MOD Resources A$15m Capital Raise and Non-Binding Offer Received by MOD

LONDON--(BUSINESS WIRE)--

Metal Tiger PLC

(“Metal Tiger” or the “Company”)

MOD Resources – A$15m Capital Raise and Non-Binding Offer Received by MOD

Metal Tiger plc (AIM:MTR), the London Stock Exchange AIM listed investor in strategic natural resource opportunities, notes the announcement made by MOD Resources Ltd (“MOD”) today, the full text of which is set out below and the full announcement (including footnotes) can be seen via the following link: https://www.asx.com.au/asxpdf/20190121/pdf/441zz9rk2mflcn.pdf.

“Highlights:

• Successfully raised $10 million through an oversubscribed institutional Placement at $0.30/sh.
• $5 million to be raised through a fully underwritten Rights Issue at $0.24/sh.
• Confirms strong shareholder confidence in the Company and the quality of the T3 Copper Project
• Received an unsolicited, non-binding, indicative, conditional proposal from Sandfire at $0.38/sh.
• The Board believes this proposal undervalues the Company’s assets
• MOD continues to explore all options including further engagement with Sandfire

MOD Resources Limited (“the Company”) (ASX/LSE: MOD) is pleased to announce that it has received firm commitments to raise $10 million through an institutional share Placement with an additional $5 million fully underwritten Rights Issue to be offered to existing shareholders. The majority of funds are intended for working capital to advance the T3 Copper Project towards production and defining additional resources within the surrounding T3 Expansion Project area.

Furthermore, following media speculation, the Company announces receipt of an unsolicited, non-binding, indicative and conditional proposal by ASX listed Sandfire Resources NL (“Sandfire”) (ASX:SFR). The proposal is to acquire 100% of MOD shares via an all scrip transaction equivalent to $0.38 per MOD share. The Board believes this proposal undervalues MOD’s unique and extensive assets.

MOD’s T3 Copper Project in Botswana lies within a largely under-explored, highly prospective region offering a dominant copper-belt scale opportunity. The T3 Copper Project, discovered in March 2016, presents the potential for a long-life, high-margin, open pit copper mine with significant exploration upside. The Company continues to progress the T3 Feasibility Study to reach a decision to mine in the first half of 2019. The Company has also advanced discussions with a number of parties which has provided the Board with confidence in the availability of a range of funding options to progress the T3 Copper Project into production.

MOD’s Managing Director, Julian Hanna, said “Funding from this capital raise will enable the Company to progress the T3 Copper Project towards a development decision and conduct further drilling for additional resources. The unsolicited, indicative proposal for 100% of the Company received from Sandfire confirms the potential of the T3 Copper Project, however the Board considers it significantly undervalues the assets of the Company. With strong ongoing support of our shareholders through a placement and a fully underwritten rights issue, we believe that the Company will have sufficient working capital to achieve our objectives.”

Successful placement of $10 million with a $5 million Fully Underwritten Rights Issue

The Company is pleased to announce that it has received firm commitments to raise $10 million through the issue of approximately 33.33 million fully paid ordinary shares to institutional and sophisticated investors (“the Placement”). The Placement will be conducted using the Company’s existing Listing Rule 7.1 placement capacity.

The issue price for the Placement is $0.30 per share representing a 36% premium to the Company’s last closing share price on ASX. This indicates strong shareholder confidence in the Company and the opportunity that T3 Copper Project and the regional exploration represents to shareholders.

To ensure that all shareholders can participate in the capital raising, the Placement will be followed by a non-renounceable rights issue to raise approximately $5 million (approximately 21.7 million shares) from eligible shareholders (“Rights Issue”), offering 1 new share per 13 shares held. The Rights Issue is fully underwritten by Ashanti Capital. The Rights Issue will be priced at $0.24 per share, a price that closely reflects the Company's last closing share price on ASX. Further details relating to the Rights Issue timetable will be released to the market shortly.

The funds raised from the Placement and Rights Issue are intended to be used to complete a 2019 capital works program, which will include:

• Progress the T3 Copper Project through Feasibility Study, mining licence application and early T3 development work to reach a decision to mine, targeted by the end of the first half of 2019;
• Completion of purchase of the farm on which T3 Open Pit is located and construction of initial project related infrastructure;
• Infill drilling to upgrade part of the early stages of T3 mine production to a JORC compliant Measured Resource category;
• Advance conceptual underground mining studies for the T3 Expansion Project and A4 Dome with resource drilling as appropriate; and
• Conduct follow-up drilling of initial, shallow copper and silver intersections at the T4 - T23 Dome.

Funds will also enable the Company to progress negotiations with a number of parties in respect of funding the development of the T3 Copper Project.

The Company's Board of Directors (“the Board”) and Metal Tiger Plc have committed to take up their entitlements in the Rights Issue.

Ashanti Capital is acting as lead manager and underwriter of the capital raising. Canaccord is acting as co-manager of the capital raising. Blue Ocean Equities provides corporate advice to the Company.

Sandfire Indicative Proposal and Update on Strategic Funding Process

On 16 January 2019, the Company received an unsolicited, non-binding, indicative and conditional proposal (“Indicative Proposal”) from Sandfire to acquire 100% of shares in MOD.

The Indicative Proposal was made after a period of technical due diligence, including access to a data room and a site visit, with respect to a potential joint venture arrangement, the potential sale of a partial interest in T3 Copper Project and a potential market placement to support development of the T3 Copper Project.

The Indicative Proposal comprises a full scrip consideration equivalent to $0.38 per MOD share, valuing the Company’s equity, on a fully diluted basis, at $113 million [1]. This is equivalent to an exchange ratio of 1 Sandfire share for approximately every 17 MOD shares¹.

The Indicative Proposal is subject to conditions, including:

• Completion of definitive due diligence to the satisfaction of Sandfire;
• Execution of a Merger Implementation Agreement;
• Receipt of a unanimous recommendation from the MOD Board;
• Binding commitments or statements of intent by MOD shareholders holding 19.9% or more, in support of the transaction; and
• Sandfire Board approval.

The Board believes that the Indicative Proposal undervalues the assets of MOD:

• MOD holds a dominant position (~11,700km [2] in granted licences) in one of the last under-explored sediment hosted copper belts in the world, within a safe jurisdiction [2];
• MOD owns 100% of the T3 Copper Project, a high-quality copper development asset;
• Strong exploration results indicate the potential for additional economically viable copper mineralization within several priority targets within MOD’s landholding;
• MOD expects the T3 Copper Project will produce a high-grade, high-quality concentrate, attracting strong interest from metal traders and smelters;
• MOD is on track to release the T3 Copper Project Feasibility Study by end of the first quarter of 2019;
• MOD’s share price and the MOD / SFR exchange ratio are at a 2.5-year low [3];
• The last placement price was $0.47 per share [4];
• NPV (pre-tax) for the T3 Copper Project based on the PFS is $370m under the Base Case and $529m under the Expansion Case [5]; and
• The acquisition would be highly accretive to Sandfire in terms of resource, reserve, extended mine-life and NPV per share [6].

The Board remains fully committed to act in the best interests of, and to maximise value for MOD shareholders. The Company is willing to engage with Sandfire and grant confirmatory due diligence if a compelling price is presented and capable of being supported by the Board and MOD shareholders.

MOD has not received any offer capable of acceptance by the Company's shareholders and no certainty that the Indicative Proposal will result in a transaction. The Company will continue to update the market with any material developments in relation to the Indicative Proposal.

The Company has appointed Sternship Advisers as financial advisor and DLA Piper as legal advisor with respect to Sandfire’s Indicative Proposal.”

Metal Tiger confirms that it has made a non-binding commitment to take up its entitlements under the Rights Issue. Metal Tiger currently holds 31,064,220 MOD shares in MOD as well as 40,673,566 unquoted options with a nil exercise price expiring on 15 November 2021; and 154,167 options over MOD shares, each exercisable at AU$0.06 per MOD share on or before 15 April 2019.

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

Michael McNeilly	(Chief Executive Officer)	Tel: [phone]
Mark Potter	(Chief Investment Officer)
Richard Tulloch James Dance Jack Botros	Strand Hanson Limited (Nominated Adviser)	Tel [phone]
Nick Emerson	SI Capital (Broker)	Tel: [phone]
Gordon Poole James Crothers Monique Perks	Camarco (Financial PR)	Tel: [phone]

Notes to Editors:

Metal Tiger plc is listed on the London Stock Exchange AIM Market (“AIM”) with the trading code MTR and invests in high potential mineral projects with a base, precious and strategic metals focus.

The Company’s target is to deliver a high return for shareholders by investing in significantly undervalued and/or high potential opportunities in the mineral exploration and development sector. The Company’s key strategic objective is to ensure the distribution to shareholders of major returns achieved from disposals. Metal Tiger has two investment divisions, Direct Equities and Direct Projects.

The Direct Equities division invests in undervalued natural resource companies listed on AIM, the ASX and the TSX. Through the trading of equities and warrants, Metal Tiger seeks to generate cash for investment in the Direct Projects division.

Metal Tiger’s Direct Projects division is focused on the development of its key project interests in Botswana, Spain and Thailand. In Botswana, Metal Tiger, through its 12.5% interest in MOD Resources Limited and related JV, has a growing interest in the large and highly prospective Kalahari copper/silver belt. In Spain, the Company has tungsten and gold interests in the highly mineralised Extremadura region. In Thailand, Metal Tiger has interests in two potentially near-production stage lead/zinc/silver mines as well as licences, applications and critical historical data covering antimony, copper, gold, lead, zinc and silver opportunities.

The Company actively assesses new investment opportunities on an on-going basis and has access to a diverse pipeline of new opportunities in the natural resources and mining sectors. For pipeline opportunities deemed sufficiently attractive, Metal Tiger may invest in the project or entity by buying publicly listed shares, by financing privately and/or by entering into a joint venture.

Background information on the T3 Project

The T3 Project is located on the Kalahari Copper Belt in northern Botswana and is a Copper/Silver Project. T3 is located within the central part of the T3 Dome Complex (approximately 1,000km²), which is the focus of rapidly increasing exploration activity undertaken by MOD. Two significant resources have been discovered to date within the T3 Dome: T1 (Mahumo deposit 100% MOD) and T3 (100% MOD).

The T3 Deposit was discovered in March 2016 when a reverse circulation (“RC”) drill hole intersected 52m @ 2.0% Cu and 32g/t Ag from shallow depth. The maiden T3 JORC (2012) compliant Mineral Resource Estimate was announced on 26 September 2016 with the first Resource upgrade announced on 24 August 2017. The results of a Scoping Study for an open pit mine at T3 with a 2Mtpa processing plant, an indicative mine life of 10 years and an average production rate of 21,800tpa of copper and 665,000oz pa of silver was released on 6 December 2016. Work on a Pre-Feasibility Study (PFS) commenced in January 2017 and additional deeper copper mineralisation was discovered below the T3 Resource in February 2017.

The Phase 2 drilling at the T3 Copper/Silver Deposit commenced on 7 August 2017, with approval granted for the recommencement of both diamond core (“DC”) and RC drilling at the T3 Project and its vicinity, through to December 2018 (which has subsequently been extended to December 2020). This included 90 DC drill holes designed to infill the Resource and test for possible extensions. The objective of the infill programme is to increase geological confidence and upgrade categorisation of the T3 Resource. The programme also included grid drilling to investigate the potential for an underground Resource down-dip and along strike from the planned open-pit, and to investigate geophysical targets. Drilling approval has been granted for the wider T3 Dome with the acceptance of the T3 Dome EMP announced on 3 April 2018.

The results of the T3 Open Pit Pre-Feasibility Study were announced on 31 January 2018; the revised and upgraded T3 Copper/Silver Deposit Mineral Resource Estimate was announced on 2 July 2018; and a Resource re-classification announced on 16 July 2018.

The T3 Open Pit Feasibility Study, towards a decision to mine, is currently underway.

Outside of the T3 Project licence area, Tshukudu Exploration, the Metal Tiger (30%) and MOD (70%) joint venture, continues to conduct regional exploration on the highly prospective Kalahari Copper Belt.

Footnotes:

¹ As at close of market on 15 January 2019.
² Refer to Sprott Capital Partners research report dated 15 January 2019, available at www.modresources.com.au/research_reports
³ Based on closing prices
⁴ MOD’s $18m placement and rights issue announced on 6 March 2018.
⁵ Refer to ASX announcement “T3 Pre-Feasibility Study Confirms Robust, Long Life Copper Mine” released on 31 January 2018.
⁶ Based on average broker NPV.

Category Code: MSCH

Sequence Number: 662912

Time of Receipt (offset from UTC): 20190121T091109+0000