Metal Tiger PLC Memorandum of Understanding - Gold Project (4523C)

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RNS Number : 4523C

Metal Tiger PLC

19 January 2015

METAL TIGER PLC

19 January 2015

Metal Tiger plc

("Metal Tiger" or the "Company")

Memorandum of Understanding - Gold Project

In line with the Company's investing policy, Metal Tiger Plc (LON: MTR), is pleased to announce that it has entered into a Memorandum of Understanding for a 50/50 Joint Venture with Kibo Mining plc ("Kibo") on its Morogoro South gold-prospective exploration portfolio in Tanzania ("Morogoro Portfolio"). The Morogoro Portfolio has a number of exploration rights in central Tanzania, consisting of 18 licences, offers, applications and tenders covering a combined surface area of approximately 1,411 square kilometres.

Metal Tiger's CEO, Cameron Parry, commented: "This transaction builds on Metal Tiger's current joint venture relationship that encompasses Kibo's uranium portfolio in Tanzania as announced on 14 January 2015. The 50/50 Joint Venture in relation to Kibo's Morogoro Project is also in line with Metal Tiger's primary interest in gold opportunities, complementing the existing Thai interests and various options under consideration in Spain. Furthermore, upon satisfactory completion of due diligence for this project, Metal Tiger will benefit from additional warrants in Kibo Mining, further exposing shareholders to the considerable potential upside going forward."

Under the MOU Metal Tiger has up to and including 20 February 2015 to complete its due diligence process and within which period the parties are to complete and sign a binding JV agreement. The terms of the MOU would see Metal Tiger pay for the ongoing licence renewal fees and other maintenance costs for a minimum of 12 months (estimated to be approximately US$100,000 p.a.) and up to a maximum of 3 years within which timeframe Metal Tiger is to expend a total of US$800,000 on project costs (including licence renewal fees) and an agreed exploration work program, to maintain its 50% interest in the JV. Should Metal Tiger expend less than a total of US$800,000 whilst maintaining the Morogoro Portfolio licences, but not less than US$300,000 then Metal Tiger's 50% interest in the JV will revert to a 10% free carry on the Morogoro Portfolio. Should Metal Tiger expend less than $300,000 in total then Metal Tiger's total interest in the JV shall revert to Kibo.

As part of the JV, should it proceed, Kibo will issue Metal Tiger with warrants over 10,000,000 new ordinary shares in Kibo, exercisable within a three-year term at an exercise price of 9p each but subject to a mechanism to increase the warrant exercise price in the event Kibo's share price trades at a significant premium as follows:

-- In the event that Kibo's listed closing mid-market share price on the AIM market of the London Stock Exchange ("AIM") exceeds 18 pence (GBP0.18) per share for a consecutive period of 15 days in which AIM is open, then the exercise price of any unexercised warrants shall increase from 9 pence (GBP0.09) to 14.5 pence (GBP0.145);

-- In the event that Kibo's listed closing mid-market share price on AIM exceeds 27 pence (GBP0.27) per share for a consecutive period of 15 days in which AIM is open, then the exercise price of any unexercised warrants shall increase to 19 pence (GBP0.19).

Gold Prospective Joint Venture Areas - Morogoro South

A wholly owned subsidiary of Kibo Gold Limited, itself a wholly owned subsidiary of Kibo Mining Plc (LON: KIBO), owns a portfolio of gold prospective asset licences for exploration in Tanzania (collectively the "Morogoro South Portfolio").

The Morogoro South Portfolio of exploration licences is located in the emerging goldfield of the Morogoro-Dodoma-Handeni region within a 90 kilometre radius of the city of Morogoro, Tanzania. The portfolio consists of 18 licences, offers, applications and tenders with a combined surface area of approximately 1,411 square kilometres.

Key Terms of the Memorandum of Understanding

Following completion of the due diligence period by/on 29 February 2015 and the parties entering into the JV agreement as outlined in the MOU, the parties are to operate under a 50/50 Joint Venture of the gold-prospective properties that form the Morogoro South Portfolio, as follows:

-- Metal Tiger is to acquire 50% of Kibo Gold Limited ("KB Gold"), a 100% wholly owned subsidiary of Kibo Mining plc, that owns the Morogoro South Portfolio for a consideration of GBP1.

-- Metal Tiger is to meet the expenses in relation to the licence renewal fees and other maintenance costs of the Morogoro South Portfolio for a minimum of 1 year (estimated to be approximately $100,000) and up to a maximum of 3 years.

-- Metal Tiger is to expend the first US$800,000 under the JV in expenses and exploration relating to the Morogoro South Portfolio, at which point costs moving forward are shared 50/50 between the parties.

-- Should Metal Tiger elect to not continue with the JV after the minimum term of one year, or fail to expend US$100,000 by the first anniversary of the JV, or should Metal Tiger fail to expend the full expenditure by the third anniversary of the JV then:

o if less than US$300,000 of the agreed expenditure, the 50% interest in the JV owned by Metal Tiger shall revert back to KB Gold subject to them exercising a claw-back option;

o if greater than $300,000 of agreed expenditure, Kibo shall have the right to exercise the claw-back option in respect of Metal Tiger's interest in KB Gold however Metal Tiger shall retain a 10% free carry in the Morogoro South Portfolio.

-- At any time following the first anniversary of the JV, on not less than 90 days notice to Kibo, Metal Tiger may elect to cease sole funding of the JV expenditure.

The acquisition by Metal Tiger of the interest in KB Gold is conditional, inter alia, on:

-- by not later than 20 February 2015 Metal Tiger conducting, and confirming in writing that it is satisfied (at its sole discretion) with the results of the legal, financial and technical due diligence investigations to be undertaken by Metal Tiger in relation to the Morogoro South Properties and KB Gold; and

-- Kibo and KB Gold procuring all necessary consents from the regulatory authorities in Tanzania.

For further information on the Company, visit: www.metaltigerplc.com:

 
 Cameron Parry                                 Tel: [phone] 
  (CEO)                                         0738 
 Paul Johnson                                  Tel: [phone] 
  (Non-Executive                                617 
  Director) 
 Sean Wyndham-Quin   Spark Advisory Partners   Tel: [phone] 
  Neil Baldwin        Limited                   555 
                      (Nominated Adviser) 
 
 Nick Emerson        SI Capital Limited        Tel: [phone] 
  Andy Thacker        (Sole Broker)             500 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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