Minbos Resources : signs Merger Agreement with JV Partner

ASX ANNOUNCEMENT MINBOS SIGNS DEFINITIVE SHARE SALE AGREEMENT TO MERGE WITH JV PARTNER Highlights

• Minbos executes a definitive binding share sale agreement to acquire 100% of Petril Phosphates Limited, its JV partner in the Cabinda Phosphate Project;
• The merger will consolidate ownership of Cabinda Phosphate Project in Angola (to become 100% owned by Minbos);
• Minbos will also acquire Petril's interest in the Lucunga (~70%) and Pedra de Feitico (100%) phosphate projects in Angola;
• Petril shareholders will acquire approximately 50% of the enlarged Minbos and will be granted a royalty over the Lucunga Project located in the Zaire Province of Angola.

  African focused phosphate developer, Minbos Resources Limited (ASX: MNB) (Minbos or the Company) is pleased to announce that it has executed a definitive binding share sale agreement (SSA) with the shareholders of Petril Phosphates Limited (Petril) under which Minbos will, subject to satisfaction or waiver of the agreed conditions, acquire all of the shares in Petril (the Transaction or Merger).

  Execution of the SSA is a continuation of the non-binding Terms Sheet that was signed in December 2016 and will move the Merger forward to completion.

  Minbos and Petril are currently 50:50 joint venture partners in the Cabinda Phosphate Project (Cabinda Project) in Angola, which is the current focus of a Bankable Feasibility Study on one of the Cabinda Project deposits, Cacata.

  Petril also holds rights to two other phosphate projects in the Zaire Province of Angola (the Lucunga Project and the Pedra de Feitico Project), which will be acquired by Minbos as part of the Transaction. The Lucunga Project, a joint venture with minority partner Haifa Chemicals Ltd (international speciality fertiliser producer), is located near Mucula in the Zaire Province and has had more than US$9 million spent on it to date. Petril holds the rights to 100% of the Pedra de Feitico Project, located on the southern banks of the Congo River. This project has river access for potential transport of product via the port of Soyo (Angola). Only minimal work has been completed on the Pedra de Feitico Project to date. Further details on both projects are set out in the Company's announcement of 5 December 2016.

  Minbos' Chief Executive Officer, Lindsay Reed, said: "Minbos is excited to finally execute the definitive sale agreement with the Petril shareholders. The merger will consolidate the ownership structure of the Cabinda Project and simplify engagement with financiers and customers to finalise offtake and financing arrangements for the project later this year. It also adds a pipeline of future developments in the Zaire project."

  Under the proposed 'merger of equals', Minbos will acquire all of the shares in Petril in a mostly scrip transaction that will result in the Petril and Minbos shareholders each owning ~50% of the enlarged Minbos. The Company has also agreed to pay the Petril shareholders a structured royalty on any future production solely from the Lucunga Project. Appendix 2 provides details on the Lucunga royalty.

  On completion of the Transaction, Minbos will control:

• 100% of the Cabinda Project;

• ~70% of the Lucunga Project; and

• 100% of the Pedra de Feitico Rock Phosphate Project.

  The Petril shareholders (the Vendors) will receive the following consideration for the transaction:

• the issue of 2,073,547,651 Minbos shares, equal to the number of Minbos shares on issue when the Merger was first announced;

• the issue of up to a further 384,958,009 Minbos shares (Conditional Shares) as further described below;

• the issue of 237,829,976 performance rights which will convert into ordinary shares on achievement of: 1) the exploration permit for the Cabinda Project being replaced by the Angolan Government with new exploration permits; 2) SOFOSA transferring to the Company 100% of the securities that it holds in the capital of Mongo Tando Ltda; and 3) the Merger having progressed and being supported via a letter of support from SOFOSA (subject to ASX approval of the proposed terms);

• the issue of 300,000,000 performance rights to Paramount Global Group Inc., a Petril shareholder, which will convert into ordinary shares on achievement of: 1) completion of the Merger, and 2) renewal of the Lucunga Project concessions for a 20-year period, with this condition being satisfied on first renewal notwithstanding the review every 5 years according to the Angolan mineral laws; and

• the grant of a royalty to the Vendors in respect of the Lucunga Project (details on the royalty are set out in Appendix 2 below). Haifa Chemicals (the joint venture partner in the Lucunga Project) will hold between 22-35% of the Lucunga Project after dilution arising from cash calls until completion of the Transaction. Haifa may consent to its share in the Lucunga Project being acquired by Minbos in the event of which it will then be entitled to an equivalent royalty as that granted to the Vendors.

  An adjustment of the net working capital of the respective corporate groups (Minbos and Petril) will be undertaken at completion. If the completion adjustment requires payment by the Vendors to Minbos, the issue of the Conditional Shares will be conditional on the Vendors making that payment.

  Completion of the Transaction is subject to the satisfaction or waiver of certain conditions, including:

• completion of due diligence on Petril and its projects by the Company, and on the Company and its projects by the Vendors;

• the approval of the Company's shareholders for the Merger, the issue of securities to the Vendors and the appointment of two nominee directors of the Vendors to the board of the Company;

• the Company issuing 237,829,976 performance rights to SOFOSA;

  • ASX approving the terms of the performance rights to be issued by the Company to the Vendors and SOFOSA;

  • the Vendors entering into restriction agreements as required by the ASX Listing Rules which imposes restrictions on trading of the securities to be issued to them by the Company;

  • the parties doing all things necessary to procure that the Company shall, directly or indirectly, subject only to the approval of the Angolan Ministry of Geology and completion occurring, be the sole holder of shares in Mongo Tando Ltda;

  • the Company, Petril and the Vendors obtaining all necessary third party approvals or consents and regulatory approvals necessary to give effect to the Merger; and

  • no event, occurrence or matter taking place which has a material adverse effect on Petril, the Company or their respective group companies prior to completion of the Merger.

For the purposes of obtaining the required shareholder approvals to complete the Merger, Minbos anticipates that it will convene a meeting to approve the transaction in July 2017. The notice of meeting will contain full details of the proposed Merger and be accompanied by an Independent Expert's Report. A pro forma capital structure of Minbos on completion is detailed in Appendix 1.

On completion of the Transaction, two existing directors of the Company will remain and two nominees of the Vendors will be appointed to the board of directors. The nominees of the Vendors have not been identified as at the date of this announcement. An independent chairman will also be appointed in due course.

BDO and Coffey have been appointed by the Company as Independent Experts, with their reports to form part of the Notice of Meeting that will be sent to Minbos shareholders.

ENDS For further information, please contact For media and broker enquiries:

Lindsay Reed Warrick Hazeldine / Andrew Rowell

Chief Executive Officer Cannings Purple

[e-mail] /

[phone] [e-mail]

[phone]

APPENDIX 1:

PRO FORMA CAPITAL STRUCTURE OF MINBOS ON COMPLETION OF THE TRANSACTION

Shares on issue 5 December 2016 when potential merger

announced 2,073,547,651

Shares issued 7 December 2016 re exercise of options 384,958,009

Total shares currently on issue 2,458,505,660

Shares to be issued to the Vendors 2,073,547,651

Conditional Shares to be issued to the Vendors 384,958,009

Total shares to be issued to the Vendors 2,458,505,660

Total Shares on issue at completion of Merger 4,917,011,320

Shareholding of existing shareholders in aggregate (%) 50%

Shareholding of Vendors in aggregate (%) 50%

Performance Rights to be issued to the Vendors 237,829,976

Performance Rights to be issued to Paramount 300,000,000

Performance Rights to be issued to SOFOSA 237,829,976

Total Performance Rights on issue at completion of Merger 775,659,952

Total Shares on issue if all Performance Rights convert 5,692,671,272

Shareholding of existing shareholders in aggregate if all Performance Rights convert (%)

43%

Shareholding of SOFOSA if all Performance Rights convert (%) 4%

Shareholding of Vendors in aggregate if all Performance Rights convert (%)

53%

APPENDIX 2:

ROYALTY FOR LUCUNGA PROJECT

The Lucunga Royalty is based on the Phosphate Rock Margin (PRM) produced from the Lucunga Project. The PRM is calculated based on the sales price per tonne of phosphate rock less phosphate rock costs and ingredient cost per tonne of phosphate rock. The royalty rate applied to the royalty calculation will vary with the PRM as follows:

PRM $80 to $130 Royalty Rate 33%