Background 

Imweru is located in the Lake Victoria Goldfields region of northern Tanzania and forms part of the Imweru Licence Portfolio. Imweru is located approximately 120 km directly southwest of the city of Mwanza in northern Tanzania (approximately 160 km west-southwest by road). The towns of Geita and Katoro lie respectively 33 km to the east and 13 km to the south.

The Imweru Licence Portfolio and Imweru Option Portfolio border on Lake Victoria’s Emin Pasha Gulf to the North. The Imweru Project lies approximately 8 km north of the Geita to Mwanza tarred road (Route B163) and approximately 8 km south of Lake Victoria. The total Mineral Resources stated for Imweru, established in accordance with the JORC (2012) Code, consist of 11.607 Mt at grade of 1.38 g/t for a Mineral Resource of 515,110 oz Au at a mineral resource pay limit of 0.4 g/t for the open pittable material and 1.3 g/t for the underground material (the “Imweru Mineral Resource”), which is within Prospecting Licence PL6284/2009.

Historic works

The Imweru Licence Portfolio was subject to extensive drilling programmes in the period from 2002 to 2008 by different operators prior to Kibo Mining’s acquisition of it in 2013. This drilling comprised 49,918 metres of rotary air blast drilling (“RAB”), 1,858 metres of reverse circulation drilling (“RC”) and 2,825 metres of diamond drilling (“DD”). The majority of the RC and DD was carried out on the Imweru Project which facilitated the first gold Mineral Resource estimation for the Imweru Project in 2009. Following Kibo Mining’s acquisition of the Imweru Project in 2013, a further drill programme was undertaken comprising 755 metres of RC and 2,515 metres of DD, resulting in an updated competent persons report by Tetra Tech EBA and an increased JORC (2012) Code compliant Mineral Resource statement for Imweru as announced by Kibo Mining in February 2014 (“2014 CPR”). The Imweru Mineral Resources are a further update of the 2014 estimate (updated in accordance with the guidelines embodied in the JORC (2012) Code). A supporting CPR compliant with the JORC (2012) Code has also been generated and is based on all drilling carried out on the Imweru Project up to and including 2013.

In addition to the 2014 CPR, Minxcon, Katoro's Competent Person, completed a preliminary economic assessment for Imweru in early 2015 (“2015 PEA”), which indicated the potential for the development of a gold mine at Imweru, with an initial production of 50,000 oz gold per annum and a mine life of seven to 10 years. In addition to the 2015 PEA, the 2014 CPR and internal studies completed by Kibo Mining indicated that significant potential exists to expand the Imweru Mineral Resource along strike and at depth both at Imweru Central and Imweru East, with an indicative expansion potential of between 40 per cent. and 80 per cent.. As detailed below, the proposed drilling programme will seek, to test strike and depth extensions of mineralised zones intersected by Kibo Mining’s 2013 drilling programme.

Development plans

The majority of Katoro's cash resources from the Company’s admission to AIM in May 2017 will be used to advance Imweru through a work programme consisting of the completion of a PFS, drilling programme, a feasibility study and the application for a Mining Licence in respect of Imweru.

Accordingly, following the Company’s admission to AIM in May 2017, the Enlarged Group will immediately commence work on the PFS and drilling programme for Imweru. The drilling programme, which the Directors expect to commence in Q3 2017, is currently expected to consist of 8-10 holes for approximately 1,400 metres of Diamond and Reverse Circulation infill drilling. With drill hole spacing and target depths carefully planned, the drilling will, inter alia, seek to test strike and depth extensions of mineralised zones that were intersected by Kibo Mining’s 2013 drilling programme and to obtain a better understanding of the current geological and mineralisation models and thus provide better geological confidence in the ore body. The drilling will also serve to provide additional diamond drill core for geotechnical, mineralogical and density measurements to provide technical data for the feasibility study and, if required and subject to future funding, the completion of a DFS.

The drilling programme is also designed, contingent on favourable results being obtained, to both increase the overall size of the current Mineral Resource and to potentially upgrade the majority of the existing Inferred Mineral Resource to a higher Mineral Resource classifications. On completion of the drilling programme, the geological models will be updated and a new Mineral Resource estimate will be prepared and the Directors hope that the upgraded Mineral Resource, or part thereof, will then be suitable for consideration for conversion into a Mineral Reserve as part of the feasibility study.

As part of the PFS and feasibility study the Company, will also undertake, inter alia, metallurgical and preliminary geotechnical studies, mine modelling/optimisation studies, financial modelling and engineering, and preliminary socioeconomic and environmental studies. In order to complete the socioeconomic and environmental studies, which will need to be completed prior to the issue (but not the application) of a Mining Licence and, if required, a DFS, the Company will need to raise additional funding.

The Directors anticipate, subject to the results of the various work streams (including the drilling programme and the PFS) being positive, commencing its application for a Mining Licence before the end of 2017. As appropriate, depending on the progress of any application for a Mining Licence, the Enlarged Group may seek to secure its continuing rights to the Imweru Project beyond the end of 2017 by applying for an extension to the current Prospecting Licence or for the grant of a Retention Licence. Further information on the licence application process within Tanzania, and the criteria to be satisfied before a Mining Licence (or other forms of licence, including a Special Mining Licence) can be granted, is set out in Part IV of the Company’s AIM Admission document.

On the basis that the results of the work programme prove positive, the Directors medium-term strategy is to fast-track a mine development decision and, subject to securing the requisite funding, to commence initial production with a target of 50,000 oz gold per annum within 18-24 months following the Company’s admission to AIM in May 2017.

Subject to securing additional funding and contingent on expansion of the Imweru Mineral Resource base, the Directors’ longer term strategy for Imweru is to seek to increase production to 100,000 oz gold per annum and develop a Mineral Resource base in excess of 1 Moz.