Keras Resources PLC (KRS.L) Acquisition of Producing Phosphate Project

Acquisition of 51% Interest in Producing, High Margin, Organic Phosphate Project and a total cash fundraising of £1.73 million

Keras Resources plc, the AIM-listed mineral resource company, is pleased to announce that it has agreed to acquire a 51% interest in Falcon Isle Holdings LLC (‘Falcon Isle’) for nominal consideration, on the basis that Keras provides a US$2.5m loan facility to Falcon Isle payable in tranches as set out below (‘the Acquisition’). Falcon Isle is the 100% owner of the Diamond Creek phosphate mine (‘Diamond Creek’ or the ‘Project’) located in in Utah (USA) which is a fully permitted, high grade direct shipping ore (‘DSO’), low capex organic phosphate operating mine.

The Company has agreed to raise 1,728,013.99 (before expenses) through the placing of 1,440,011,666 new ordinary shares of 0.01p each (‘Ordinary Shares’) for cash at a price of 0.12p per Ordinary Share (the ‘Placing Shares’).

Overview of the Acquisition

· Acquisition of a controlling interest in a niche market, operating organic phosphate mine, supporting Keras’ strategy of building cashflow positive mining projects, growing its asset base and diversifying its revenue streams

· Diamond Creek benefits from:

o full permitting and location in the mining-friendly jurisdiction of Utah, USA

o current production – 5,000 tons of DSO planned for the North American market in Year 1 ramping up to 48,000 tons in Year 5

o excellent economics with internally estimated operating costs of US$229/ton in Year 1 reducing to US$92/ton at peak production in Year 5

o estimated low capex requirement of US$468,000 including contingencies

o long resource life*: at a peak production rate of 48ktpa, the opencast resources alone represent in excess of 60 years of production

o operationally de-risked – bulk sample completed in November 2019 proving up mining, processing and logistics for the project

o Diamond Creek is one of the highest grade phosphate projects in the US and is marketing a 28% Phosphorus pentoxide (‘P 2 0 5 ‘) premium product with minimum 14% available phosphorous (‘P’), the available P is significantly higher than the 3% which the majority of its competitors market

· Complements existing asset base – together with its interest in Nayega, Keras holds two quality projects, both with bulk samples completed, low capex and near-term production with robust cashflow projected

· Appointment of Jean du Plessis, who together with Russell Lamming and Graham Stacey was part of the successful Chromex Plc executive management team, to advance Diamond Creek and build the platform required to build a cashflow generative, dividend paying company

*Mineral resources have not been classified according to any International Reporting Standard / any Standard defined in the AIM Rules for Companies.

Russell Lamming, CEO of Keras Resources, commented, “Diamond Creek meets all our investment criteria as a high grade, low Capex and cash generative investment and sits well with our existing project – the Nayega Manganese Project in Togo – in that both projects are low volume, high margin assets with the initial investments based on known resources leaving significant upside to develop long-life assets. This is a significant milestone for Keras with the Company transforming from developer to producer overnight with the first commercial production of high grade organic phosphate taking place at Diamond Creek yesterday.

“Importantly, Diamond Creek has a direct route to market as a shallow open pit mining operation with a simple crushing and screening plant minimising the technical risks. The technical attributes are further underscored, when read in parallel with its location in the mining friendly jurisdiction of Utah, and the compelling long-term demand fundamentals for organic fertilisers.

“We have followed the same route to production at Diamond Creek as we did in Togo with a bulk sample and the procurement of a local turn-key contractor to reduce the operational risk. The bulk sample which included the construction of access roads, the extraction and processing of 300 tons of DSO, metallurgical testwork for an owner operated processing plant and the supply of saleable product to key potential customers.

“The lease area has a long history of small scale mining but the receipt of organic certification by all three official certification agencies; Organic Materials Review Institute (‘OMRI’), California Department of Food and Agriculture (‘CDFA’) and Washington State Department of Agriculture (‘WSDA’) in June 2016 was the major breakthrough in the Project’s advancement and has played a pivotal role in paving the way for us to develop an economically viable and operationally robust asset through which to diversify revenue streams and create tangible value for shareholders.

“Diamond Creek boasts strong economics which promise to build value; an internally estimated EBITDA margin in excess of 50%, low operational gearing, and a significant resource to underpin a long life-of-mine. Importantly the marketing strategy and ability to carve out a market share is underpinned by the ability to sell a premium, higher grade product to our competitors at a competitive price. This strategy has already been validated by the first order of 770 tons, representing approximately 15% of projected sales for the year ahead.

“I would like to welcome Jean du Plessis to the Keras group. Jean, together with Graham Stacey and I, was part of the successful Chromex Mining Plc team which built the Stellite chrome mine in South Africa. He has significant experience in operating mining and processing operations around the world and has been based in the United States since October 2011. Jean will be employed by Falcon Isle and will be highly instrumental in both the operation of Diamond Creek and identifying other projects in the US as we continue to diversify our portfolio of assets both operationally and geographically.

“I look forward to providing updates on both assets as we move towards commercial production in the coming months.”

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