Pembridge Resources plc Minto Updates and New Terms Agreed with Pembridge (9848X)

TIDMPERE

RNS Number : 9848X

Pembridge Resources plc

02 May 2023

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS AMED BY REGULATION 11 OF THE MARKET ABUSE (AMMENT) (EU EXIT) REGULATIONS 2019/310.

2 May 2023

Minto Metals Announces New Funding Facilities and Deferral of Consideration Under the Share Purchase Agreement, and Pembridge Receives Indemnities and Defers Minto Repayments

London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or the "Company") is pleased to announce that Minto Metals Corp. ("Minto") has received funding facilities and, together with Pembridge, has agreed to amend the share purchase agreement dated 3 June 2019 for the purchase of Minto (the "SPA") . Linked to this, Pembridge and Minto have signed an Indemnity Agreement and a Postponement Agreement.

Highlights

-- Pembridge, Minto and Capstone Mining Corp. ("Capstone") have agreed to amend the share purchase agreement dated 3 June 2019 for the purchase of Minto (the "SPA") to defer payment of remaining $5 million purchase price and to release and discharge Pembridge from the liabilities and obligations owing to Capstone under the SPA.

-- Minto has received CAD 1 million advance from Lion Point Capital, LP ("Lion Point") pursuant to a loan agreement dated 14 April 2023 (the "Loan Agreement") that may be increased to CAD 2 million subject to further commitments to being obtained from the Lenders to fund any additional amount.

-- Minto has drawn down a further US$1.5 million under its existing prepayment facility with Sumitomo Canada Limited ("Sumitomo"), bringing the total amount of funds advanced by Sumitomo under the facility to US $12.5 million, and extend the term of the offtake agreement with Sumitomo by a further 12 months or until an additional 40,000 dmt of copper concentrate are produced.

-- Minto has agreed to indemnify and hold Pembridge harmless from and against any claims, actions, causes of action, proceedings, judgements, debts, damages, costs, obligations, liabilities and/or losses that it may incur directly or indirectly as a result of or arising from any claim made:

(a) by the General Indemnitees or any of them against Pembridge in relation to each and all of Pembridge's obligations pursuant to the General Indemnity Agreement dated June 3, 2019 (the "General Indemnity Agreement") in favour of Zurich American Insurance Company, Fidelity and Deposit Company of Maryland, Zurich American Insurance Company, Colonial American Casualty and Surety Company, American Guarantee and Liability Insurance Company and Zurich Insurance Group Ltd.);

(b) by the Zurich Indemnitees or any of them against Pembridge in relation to each and all of Pembridge's obligations pursuant to the Deed of Indemnity; and

(c) by Capstone against Pembridge in relation to each and all of Pembridge's obligations pursuant to the Share Purchase Agreement.

-- Minto and Pembridge have signed a Postponement Agreement with respect to its remaining receivable of CAD 1 million and accumulated interest, with payment of CAD 250,000 by the end of Q3 2023 and the remaining amounts due after the full settlement with Capstone of the remaining purchase price.

Amendment to Share Purchase Agreement

Pembridge, Minto and Capstone have agreed to amend the SPA, as previously amended, to extend the due date for payment of the US$5 million deferred balance of the purchase price owing to Capstone under the SPA to be payable as follows: (a) $250,000 on each of September 1, 2023, December 1, 2023, March 1, 2024 and June 3, 2024 and (b) $1,000,000 on each of September 3, 2024, December 3, 2024, March 3, 2025 and June 3, 2025. In addition, the terms of the amendment provide that Pembridge has assigned to Minto all of its obligations under the SPA and Capstone has released Pembridge from all such obligations.

New Term Facility for Minto

Under the Loan Agreement, the Lion Point have agreed to provide a secured non-revolving term facility (the "Facility") in a principal amount up of CAD 1 million, which may be increased to CAD 2 million subject to further commitments being obtained from the Lenders to fund any additional amount. The Facility bears interest at the rate of 10% per annuum, payable semi-annually. Repayment of the Facility is due on the earlier of 14 April 2026 or the final repayment date under secured notes previously issued by the Company on 3 June 2019.

Minto Sumitomo Prepayment Facility and Offtake Agreement

Minto also announces that it has drawn down a further US $1.5 million under its existing prepayment facility with Sumitomo, bringing the total amount of funds advanced by Sumitomo under the facility to US $12.5 million. Pursuant to an Amended and Restated Prepayment Facility Agreement dated May 16, 2022, Sumitomo established a secured prepayment non-revolving credit facility in favour of Minto in the amount of US $17.5 million, repayable over 48 months, in connection with an offtake agreement between the parties. Under the offtake agreement, Sumitomo agreed to purchase 100% of the copper concentrate produced at the Minto Mine for a four-year term, based on 50,000 dmt/year of concentrate production. In conjunction with this new drawdown, Sumitomo and Minto will amend the offtake agreement to extend the term by a further 12 months or until an additional 40,000 dmt of copper concentrate are produced. Minto intends to use the proceeds of the drawdown for general corporate purposes.

Minto Indemnity Agreement with Pembridge

As part of the acquisition of Minto in June 2019, Minto and Pembridge are parties as indemnitors to a General Indemnity Agreement dated 3 June 2019 (the "General Indemnity Agreement") in favour of Zurich American Insurance Company, Fidelity and Deposit Company of Maryland, Zurich American Insurance Company, Colonial American Casualty and Surety Company, American Guarantee and Liability Insurance Company and Zurich Insurance Group Ltd.) (collectively, the "General Indemnitees"). In addition, Pembridge is a party as indemnitor to a Deed of Indemnity dated 24 May 2019 (the "Deed of Indemnity") in favour of Zurich Insurance Public Limited Company (Zurich Insurance Public Limited Company, together with each other party indemnified pursuant to the Deed of Indemnity, collectively, the "Zurich Indemnitees") and Pembridge, Minto and Capstone Mining Corp ("Capstone") are the parties to the SPA.

Minto has agreed to indemnify and hold Pembridge harmless from and against any claims, actions, causes of action, proceedings, judgements, debts, damages, costs, obligations, liabilities and/or losses (including costs and expenses incurred in investigating or defending any claim or threatened claim, whether or not any amounts are paid by Pembridge on such claim) (together, "Losses") that it may incur directly or indirectly as a result of or arising from any claim made:

(a) by the General Indemnitees or any of them against Pembridge in relation to each and all of Pembridge's obligations pursuant to the General Indemnity Agreement;

(b) by the Zurich Indemnitees or any of them against Pembridge in relation to each and all of Pembridge's obligations pursuant to the Deed of Indemnity; and

(c) by Capstone against Pembridge in relation to each and all of Pembridge's obligations pursuant to the Share Purchase Agreement.

Postponement Agreement

Pembridge lent a total of CAD 4 million to Minto, to fund Minto's surety account, during 2019 and 2020. The loan carries interest at 8% and was due to be repaid in full via quarterly instalments each of CAD 1 million during 2022, with the final interest payment in early 2023. The first two instalments were repaid in March and June 2022 and the third instalment, which was due originally at the end of September, has now been repaid fully with the last CAD 250,000 received in December 2022. The third instalment was partly deferred under an agreement between Minto and Pembridge, announced by Pembridge on 13 October 2022, to aid Minto in funding increased reclamation security payments, and Minto has made its payments in accordance with that agreement. Minto and Pembridge had agreed to spread the fourth instalment of CAD 1 million and accumulated interest due until the end of September 2023.

To support Minto and ensure the deferral of the payment to Capstone of the remaining purchase price, Pembridge and Minto have agreed to defer the repayment of the amounts due from Minto to Pembridge and receive CAD $250,000 in approximately equal monthly payments ending in September 2023, the remaining amounts becoming due after the full settlement with Capstone of the remaining purchase price under the SPA.

The release from Minto can be found at the following link.

http://www.rns-pdf.londonstockexchange.com/rns/9848X_1-2023-5-1.pdf

Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of Pembridge said:

"The ability to support Minto's financial position is of high importance to the success of our investment in Minto. The acquisition of Minto in June 2019 came with liabilities and obligations by Pembridge to Capstone and Zurich Insurance. I am pleased that we have reached agreement with Minto to receive full indemnity by Minto to Pembridge for all those obligations and liabilities and for Capstone's agreement to release and discharge of Pembridge of the obligations and liabilities of Pembridge towards Capstone arising from the SPA. To achieve this significant step in simplifying the potential liabilities of Pembridge has come at the cost of deferring a large part of our receivable from Minto. However, this enables us to continue more effectively seeking partnerships to grow our business and provides the fullest support to Minto that Pembridge is in a position to undertake. I trust that, with the additional financing that Minto has received and the support from Capstone with the deferral of the payment of the remaining purchase price, Minto will continue

developing the mine and seek to generate the maximum value of the investment."

Cautionary Statement

This News Release includes certain "forward-looking statements" which are not comprised of historical facts. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company, or management, expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although these statements are based on information currently available to the Company, the Company provides no assurance that actual results will meet management's expectations. Risks, uncertainties and other factors involved with forward-looking information could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes, but is not limited to, the Company's intentions regarding its objectives, goals or future plans and statements. Factors that could cause actual results to differ materially from such forward-looking information include, but are not limited to, the Company's ability to predict or counteract the potential impact of COVID-19 coronavirus on factors relevant to the Company's business, failure to identify additional mineral resources, failure to convert estimated mineral resources to reserves with more advanced studies, the inability to eventually complete a feasibility study which could support a production decision, the preliminary nature of metallurgical test results may not be representative of the deposit as a whole, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects, capital, operating and reclamation costs varying significantly from estimates and the other risks involved in the mineral exploration and development industry, and those risks set out in the Company's public documents. Although the Company believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

ENDS

NOTES TO EDITORS

About Pembridge Resources plc

Pembridge is a mining company that is listed on the standard segment of the Official List of the FCA and trading on the main market for listed securities of London Stock Exchange plc. Pembridge has an investment in Minto Metals Corp, a British Columbia incorporated business listed on the TSX Venture Exchange under the symbol "MNTO" that operates the Minto mine in Yukon, Canada.

About Minto Metals Corp

Minto Metals Corp operates the underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse along the Klondike Highway. In excess of US$350 million of capital expenditure has been invested into Minto operations since site construction began in 2006. The Minto mine was in continuous production between 2007 and 2018, when the mine was placed onto temporary care and maintenance. Pembridge acquired the Minto mine from Capstone Mining Corporation in June 2019 and restarted operations in October 2019.

Enquiries:

Pembridge Resources plc: [phone]

Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board

David James, Chief Financial Officer

Tavira Financial Ltd: [phone]

Jonathan Evans

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May 02, 2023 02:00 ET (06:00 GMT)