HoT with Alara Resources & Awtad Copper

11 September 2024

Power Metal Resources PLC

("Power Metal" or the "Company")

Non-binding Heads of Terms signed with Alara Resources & Awtad Copper

Power Metal Resources PLC (AIM:POW, OTCQB:POWMF), the London listed exploration company with a global project portfolio, and its majority held subsidiary Power Arabia Ltd ("Power Arabia"), are pleased to announce the signature of a non-binding Heads of Terms ("HoT") with Alara Resources Limited ("Alara") and Awtad Copper LLC ("Awtad Copper") for Power Metal to spend up to US$740,000 from the date of execution of a legally binding agreement to earn a 12.5% stake in the Block 8 concession in Oman ("Block 8"), (the "Proposed Agreement").

Alara (ASX: AUQ) is an Australia-based mining and exploration company with operations currently focused in the Middle East. Alara's flagship mining project is the Al Wash-hi - Majaza Copper-Gold Project in Oman (the "Al Wash-hi - Majaza Mine"), and it also continues to pursue exploration opportunities across Oman and Saudi Arabia for copper and other metals including zinc, silver and gold. Awtad Copper is a special purpose private company in Oman established by the Al Maawali Family, specifically focused on the Block 8 Project, located in the Hazm area of northwestern Oman. Alara holds its 10% interest in Block 8 under a joint venture with Awtad Copper.

A formal and legally binding agreement containing the full terms and conditions of the Proposed Agreement shall be executed by the parties within 15 days of executing the HoT. Although there can be no certainty at this stage given the non-binding nature of the HoT, Power Metal remains confident that the agreement will become binding subject to further discussions between the parties. Further announcements relating to the Proposed Agreement will be made as appropriate. 

Sean Wade, Chief Executive Officer of Power Metal Resources plc, commented: 

"I am delighted to be sharing this news for Power Metal in the Arabian Shield, expanding the Power Arabia portfolio into Oman. I am hopeful that the prospective nature of Block 8, identified in historic workstreams, will be further proven once exploration works get underway, following consultation with Awtad and Alara."

"This deal showcases our intent to deliver value from a diverse portfolio and I look forward to providing shareholders with updates from the Proposed Agreement."

Awtad Copper Chairman Sheikh Zeyad bin Talib Al Maawali said: "We are thrilled to embark on this strategic collaboration with Alara Resources and Power Metal Resources. The exploration of Block 8 represents a significant milestone in unlocking the mineral wealth of Oman, and we believe that with the combined expertise and resources of our partners, we are well-positioned to uncover the true potential of this highly prospective area.  As stewards of this important concession, Awtad Copper LLC is dedicated to playing a pivotal role in driving sustainable growth and delivering long-term value for Oman and all stakeholders involved."

Alara Managing Director Atmavireshwar Sthapak said: "Alara is pleased to welcome Power Metal as a potential third partner in Awtad Copper LLC and looking forward to commencement of exploration activities in Block 8 area. Alara continues to hold its stake in the JV and maintains its right to increase its shareholding by investing in future exploration programs in the area."

The terms of the HoT are that:

·    Power Metal will become manager of the exploration programmes for Block 8 during the spending phase of the Proposed Agreement.

·    The Company will provide all management, planning, execution, interpretation and reporting on all exploration activities and will consult with Awtad Copper during development and implementation of exploration programmes.

·    Power Metal will provide funding of up to US$740,000 for work activities. An initial amount of US$500,000 will relate to the period up to the renewal date of the existing licence (30th April 2025), with the balance attributable to the period following successful renewal by Awtad Copper.

·    Following the initial expenditure milestone of US$500,000, Power Metal will earn a 10% interest in Block 8 and a further 2.5% interest following an additional US$240,000 spend.

·    At completion of the US$740,000 spend, a joint funding programme covering future spend and earn in percentages will be negotiated.

·    Awtad Copper will maintain the licences and remain licence holders for this phase of work, however, Power Metal holds first right of refusal for acquisition should Awtad Copper wish to dispose of Block 8.

·    Awtad Copper is responsible for seeking all required approvals for the exploration programme.

·    With the Al Wash-hi - Majaze Mine being in close proximity to Block 8, and Awtad Copper being well established in Oman, local logistical and stakeholder support will be provided to Power Arabia to enable the focus of work to be in the exploration arena.

Figure 1: Location of Block 8, Oman, September 2024

Block 8 exploration history and prospectivity

Block 8 covers about 496 km2 in the Hazm area east of Daris in northwestern Oman and was first granted in 2009. In January 2011, Awtad Copper entered into a joint-venture ("JV") agreement with Alara who have been carrying out exploration work in the adjoining Block 7 as part of another JV arrangement. Exploration work on Block 8 ceased in 2013 while the block was being renewed, which was finalised in May 2024.

Further to detailed discussions, the Company has proposed a comprehensive exploration programme for Block 8 to both develop existing copper prospects defined from a combination of historic surface work and drilling, as well as grass roots exploration work on the remainder of the Block which, to date, has not been the subject of detailed exploration.

The historic exploration work, combined with the geological setting of the Block, are highly encouraging, with the Block hosting a section of the Semail ophiolite sequence which is a highly prospective geological unit that, to date, has yielded 150 known volcanic massive sulphide (VMS) prospects. 

Figure 2: Simplified geologic map of the Semail ophiolite in northern Oman taken from Gilgen et al. 2013 (modified from Calvez and Lescuyer, 1991), showing the main VMS and gossan deposits. The black polygon marks the location of the Block 8.

Figure 3: Summary of historical exploration work in relation to Block 8, Alara, 2013.

Power Metal will use industry-accepted exploration techniques to advance the licence, with technical work to be carried out at every stage to enable any new data to qualify for inclusion in an accredited MRE to 43-101 or JORC compliance should this be required.

Through historical work by Alara in 2013, there are several copper prospects already identified, which allows next stage exploration programmes to proceed efficiently while more early-stage work will be required on the remainder of the highly underexplored Block 8.

Figure 4. Geological Map of Block 8, Alara, 2013

For further information please visit https://www.powermetalresources.com/ or contact:

NOTES TO EDITORS

Power Metal Resources plc (AIM:POW,OTCQB:POWMF) is a London-listed metals exploration company which finances and manages global resource projects and is seeking large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale potential across a global portfolio including precious, base and strategic metal exploration in North America, Africa, Saudi Arabia and Australia.

Project interests range from early-stage greenfield exploration to later-stage prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint ventures until a project becomes ready for disposal through outright sale or separate listing on a recognised stock exchange thereby crystallising the value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the Company's growth or may be returned to shareholders through share buy backs, dividends or in-specie distributions of assets.