MIDDLE EAST DIAMOND RESOURCES LIMITED - Proposed disposal of the Stepford gold deposit and cautionary announcement

Proposed disposal of the Stepford gold deposit and cautionary announcement

MIDDLE EAST DIAMOND RESOURCES LIMITED
 (Incorporated in the Republic of South Africa)
(Registration number: 2001/006539/06)
(Share Code: MED ISIN Code: ZAE000211876)
(“MEDR” or “the company”)


Proposed disposal of the Stepford gold deposit and cautionary announcement

1. Introduction
   Shareholders are referred to the SENS announcement dated 11 November 2020 and the
   various cautionary announcement regarding the proposed acquisition by Fast Pull Trade
   and Invest (Pty) Ltd (“Fast Pull”), a wholly owned subsidiary of MEDR, to acquire 50% of the
   issued shares of and claims in Stepford Company Limited (“Stepford”), a company
   incorporated in Ghana (“Stepford project”).
   Shareholders are advised that MEDR has entered into a Heads of agreement with
   Susanooholdings (Pty) Ltd (“Susanoo”) on 20 March 2021 where SPV (Pty) Ltd (“SPV”) will
   acquire 100% of the share capital of Fast Pull, resulting in SPV acquiring an effective 50% in
   Stepford, in exchange for a loan of R10 million to MEDR and a royalty of 1.5% of the Net
   Smelter Revenue of gold and copper sales from the Transaction payable to MEDR (“the
   Disposal”).

2. Rationale
   MEDR has been investigating strategic partners and investors for the Stepford Project and
   this transaction realises the best option for MEDR in that a working capital loan is made to
   MEDR and in addition there is the possibility of potential value through the Net Smelter
   Royalty, which requires no further capital investment by MEDR. This represents a low risk
   return to shareholders.

3. Salient terms of the Disposal
   Stepford owns the Prospecting Licence on 101.22 km2 of ground in the Asutifi district of the
   Brong Ahafo region of Ghana. Susanoo will advance to MEDR an interest free loan of R10
   million repayable within a period of three years or to be converted into equity in MEDR at a
   10% discount to the 30 day weighted average share price. MEDR will use $450 000 of the
   loan to pay for costs relating to the Stepford project.

   Susanoo will fund the exploration programme up to $3.2 million.

   The Disposal will be subject to normal warranties that are customary for transactions of this
   nature.

4. Conditions precedent
    The Disposal is subject to the parties entering in formal agreements.

5. Categorisation of the Disposal
   MEDR is in discussions with the JSE regarding the category of the Disposal and according
   shareholders are advised to exercising caution when dealing in the company’s shares until
   the category is determined.


6. Financial information and cautionary announcement
   The financial information relating to the Disposal will be available in due course. Accordingly
   Shareholders are advised to exercising caution when dealing in the company’s shares until
   the financial information is released.


24 March 2021
Sandton


Sponsors
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Date: 24-03-2021 11:33:00
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