Paternoster Resources : Quarterly Update

RNS Number : 7235H Paternoster Resources PLC 12 June 2017

12 June 2017

PATERNOSTER RESOURCES PLC

"Paternoster" or the "Company"

Quarterly Update to 31 March 2017

Paternoster Resources plc, the AIM quoted investing company focused on the natural resources sector, is pleased to provide a quarterly update for the three months to 31 March 2017.

Highlights

• Net asset value per share was 1.8 times the share price as at 31 March 2017

• Total cash held was equivalent to 32% of market capitalisation at the period end

• Listed investments and cash represented 1.4 times market capitalisation at the period end

• Around 83% of the investment portfolio, which is currently worth around £3 million, now comprises cash and listed investments

• GAEA Resources Limited became a major shareholder

Nicholas Lee, Chairman of Paternoster, commented:

"Since 31 December 2016, the Company's net assets have decreased, principally due to the fall in the Plutus PowerGen plc ("Plutus") share price as a result of uncertainty surrounding the statement by OFGEM with respect to TRIAD payments to local embedded power generators. Plutus, however, is confident in its business model going forward and, since the period end, its share price has already recovered significantly, increasing by over

25%. Furthermore, Alecto Minerals plc is expected to come back to the market shortly having made a transformational acquisition. Also, through its investment in Glenwick plc, the Company is expected to receive shares in i3 Energy Limited when it completes its listing on AIM. We are therefore looking forward to an uplift in net assets in the short term. Also, during the first quarter, we welcomed a new major shareholder and expect this relationship to provide significant benefits to the Company going forward."

The key unaudited performance indicators are set out below.

COMPANY STATISTICS	31 March 2017	31 December 2016	Change
Net asset value	£3,057,678	£3,657,304	(16.4)%
Net asset value - fully diluted per share	0.301p	0.361p	(16.6)%
Closing share price	0.17p	0.18p	(5.6)%
Share price premium/(discount) to net asset value	(44%)	(50%)	-
Market capitalisation	£1,728,234	£1,829,894	(5.6)%

Category	Principal investments	Cost or valuation (£) at 31 March 2017
Listed investments	Metal Tiger plc, MX Oil plc, Plutus PowerGen plc, Shumba Coal Limited, Pires	1,924,441

Investments, Ortac Resources Limited, Polemos plc and Alecto Minerals plc
Cash resources	555,450
Cash and listed investments	2,479,891
Unlisted investments	522,149
Total	3,002,040

Details of some of the developments during the period at certain of the Company's investments are set out below:

Plutus PowerGen plc

During Q4 2016, the Plutus share price increased from 1.5 pence to 2.6 pence, however, in Q1 2017 it fell significantly as a result of the uncertainly surrounding the OFGEM statement regarding TRIAD payments to local embedded power generators. Given that Plutus benefits from multiple earnings streams, it believes that its business model going forward continues to be attractive. It also has a number of projects in the pipeline that are expected to deliver additional fees and revenues. Since the period end, the company's share price has already recovered by over 25%.

Alecto Minerals plc

The company continues to progress the proposed acquisition of the Mowana Copper Mine in Botswana ("Mowana"). As this constitutes a reverse takeover under the AIM Rules for Companies, the company's shares continue to be suspended.

Production at Mowana is now ongoing on a full-time basis following completion of the first blast on 29 April 2017 and a successful trial period which saw the company produce saleable

concentrate comprising up to 28% copper ("Cu"). To date, over 1,900 tonnes of copper concentrate have been produced and sold to Alecto's offtake partner Fujax Minerals and Energy Limited.

A Competent Persons Report ("CPR") on Alecto's African assets and Mowana has now been completed by Wardell Armstrong International, representing an important milestone towards the publication of the admission document required to enable Alecto to recommence trading on AIM.

The CPR reports a current resource of circa 172Mt at 0.84% Cu, of which 26Mt sits within two existing pre-stripped 350 metre deep pits. These pits represent the main areas of current operation. The company intends to increase production to an annualised rate of 12,000 tonnes Cu in Q3 2017. Production costs are expected to average US$1.5/ lb over the mine life based on an average metallurgical recovery of 91%. The CPR reports an NPV of US$87.5 million for the initial 12,000 tonnes Cu production scenario based on an average copper price of US$2.8/ lb and a discount rate of 10%.

Alongside its current mining activities at Mowana, the company intends to undertake additional test work over the coming months to finalise its decision on the installation of a Dense Media Separation ("DMS") unit. If pursued, this technology is anticipated to facilitate a significant increase in throughput to 2.6Mtpa to produce around 23,000 tonnes of Cu per annum by Q3 2018. This will dramatically enhance the mine economics and increase the project's NPV to US$245 million. As the company announced in December 2016, it has conditional funding for a DMS of US$20m. Additional upside potentially exists by developing an underground operation in the future to access the rest of the resource, which is located down dip and along strike from the open pits currently being mined. An underground operation has the potential to increase the life of mine to 20 years.

Ortac Resources Limited

In April 2017, the company announced that it has entered into an agreement to form a joint venture with a Slovakian company to jointly develop the Sturec Gold Project at

Kremnica. The Sturec project has a reserve of just under 900,000 oz gold equivalent which has progressed to pre-feasibility stage. Meanwhile, the process for final validation of the underground mining license, as announced on 17 March 2017, continues on track.