29 October 2021

Power Metal Resources plc

("Power Metal" or the "Company")

Power Metal Acquires 100% of FDR Australia

Power Metal Signs Revised Agreement to Acquire 100% Ownership of First Development Resources Australia with Exploration Interests in the Paterson Region of Western Australia

Power Metal Resources plc (LON:POW), the London listed exploration company seeking large-scale metal discoveries across its global project portfolio, announces it has today signed a revised agreement ("Agreement") for the 100% acquisition of First Development Resources Pty Ltd (FDR Australia). This Agreement is unconditional and binding.

HIGHLIGHTS

About FDR Australia

-      FDR Australia holds exploration interests in the prolific Paterson region of Western Australia and is targeting major gold-copper discoveries.

-      The exploration work completed in 2021 to date has identified three magnetic bullseye targets hosted within the Wallal Project held by FDR Australia.

-      In Power Metal's view the Wallal Project offers potential for large scale gold-copper discoveries, supported by the geological and geophysical similarities to Greatland Gold's Havieron project, also located within the Paterson province.

-      2D seismic reprocessing work and a passive seismic survey are underway, the results from which will further assist preparations for a planned drill programme for which co-funding has been secured of up to A$165,000 as part of the Western Australia Department of Mines, Industry Regulation and Safety's Exploration Incentive Scheme (EIS). The Company would like to formally acknowledge and thank the State government for their support.

The Key Agreement Terms

-      With this acquisition Power Metal secures a 100% interest in FDR Australia. (Note: Power Metal previously announced a conditional acquisition agreement on 28.04.21 which on completion would have led to Power Metal holding a 75% effective interest in FDR Australia.  This agreement has been superceded and Power Metal has now signed a revised agreement to acquire a 100% interest in FDR Australia, subject to the revised consideration terms outlined below.)

-      FDR Australia will be acquired outright by First Development Resources Limited, a UK company and wholly owned subsidiary of Power Metal (FDR UK).

-      Power Metal will fund the transaction on behalf of FDR UK by paying two main batches of consideration as follows:

Initial Consideration for the 100% acquisition of FDR Australia and the Wallal Main licence currently held within FDR Australia of: 13,333,333 Power Metal new ordinary shares of 0.1p each ("Ordinary Shares") at an issue price of 2.75p and 13,333,333 warrants to acquire new Ordinary Shares at an exercise price of 4.5p.

Additional Consideration for the 100% acquisition of all other FDR Australia interests (granted licences and a licence application currently held by third parties to be transferred into FDR Australia under the Agreement) of: 10,000,000 Power Metal shares at an issue price of 3.2p and 10,000,000 warrants to acquire new Ordinary Shares at an exercise price of 5.0p.

-      Full acquisition terms are outlined below.

Next Steps

-      FDR UK is planning to list on the London capital markets in Q1 2022.

-      FDR UK is in late stage discussions to expand its project portfolio in preparation for listing, including new uranium and rare-earth element project interests as well as additional precious, base and strategic metal opportunities.

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:

"Today marks an important day for Power Metal as we have completed an unconditional agreement to acquire FDR Australia with its unique portfolio of projects in the Paterson region of Western Australia.

We have undertaken important work in 2021 which focused mainly on the Wallal project where three magnetic bulleyes anomalies have been identified which we consider to be prospective for large scale gold-copper discoveries.  That work has increasingly strengthened our belief in the Wallal project's potential which has led to our decision to acquire FDR Australia outright.

Power Metal  has now begun preparations for a planned drill programme at Wallal targeting the Eastern and Border anomalies.  Alongside this we are undertaking corporate work to secure a listing of the ultimate holding company FDR UK on the London capital markets.

There will be further announcements as we move FDR UK forward from both exploration and corporate perspectives."

FDR AUSTRALIA REVISED 100% ACQUISITION TERMS

FDR UK will acquire the entire share capital of FDR Australia and all FDR Australia interests.  The vendors of FDR Australia are the existing shareholders (the "Vendors").

Initial Consideration

For the acquisition of the entire share capital of FDR Australia and its current sole granted licence E45/5816 (Wallal Main) Power Metal will pay initial consideration of A$66,000 in cash and £366,667 payable through issue to the Vendors of 13,333,333 new Power Metal Ordinary Shares of 0.1p ("new Ordinary Shares") at an issue price of 2.75 pence per share ("Initial Consideration Shares").

(Note: The A$66,000 cash will be used to eliminate all shareholder loans in FDR Australia leaving no liabilities as at the Agreement date.  For the quarter ended 30.9.21 the FDR Australia Unaudited Profit and Loss Statement shows  a loss of A$3,664 and as at 30.9.21 Accumulated Losses of A$29,229.  The Accumulated Losses and any subsequent costs to the Agreement date will be eliminated as described above). 

In addition, Power Metal will issue the Vendors 13,333,333 Power Metal warrants with an exercise price of 4.5p per new Ordinary Share and life to expiry of 3 years from the date of issue ("Initial Consideration Warrants").  Should the volume weighted average price ("VWAP") of Power Metal shares meet or exceed 7.0 (seven) pence for a 5 consecutive trading days Power Metal may serve notice on the Vendors providing 10 trading days to exercise and pay for the Initial Consideration Warrants or the Initial Consideration Warrants will be cancelled.

Additional Consideration

For the acquisition of all other FDR interests (with the exception of Ripon Hills Project - E45/5088 - an option over which is outlined below) Power Metal will pay additional consideration of £320,000 through the issue of 10,000,000 new Ordinary Shares at an issue price of 3.2p each ("Additional Consideration Shares"). 

In addition Power Metal will issue the Vendors 10,000,000 warrants with an exercise price of 5p per new Ordinary Share and life to expiry of 3 years from the date of issue ("Additional Consideration Warrants").  Should the VWAP of Power Metal shares meet or exceed 10.0 (ten) pence for a 5 consecutive trading days Power Metal may serve notice on the Vendors providing 10 trading days to exercise and pay for the Additional Consideration Warrants or the Additional Consideration Warrants will be cancelled. 

Ripon Hills E45/5088 Option

FDR UK may, at any time within 12 months of the date of signing of this Agreement, acquire E45/5088 (the Ripon Hills project) with consideration comprising a payment of A$20,000 (to be paid as 398,036 Power Metal Ordinary Shares at an issue price of 2.75p and 398,036 Power Metal warrants at an exercise price of 4.5p and on the same basis as the Initial Consideration Warrants above) to Great Sandy Pty Limited ("Great Sandy"), current holder of the licence. Upon witten notice of exercise and payment, Great Sandy will transfer E45/5088 to RH Resources Pty Ltd (which will become a wholly owned subsidiary of FDR Australia).

Royalty

The Vendors will retain a 2% net smelter royalty ("NSR") over all licences included in this transaction and FDR UK will have the right to purchase 1% of this NSR for A$1,000,000.

PATERSON REGION PROJECTS - BACKGROUND

FDR Australia holds the following project  interests:

Wallal Project (Wallal Main-E45/5816 (390km² - granted), Wallal West 1-E45/5853 (96km² - granted) and Wallal West 2 - E45/5880 (86km² - granted)

A comprehensive historic desktop study completed by the Company over the Wallal Project identified three prospective bullseye magnetic targets. These include the Western, Eastern and Border anomalies which have estimated dimensions of 5km x 5km, 2.5km x 2.5km and 1km x 1km respectively.

Further analysis determined that the Eastern and Border anomalies are located at depths more similar to Greatland Gold's Havieron discovery, which was discovered by blind drilling a magetic bullseye anomaly through ~420m of post-mineral sedimentary cover. The latest exploration update focused on the Wallal Project and released by the Company on 13 September 2021 may be viewed through the following link:

https://www.londonstockexchange.com/news-article/POW/fdr-australia-paterson-region-exploration-update/15132674

Braeside West Project (137km² - one licence application)

In-depth historic desktop analysis is currently underway on the Braeside West Project. A recent base-metal discovery was made by neighbouring company Rumble Resources, which enhances the overall prospectively within the Braeside West Project as it is hosted within a similar geological environment to that of Rumble Resources discovery.

Ripon Hills Project (42km² - one granted licence).

The Ripon Hills Project is prospective for base metal and gold mineralisation associated with deep-seated north-south oriented fault structures which run through the Ripon Hills Project. In-depth historic desktop analysis is currently underway over the Project.

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the 23,333,333 Initial and Additional Consideration Shares to be admitted to trading on AIM which is expected to occur on or around 8 November 2021 ("Admission"). The Initial and Additional 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 1,293,721,067 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.

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:

NOTES TO EDITORS

Power Metal Resources plc - Background

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, base and strategic 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.

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal now has the following exploration completed with results awaited or exploration underway:

-      Silver Peak Project (Canada) - diamond drill programme completed targeting high-grade silver (laboratory assay results awaited)

-      Authier North Lithium Project (Canada) - soil & rock sampling completed (laboratory assay results awaited)

-      Athabasca Uranium (Canada) - Phase I exploration commenced and field results, together with laboratory assay testing of samples collected, awaited.

-      Tati Gold/Nickel Project (Botswana) - reverse circulation drilling completed (field results, together laboratory assay results awaited)

-      Molopo Farms Complex (Botswana) - further samples being tested for nickel sulphide and platinum group elements ("PGEs") from diamond drill programme completed (laboratory assay results awaited)

-      Ditau Project (Botswana) - preparatory exploration work underway on target I10 leading to planned accelerated drilling targeting rare earth elements and base metals

-      Kalahari Copper Belt (Botswana) - results from ongoing exploration across the South Ghanzi Project and further exploration at the more recently acquired South Ghanzi Extension and Mamuno licence areas

-      Wallal Gold/Copper Project (Australia) - geophysics results from 2D seismic processing and passive seismic awaited

-      Victoria Goldfields (Australia) - results from ongoing exploration across 848km² of granted exploration licences