(Registration Number: 9306219)

Share code on AIM: KAT

ISIN: GB00BSNBL022

("Katoro" or "the Company")

Dated: 20 September2022

Katoro Gold PLC ('Katoro' or the 'Company')

KATORO GOLD ENTERS INTO UNINCORPORATED JOINT VENTURE ON STRATEGIC
IRON PRODUCTION OPPORTUNITY

Katoro Gold PLC ('Katoro' or 'the Company') (AIM: KAT), the strategic and precious minerals exploration and development company, is pleased to announce that it has entered into a conditional agreement ('the Agreement') with Trans Namibian Mining and Minerals (Pty) Ltd ('TNMM') to undertake exploration/development activities on TNMM's iron ore project in Namibia.

Below is an overview of the Agreement and Project. Readers are encouraged to review the announcement in its entirety, including the section headed 'Important Information for Shareholders'.

OVERVIEW OF THE AGREEMENT AND PROJECT

Joint Venture

Katoro has entered into a binding conditional agreement to form a 50/50 unincorporated joint venture ('JV') with TNMM (and together with Katoro, the 'JV Partners'). The JV seeks to continue the development of TNMM's iron ore project.

The Agreement provides Katoro with a pre-emptive right to acquire up to 60% of the total issued share capital of TNMM and the same percentage of all claims on the shareholder loan account against TNMM should the shareholders of TNMM decide to sell their interest in TNMM.

Project Overview

The TNMM Properties comprise the four farms owned by TNMM in Namibia (the 'Project' or the 'Trans Namibian Iron Ore Venture') and known as Naruchas, Kanubeb Wes, Kanubeb Oos and Kanubeb.  The most exploration work undertaken to date has been on an iron ore project based on the Naruchas farm ('Naruchas').

The deposit on the Naruchas farm is being explored for medium- to high-grade sedimentary iron ore. The iron ore on Naruchas occurs as a black to dark-grey laminated ore with massive magnetite and hematite mineralisation.

The JV Partners plan to continue the exploration and potential development of deposits of iron ore and any other minerals from the TNMM Properties. TNMM also holds the associated prospecting licenses issued by the Government of the Republic of Namibia (the 'TNMM Rights'). TNMM is the current operator of the Project and holder of the rights over 100% of the project.

Historical Estimate

A Historical Estimate of mineral resources at Naruchas, dated October 2013, was completed by Sheron Kaviua, an independent consultant to TNMM, in compliance with the SAMREC Code and is summarised in Table 1. The estimate is defined as a Historical Estimate by virtue of being prepared before Katoro entering into the agreement to acquire an effective interest in the property containing the Naruchas deposit.

Table 1: Mineral Resource statement as of October 2013 for the iron ore project on the Naruchas farm (Kaviuola, S. 2013.).

The source and date for the Historical Estimate is a report titled: 'Mineral Resource and Ore Reserve Statement' compiled by S. Kaviua for Trans-Namibian Mining and Minerals (Pty) Ltd and dated 31 October 2013.

Katoro has not independently verified the Historical Estimate and no Competent Person (as defined in the SAMREC Code, 2016 Edition) has done sufficient work to classify this as a 'current Mineral Resource' and therefore Katoro is not treating the Historical Estimate as a current Mineral Resource Estimate.

Further, the Historical Estimate was classified according to the SAMREC Code in place at the time it was produced, being the 2007 Edition as amended in 2009. This code has been superseded by the SAMREC Code, 2016 Edition, and the reader should note that the most recently published SAMREC Code is more rigorous in its estimation and classification protocols than the previous codes, and the Historical Estimate should be re-evaluated in terms of these later codes.

Consequently, no reliance can be placed on the Historical Estimate as no assurance can be given that any particular grade, stripping ratio or grade of minerals will in fact be realised or that any current Mineral Resource Estimate or Ore Reserve will ever be delineated or that planned future exploration and study programs will result in profitable commercial mining operations.

The Historical Estimate was calculated based on the technical programme and analysis summarised below.

High resolution airborne magnetic data was purchased from the Ministry of Mine and Energy to identify magnetic iron formations and were utilised to identify target areas, especially where mapping has confirmed outcropping iron formations. Additionally, ground magnetic surveys were carried out and all survey lines together with anomalous readings, were plotted on topographical maps and used for selecting sites for Reverse Circulation ('RC') drilling.

A total of 25 RC boreholes were drilled on two separate drilling campaigns in 2013 by hard rock drilling on farm Naruchas. The boreholes were drilled on an irregular grid, with the drills pacing ranging from 20m in the north-east to 500m in the southeastern part of Naruchas. A total of 1,307m was drilled at an average depth of 52.2m. The aim of the drilling was to test the continuity of the iron ore formations down depth for estimation purposes and to understand their occurrence. At the drill site, 1m sample intervals were collected from the cyclone and then riffle split to obtain two samples A and B, each weighing 250g. Drill chips were also collected and placed into chip trays for geological logging.

All samples taken during RC drilling campaigns were assayed using NITON handheld XRF spectrometer for screening only. Samples exceeding 25% Fe (32% Fe₂O₃ equivalent) were selected and sent for analysis at Acts laboratories. A total of 50 drill chip samples were selected and submitted as well. The samples were checked, verified, then crushed using a jaw crusher before splitting to obtain representative samples. The representative samples were then mill pulverised prior to analysis via wavelength dispersive X-Ray Fluorescence Spectroscopy. Certified reference materials, duplicates and blanks were incorporated in the testing procedure to ensure the integrity of results.

No samples were analysed for specific gravity ('sg;) from farm Naruchas, with an assumed sg of 4.5t/m³ used for the mineralised iron formation and 3.0t/m³ for unmineralised lithologies.

Resource estimation was completed using MineSight software and followed a relatively typical process.  Lithological models were developed for carbonates, quartzites, diamictites, alluvial sands and the mineralised iron formation. These were based on surface mapping, grab sampling and drilling data, with structural planes also modelled. Iron grades were observed to drop sharply at lithological boundaries, and the cut-off could be described as geological; in practice, a 15% Fe cut-off was applied in combination with minimum widths for the iron formation of 2m. Any iron formation not meeting these criteria was reclassified as diamictite. 

The block models were built using a 100m x 100m x 25m blocks (L x W x H), a tighter spacing in general than the drilling, which was on average at 250m spacings. The block model was subsequently coded using the iron formation lithological model and IDW2 interpolation, with a primary search ellipse of 2,000 x 2,000 x 100m for the x, y and z search directions respectively. 

The classifications of the Historical Estimate were done on the following basis:

·    Inferred: mapped, sampled and drilled on a drill spacing of 500m - 1,000m and a depth of -75 to -100 levels

·    Indicated: mapped, sampled and drilled on a drill spacing of 250m - 500m and a depth of -50 to -75 levels

·    Measured: mapped, sampled and drilled on a drill spacing of 50m - 250m and a depth of 0 to -50 levels

There are no more recent estimates or data available to the Company's knowledge.

In addition to the Naruchas iron ore, the Kanubeb Wes, Kanubeb Oos and Kanubeb farms are in early phases of exploration for copper deposits.

Work Programme and Budget

The JV Partners will, in accordance with the provisions of the JV agreement, assess all work done to date and agree on an appropriate development budget and work programme to:

·    advance the Project to a level where it will qualify as a bankable project, and

·    procure appropriate debt, project and equity funding from prospective investors for the purposes of developing, constructing and commissioning a producing mine capable of producing a targeted c. 3 million tonnes of ore per annum, should further development and exploration work return positive results.

Katoro does not have any funding obligation to the JV other than it shall be obliged to procure the funding required in respect of all expenditure of the JV. For the avoidance of doubt, this does not commit Katoro to directly provide the funding; the obligation is limited to procurement only. In the event that Katoro does not or cannot procure such funding, the JV will unwind and Katoro will have no further interest in the Project.

Executive Chairman of Katoro, Louis Coetzee, says: "This JV represents an exciting investment opportunity for the Company with the possibility of near-term value uplift.

"Our initial objective is to rapidly determine the work programme and budget that will be required to advance the project to bankability status. Based on the preliminary evaluation and review of the substantial amount of historic work done to date on the Project, we believe that this can be achieved within a relatively short timeframe and with minimal rework and/or additional work on the Project. A significant number of the required licenses and/or permits are also already in place, which will make the process towards achieving industry standard bankability significantly easier and quicker.

"The JV also includes exploration rights that cover a number of very exciting copper anomalies, and we will be looking at getting an extensive copper exploration programme going in parallel to the work on the iron Project. Previous work undertaken by, amongst others, Mesars Universal Ores (Pty) Ltd, Kaniganas Mining Company (Carbonado Investments (Pty) Ltd), Newmont South Africa Limited and Falconbridge of South West Africa (F.S.W.A), and ActLabs, will assist the company in focusing its near term development programme.

"We look forward to working with TNMM to bring this Project to fruition and will provide further market updates shortly to keep shareholders reasonably informed of our progress."

FURTHER INFORMATION

The JV Agreement ('Agreement')

Under the terms of the Agreement, Katoro is required to procure financing for the full funding requirements of the Project and JV, including the construction and commissioning of a beneficiation plant and auxiliary operations should the continued development and exploration work provide positive results. The Agreement has a stated objectives for the JV to target production capacity of 3Mtpa once all development work is completed.

Pursuant to the Agreement, once the only remaining conditions have been met, being the approval of a work programme and associated budget to advance the Project to bankability status, the JV Partners will form the JV, which is intended to be an unincorporated JV to be held 50% by the Company and 50% by TNMM.

Under the Agreement, TNMM shall make available to the JV, all technical data relating to the TNMM Properties and TNMM Rights, including but not limited to, all geological data, feasibility studies, geophysical and geochemical data in its possession. TNMM will furthermore provide the JV with customary warranties and undertakings in respect of ownership of the TNMM Properties and TNMM Rights.

It is proposed that the JV will continue for an indefinite period for as long as Katoro is in compliance with its obligations in accordance with the Agreement, including sourcing funding for the development of the Project, which, if positive, leading to the mining, processing, beneficiating and selling of concentrates of iron ore and any other minerals that may be processable in economically viable quantities.

The JV Partners will establish a Management Committee to oversee the objectives of the JV, including the consideration and approval of the work programme and budget, the determination of the admissibility of expenditure and the appointment of auditors to the JV. The Management Committee will furthermore establish Technical Subcommittees to advise and review the technical aspects of the JV. Katoro and TNMM shall appoint two representatives to the Management Committee, respectively, with Katoro appointing the chairman of the Management Committee who must be a member of same. Subject to Katoro having procured the full funding requirements for the JV, the Company will be entitled to appoint three members to the Management Committee.

The right to net revenue earned from all concentrates of iron ore and any other mineral mined or acquired by the JV is to vest in accordance with each party's interest in the JV.

Under the Agreement, Katoro has a pre-emptive right to acquire up to 60% of the total issued share capital of TNMM and the same percentage of all claims on the shareholder loan account against TNMM should the TNMM shareholders decide to sell its interest in TNMM. If the right is exercised, the purchase price may be elected to be payable by cash or new Katoro shares.

The Agreement contains assignment rights of the whole or any part of a party's rights and obligations to an affiliate, subject to such affiliate covenanting to be bound by the terms and conditions of the Agreement. The Agreement also contains termination rights including: (i) if the consequences of expropriation materially affect the economic feasibility of the JV; (ii) in the event that the mining or processing activities conducted by the JV should prove, to the satisfaction of both parties, that further exploration or mining would not be commercially viable; or (iii) at any time by mutual agreement. In addition, the JV shall terminate 90 days after the manager of the JV delivers to each party a written notice stating that all viable deposits of iron ore and/or any other minerals to which the TNMM Properties relate have been exhausted.

IMPORTANT INFORMATION FOR SHAREHOLDERS

Katoro shareholders should note that there is no certainty that the Project funding, which includes all funding that is required to advance the project to industry bankability standards, and to construct and commission the Project, will be secured for the continued development of the Project, and if the Project progresses, the construction and commissioning of a plant to produce a marketable iron ore product or any other minerals or derivatives thereof. If the Project funding is not secured, the conditions of the Agreement will not have been satisfied and the Project will not commence, meaning that the Company will have no further interest in the JV or the Project.

Review by Qualified Persons

Information in this announcement that relates to the Naruchas Mineral Resource is taken from the report titled  'Mineral Resource and Ore Reserve Statement' compiled by Miss Sheron Kaviua for Trans-Namibian Mining and Minerals (Pty) Ltd and dated 31 October 2013 (the 'Report'). The Report contains a SAMREC-compliant Mineral Resource estimate, based on the SAMREC CODE, 2007 Edition. The Competent Person responsible for the submission of this document, Miss Sheron Kaviua, was registered with the Geological Society of South Africa and was a Competent Person in resource evaluation of base metals based on the criteria set out in the SAMREC CODE at the date of the report at which point she had seven years' experience in resource estimation and three years' experience in resource statement compilation. Specifically, she had four years' experience relevant to the style of mineralisation and type of deposit at Naruchas, where she was involved in exploration in the period 2010 to 2013 and conducted several sampling and mapping programmes on the property as an independent consultant.

 Information contained in this announcement has also been reviewed by Mr. Noel O'Keeffe, geologist, BSC.  P.Geo, who is a Member of the Institute of Geologists of Ireland. Mr. O'Keeffe has several years' experience in the management and evaluation of mineral exploration projects.

Further announcements in respect of the JV will be made as appropriate.

Glossary of Technical Terms

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.

**ENDS**

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