17 July 2018

Equatorial Mining & Exploration Plc ("EME" or the "Company")

Investment Agreement with ARQ Minerals (Pty) Limited ("ARQ")

Further to the announcement of 1^st June 2018 which referred to a Heads of Terms with ARQ, EME is delighted to announce the completion of an Investment Agreement which formalises a commitment to work together in Nigeria in the production and commercialisation of EME's interests.  

ARQ will partner with EME Mine Nigeria Limited (the Company's wholly owned subsidiary) ("EMEMine") to manage the day to day running of excavation and mining activities at the St Leonard Mine in Kogi State.  The origination and nature of the St Leonard Mine was disclosed in announcements last year and to-date the Company has been successful with its opening of the pit and delivery of trial amounts of coal to EME's customer.  The initial investment provided by ARQ will take the Company into immediate commercial production.

The terms of the Investment Agreement are summarised as follows:

ARQ, having made an initial investment of £50,000 in return for 500 million new ordinary shares, under the Heads of Terms, will invest a further £50,000 in return for a second issue of 500 million new ordinary shares.  In return, on receipt of this second issue, ARQ will increase its ownership of EMEMine from 25% to 50%.

ARQ will also be issued a total 1000 million warrants to subscribe for ordinary shares at 0.02p per share.

Under an earn-in element, ARQ will commit to producing a minimum 40,000 tonnes as quickly as possible. For every 1000 tonnes above this quantity ARQ will earn an additional 0.625% ownership of EMEMine up to a maximum ownership of 75%.

The profits from production will be shared between EME and ARQ in proportion to their equity interest in EMEMine following the payment of 10% of Gross Profit each month to both ARQ and EME as consultancy fees.  In the case of EME, this will provide the Company with a monthly income stream.

Nicholas Nelson, Executive Chairman, Equatorial Mining & Exploration Plc, commented:

"ARQ is a significant coal mining company in South Africa and joins us with the common objective to dominate coal production in Nigeria.  Things have started moving quickly and excavation at the St Leonard mine restarted 4 weeks ago under Welcome Sandawana's personal oversite, using locally operated machinery and our own existing staff in support.  We have offtake agreements in place with domestic companies which need coal to power the cement and ceramics industries."

Welcome Sandawana, Director, ARQ Minerals (Pty) Ltd, commented:

"Coal is enjoying a resurgence of interest throughout the world and we are pleased with this opportunity to expand our interests into Nigeria.  EME provided us with a platform and our plan is to help grow EMEMine into a dominant player in Nigeria's industrial minerals sector.  Nigeria is rich in mineral opportunity and we will look beyond the existing coal interests into other areas which are also capable of easy and speedy production."

Additional Notes:

Future issues of Ordinary Shares

The initial 500,000 shares issued to ARQ represents 6.2% of the enlarged issued share capital.  As part of EME's commitment to rid the Company of all legacy debt, instructions have been provided to the Company's registrars which will lead to a significant issue of new ordinary shares. 

The Directors will make a full disclosure on the number of new shareholders and their holdings when the shares are admitted to trading, which is expected to be following the posting of the accounts.  

Year end Accounting and Audit

The above exercise will pave the way for the continuation of the accounting and audit process and the lifting of the present share suspension and more information will be announced in the weeks ahead.  Additional papers will be handed to our accountant this week to enable him to consolidate the Nigerian subsidiary into the group accounts.

Competent Persons Report

The Company's in house Nigerian geologist has started preparing background materials which will be handed to Tanylag Limited (EME's Competent Person) and subject to budget, we target end 2018 for the publication of an updated CPR.

Enquiries:

The Directors take responsibility for this announcement.