North River Resources : Proposed cancellation of trading on AIM and Notice of General Meeting

North River Resources plc / Ticker: NRRP / Index: AIM / Sector: Mining

21 February 2017

("North River" or the "Company")

North River Resources plc today announces a proposal to cancel the admission of the Company's ordinary shares to trading on AIM in accordance with Rule 41 of the AIM Rules for Companies ("Cancellation").

A circular including a Notice of General Meeting will today be posted to Shareholders (the "Circular") to convene the necessary general meeting of the Company (the "General Meeting") to approve the Cancellation. The General Meeting is to be held at the offices of Shakespeare Martineau LLP, 6th Floor, Allianz House, 60 Gracechurch Street, London, EC3V 0HR on 17 March 2017 at 10.30 a.m. (London time). A copy of the Circular and Notice of General Meeting will also be available to view shortly on the Company's website www.northriverresources.com.

The Company has received irrevocable undertakings to vote in favour of the Cancellation resolution representing 77.09% of the votes entitled to vote at the General Meeting. Accordingly, it is anticipated that the Cancellation will be approved at the General Meeting.

An extract of selected parts of the Circular is copied out below along with an indicative timetable of principal events related to the Cancellation process. The definitions that apply throughout this announcement can be found at the end of this announcement.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

The Board announces that it is seeking Shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM. Implementation of the Cancellation is conditional on the Resolution being passed at a General Meeting to be held on 17 March 2017 at 10.30 a.m. A circular including a Notice of General Meeting containing the full text of the Resolution will today be posted to Shareholders. Subject to the Resolution being passed at the General Meeting, it is anticipated that the Cancellation will become effective at 7.00 a.m. on 27 March 2017.

The purpose of this announcement is to provide Shareholders with details of the Board's proposal and to advise Shareholders of a General Meeting at which the Resolution to approve the cancellation of the Company's Ordinary Shares from trading on AIM will be considered. This letter sets out the reasons why I and the rest of the Board, including the Independent Directors, consider the Cancellation to be in the best interests of the Company and its Shareholders as a whole and why the Independent Directors are therefore unanimously recommending that you vote in favour of the Resolution.

1. Background to, and reasons for, the Cancellation

1.1 Principal Reasons for the Cancellation

The Company is continuing to focus on advancing the Namib zinc-lead mining project in Namibia ("Namib Project" or "Project"). The successful development of the Project will depend on the grant of a mining licence, on terms which are economically viable and secure, favourable economics of the Project, and the availability of finance for the up-front capital required for construction.

Over the past year, in the announcement of the final results for the year ended 31 December 2015, in the funding Circular of 28 June 2016, and most recently again in the announcement of drilling programme results on 12 December 2016, the Company has drawn Shareholders' attention to the efforts of the Company to identify cost saving opportunities. It has become increasingly critical that the Company preserves its option to develop the Namib Project for as long as possible with existing cash resources.

In line with this need, non-executive director fees have been suspended, the London corporate office has been closed and all other corporate costs reduced or eliminated. In Namibia, following completion of the drilling programme in late 2016, activity on the Project and at site has been cut right back, pending clarity on the development timeline for the Project.

In the context of the above, the Independent Directors (being all of the Directors other than Greenstone's representative, Mark Sawyer) have conducted a review of the benefits and challenges of maintaining the Company's quotation on AIM. After careful consideration, the Independent Directors have concluded that it is no longer in the interests of the Company to continue to have its Ordinary Shares admitted to trading on AIM and, accordingly, that Cancellation is in the best interests of the Company and its Shareholders as a whole.

In reaching this conclusion, the Board has focused on the following key factors:

• Cash preservation:

  • The need to preserve cash by cutting costs to a minimum until the Company has clarity on the timeline for developing a licensed and financeable project, should it prove economical to develop the Namib Project. Regarding the outstanding mining licence, the Company received a Notice of Preparedness to Grant the Mining Licence from the Ministry of Mines and Energy on 28 January 2016. This was announced to shareholders on 1 February 2016. The Company submitted a proposal on meeting the terms and conditions for the grant of the licence, on 26 April 2016. The Ministry indicated again in late 2016 that it intends to issue the mining licence, subject to a further condition that the full terms and conditions of such licence are met within 6 months following grant of the licence. The Company has not yet agreed the detailed terms and conditions to be attached to the grant of the licence and, as such, uncertainty remains around the details of the licence conditions and the timing of its grant.

  • Mining licence aside, in light of the limited trading in the Ordinary Shares, the tangible costs associated with maintaining the AIM quotation (such as legal, accounting, broking, London Stock Exchange and Nominated Adviser costs) are disproportionately high when compared with the benefits, and the Directors consider that these funds could be better utilised in extending the window of time for the Company to license and optimise a project for development.

  • The management time and legal and regulatory burden associated with maintaining the Company's admission to trading on AIM, and complying with the AIM Rules and related regulatory requirements (including reporting, disclosure and corporate governance requirements) is disproportionate to the benefits to the Company, in light of the continuing uncertainty regarding the Namib Project, and Cancellation would allow the Company to substantially eliminate the UK corporate level of executive management and overhead and streamline management of the Project in-country in Namibia.

• Depressed share price and restricted share liquidity:

  • There has been very limited advantage to the Company having its shares admitted to trading on AIM for capital raising purposes in recent years, evidenced by the very limited funding raised from the existing shareholder base, excluding Greenstone, or new investors.

  • The extended period since announcement of the Definitive Feasibility Study in November 2014, without being able to define a timeframe and pathway to developing the Project, has contributed to the depressed share price and consequently reduced benefits to the Company and its shareholders of an AIM quotation.

  • The Company, like a number of other AIM quoted companies of its size, has a tightly held register of Shareholders and suffers from a lack of liquidity for its Ordinary Shares. Greenstone now holds 75.69 per cent. of the existing Ordinary Shares following its support of the two fundraisings undertaken by the Company in 2015 and 2016 and in the absence of significant investment by other shareholders or new investors. In practical terms, this has resulted in a small free float and very low trading volumes, which the Board believes further reduces the demand for the Ordinary Shares.

• Project profile:

  • The results of the recent drilling campaign have highlighted the challenges associated with growing the Namib mineral resource before getting into and developing the underground mine during construction and thereafter when in operation. Debt and equity financing will therefore need to be raised for an initial project that is supported by the current JORC- defined resources. The Board is reviewing the appropriate project profile and related funding strategy with this in mind.

• Financing:

  • The Company will need additional financing if the mining licence is received and a decision to build the mine is taken. The Company may also need additional financing for working capital purposes if the award of the mining licence is delayed further.

  • The Board, having considered in detail a broad range of options, believes the likelihood of raising further funds, on acceptable terms, whilst remaining on AIM, to be very low. However, as a private company, the Board believes its options would be much wider and not constricted by reference to the Company's low and illiquid share price.

  • It is the Board's belief that it is unlikely that the Company will be able to raise significant funding through a new share issue to Shareholders other than Greenstone (where there is no guarantee either of support) and therefore the lack of Ordinary Shares in public hands and low volumes can be expected to continue.

  • The depressed share price is also not a positive platform from which to explore corporate opportunities to unlock value for shareholders or grow the Company.

The Board believes that strategic investor appetite in the Namib Project in the current economic environment will not be undermined by a cancellation of admission of the Company's Ordinary Shares to trading on AIM.

Finally, the Board believes that both the Shareholders and the Namibian government wish to see the Project succeed. It is in both parties' interests to avoid unnecessary costs in order to optimise use of existing cash resources in seeking to define a licenced and economically attractive Project. The Cancellation is believed to be in all parties' interests in maximising the likelihood of successfully achieving this aim.

Accordingly, the Independent Directors strongly believe that it is no longer in the best interests of the Company or its Shareholders as a whole for the Company to retain its AIM admission.

Following Cancellation, the Company intends to appoint Asset Match to facilitate trading in the Ordinary Shares of the Company. Asset Match, a firm authorised and regulated by the Financial