Conditional Asset Portfolio Restructuring

27 June 2024

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.

Andrada Mining LimiteD

("Andrada" or the "Company")

Proposed Restructuring of Andrada's Main Operating Company

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), the technology-metals producer with mining and exploration assets in Namibia, is pleased to announce it has, on 26 June 2024, executed a legally binding agreement to restructure Uis Tin Mining Company ("UTMC"), the operational Namibian entity that holds the Company's licences (ML133, ML134 and ML129) (the "Licences"), to ensure a more efficient corporate structure going forward, subject to certain conditions.

Background to the Transaction

The Company is seeking to increase its ownership interest in UTMC, from 85% to 100% through the acquisition of the 15% interest currently held by the Small Miners of Uis ("SMU").

The SMU is a not-for-gain (Section 21 of the Namibian Companies Act 2004) organisation established by the Minister of Mines and Energy of Namibia to support the economic development of Namibians in historical mining areas. UTMC was a joint venture between SMU and Andrada's wholly owned subsidiary Andrada Mining (Namibia) (Pty) Ltd ("Andrada Namibia") to ensure the economic development of the Licences. To date, the collaboration has been considered very successful in implementing its mandated responsibility to operate Uis Mine and to develop all the licences. SMU has a 15% interest in UTMC and under the proposed transaction this interest is being ultimately sold to Andrada Namibia.

The SMU has approved as part of the transaction, the transfer of a 5% ownership interest in UTMC, from its original 15% ownership interest in UTMC, to Sinco Investments Five (Pty) Limited ("Sinco"), to fulfil its mandate to further empower Namibians and enable access to the mining industry. Subject to satisfaction of the completion conditions set out below, Andrada Namibia will then acquire this 5% interest in UTMC from Sinco, as Sinco has expressed a preference to hold Andrada listed shares. Sinco is a locally owned and managed investment company focussed on developing mining and construction projects within Namibia. It works with partners across the mining value chain to advance Namibian interests. This transaction is a continuation of Andrada's strategic positioning to benefit Namibia through collaboration with SMU to unlock multiple critical minerals while empowering local Namibians.

The Directors believe that this transaction will simplify Andrada's ownership structure in the Uis and Lithium Ridge licences, whilst still giving the SMU and Sinco economic exposure to the development of the Company's assets through a shareholding in Andrada itself. The Directors also believe the new structure will allow streamlining of operations for value creation and will create the opportunity for more rapid development of the assets through the introduction of project specific financing partner solutions.

Anthony Viljoen, Chief Executive Officer, commented:

"We believe that this transaction reflects the strong and collaborative relationship Andrada has built with the SMU over the years. It signifies our mutual growth and development as partners, and the progression of SMU as an organisation. Furthermore, it marks a significant step forward, with the aim to leverage our combined strengths to advance the economic revival of historical mining areas and upliftment of local communities. 

Building on this momentum, we have reached a mutually beneficial share swap agreement that upholds our commitment to empower local Namibians. The net effect of this restructure should be value-accretive for all Andrada shareholders and facilitates Andrada's long-term strategy. Andrada's full ownership of the Uis and Lithium Ridge licences will provide strategic optionality to enhance the value proposition of our portfolio, and on completion we will be well-positioned to unlock the full potential of both assets through the various ongoing strategic discussions that the Company is currently undertaking. I look forward to providing updates as the transactions progress."

Rationale for the Restructuring

The restructuring is intended to consolidate the ownership of Uis and Lithium Ridge licences, in order to provide Andrada with the ability to target and expedite the development of these individual mining licences through full operational and strategic control. As part of the transaction, Andrada Namibia will also dispose of its 85% interest in Licence ML129 to SMU. Whilst Licence ML129 (known as Spodumene Hill) no longer aligns with Andrada's current plans, it presents a valuable opportunity for the SMU to drive immediate development and economic growth in the Erongo region.

The restructure of ML134 (Uis) and ML133 (Lithium Ridge) should augment Andrada's strategic dialogue with potential funding partners and culminate in a series of value-accretive transactions aimed at realising the full potential of the Company's lithium resource and asset portfolio. At the same time, this transaction will allow Andrada to retain its empowerment credentials in line with its commitment to uplifting economic empowerment in Namibia, while the SMU will realise near-term value and remain well-positioned to continue to benefit from Andrada's future growth.

The two remaining licences will strategically position the Company to develop its lithium strategy and to attract partners with expertise in processing lithium for both the technical (glass - ceramics) and chemical (battery) industries through the production of petalite and spodumene concentrates respectively. Whilst the transaction is subject to certain consents and approvals the Directors are confident that these will be obtained and look forward to providing updates as this process progresses.

Details of the Transaction

As set out above, the Company has today executed a conditional Share Purchase Agreement ("SPA"), pursuant to which following satisfaction of the outstanding conditions Andrada Namibia will acquire 15 ordinary shares of NAD1.00 each in the capital of UTMC currently held by the Small Miners of Uis ("SMU") and will (as one of the requirements of the SPA) immediately transfer 5 of those shares to Sinco. This would result in Andrada Namibia holding, in aggregate, 95 ordinary shares of NAD1.00 each in UTCM, representing a 95% interest in UTMC, and therefore in the Licences held by UTMC (other than ML129, which is to be transferred to SMU as part of the consideration under the SPA) (the Acquisition"). In addition, as part of the Acquisition arrangements, Andrada Namibia would be granted an option to acquire the remaining 5% of UTMC transferred to Sinco, as set out above (the "Option").

Once exercised, Andrada Namibia (and accordingly Andrada) will then hold a 100% interest in UTMC and a 100% interest in all of its Licences (with the exception of ML129 which will be disposed of as part of the Acquisition). As part of the consideration for the conditional Acquisition the SMU will be issued with ordinary shares in Andrada, calculated as set out below (the "Consideration Shares"). As also set out below, SMU will be paid a cash payment and will take control of Licence ML129, currently held by UTMC. In addition, once the Acquisition has completed, the Option can be exercised and Sinco will be issued with ordinary shares in Andrada calculated as set out below (the "Option Shares").

Conditions

The Acquisition (including the transfer of ML129) and the Option are conditional upon, amongst other items, Ministerial Consent and consents from Orion, Standard Bank and the Development Bank of Namibia. Accordingly, whilst there can be no guarantee that the Acquisition or the Option will complete the Directors have every expectation that they will. Further updates will be provided in due course.

Consideration

The consideration for the Acquisition is as follows:

§ The issue by Andrada of Ordinary Shares to the SMU (for a total value of NAD12 million (approx. £520 000) using a 30-day VWAP on the date prior to the completion of the Acquisition).

§ NAD18 million (approx. £781 000) total cash payment to be paid by Andrada Namibia to SMU by way of 240 monthly payments of NAD75 000.

§ Transfer of Andrada Namibia's 85% interest in ML 129 to the SMU.

§ The transfer of 5% of the shares in UTMC to Sinco.

Exercise of Sinco Option

Following completion of the Acquisition documentation, the intention is that Andrada will exercise its option to acquire the remaining 5% of UTMC held by Sinco. The consideration for which is the issue by Andrada of Ordinary Shares in the Company at a total value of NAD24 million (approx. £ 1 million) using a 10-day VWAP on the date prior to the completion of the Acquisition.

About: ML129 (Spodumene Hill)

The Company's Uis Tin Project is comprised of three separate mining licences (ML129, ML133 and ML134) each of which has been historically exploited for tin on varying scales. ML134 is the main licence of the Company and incorporates the former Uis tin mine. ML129 is the least advanced of the Company's three licences and a key portion of the historic exploration details for ML129 (from before Andrada acquired the licence) no longer exist. The Andrada directors do not consider ML129 to be a material licence in the Company's portfolio and do not consider it aligns to the Company's current objectives.

Additional Information in respect of the 15% interest in UTMC

The losses attaching to the 15% interest in UTMC for the year ended 28 February 2023 are NAD9 720 115.20 (approx. £423 000) (by reference to the annual audited accounts for the year ended 28 February 2023 of UTMC) and the turnover attaching to the 15% interest in UTMC for the year ended 28 February 2023 is NAD29 612 777.40 (approx. £1 289 000) (by reference to the annual audited accounts for the year ended 28 February 2023 of UTMC).

A 15% interest in the gross asset value of UTMC is NAD90 420 734.70 (approx. £3 935 000) (by reference to the annual audited accounts for the year ended 28 February 2023 of UTMC).

Additional Information in respect of licence ML129

CONTACT

About Andrada Mining Limited

Andrada Mining Limited, formerly Afritin Mining Limited, is a London-listed technology metals mining company with a vision to create a portfolio of globally significant, conflict-free, production and exploration assets. The Company's flagship asset is the Uis Mine in Namibia, formerly the world's largest hard-rock open cast tin mine and currently being re-developed as a major tin-tantalum-lithium producer.

An exploration drilling programme is currently underway with the aim of expanding the tin resource over the fourteen additional, historically mined pegmatites that occur within a 5 km radius of the current processing plant. The Company has set a mineral resource target of 200 Mt to be delineated within the next 5 years. The existing mine, together with its substantial mineral resource potential, allows the Company to consider economies of scale.

Andrada is managed by a board of directors with broad industry knowledge and a management team with extensive commercial and technical skills. Furthermore, the Company is committed to the sustainable development of its operations and the growth of its business. This is demonstrated by the way the leadership team places significant emphasis on creating value for the wider community, investors, and other key stakeholders. Andrada has established an environmental, social and governance system that has been implemented at all levels of the Company and aligns with international standards.