Trading in Cradle Arc’s Ordinary Shares on AIM commenced today, under the ticker CRA.L (Admission). As part of the Admission process, the company has raised, in aggregate, £5.65 million before expenses, comprising £3.25 million in pre-IPO funding, via the issue of the October 2017 Convertible Loan Notes, which will automatically convert into Ordinary Shares on Admission, and a further £2.4 million on Admission, through a Placing of 24,000,000 new Ordinary Shares at a Placing Price of 10 pence per Ordinary Share. On Admission, the Company will have a total of 201,329,482 Ordinary Shares in issue, implying a market capitalisation of approximately £20.1 million (approximately $28.1 million) at the Placing Price.

Overview:

• Raised £5.65 million before expenses in pre-IPO and IPO equity raisings to support the ramp-up of production at the Mowana Copper Mine in Botswana, an established and relatively low risk mining jurisdiction
• Mowana mine has strong value fundamentals, with a current base case NPV of $87 million, which is projected to increase to up to $245 million following certain planned plant upgrades
• Mowana also has significant potential future upside from the development of the exploration areas that fall outside of the current base case mine plan and the potential development of the Makala underground mine
• In addition to its cornerstone copper producing asset in Botswana, the company also owns the development ready Matala gold asset in Zambia with a JORC resource estimate of 568,000oz @ 2.7 g/t Au

Mowana copper mine (Cradle Arc, 60%) was acquired on attractive terms via a transaction originally agreed in December 2016, when the copper price was approximately $2.5/lb (some $5,512/t), since when the copper price has increased by approximately 25%. to circa $3.1/lb (some $6,897/t), making the investment even more compelling.

Over $170 million of capital historically invested by previous operators at Mowana, which was in production between 2008 and 2015 before ceasing operations at a time of low copper prices and following operating challenges now addressed through a revised mine plan.

Production restarted in March 2017 and is currently ramping up to the base case nameplate production rate of approximately 12,000 t/y of copper in concentrate:

• Processing at a throughput rate of 1.2 Mt/y, mining at a grade of 1.16% Cu
• Average all-in cash costs of approximately $4,400/t of saleable copper
• Base case NPV of $87 million.

There is a low capex expansion option to increase production at Mowana to about 22,000 t/y of copper in concentrate through the installation of a Dense Media Separation (DMS) pre-concentration process:

• DMS is expected to increase throughput to approximately 2.6 Mt/y with reduced cash costs
• Increased NPV of up to $245 million
• JORC compliant resource base of 686,000 t of contained Cu in Measured & Indicated categories and a further 758,000 t contained Cu in Inferred, to support a long mine life operation, with significant exploration upside potential

Kevin van Wouw, CEO of Cradle Arc, said: “The central pillar of our portfolio is Mowana, an established copper mine in Botswana, which is currently in production and ramping up to approximately 12,000 t/y of saleable copper per annum, at an all in cash cost of $4,400/t versus a current copper price of $6,897/t, clearly highlighting the already robust economics of the mine. Our plans to expand and optimise Mowana, primarily through the implementation of a DMS pre-concentration process, considerably improve the economics of this asset and can potentially raise the total project NPV significantly, to $245 million.  In addition to the producing Mowana mine, there is significant additional upside potential from the exploration opportunities open to us in the region and exciting opportunities across our wider portfolio.

“Our strategy is centred on applying new mining models and techniques, to achieve cash positive production from proven mining assets, having secured JV partnerships for our Mali assets, to maximise value in the near term for our shareholders. This strategy has been presented to potential investors and I am delighted to report that the appetite for this model has been significant and we have now added several well-known institutional holders to our register.  I look forward to providing regular updates to shareholders on our progress with Mowana and our other attractive portfolio assets.”