Proposed Merger of West African Assets

22 July 2020

 

Panthera Resources PLC

("Panthera" or the "Company'")

 

Proposed Merger of West African Assets

 

The Board of Panthera is pleased to announce that it has entered into a conditional sale and purchase agreement (the "Agreement") to divest its interests in the Labola gold project in south west Burkina Faso and the Kalaka gold project in south west Mali (the "Projects") to Moydow Holdings Limited ("Moydow" and altogether the "Transaction"), whilst retaining a significant interest in Moydow.

 

Panthera believes the Moydow team, with a proven track record of delivering value to shareholders on West African gold projects, is well positioned to progress the Projects, initially through a drilling and evaluation programme.

 

Moydow, with its joint venture partner, holds three exploration licences in two prospective gold projects at the southern end of the Kushaka Schist Belt in Nigeria.  Moydow currently holds a 20% interest in the Nigerian joint venture, with an earn in right to increase this to 65%, which combined with Labola and Kalaka, will form a multi-project West African focused exploration and evaluation mining group.

 

Panthera will retain 100% of its interests in the Naton and Bassala gold projects and intends to progress these separately.

 

Highlights of the Transaction and Terms of the Agreement:

 

1)		Panthera to transfer to Moydow:
		a)	the Labola Option Agreement under which Moydow will have the right to acquire 100% in the Labola gold property in Burkina Faso; and
		b)	Panthera Mali Resources SARL, which holds the Kalaka gold exploration licence under a joint venture agreement in Mali;
2)		As consideration for the Transaction, Panthera to receive 3 million new ordinary shares in Moydow (the "Consideration Shares") together with cash of US$350,000 (est. £279,000) in two tranches of US$200,000 (est. £159,000) by 30 September 2020 and US$150,000 (est. £120,000) by 31 March 2021;
3)		The subscription of US$1 million comprising one (1) million new ordinary shares in Moydow at a subscription price of US$1 per share, payable in cash, by the existing shareholder of Moydow;
4)		The grant of an option to the existing shareholder of Moydow to subscribe for a further 500,000 new ordinary shares in Moydow at US$1 per share on or before 31 December 2021 ("Option");
5)		The procurement of US$0.5 million in drilling services by the existing shareholder of Moydow on arm's length terms in consideration for a further 500,000 new ordinary shares in Moydow at a subscription price of US$1 per share;
6)		Closing of the Transaction on or before 31 August 2020 (unless extended by agreement between the parties) is subject to inter alia, the following conditions precedent:
		a)	A minimum subscription of US$1 million comprising one (1) million new ordinary shares in Moydow at a subscription price of US$1 per share by the existing shareholder of Moydow;
		b)	Delivery of various agreements including:
			•       an option agreement, in a form to be agreed, entitling the existing shareholder of Moydow to subscribe for 500,000 new ordinary shares in Moydow at a subscription price of US$1 per share;   •       the parties entering into a shareholders agreement on mutually agreeable terms in respect of Moydow; and   •       completion of variation agreements, on mutually agreeable terms between Moydow and the Projects' partners;
		c)	Completion of due diligence by Panthera and Moydow on the respective projects; and
		d)	The various warranties in the agreement remaining true, accurate and not misleading at closing along with specific provisions to reverse each licence acquisition, for either Panthera or Moydow, in the unlikely event that the acquired interest in the applicable licence is not in good standing after one year from closing;
7)	Mark Bolton, CEO of Panthera, will be appointed a director of Moydow on closing, to represent the interests of Panthera on the Moydow board; and
8)	Panthera will be required to retain the Consideration Shares until the earlier of 30 June 2022 or the date 6 months after any IPO of Moydow, unless Moydow agrees to the contrary.

 

Summary of Pro Forma Moydow Capital Structure

 

Prior to the completion of the Transaction, Moydow has one (1) million shares in issue and indirectly holds the Nigerian gold projects with its joint venture partner. 

 

The table below summarises the capital structure and shareholdings in Moydow upon completion of the Transaction together with the potential impact should the Option be exercised:

		Moydow Issued Shares	PAT Interest
	Existing shareholder in Moydow	1,000,000
	Consideration shares issued to Panthera	3,000,000
	Subscription by existing shareholder in Moydow	1,000,000
	Shares issued for procurement of the drilling services	500,000
	Pro Forma Issued Shares on Completion	5,500,000	54.5%
	Exercise of Option	500,000
	Pro Forma Issued Shares on Completion (including exercise of Option)	6,000,000	50.0%

 

Note: the above table does not include any potential Moydow shares issued pursuant to any further capital raising activity completed by Moydow.

 

Moydow Projects

 

Moydow currently holds a 20% interest in the joint venture company which wholly owns three Nigerian exploration licences comprising Paimasa, Dagma and Dext.  Moydow can earn up to 65% of the joint venture company by funding US$2 million in project expenditure by July 2023.

 

At Paimasa, Moydow is targeting multiple high-grade quartz veins discovered and worked by artisanal miners.  The quartz veins occur on a well-defined NE-SW trending gold geochemical anomaly.  Significant historical artisanal production occurred until the licence was granted to Moydow's joint venture partner in 2017.

 

During 2017 and 2018 a new swarm of quartz-tourmaline veins was discovered at the Mint target on the Paimasa licence area, some 1.5 kilometres northwest of the Paimasa target.  The new discovery is a 300 metre- wide zone with high-grade auriferous quartz-tourmaline veins over a strike length of 1 kilometre.  To date more than 30 vein segments have been identified over a 50-hectare area at the Mint target.

 

In 2018 a high-grade quartz vein system was discovered at Dagma.  Work to date includes remote sensing interpretation, geochemical surveys and mapping followed by a short first-pass drilling programme.  On the contiguous Dext licence area, preliminary reconnaissance has established along-strike prospectivity.

 

There has been no historical drilling within the Paimasa licence area.  Moydow plans to drill both the Paimasa and Mint vein systems as well as further drilling at Dagma to test the strike extension of the mapped mineralised veins.

 

Moydow has early mover status in Nigeria where very little systematic, modern exploration has been undertaken within the gold-bearing ("Schist Belt") terrain of the Benin-Nigeria Shield, which has broad similarities to the Birimian of the Man Shield of West Africa, which over the past 35 years has become one of the most productive gold provinces globally. 

 

Labola and Kalaka Projects

 

Pursuant to the Transaction, Panthera is vending into Moydow its relevant interests in the Labola and Kalaka gold projects into Moydow for a significant shareholder position in Moydow and ongoing exposure to these projects.

 

The Labola gold project is located in the south-eastern part of Burkina Faso within the Banfora greenstone belt, approximately 380km southwest of the capital city Ouagadougou and 90km east-northeast of the 2.4 Moz Banfora gold deposit owned by Teranga Gold Corporation.

 

The project has been drill tested by previous explorers with a total of 65,556m in 541 reverse circulation percussion and diamond drill holes.

 

The drilling covers an area of artisanal mining that extends over a strike length of approximately 9km.  The previous exploration has been conducted by several different explorers with the ownership historically fragmented.  Panthera has recently combined the historical drilling into a single database, however this requires additional quality assurance and quality control ("QaQc") assessment and verification prior to any JORC resource being estimated.  Based on previous explorers' informal resource estimates from past drilling and its own internal review of the merged database, Panthera has assessed an exploration target of between 15 and 30 million tonnes grading between 1.0 and 1.5 g/t gold (0.5-1.5Moz gold) based on the results of drilling to date.  The potential quantity and grade of this target is conceptual in nature, there has been insufficient verification to estimate a Mineral Resource and it is uncertain if further verification will result in the estimation of a Mineral Resource. 

 

Moydow intends as a priority to carry out the necessary QaQc and verification review in order to attempt to report a JORC resource based on existing drill data.  This will be followed by drilling focussed on improving the confidence in the potential resource and further increasing resources where historical drilling has not previously closed off the mineralisation.  Additional exploration targets have also been identified which may further expand the resource potential for the project.

 

The Kalaka gold project is located 260km SE of Bamako in South Mali, 80km south of the 8 Moz Morila gold mine ownded by Barrick/AngloGold and 85km northwest of the 6 Moz Syama gold mine ownded by Resolute.  Panthera believes the property has large scale potential.

 

Previous exploration work includes 7,349 soil samples, airborne geophysics comprising 909 line km magnetics and EM, ground IP and 20,952m RAB, AC, RC and DD drilling in 372 holes.  This work indicates a large, low grade zone of mineralisation with multiple drill intersections exceeding 150m at the 0.5 g/t Au level at the K1A prospect, just one of several similar targets within the 62.5Km² permit area along an interpreted 47Km combined strike.   Similarities between the mineralisation at K1A and Morila have been noted, in particular the early intrusion hosted mineralisation at Morila.

 

At the K1A prospect, there is a substantial zone of mineralisation that is about 750m long, 150m wide and open at depth (but at least 200m deep) grading 0.4-0.6g/t Au.  Drill intercepts from previous explorers include:

 

·        249.3m @ 0.54g/t Au from 52m (to end of hole) including 8m @ 3.17g/t Au from 107m

·        176.4m @ 0.49g/t Au from 24m (to end of hole) including 8m @ 1.83g/t Au from 52m

·        191.8m @ 0.52g/t Au from 9m (to end of hole) including 6m @1.47g/t Au and 4m @ 2.47g/t Au

·        84m @ 0.52g/t Au from surface

·        63m @ 0.58g/t Au from 4m including 11m @ 1.92g/t Au from 15m

·        43m @ 0.56g/t Au from 5m and 78m @ 0.52g/t Au from 51m including 5m @ 2.08g/t Au from 99m

·        53.4m @ 0.49g/t Au from 147m (to end of hole)

 

Similar grade mineralisation has been identified in the RAB and Aircore drilling in several other areas as noted above and potential can be seen for several hundred million tonnes of material at similar grades.

 

Moydow intends to undertake additional IP surveying and subsequently to drill test the best anomalies identified by this work, along with a 1,000m by 150m zone of intense artisanal mining activity that is currently undrilled, with the aim of defining higher grade parts of the mineralisation.

 

Commenting on the disposal, Mark Bolton, Managing Director of Panthera said:

 

"We remain highly enthusiastic on the outlook for the Labola and Kalaka projects.   The Moydow transaction provides the necessary finance to progress the Projects and the Moydow team has the technical ability and good track record in West Africa to enable rapidly progress.  Panthera's significant ongoing shareholding in Moydow ensures that the Company will benefit from any success derived from the planned work programmes, while not diluting shareholders' exposure to the Company's other assets, principally the Bhukia JV project.

 

We believe that Moydow's proposed work programme will confirm the historical drilling at Labola to deliver a JORC compliant mineral resource estimate.  Furthermore, the proposed infill and step-out drilling has the potential to materially increase the overall resource base.

 

At Kalaka, Panthera believes there is large-scale potential which is ready for drill testing by Moydow.

 

The combination of attractive and relatively unexplored, early stage exploration properties in Nigeria, together with the more advanced prospects at Labola and Kalaka, positions Moydow as a compelling regional West African exploration group with, in our view, strong development and exploration potential."

 

Substantial Transaction

 

The sale of the Projects constitutes a substantial transaction under AIM Rule 12.  As at 30 September 2019, as a result of Panthera's accounting policy of treating all exploration expenditure as an expense, the reported net book value of Panthera's interest in the Labola Option Agreement was £0 and the net book value of the shares in Panthera Mali Resources SARL was £0, against the gross consideration of US$3.35 million (£2.67 million). 

 

As at 30 September 2019 the Company and its subsidiaries had charged to expenses £74,951 in respect of the Labola Option Agreement and £469,150 in respect of Panthera Mali Resources SARL.

 

The cash proceeds of the disposal of US$350,000 (est. £279,000) when received will be applied for general working capital purposes.

 

As noted above, Panthera will be required to retain the Consideration Shares until the earlier of 30 June 2022 or the date 6 months after any IPO of Moydow, unless Moydow agrees to the contrary.

 

Enquiries

 

Panthera Resources PLC

Mark Bolton (Managing Director)

+61 411 220 942

 

Nominated Advisor and Broker

RFC Ambrian

+44 (0) 20 3440 6800

Rob Adamson

Bhavesh Patel

Charlie Cryer

 

Qualified Person

The technical information contained in this disclosure has been read and approved by Antony Truelove (BSc (Hon), MAusIMM, MAIG), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies.  Antony Truelove is the COO of Panthera Resources PLC.

 

For more information visit www.pantheraresources.com

 

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Forward-looking Statements

This news release contains forward-looking statements that are based on the Company's current expectations and estimates. Forward-looking statements are frequently characterised by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.

 

**ENDS**