Business Update

The Board of AIM listed Power Metal Resources plc (LON:POW) is pleased to inform shareholders of key developments in the progression of the Company’s significant operational activities.

Chief Executive Officer Paul Johnson commented: “The key strategic objective of POW is to make large scale metal discoveries. This is a bold statement, particularly when market conditions have dampened the ardour of even the most resilient junior resource investors. In spite of market conditions, the Company has continued to make good progress with its projects as detailed further below.

Our work in Cameroon and The Democratic Republic of the Congo (“DRC”) has identified vanadium and copper anomalies respectively. The irony is in both jurisdictions we were looking for principally cobalt and found something else to investigate further which we intend to do.

In Botswana and Tanzania in conjunction with our partners we have now completed a body of work that demonstrates large scale nickel sulphide targets in both projects. Whilst our work in Cameroon and the DRC is at an early stage, in Botswana and Tanzania, the projects are more advanced and progressing to the drill stage.

I recall reading a quote a few years ago that the truth lies in the drill bit, and that is true, we will only really answer the exploration questions through drilling and of course with that comes the risk of failure. Though I can tell you that the technical teams in Botswana and Tanzania are encouraged by the potential for a large scale nickel sulphide discovery.

The potential for a nickel sulphide discovery in both Botswana and Tanzania compel us to apply time and resource to these projects, which we intend to do. By doing this we hope to expose our shareholders to the upside that can come with a major discovery.

The demand for nickel, and particularly nickel sulphides, is starting to drive the price of the commodity higher and whatever junior resource market conditions may be, a nickel sulphide discovery will attract a considerable valuation, which is justification for our commitment.

The Company and its partners continue to pursue external dialogue with larger organisations with a view to project farm-in, joint venture or disposal. There is clear interest in the nickel sulphide exploration projects.

So, we push on, committed, focused and intent on delivering for shareholders with the willingness and determination to share the Company’s vision.”

OPERATIONAL UPDATE:

Botswana Nickel – Molopo Farms Complex

In Botswana the Company has an 18.26% stake in Kalahari Key Mineral Exploration Pty Ltd (“KKME”), which owns outright a single project, the Molopo Farms Complex (“MFC” or the “MFC Project”) nickel-copper-PGM project, in South West Botswana (POW can by 31.12.19 elect to earn-in to a 40% direct MFC Project interest by spending US$500,000 on the project by 31.12.20 – upon earn-in POW will hold a 50.96% effective economic interest in the MFC Project).

The KKME team in Botswana completed the helicopter airborne electromagnetic work defining 17 sub-surface targets earlier in the year and very recently the ground geophysics with 11 loops over 14 targets.

Initial interpretation of the geophysics data identified 6 top targets and we anticipate the final report covering these targets will be available shortly, enabling us to update the market with regard to specific technical findings.

The Company attended an KKME operational meeting recently and reviewed the top 6 targets and initial drill plans in further detail. The six targets are extremely large conductor bodies, within a reasonable distance from surface and if hosting economic mineralisation, would represent a discovery on the scale we seek to achieve.

It is fair to say the number, size and scale of the top targets identified at the MFC project have exceeded initial expectations with further target selection needing to be undertaken. KKME and POW may consider farm-in or joint venture partners in respect of a larger drill programme at the MFC project which could enable the full expanded 6 target drill programme to proceed.

Next steps are the receipt of the full geophysics technical report which is expected to be received shortly, confirmation of drill targets, completion of environmental approvals, gravity surveys and drill contractor selection and engagement.

Cameroon Project

In 2018 the Company acquired license interests in south-eastern Cameroon including 4 adjacent or near to the Nkamouna Co-Ni deposit of Geovic Mining Corporation ("Geovic"). Nkamouna is believed to be the largest defined cobalt Resource outside the Democratic Republic of Congo and is exceptional among laterites for its high Cobalt to Nickel ratio.

Geovic identified and holds 7 lateritic plateaus in its 1250 sq km permit area, of which Nkamouna and Mada have been explored, and the 4km by 2km Nkamouna deposit is the most defined.

POW holds nearly 2000 sq km containing a number of potentially similar plateaus, on which it conducted a preliminary reconnaissance and sampling programme last year but failed to reach the depth at which the target laterised strata might be encountered.

The Company undertook a pitting, sampling and mapping programme at the project in June/July earlier this year, and following initial x-ray fluorescence (“XRF”) testing, identified anomalous results requiring samples to be sent for laboratory assay analysis.

We have received the assay results and these are being interpreted at present. Significantly the samples have confirmed the exploration successfully intersected the distinct laterite profile that is most likely to be mineralized from average depths of 5m, which is consistent with depths in the mineralized zones at the adjacent Nkamouna project.

Initial XRF results pointed to elevated cobalt grades, a high cobalt to nickel ratio and some presence of precious metals. The assay results themselves demonstrate lower cobalt readings than within the XRF readings and although at lower grades a high cobalt to nickel ratio was confirmed. No material precious metal grades were demonstrated, however the assay results demonstrated anomalous elevated levels of vanadium and titanium, which was not identified in the XRF results. In essence the XRF results indicated cobalt, however the more reliable assay results confirmed vanadium, which is equally of interest to the Company, albeit at this stage something of a surprise and will require further investigation.

The Cameroon geology is complex and the exercise to review and interpret the data collected is equally complex. The Company has sourced guidance from international experts to help interpret the information and to determine the forward work programme for what is becoming an intriguing project.
Based on the work undertaken thus far it is clear that cobalt exploration is best focused on the thicker lateritic cover and POW's consultants recommend concentration of future work at higher elevations where these thicker profiles are more likely to occur.

However also key is to understand the elevated vanadium and titanium and to develop our further exploration programme around this understanding.

In this regard a further announcement will be made in due course regarding next steps noting that exploration on the ground can only recommence when weather conditions allow, notably on expiration of the rainy season in October. Upon completion of the follow up programme the Company should have a larger data set from which to form material conclusions with regard to the project prospectivity and further medium term operational development.

Note: With respect to Nkamouna, Geovic published an NI 43-101 compliant Mineral Resource1 on the Nkamouna deposit with a total Measured, Indicated and Inferred Mineral Resource of 323mt of 0.21% cobalt, 0.61% nickel and 1.26% manganese.

1 Source: NI 43-101 Technical Report, Geovic Mining Corp by SRK Consulting, 02 June 2011 (viewable at Edgar Online)

DRC – Copper/Cobalt Projects

In the DRC the Company identified a 6.8km copper anomaly running through the heart of its 70% owned Kisinka copper-cobalt license, as announced in July 2019. This was a significant step forward for the project and as a result further exploration is planned, and details will be announced to the market in due course.

Also in the DRC the Company’s technical team are progressing well with the due diligence ground operational programme in respect of the PR 13479, ("Permis de Recherches")  a license prospective for cobalt and copper to the north and east of the Tondo cobalt-copper mine (the "N Tondo copper-cobalt License" or the "License") in the DRC. The Company has an option to acquire a 70% interest in the License subject to due diligence.

Due diligence work has included the completion of 400 termite mound samples and the completion of 1 trench in an area believed to contain higher grade mineralisation with results expected to be subject to XRF testing shortly.

A further update will be provided to the market should the Company decide to proceed with option exercise.

Tanzania Nickel – Haneti Project

In Tanzania POW has acquired a 25% holding in the Haneti nickel project held in joint venture with Katoro Gold plc (LON:KAT) with a right to increase to 35% through a payment of £25,000 by 15 May 2020.

Power Metal Resources also holds 10,000,000 Katoro shares representing 5.90% of Katoro Gold's issued share capital.  In addition, POW also holds 10,000,000 warrants in Katoro Gold exercisable at 1.25p (2,500,000 warrants expiring on 15 March 2022 and 7,500,000 warrants expiring on 15 May 2022).

The Company recently participated in operational discussions with Katoro in respect of the upcoming drill programme to be undertaken over the two principal drill targets at Haneti at the heart of what is considered to be an 80 km potential mineralised strike.

The targets identified have been selected following years of preparatory work and we are keen to implement with our joint venture partners a programme that rapidly establishes the presence of sulphides and if confirmed, nickel sulphide, which we hope would be economically mineable.

As with Botswana the conductor bodies that are the subject of this work are substantial and if bearing nickel sulphides at economically mineable grade and metallurgy, could represent what we consider to be a major discovery.

POW is working with our partners Katoro to finalise and implement the first drill programme over what is a compelling opportunity. And further to this to articulate the fact that the Haneti project is not simply nickel, but also offering prospectivity for many other metals within the target zones.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

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23 September 2019

 
 
 

Power Metal Resources plc
201 Temple Chambers
3-7 Temple Avenue
London EC4Y 0DT
United Kingdom

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