desert Scheelite highlighted a strong induced
polarisation ("IP") conductor which is much larger than known
mineralisation on the Project.
-- Surface outcrops and historic small scale mine workings
indicate that Good Hope mineralisation may comprise multiple
copper-rich sub-vertical lodes which have been subject to minimal
drilling which include results of 26.6m averaging 0.21% WO(3) ,
1.0% Cu and 1.2% Zn starting at surface.
-- Kaiser Engineering in 1981 estimated that the Gunmetal South
deposit comprised a historical non-compliant estimate 2-3 Mt at an
average grade of 0.3 - 0.5% WO(3) . This area has not been subject
to minimal modern exploration.
-- The most recent exploration efforts conducted across the
whole project area occurred in the 1970s, and minimal modern
geophysical coverage and drilling has been completed in areas with
alluvial cover which exists over much of the eastern part of the
Project.
TRANSACTION INFORMATION
Under the terms of the Agreement Golden Metal may acquire a 100%
interest in Pilot Mountain, from Thor Mining plc ("Thor Mining" or
the "Vendor")
Option Period
Under this Agreement Golden Metal will have a 60 calendar day
Option Period (ending 5pm GMT on Friday 29 October 2021, the
"Option Expiry Date") during which it may conduct due diligence
with regard to Pilot Mountain.
Power Metal will pay US$25,000 in cash to Thor Mining and issue
to Thor Mining 500,000 new Power Metal Ordinary shares of 0.1p
("Ordinary Shares") at an issue price of 2.5p (GBP12,500 of
Ordinary Shares). The cash compenent is a contribution toward
Bureau of Land Management fees due in respect of the PMP due 1
September 2021, which will be paid in full by Thor Mining to keep
the project in good standing.
Option Exercise
Subject to written confirmation of Option Exercise by the Option
Expiry Date Golden may acquire Pilot Mountain on the following
terms:
Power Metal will pay US$115,000 in cash to Thor Mining and
US$1,650,000 payable through issue to the THR of 48,118,920
Ordinary Shares at an issue price of 2.5 pence per share ("Initial
Consideration Shares").
Thor Mining will hold the Initial Consideration Shares in full
for a minimum of 6 months after the Option Exercise date and
thereafter the Initial Consideration Shares will become freely
tradable in 25% instalments (25% tradable 6 months after Option
Exercise date, 50% - 9 months after Option Exercise date, 75% - 12
months after Option Exercise date and 100% - 15 months after Option
Exercise date.) This trading restriction period may be varied with
the written agreement of both parties.
In addition, Power Metal will issue to Thor Mining 12.5 million
warrants to subscribe for Ordinary Shares with an exercise price of
4p per Ordinary Share and life to expiry of 3 years from the Option
Exercise date ("Initial Consideration Warrants"). Should the volume
weighted average price ("VWAP") of Power Metal shares meet or
exceed 10 (ten) pence for 5 consecutive trading days Power Metal
may serve notice on Thor Mining providing 14 calendar days to
exercise and pay for the Initial Consideration Warrants or the
Initial Consideration Warrants will be cancelled.
Should Thor Mining exercise the Initial Consideration Warrants
above within 12 months from the Option Exercise date, Thor Mining
will receive one for one replacement warrants to subscribe for
Ordinary Shares at a fixed price of 8p per Ordinary Share, and life
to expiry ending 3 years from the date of Option Exercise ("Super
Warrants"). Should the Power Metal volume weighted average share
price meet or exceed 20p for five consecutive trading days Power
Metal may at any time issue Thor Mining with a written notice
providing 14 days to exercise and pay for the Super Warrants or the
Super Warrant will be cancelled.
Tail Benefit
POW will issue Thor Mining with a further US$500,000 of Ordinary
Shares if Golden Metal publishes a JORC or 43-101 compliant
resource at Pilot Mountain which increases against current declared
levels by 25% across total indicated and inferred categories within
two years after the Agreement date. The number of Ordinary Shares
to be issued will be calculated based on the volume weighted
average Power Metal share price in the ten trading days immediately
preceding the announcement by Golden Metal of the JORC or 43-101
compliant increase.
Additional Terms
Thor Mining and their professional corporate, licensing and
geological teams will continue to work with Power Metal and Golden
Metal to assist with Pilot Mountain ownership transfer and to
manage local corporate & exploration/development operations in
the 12 months following the Option Exercise date. Power Metal and
Golden Metal will pay for any assistance provided post Acquisition
on reasonable commercial terms to be agreed.
ADMISSION AND VOTING RIGHTS
Application will be made for the 500,000 Option Shares to be
admitted to trading on AIM which is expected to occur on or around
7 September 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 1,240,567,944 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.
Reference Notes
1 JORC (2012): The Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves ('the JORC
Code') is a professional code of practice that sets minimum
standards for Public Reporting of minerals Exploration Results,
Mineral Resources and Ore Reserves. The current edition of the JORC
Code was published in 2012, and is available at
http://www.jorc.org/docs/JORC_code_2012.pdf
2 Fraser Institute: https://www.fraserinstitute.org/categories/mining
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
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)
Nick Emerson +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 company which finances and manages global resource
projects and is seeking large scale metal discoveries.
The Company has a principal focus on opportunities offering
district scale potential across a global portfolio including
precious and base metal exploration in North America, Africa and
Australia.
Project interests range from early-stage greenfield exploration
to later-stage prospects currently subject to drill programmes.
Power Metal will develop projects internally or through
strategic joint ventures until a project becomes ready for disposal
through outright sale or separate listing on a recognised stock
exchange thereby crystallising the value generated from our
internal exploration and development work.
Value generated through disposals will be deployed internally to
drive the Company's growth or may be returned to shareholders
through share buy backs, dividends or in-specie distributions of
assets.
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