Cobre Limited: Strategic Botswana Copper Acquisition

Sydney, Australia - Cobre Ltd. (ASX:CBE) is pleased to announce the signing of a binding Heads of Agreement (HOA) for the proposed scrip-based acquisition of 51% of the equity of Kalahari Metals Limited (KML). KML is a private UK company which controls approximately 8,100 km2 of tenements within the Kalahari Copper Belt (KCB) in Botswana (with 6,650 km2 owned 100%, and 1,450 km2 in JVs). The KCB is regarded as one of the most prospective areas globally for copper exploration by the US Geological Survey (USGS), with a number of copper-silver deposits currently under development by both Sandfire Resources (ASX:SFR) and Cupric Canyon Capital (Cupric Canyon) (refer Figure 2*).

KML is currently owned by seven shareholders, including Cobre's largest shareholder, Metal Tiger plc (LON:MTR) which currently holds ~62%. In the circa 2 years since MTR acquired its stake, it has invested approximately US$4.2m into KML, and has successfully identified copper mineralisation at multiple locations. Post completion, MTR will continue to hold a 49% stake in the KML JV, with all other KML shareholders fully converting their existing KML shares into CBE shares. Other than MTR, none of the other KML shareholders are related parties of Cobre. Upon completion MTR will hold circa 21% of CBE.

Key terms of the HOA include:

- The KML vendors will collectively be issued circa 21.4m CBE shares in consideration for the 51% interest in KML. Cobre will initially acquire a 49.9% interest in KML, and subject to obtaining change of control approval from the Ministry of Mines of Botswana, will increase its shareholding in KML to 51% immediately thereafter.

- The new shares, to be escrowed until 31 January 2022, will be issued at an implied CBE share price of 20cps.

- KML and each vendor have agreed to a 60-day exclusivity period in order for Cobre to conduct detailed due diligence on KML and its exploration licences.

o Transaction completion is conditional upon:

- Cobre conducting due diligence enquiries in relation to KML and its licences to Cobre's satisfaction;

- Cobre and the vendors negotiating and executing an agreed share purchase agreement;

- Cobre and MTR negotiating and executing a shareholders' JV agreement in relation to the future management of KML;

- Cobre obtaining shareholder approval at its upcoming AGM in mid-October 2020; and

- MTR obtaining FIRB approval, if required, for the receipt of additional Cobre shares.

Assuming completion occurs on or before 30 November 2020, it is estimated that KML will hold a cash balance of approximately US$600,000. These funds will be used for ongoing exploration activities within the Kalahari tenements over the next 6 months. Once this cash balance is exhausted, Cobre and MTR have agreed to commit A$1.75 million each (A$3.5 million in total) to fund further exploration for the following two years. Cobre can fund this commitment from existing cash holdings.

Background on Kalahari Metals Limited (KML)

In geological terms, copper mineralisation in the KCB is typically hosted above the contact between the D'Kar Formation (reduced sediments) and the Ngwako Pan Formation (oxidised continental red beds). This is evidenced by nearby copper discoveries held by Cupric Canyon and Sandfire (through its acquisition of the formerly ASX-listed MOD Resources). In recent years, KML has undertaken a systematic exploration program across its Kalahari tenements. This included Airborne Electromagnetic (AEM) surveys to identify conductive carbonaceous marker units within the lower D'Kar Formation stratigraphy, which are critical in determining the underlying D'Kar/Ngwako Pan contact position, combined with magnetic survey interpretations of the geological structure, which together identify favourable locations for exploration drilling.

KML's 8,100 km2 of licences are separated in to four project areas:

- Okavango (2,720 km2)

- Ngami (720 km2)

- Kitlanya East (2,750 km2)

- Kitlanya West (1,900 km2)

Okavango includes tenements immediately along strike from Cupric Canyon's Zone 5 and Zone 5N copper deposits. KML has utilised high resolution magnetics and AEM surveys to map out target areas for exploration drilling. Of the six core holes drilled in 2019 as an initial test of these targets, KML has reported that five holes intersected the mineralised D'Kar/Ngwako Pan contact. The Okavango tenements are a mix of 100%-owned and JV holdings (refer Figure 2*).

Similarly at Ngami, KML has reported that early stage exploration drilling based on magnetic and AEM survey interpretation has resulted in successful intercepts of the copper mineralised D'Kar/Ngwako Pan contact. The Ngami tenements are held as JVs (refer Figure 2*).

Kitlanya East includes tenements in close proximity to Cupric Canyon's Banana Zone and Sandfire's T3 and A4 copper deposits. Recent magnetic and AEM data interpretation by KML has identified a number of prospective anticlinal fold hinge targets. Initial drill testing commenced in Q1 2020 confirmed the presence of lower D'Kar stratigraphy before drilling was suspended due to COVID-19.

These tenements are 100% owned by KML.

100%-owned Kitlanya West, located proximal to the Ngami tenements, includes three conductive dome targets considered analogous to Sandfire's T3 and A4 deposits as identified in recent AEM surveys. Soil sampling by KML has displayed positive base metal responses in this location.

Botswana's recent COVID-19 lockdown has now eased allowing KML to restart their 2020 exploration program, which is scheduled to include drilling of the Kitlanya East and Kitlanya West prospects.

Drilling has already commenced at Kitlanya East.

*To view tables and figures, please visit:
https://abnnewswire.net/lnk/DV144F8H

About Cobre Limited:

Cobre Ltd. (ASX:CBE) is a Sydney based company focused on mineral exploration in Western Australia. The company recently discovered a new high grade VMS deposit enriched in Copper, Gold, Zinc and Silver in Western Australia from its maiden drill program in June 2019.

Source: Cobre Ltd.



Contact:

Cobre Ltd.
Martin Holland
E: info@cobre.com.au
www.cobre.com.au