BMR Group PLC Joint Venture Agreement (4793P)

TIDMBMR

RNS Number : 4793P

BMR Group PLC

31 August 2017

BMR Group PLC

("BMR", the "Group" or the "Company")

Agreement of Term Sheet to enter in to a Joint Venture agreement with Galileo Resources PLC

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

On 16 August 2016, the Board first announced that the Company had entered into an option agreement ("Option") with Bushbuck Resources Limited of Zambia ("Bushbuck") to acquire its Large Scale Prospecting Licence 19653 - HQ - LPL ("Star Zinc") for a cash consideration of US$1,000,000, together with VAT and Property Transfer Tax amounting, in aggregate, to $260,000. The Option expired on 11 November 2016 in accordance with its terms.

Since expiry of the Option the Company has been reviewing funding options to enable it to complete the acquisition of Star Zinc from Bushbuck. The Board is delighted to announce that on 31 August 2017 the Company entered into a binding term sheet ("Term Sheet") with Galileo Resources PLC ("Galileo"), a UK focused resource company quoted on AIM whereby Galileo has agreed to conditionally advance to the Company $591,600 (at an interest rate of 12% per annum) which is intended to be used for the purpose of completing the acquisition of Star Zinc ("Acquisition"), through a joint venture (the "Joint Venture") to be established with Galileo. The Term Sheet stipulates that Galileo will subscribe for a 51% equity stake in the Joint Venture through a newly created special purpose vehicle, to be named Enviro Zambia Limited, which will be financed by the cancellation of the aforementioned $591,600 loan.

Although the Option has expired, having secured required funding, the Company expects to conclude negotiations with Bushbuck in the near future to complete the Acquisition on broadly similar terms, and will update the market upon completion. The funding into the Joint Venture is conditional upon completion of the Acquisition. There can be no guarantee that final agreement with Bushbuck will be reached, and that the Joint Venture funding will accordingly be released.

The Term Sheet with Galileo also provides that:

-- within 60 days of completion of the Acquisition, BMR and Galileo will enter into a formal Joint Venture agreement in respect of Star Zinc;

-- upon the completion of the Joint Venture agreement, Galileo will place $100,000 in escrow. Galileo will then undertake an 18 month work programme at a cost of $250,000, using reasonable endeavours to complete a preliminary economic assessment of Star Zinc ("PEA"), following which further new shares in Enviro Zambia will be issued to Galileo to increase its aggregate equity interest therein to 85%;

-- BMR shall have the right to reduce the interest of Galileo from 85% to 75% on payment of $150,000 to Galileo, being the repayment of $100,000 held in escrow plus a $50,000 arrangement fee within 90 days of the date of completion of the Joint Venture agreement (failing which the US$100,000 is released to the Company);

-- from completion of the 18 month work programme until completion of a feasibility study, the interest of BMR in Enviro Zambia shall be free carried;

-- thereafter, any net costs will be borne by the joint venture parties relative to their shareholdings in Enviro Zambia; and

-- concurrent with execution of the joint venture agreement, BMR and Enviro Zambia shall enter into an off take agreement for processing of ore from Star Zinc at Kabwe, such terms to be determined as soon as reasonably practicable following completion of the PEA to reflect capacity production of Zinc from Star Zinc, and relevant grade and resource life of the project set out in PEA, which BMR intends to process in conjunction with its Leach Plant Residues.

Alex Borrelli, Chairman of BMR, commented: "We are delighted to have agreed upon a Term Sheet with Galileo that should allow us to complete the acquisition of Star Zinc which will provide access to Star Zinc's high grade resources which have the potential to enhance the grade of the Zinc products from our Kabwe processing plant.

"As I have stated previously, this should enable BMR to extend the operating life of the plant as further ore resource can be processed at Kabwe combined with the Leach Plant Residues, and therefore represents a significant step for the Group.

"Most importantly, through the completion of the Joint Venture agreement with Galileo, BMR will secure a strong partner for mining the resource at Star Zinc, which BMR had to secure in any event, and has also established the grounds for an off take agreement for BMR to process the resource from Star Zinc at its Kabwe processing plant."

For further information:

BMR Group PLC 020 7734 7282

Alex Borrelli, CEO and Chairman

WH Ireland Limited 020 7220 1666

NOMAD and Joint Broker

Chris Fielding/ Alex Bond

Peterhouse Corporate Finance 020 7469 0930

Joint Broker

Lucy Williams/ Duncan Vasey/ Heena Karani

This information is provided by RNS

The company news service from the London Stock Exchange

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August 31, 2017 10:30 ET (14:30 GMT)