3 June 2024

Power Metal Resources PLC

("Power Metal" or the "Company")

Strategic Financing and Proposed Formation of Uranium-Focused Joint Venture 

Power Metal Resources PLC (AIM:POW, OTCQB:POWMF), the London-listed exploration company with a global project portfolio, is pleased to announce that it has entered into a legally binding subscription agreement (the "Subscription") with  ACAM LP ("ACAM" or the "Investor") pursuant to which it will invest £2 million in Power Metal by way of a loan note (the "Notes"), with attaching warrants (the "Warrants"). 

Furthermore, the Company has entered into an eight-week exclusivity period and a non-binding term sheet with ACAM with the intention of forming a uranium-focused joint venture involving Power Metal's entire portfolio of uranium licences (the "Joint Venture").   

Highlights:

·    ACAM has entered into a legally binding Subscription agreement to purchase Notes with attaching Warrants for £2 million. The Notes have a term of five years, bearing interest at 10% per annum, payable at the option of the Company in cash or through the issuance of new ordinary shares in the Company ("Shares"). The 13,333,333 Warrants are exercisable for five years at a price of 15 pence per Share. 

·    ACAM is a natural resource focused Limited Partnership advised by S and F Investment Advisors Limited ("S&F").

·    Non-Binding term sheet signed with ACAM, pursuant to which the parties intend to enter into a Uranium-focused joint venture involving Power Metal's entire portfolio of uranium licences.

·    Pursuant to the proposed Joint Venture, it is currently intended that ACAM, or an affiliate, will make an initial equity investment of £10 million into the Company's wholly owned Canadian subsidiary company, Power Metal Resources Canada Inc ("PMC"), for a majority interest in PMC of 70%. The Company will potentially receive an additional cash payment of up to £4 million, conditional upon a sale transaction completing or other value realisation by the Investor, subject to the Investor achieving a minimum return threshold on its investment.

·    If completed, the proposed Joint Venture is expected to provide Power Metal shareholders with exposure to at least five significant, high impact drilling programmes with an experienced financial partner, with significant advancement on several more. ACAM and its affiliates have investments in mining and exploration projects globally including the Gardaq joint venture with TSX and AIM listed Amaroq Minerals in Greenland.

·    Assuming the successful completion of the Joint Venture, which cannot be guaranteed, the IPO of Uranium Energy Exploration plc ("UEE") is to be aborted with the costs incurred, approximately £500k, to be met through the proceeds of the Notes. Accordingly, at this stage, it is unlikely that the disposals of the Company's wholly owned Reitenbach Uranium Property, and   E-12 Uranium Property, as announced on 8 August 2022 and 4 November 2022 respectively, will occur.

·    The balance of the proceeds of the Notes is to be used for general corporate purposes.

Sean Wade, Chief Executive Officer of Power Metal Resources, commented:

"We announced on 25^th March 2024 that we were looking at various options to maximise value from our uranium portfolio and whilst these discussions are still taking place, I am pleased to announce that we are making progress to finalise a transaction that we are confident will crystallise significant value for our shareholders.

Whilst there can be no guarantee that the Joint Venture will complete, we are confident that we will achieve a successful outcome and will update shareholders once the legally binding documentation is finalised.

ACAM have already made a significant commitment to the Company pursuant to the Subscription and we look forward to working with them to successfully conclude the proposed Joint Venture."

Details of the Subscription for Notes and Warrants

The Company and ACAM have entered into a legally binding subscription agreement, pursuant to which ACAM will subscribe for 2,000,000 Notes with 13,333,333 attaching Warrants, for proceeds of £2 million, before expenses.  

The Notes, which are unsecured, will rank as the senior indebtedness of the Company, have a term of five years from issuance (the "Repayment Date") and bear interest at 10% per annum, payable semi-annually. If the Company and ACAM fail to enter into definitive legal documentation in relation to the Joint Venture on the basis set out in the Term Sheet (as defined below) within 12 months, both parties acting reasonably, the Repayment Date will be accelerated to 12 months from the issuance of the Notes.

At the election of the Company interest payments can be paid in cash or in Shares. Where the Company elects to settle interest in Shares, such Shares will be issued at the 10-day VWAP of the Company's Shares on the AIM Market of the London Stock Exchange to the date preceding the relevant payment date.

While the Notes remain outstanding, the Company will use 20% of the proceeds of any future equity financing to redeem Notes for cash. The Company is also required to utilise a portion of any cash proceeds realised from the sale of assets in excess of £300,000 to redeem Notes for cash, with such proportion being 50% if the 10-day VWAP is in excess of the exercise price of the Warrants at the time, or 100% if the VWAP is equal to or below the exercise price of the Warrants. The Notes can otherwise be redeemed at any time by the Company without fee or penalty.

The Warrants have a term of five years and are exercisable at a price of 15 pence per Share, subject to standard adjustment provisions, including for bonus issues and stock splits. The quantum of Warrants will be re-set in proportion to an increase in the Company's fully diluted share capital as a result of any future equity fundraising.  

Proposed Joint Venture

The Company has entered into an eight-week exclusivity period and a non-binding term sheet (the "Term Sheet") with ACAM, pursuant to which the parties intend to form the uranium focused Joint Venture.

Pursuant to the Term Sheet, it is intended that ACAM, or an affiliate with substantially the same beneficial owners, will invest an initial £10 million into PMC for an equity interest of 70% with the proceeds used to fund exploration programmes across the portfolio of uranium licences, including drilling. The Company will potentially receive an additional cash payment of up to £4 million, conditional upon a sale transaction completing or other value realisation by the Investor, subject to the Investor achieving a minimum return threshold on its investment.

At this stage, there is no binding obligation or commitment on the part of any party with respect to the Joint Venture which is subject to the execution of various definitive legal documentation. Accordingly, there is no certainty that this Joint Venture will proceed, or if it does, that it will proceed on the terms outlined here.

If the Joint Venture is successfully completed, the IPO of UEE is to be aborted with the costs incurred to be met through the proceeds of the Notes. Accordingly, at this stage, it is unlikely that the disposals of the Company's wholly owned Reitenbach Uranium Property, and E-12 Uranium Property, as announced on 8 August 2022 and 4 November 2022 respectively, will occur.

Shareholders should note that Sean Wade is a director of both Power Metal and UEE.

Advisers

Tamesis Partners LLP ("Tamesis") is acting as financial adviser to the Company in relation to the Subscription and the proposed Joint Venture.

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.