Marula to Invest in Kenyan Manganese Mining Operation & Issue of Equity

Marula Mining PLC

(“Marula’’ or the “Company”)

1 March 2024

Marula to Invest in Kenyan Manganese Mining Operation

Issue of Equity

Marula Mining (AQSE: MARU) an African focused mining and development company, is pleased to announce that the Company has signed a binding terms sheet (“Term Sheet”) with Kenyan manganese mine operator Gems and Industrial Minerals Limited (“GIM”) for a commercial interest in the Larisoro Manganese Mine located in Samburu County in Northern Kenya (the “Mine”).

The Larisoro Manganese Mine is a conventional and shallow open pit mine which commenced operation in 2012 and has operated intermittently over the past 12 years on two granted and adjoining mining permits. Mined manganese ore has ranged from 18.82% manganese (“Mn”) to up to 55.01% Mn and has averaged 33.41% Mn over the past 6 years and which is crushed and screened to produce a +37.00% Mn saleable product that has historically been sold into the Asian markets.

On signing the Term Sheet, consideration of £300,000 became payable to GIM to be satisfied through the issue of 2,400,000 new ordinary shares in the Company at a price of 12.5p per new ordinary share.

The Term Sheet provides that subject to GIM entering into a Technical Support Agreement (“TSA”) and a Commercial Agreement (“CA”) Marula will provide investment of US$1,500,000 for new mining, crushing, screening and processing equipment (the “Investment”) to increase monthly manganese ore production to between 5,000 tonnes and 10,000 tonnes of saleable high-grade manganese ore over the next 3 to 6 months. The TSA and CA are expected to be signed in mid-March 2024.

On signing the TSA and CA, the Company has agreed to pay GIM and its nominees a sum of £200,000 to be satisfied in new ordinary shares or in cash. A further £300,000 will be payable to GIM on completion of the initial exploration program and a final payment of £750,000 will become payable on achieving 50,000 tonnes of commercial sales of manganese ore.

Furthermore, the Term Sheet provides that Marula will be granted an option (exercisable for 12 months following the signing of the TSA and the CA) to increase its commercial interest in the Mine to 70% through a further payment to GIM of £1,250,000 in cash or shares, at the Company’s election.

The Company has already completed a detailed due diligence work program.  This work has confirmed the potentially high-grade nature of the manganese mining operation, with independent assay and export reports confirming the high-grade nature of the manganese, the established mining and processing operations, and the opportunity to materially expand production to the initial targeted levels through major investment in new mining and processing equipment.

Highlights:

• Marula to invest in an established manganese mining operation in northern Kenya and secure an initial 60% commercial interest with an option to increase to 70%
• The investment further strengthens Marula’s expanding operational and development stage battery metals portfolio in Southern and East Africa
• The current operation consists of 3 shallow open pits that extend over a cumulative length of approximately 600m and which have mined the highly visible and outcropping surface manganese mineralisation by conventional drill and blast and load and haul open pit mining operations down to very shallow depths of between 1.5m and 12m
• Site inspections by the Company’s technical team of the current open pit operations indicates that the manganese mineralisation appears to remain open down-dip and along strike
• Current processing equipment crushes and screens the run-of-mine ore to +60mm sizing and targets production of +37% Mn saleable product – which is considered the benchmark medium-grade product in the international markets – and which the current mine operators have sold into the Asian markets with exports through port facilities at Mombasa
• Analyses of historical testwork and assays of mined material at the Larisoro Manganese Mine between 2018 and 2024 have indicated that mined manganese ore has ranged from 18.82% Mn to up to 55.01% Mn and averaged 33.41% Mn
• Samples taken by the Company from the open pit mining operations in December 2023 and independently assayed by a European based commodity trading group, returned results of 37.61% Mn, 36.16% Mn and 39.38% Mn and averaged 37.72% Mn and also reported very low and very attractive iron grades of below 2.00% Fe
• Further samples are currently being taken at the Larisoro Manganese Mine by the Company’s geological team and are to be sent to South Africa in March 2024 for metallurgical analyses and testing to determine the ability to further upgrade the manganese ore from 37% Mn to up to a high-grade 44% Mn saleable product
• In addition to the manganese mineralisation, high-grade coltan, columbite-tantalite mineralisation has also been reported with assay reports indicating grades of 43.7% Na₂O₅ and 35.9% Ta₂O₅
• Total costs at the Larisoro Manganese Mine are reported by GIM as being US$77/tonne of saleable product and including all mining, processing and logistics and sales costs and compare very favourably to the current Manganese Ore Index 37% Mn FOB Port Elizabeth price which is US$3.91 per dry metric tonne unit (“DMTU”)
• The Company now proposes to complete a major investment into the Larisoro Manganese Mine to increase monthly production to an initial 5,000 tonnes and 10,000 tonnes of a saleable high-grade, up to 44% Mn, manganese ore through investment under the TSA and CA in new mining and processing equipment, a broad exploration program and through new mine planning and addition of new and experienced technical personnel
• Initial investment of approx US$1.5 million in new mobile mining equipment and new processing equipment is now planned to be completed into GIM by the Company and which will include a new primary jaw crusher, screens and associated conveyors, and two new excavators, three loaders and two articulated dump trucks that are considered sufficient to achieve the initial expanded targets and are capable of achieving production rates necessary to take the operation through to up to a 25,000 tonnes of monthly production
• The investment in new mobile mining and processing equipment and upgrades and expansion is to commence in March 2024 and the Company is currently finalising the acquisition and transportation of the new mining and processing equipment following meetings held by the Company’s CEO with a number of equipment suppliers in Johannesburg earlier this week
• In parallel with the investment in the mining and processing operation, the Company will now commence a further investment of approx US$1.75 million in an initial exploration program to be completed over the course of 2024 and that is aimed at increasing the understanding of the broader extent and characteristics of the manganese mineralisation at the Larisoro Manganese Mine
• This work will immediately focus on establishing the down-dip and strike length continuity of the manganese mineralisation beyond what is currently seen in the open pits and in surface outcrops, and which will include ground magnetic work, trenching and sampling and to also include exploration and resource drilling, upon which the Company’s aims to better understand the scalability of the Larisoro Manganese Mine in order build a much longer-term and sustainable manganese mining and processing operation
• The Company can also confirm that it is in advanced discussions with a European based commodity trading group in respect to the offtake and marketing of 100% of the production of saleable manganese ore. This group has already independently tested the manganese ore from the Larisoro Manganese Mine on behalf of the Company in December 2023, has completed a site visit in February 2024 and is an established purchaser and exporter of manganese ores in East Africa through its port facilities here in the region
• Following signing of the binding terms sheet, the Company and its lawyers have commenced formal documentation of the TSA and CA, and which is expected to be completed in mid-March 2024
• Under the terms of the Company’s proposed investment to GIM and to the Larisoro Manganese Mine, Marula has secured a 60% commercial interest by agreeing to fund 100% of all working capital and development costs to increase production to between 5,000 tonnes and 10,000 tonnes of saleable manganese ore over the next three to six months. This includes the funding of the new mining and processing equipment and completion of the planned exploration program
• The Company will also issue to GIM or its nominees, ordinary shares to the value of £300,000 on signing of the binding terms sheet at a price of 12.5 pence per share. Additional deferred payments are to be made to GIM in cash or in shares at the Company’s election, with a £200,000 payment due on execution of formal TSA and CA documents, £300,000 on completion of the initial exploration program and a final payment of £750,000 on achieving 50,000 tonnes of commercial sales of manganese ore.
• The Company has also agreed, if necessary, to guarantee up to KES 70,000,000 (approximately £376,000) of GIM’s existing indebtedness, which GIM is to repay immediately from its attributable cashflow from operations at the Larisoro Manganese Mine
• Marula also has a 12-month option to increase its commercial interest to 70% through a further payment to GIM of £1,250,000 in cash or shares, at the Company’s election
• Based on the Company’s preliminary economic analyses, payback in full of its investment in GIM and Larisoro Manganese Mine and 60% commercial interest, is projected to be achieved within the first 12 to 15 months of operations

About the Larisoro Manganese Mine

The Larisoro Manganese Mine commenced operation in 2012 and has operated intermittently over the past 12 years on two granted and adjoining mining permits.

Geologically it is located within the Proterozoic Mozambique mobile belt, in the portion which lies to the east of the East African Rift Valley.

The manganese ore body is considered to be structurally controlled with both hydrothermal and terrestrial input set in a transgressive and regressive continental shelf environment. Historical regional mapping indicates that the manganese mineralisation is found in the faulted contact zone between quartz-felspar granulites and leucocratic biotite gneiss and extends for over 5km.

The operations at the Larisoro Manganese Mine have historically been limited by inefficient mining and processing activities, aged and poorly maintained equipment, and a lack of geological understanding and modern mine planning.

Sales and exports of manganese ore have been made by GIM into the Asian markets with exports made through port facilities at Mombasa.

Historical Assay and Export Results 2018 to 2024

Sample and Export Number	MnO Grade	Mn Grade
Mn_20180405	35.32%	27.35%
Mn_20190321_1	24.04%	18.63%
Mn_20190321_2	32.68%%	25.33%
Mn_20190912	70.98%	55.01%
Mn_20190912_1	53.48%	41.45%
Mn_20190912_2	51.01%	39.53%
Mn_20201109	58.58%	45.40%
Mn_20210211	64.87%	50.27%
Mn_20210526	27.37%	21.21%
Mn_20211129	38.99%	30.22%
Mn_20220222	56.17%	43.53%
Mn_20220411	51.23%	39.70%
Mn_20220712	63.55%	49.25%
Mn_20230615	49.18%	38.11%
Mn_20230615_1	34.35%	26.62%
Mn_20230615_2	34.97%	27.10%
Mn_20230615_3	35.60%	27.59%
Mn_20230615_4	38.96%	30.19%
Mn_20230615_5	25.37%	19.66%
Mn_20240118	24.28%	18.82%
Mn_20240118_1	53.28%	41.29%
Mn_20240118_3	24.28%	18.82%

Independent Sample Assays from Marula Due Diligence Review

Sample Number	Fe Grade	Mn Grade
Meru - 001	1.97%	36.17%
Mn_20190321_1	1.99%	37.61%
Mn_20190912	2.05%	39.58%

Admission

Application has been made for the 2,400,000 to be admitted to trading on the Aquis Stock Exchange Growth Market on or around 8 March 2024 (“Admission") and will rank pari passu with the ordinary shares of the Company in issue.

Total voting rights

Following Admission, the Company's issued share capital will comprise 173,530,403 ordinary shares of 0.01p each, with each share carrying the right to one vote, therefore the total number of voting rights in the Company will be 173,530,403. This figure may be used by shareholders as the denominator for calculations by which they will determine if they are required to notify their interest in the Company, or a change to their interest in the Company, under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Jason Brewer, Marula Mining PLC CEO, said:

“Following a successful sit visit we made late 2023, and a very thorough technical assessment and review, we are very confident about this investment in GIM and the Larisoro Manganese Mine.

“With its historical high-grade assays, production history, established operations, existing stockpile of material, and the interest we have already received for offtake and marketing of the planned increased manganese production, we are pleased to proceed with this investment, which we believe is firmly in line with our strategy here in Kenya and East Africa and firmly in the battery metals sector.

“This marks our first investment in Kenya’s mining sector and is ahead of its planned dual listing on the Nairobi Securities Exchange which the Company anticipates completing in due course. This is an important milestone for us, as we continue to establish Marula Mining to be an African focused mining and development company in the battery metals sector.

“We are excited to get started with our investment in new mining and processing equipment and an exploration strategy which we hope will materially expand the operation and manganese resources. A considerable amount of work is to now commence and I look forward to updating shareholders on the progress we make with GIM and their progress at Larisoro Manganese Mine.”

Makena Mwiraria, Director Gems and Industrial Minerals Limited, said

“We are thrilled to have Marula invest and support our manganese mining and processing activities. I am also proud that this is Marula's first entry into Kenya's mining sector. This is a transformative transaction for us and the manganese mining operations.

“As we progress this with Marula, we look forward to maximising the potential that we believe we have here for all involved in the operation and for the broader benefit of the local communities and businesses.

“As part of Marula's investment, we look forward to the arrival of the new mining and processing equipment to increase production, as well as new mine planning and the addition of experienced technical personnel to see the project advance further.

“This partnership with Marula signifies a new chapter of growth, innovation, and collaboration for our company and the Larisoro Manganese Mine."

Review of Announcement by Qualified Person

This announcement has been reviewed by Mr Jacques Perold (PrSciNat, MGSSA, MIQ MSc(Eng), MSc(ESPM), NDSURMA, Datametrics), who is engaged by Marula Mining plc as its professional consulting geologist.

Mr Jacques Perold is a professional geologist with 37 years of experience in the field and extensive knowledge of all aspects of mineral resource management.

Mr Jacques Perold is Member of the Geological Society of South Africa (No. 965505) and a registered scientist of the South African Council for Natural Scientific Professions (Reg No. 400171/05) in terms of section 20(3) of the Natural Scientific Professions Act, 2002 (Act 27 of 2003) in the field of Geological Science (Professional Natural Scientist).

The Directors of Marula are responsible for the contents of this announcement. This announcement contains inside information for the purposes of UK Market Abuse Regulation.

About Marula Mining

Marula Mining (AQSE: MARU) is an African focused battery metals investment and exploration company and has interests in several high value mine projects in Africa; the Blesberg Lithium and Tantalum Mine and Korridor Lithium Project in South Africa, the Kinusi Copper Mine, the Nyorinyori Graphite Project, the NyoriGreen Graphite Project and the Bagamoyo Graphite Project all in Tanzania and the Nkombwa Hill Project in Zambia. As we advance operations at these battery metals focused projects, Marula will continue to build and expand its interests in other high-quality projects in Africa.

Marula’s strategy is to identify and invest in advanced and high-value mining projects throughout East, Central and Southern Africa that the Directors believe would deliver returns for its shareholders. The Board and management team aims to establish Marula as a socially and environmentally responsible, sustainable, and profitable producer of critical metals and commodities that are of increasingly strategic importance to modern technologies and the global economy.

Marula’s shares are traded on the AQUIS Stock Exchange (AQSE), Marula is exploring opportunities to admit its shares to trading on the London Stock Exchange plc’s Standard List Market, Kenya’s Nairobi Securities Exchange and South Africa’s Johannesburg Stock Exchange.

For enquiries contact:

Marula Mining PLC Jason Brewer, Chief Executive Officer Faith Kinyanjui Mumbi, Investor Relations	Email : [e-mail] Email : [e-mail]
AQSE Corporate Adviser Cairn Financial Advisers LLP, Liam Murray / Ludovico Lazzaretti	[phone]
Broker Peterhouse Capital Limited, Charles Goodfellow / Duncan Vasey	[phone]
Financial PR and IR BlytheRayTim Blythe / Megan Ray / Said Izagaren	[phone]

Caution:

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

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