Keras Resources PLC (AIM:KRS) Increase in Diamond Creek Ownership to 100%

Keras increases ownership of the Diamond Creek Phosphate Mine in Utah, USA to 100%

Keras Resources plc (AIM: KRS) is pleased to announce that it now owns 100% of Falcon Isle Resources LLC and Falcon Isle Holdings LLC (collectively ‘Falcon Isle’), having acquired the outstanding 49% minority interests of Falcon Isle from the Helda Living Trust (‘HLT’). Falcon Isle owns the high-grade Diamond Creek organic phosphate lease and mine, (‘Diamond Creek’) and the Spanish Fork processing facility (‘Processing Facility’) in Utah, USA. Keras has now assumed full management of Falcon Isle and production has recommenced operations at the Processing Facility.

As previously announced, Keras had been looking to resolve the funding shortfall at Falcon Isle and engaged local US legal representatives to enforce its rights of the terms of the transaction agreed in June 2020, under which Keras secured a 51% stake in Falcon Isle effective 29 December 2020. Further to these discussions, agreement has been reached whereby Keras has purchased the outstanding 49% equity interest in Falcon Isle for a total consideration of US$3.2m including loans repaid to the vendor of Falcon Isle of US $1,816,527 . To preserve cashflow for developing the project, this will be paid in four annual instalments of US$800,000 commencing on 1 July 2022 with the final payment on 1 July 2025. Importantly, concluding this agreement has ensured that the Company avoids a lengthy and costly litigation process in the United States and allows Falcon Isle to recommence operations to meet demand in the key spring season.

The losses in the financial year ended 31 December 2021 attributable to the 49% interest in Falcon Isle acquired were US$24,187.

The transaction set out above constitutes a related party transaction pursuant to AIM Rule 13 of the AIM Rules for Companies as a beneficiary of the HLT is also a director of Falcon Isle. The directors of Keras, all of whom are independent for the purposes of this transaction, having consulted with the Company’s Nominated Adviser, consider that the terms of the transaction are fair and reasonable insofar as the shareholders of Keras are concerned.

Russell Lamming, CEO of Keras, commented, “We are delighted to have acquired 100% of Falcon Isle, securing the high-grade Diamond Creek phosphate mine and strategically located Spanish Fork processing plant in a very buoyant organic fertiliser market. Although processing operations were temporarily suspended whilst we sought this resolution, our management team has been on site regularly to oversee sales from our inventory of processed material and ensure business continuity, specifically retaining our customer base and maintaining relationships with key contractors. The payment terms have been structured to use cash generated from the operation and minimise additional funding. We have a 3-month window to explore financing options before the first tranche is due and have already initiated discussions with key customers to look at funding solutions.

“This acquisition has brought what has been an incredibly frustrating period for the Company to a close and results in Keras now having complete autonomy over all mine to market activities. With a total mined inventory of over 10,000 tons, including 4,000 tons of processed, saleable product available, we are extremely well placed to convert this to cashflow and increase our market share. We will also be consolidating the long term future of the Company through a targeted exploration programme to underpin future production. The organic phosphate market is on an upward trajectory, with robust long term fundamentals, operations have recommenced and we look forward to realising the full and true value inherent within the Diamond Creek asset.”

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this Announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information please visit, follow us on Twitter @kerasplc or contact the following:

Russell Lamming

Annabel Redford

Keras Resources plc

[email protected]

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