EDITOR: | June 17th, 2013

Rare Earth Minerals Plc : Mexico Drilling Update and Placing

| June 17, 2013 | No Comments
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June 17, 2013 — (Source: Rare Earth Minerals Plc) — Highlights:

  • REM intersects 84 metres of clays in diamond drill hole ES-03 at its Fleur – El Sauz Lithium Project in northern Mexico. This is the thickest clay intercept to date from this current drilling programme.
  • The three holes completed to date have extended the strike length of the clay-bearing sedimentary succession on the La Ventana Lithium deposit by 1.7 kilometres to the southeast, for a total drill indicated strike length on both the La Ventana and Fleur concessions of approximately 6.7 kilometres.
  • REM has entered into a £300,000 Placing Agreement and, separately, a £150,000 Equity Swap Agreement with YA Global Master SPV, Ltd. (“YAGM”).
  • YAGM have agreed with the Company that they will not dispose of any shares for an initial 2 month period.

David Lenigas, The Company’s Chairman commented:

“REM is pleased to report that the first three holes of the drill program have clearly established continuity of the clay units over a strike length of 1,700 metres on the joint venture lands. These clay sequences form a part of the basin that hosts the adjacent 60 million tonne La Ventana lithium deposit, which is estimated to contain a resource grading the equivalent of 1.6% lithium carbonate (Li2CO3). We look forward to reporting the grades of the core drill in due course.”

“REM is also please to have it’s first corporate investor with YACM now holding 19.3% of the Company.”

Update:

Rare Earth Minerals PLC (AIM: REM) is pleased to provide further updates on the diamond drill program that is underway at the El Sauz – Fleur lithium concessions in Northern Mexico, and under joint venture with Bacanora Minerals Ltd. (BCN: TSX-V). As previously reported (June 4 and June 7, 2013), the first two diamond drill holes (ES-01 & ES-02) have been completed. The third hole (ES-03) has also been completed.

The third hole (ES-03) was drilled 1,700 metres southeast of and on strike from the La Ventana lithium deposit The preliminary log for ES-03 show intersections of 43 metres in length for the Upper Clay and 41 metres for the Lower Clay (Table 1), these are estimated to be equivalent to true thicknesses of 40.4 metres and 38.5 metres for the Upper and Lower Clay units respectively, assuming a dip of 20o for the clays. A complete section of the Upper Clay unit was intersected in ES-03 and it is very comparable to that intersected in hole ES-01. The Lower Clay unit in ES-03 is also comparable to that in ES-02, but thicker than that in ES-01. The nature of the clay units in these intervals correlate well with the clay units found on La Ventana.

Table 1. El Sauz – Fleur Hole ES-03 Preliminary Log

From (m) To (m) Length (m) Lithology
0

147

147 Basalt
147 158 11 Sandstone
158 201 43 Upper Clay
201

 211

10 Ignimbrite
211 252 41 Lower Clay
252 256 4 Conglomerate

The results of the first three holes successfully demonstrate continuity of the clay units from the La Ventana lithium deposit onto the Fleur and El Sauz concessions. The holes extend the strike length of the clay-bearing sedimentary succession on La Ventana by 1.7 kilometres to the southeast, for a total drill indicated strike length on both the La Ventana and Fleur concessions of approximately 6.7 kilometres.

Analytical results from drill core samples taken across the clay units of hole ES-01 are expected within the next 10 days. Samples from ES-02 have been shipped to the laboratory and results from these will be reported when received.

Drilling has commenced on the fourth hole (ES-04) of the 10 hole program. The fourth hole is situated approximately 500 metres southeast of ES-03. Hole ES-04 will continue to test the lateral continuity onto the El Sauz concession where the clay units become exposed at surface at the southern part of the concession.

Placing and Equity Swap:

REM has entered into a £300,000 Placing Agreement and, separately, a £150,000 Equity Swap Agreement with YA Global Master SPV, Ltd. (“YAGM”).

YAGM has subscribed for a total of 666,666,666 new ordinary shares (“Placing Shares”) in the Company at a price of 0.045p per share and therefore for a gross £300,000 in aggregate. £150,000 will be paid immediately to REM by YAGM and REM will receive an additional £12,500 per month for a 12 month period. YAGM have agreed with the Company that they will not dispose of any shares for an initial 2 month period.

Completion of this Placing is conditional on admission of the Placing Shares to trading on AIM of the London Stock Exchange. Application will be made for the admission of the Placing Shares to trading on AIM (“AIM Admission”) and it is expected that AIM Admission will occur and that trading in the new ordinary shares will commence on AIM at 8.00 am on Friday, 21 June 2013.The Placing Shares will rank pari passu in all respects with the Company’s existing issued ordinary shares.

Following AIM Admission, the Company’s enlarged issued share capital will comprise 3,446,952.833 ordinary shares. The Company does not hold any shares in treasury. This figure of 3,446,952.833 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.

Following the issue of the Placing Shares, YAGM will be interested in 666,666,666 ordinary shares in the Company, representing 19.3% of the issued share capital.

The Company and YAGM have entered into an equity swap agreement (“the Equity Swap Agreement”) over 333,333,333 of the Subscription Shares (“the Swap Shares”). In return for an payment by the Company to YAGM of £150,000 (“the Initial Escrowed Funds”), twelve monthly settlement payments in respect of such payment will be made by YAGM to the Company, or by the Company to YAGM, based on a formula related to the difference between the prevailing market price (as defined in the Equity Swap Agreement) of the Company’s ordinary shares in any month and a ‘benchmark price’ that is 5% above the Subscription Price. Thus the funds received by the Company in respect of the Swap Shares will be dependent on the future price performance of the Company’s ordinary shares.

The Initial Escrowed Funds will be deposited into an escrow account (“the Escrow Account”) and the subsequent monthly settlement payments will be managed through the Escrow Account under the terms of the Equity Swap Agreement.

YAGM may elect to terminate the Equity Swap Agreement and accelerate the payments due under it in certain circumstances. The Company may pause a monthly payment under the Equity Swap Agreement once in each six month period.

YAGM has agreed that it and its affiliates will refrain from holding any net short position in respect of the Company’s ordinary shares and has agreed restrictions on the volume of ordinary shares in the Company that it can trade from time to time until the expiry or if earlier termination of the Equity Swap Agreement.

About the Sonora Lithium Project:

The Company’s optioned concessions cover 3,411 hectares out of a total of 5,786 contiguous hectares that make up the Sonora Lithium Project owned by Bacanora.

Lithium is the lightest of the alkali metals and has unique electrochemical properties that make it the element of choice for batteries of high energy storage capacity and other energy applications as well as a host of industrial and health applications.

Qualified Person’s Statement:

Information in this announcement relates to information compiled by Carl G Verley, P.Geo, a consultant to the Company, who is a member of the Association of Professional Engineers and Geoscientists of British Columbia and is a Qualified Person with respect to the information disclosed herein.


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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