Metal Tiger plc Substantial progress made through 2018

Metal Tiger Plc (LON:MTR), the AIM listed natural resources investment company, has today announced its unaudited interim results for the six months ended 30 June 2018.

Key Highlights:

Six months to 30 June 2018

• Completion of the pre-feasibility study for the T3 Project demonstrating robust economics (base case NPV US$281m, expansion case NPV US$402m) and in addition an upgraded T3 resource (60MT containing ~590kt of Cu).
• Substantially negotiated an agreement for the sale of MTR’s 30% stake in the T3 Project to the Company’s joint venture partner MOD Resources Limited (“MOD”), subject to conditions precedent. The binding agreement was finalised and announced on 18 July 2018 following the period end. The consideration upon completion will comprise circa 17.2m MOD shares and 40.6m options to receive a further 40.6m shares for nil consideration (subject to certain conditions), with completion expected in October 2018.
• Drilling within the Company’s 30% Botswanan JV with MOD commenced at T3-Dome following receipt of environmental approvals and early visual drilling results were highly encouraging.
• Binding agreement signed to acquire up to 50% of Botswana focused Kalahari Metals Limited (“KML”) that holds interest in seven highly prospective exploration licences covering 4,036 square kilometres in the Kalahari Copper Belt. First tranche invested giving the Company 18% of KML.
• Loss for the period 1 January to 30 June 2018 of £4.5m, of which £3.1m was accounted for by the loss in fair value of Direct Equities investments.
  Post period end

Successfully raised £6.2m at 2.8p per share (with warrants), in August 2018, from existing and new shareholders based in the UK and North America.

KEY PERFORMANCE INDICATORS

Chairman’s Statement

The first half of 2018 has seen substantial progress made by the Company with respect to its core investments, although the fall in value of its minority equity investments as a result of challenging market conditions has disguised much of the work done during the period.

The culmination of this work has been the signing of a binding agreement for the sale of Metal Tiger’s 30% stake in the Botswana T3 Project to our joint venture partner MOD which was announced just after the period end on 18 July 2018. Consideration for the sale amounts to 17,200,000 MOD shares and options to receive a further 40,563,566 MOD shares for nil consideration (“Options”), exercisable under certain conditions, for a total value equivalent to A$27.7 million on the date of announcement. The allocation between shares and Options may vary subject to Metal Tiger’s shareholding at the date of completion. The deal with MOD will occur five business days after the satisfaction of all conditions precedent and is expected to complete by the end of October 2018. On 19 September 2018, MOD held a shareholders meeting to vote on a resolution to approve the deal, which was passed by MOD shareholders unanimously. This was a very encouraging development, since the shareholder vote was a condition precedent outside the direct control of the parties. Metal Tiger has invested circa £3.8m to date in the MOD/Metal Tiger joint venture including contributions made to both T3 and other exploration licenses which will remain in a new 30/70 JV with MOD.

On completion, the sale of the T3 Project will provide Metal Tiger shareholders with exposure to the development of the T3 Project, without a requirement to contribute to mine construction costs, and provides increased exposure to MOD’s successful ongoing exploration programme.

In addition, consolidation of the T3 Project to 100% MOD direct ownership is expected to make the asset more attractive with regard to development financing options. Metal Tiger will benefit from this through its substantial shares and Options sale consideration and current equity position in MOD.

In the event of a successful takeover offer for MOD any remaining Metal Tiger Options will be automatically converted to MOD shares.

Botswana/MOD

As part of the deal, Metal Tiger and MOD will enter into a new JV comprising all of the joint venture exploration licenses (excluding the sold T3 Project), covering circa 7,978 square kilometres of prospective land in the Kalahari Copper Belt providing Metal Tiger shareholders with a 30% interest in any future discoveries. Metal Tiger will also retain a 2% net smelter royalty over the T3 Project capped at US$2 million. Metal Tiger may also receive a 2% net smelter royalty over all Exploration Assets under specific scenarios.

Prior to the announcement of the deal to sell the T3 Project to MOD, MOD issued a statement advising an increase in the T3 Indicated Resource to 60MT with ~590kt of contained copper. This followed on from the T3 Mineral Resource update announced on the 2 July 2018. The project’s technical team consider the Resource upgrade may well support an increase in the design throughput of the planned T3 processing plant, and that there is now the potential that the Feasibility Study Ore Reserve could significantly exceed the Ore Reserve used in the Pre Feasibility Study.

On 12 June 2018 MOD announced drilling on the A4 Dome had yielded an outstanding drill intersection and subsequent drilling results have confirmed further copper intersections in the area. The circa 5km A4 Dome is located just 8km from the 60MT T3 Pit Project and planned processing plant. Drilling at the A1 Dome has also intersected visible copper mineralisation. The A4 Dome and the A1 Dome together with the T3 Deposit, form part of the 700 square kilometres T3 Dome complex.

Mineralisation is stockwork-type, hosted in a sandstone sequence and remains completely open at depth and along strike.

Botswana/Kalahari Metals Limited

On 6 June 2018 Metal Tiger signed a binding Investment Agreement to acquire up to 50 % of Botswana focused explorer Kalahari Metals Limited (“KML”) and at 30 June 2018 had exercised the first option and held an 18% interest in the company. KML is privately owned and holds interests in seven highly prospective exploration licences covering 4,036 square kilometres in the Kalahari Copper Belt, consisting of two 100% owned exploration licences and five exploration licences subject to a binding earn-in agreement with Triprop Holdings (Pty) Limited. Licences cover the prospective D’Kar and Ngwako Pan Formations with favourable structural positions and are associated with major copper deposits. The deal gives Metal Tiger exposure to a further 4,063 square kilometres of largely unexplored ground, adjacent to significant recent discoveries in the highly prospective Kalahari Copper Belt. The 100% KML owned exploration licences are situated northeast along strike of the Cupric Canyon Capital (circa 50km) and the MOD / Metal Tiger JV projects (circa 170km).

Since the period end, Metal Tiger and KML have announced that airborn high resolution electromagnetic (AEM) surveys had been completed over the prospective Okavango Project (Eastern Block) and Ngami Copper Project (Western Block) concessions. Processed survey data will help target the mineralised redox contact at the base of the D’Kar Group as well as identifying favourable regional structures and anticlines which have the potential to host mineralisation in analogous settings to the MOD T3 Deposit. Results from the AEM will be used to provide priority areas for follow-on drill testing.

Thailand

The Thai IPO for KEMCO was scheduled to launch in the first quarter 2018 but was postponed pending release of the Thai Minerals Management Master Plan. The Thai Cabinet has now approved the 20-year mineral management strategy (2017-2036) and the five-year mineral management master plan for 2017-2021 (the Master Plan). Importantly, the historical mining lease application areas under the KEMCO project fall into the Mineral Deposit Area classification. The Company has been informed that the formation of a new Minerals Act Committee (as per the new regulations) is underway and it is anticipated that once this has been formed then both mining licence applications and prospecting licence applications will be able to be processed.

Direct Equities

Direct Equities have shown a fall in value since the year end resulting in an unrealised loss of £3.1m in the period reversing the gains of previous periods although still showing a small gain over cost.

Metal Tiger built up an 8.6% equity stake in ASX listed, Kingsgate Consolidated Limited (KCN), towards the end of 2017. A notice of a General Meeting was requisitioned to seek to remove the majority of the Directors. Although the vote was close the motion was not passed. Metal Tiger had the support of both Institutional and Private Investors. It was decided not to pursue KCN and the equity holding was sold at the end of January 2018 and the proceeds directed to meeting continued costs in our JV project with MOD.

Metal Tiger continues to increase its direct equity investment in MOD by buying on market. At 30 June 2018 the Company held 13,880,042 shares in MOD and as at 26 September 2018 holds 13,974,220 shares in MOD representing 6.1% of its issued share capital.

The company has also made further acquisitions in the period in its investment in Thor Mining plc, which has tungsten and copper projects in Australia and the USA and, at 30 June 2018 held 73,430,000 ordinary shares in the company representing 10.7% of its issued ordinary share capital. The Company is actively pursuing strategies to maximise the value of its investment in Thor. Small investments have also been made in Veta Resources Inc and Pan Asia Metals Limited.

Results for the period

Administration costs for the period were £1,678,400, a reduction from those in the first half of 2017 (2017 H1: £1,994.800) and are significantly down on the full year comparatives (2018: £4,927,100) due mainly to reduced activity in Thailand and lower costs in administering Direct Equities Division deals. After reflecting the decline of market value in the Direct Equities Division and the sale of the KCN holding, the Group had an operating loss for the period of £5,110,300 (2017 H1: profit of £4,000; 2017 full year: profit of £510,200).

With the reinvestment of the proceeds of KCN into our joint ventures and associates, cash at bank and in hand fell from £2.8m to £0.7m at the end of the period. As described below, new funds were introduced into the Company in August 2018 to provide additional resources for the future without the need to liquidate further Direct Equity division holdings.

Fund raising post 30 June 2018

At the end of August 2018 Metal Tiger raised £6.2m at a price of 2.8p per ordinary share with attached warrants at 5p exerciseable within a 3 year period . This represents that largest fundraise to date. The proceeds of the fundraising will be used to fund Metal Tiger’s portion of its commitment to 2018 budget for its Joint Venture project with partners MOD in the Kalahari Copper Belt in Botswana (30% Metal Tiger / 70% MOD), for its commitment to its recently acquired Joint Venture with KML in the same region, as well as for working capital and general corporate purposes. It is particularly pleasing to see our biggest shareholder Sprott Capital Partners contributed a further £2.6m towards the fundraise.

Conclusions

Metal Tiger plc remains positive on the outlook for copper prices given limitations on supply and the important role of copper in the global economy. In the year to date the Company has focussed the majority of its resources on the highly prospective Kalahari Copper Belt in Botswana and this will continue to be its priority. Metal Tiger believes that its JV with MOD has the potential to become a world class copper asset. The investment in KML, which is in the early days, will provide further exposure in this exciting region. I look forward to reporting continued success here.

I would like to take this opportunity to thank all our advisers and partners, the Company’s success has been helped by the quality of those engaged around the world. Thanks also belong to our shareholders, who share our resolve to create high investment returns, many of these investors have held their shares in the company for the past four years.

We are working hard and will continue to strive to deliver significant value from all our investments.

Charles Hall

Chairman