Alecto Minerals : - Notice of GM

14 July 2017

Alecto Minerals plc ("Alecto" or the "Company") Proposed Share Consolidation, Amendments to Articles, Authority to Allot Ordinary Shares and Disapplication of Pre-emption Rights and Notice of General Meeting

Alecto Minerals plc, the African focused gold exploration and base metal development company, announces that it will today be posting to Shareholders a circular and Notice of General Meeting (the "Circular"), together with a Form of Proxy, convening a General Meeting of the Company to be held at the offices of Michelmores LLP, 12th Floor, 6 New Street Square, London EC4A 3BF at 11.00 a.m. on 31 July 2017. The Circular and Form of Proxy will be available on the Company's website at www.alectominerals.com.

The letter from the Chairman of the Company forms Part I of the Circular and is set out in full below. The expected timetable of principal events, Share Consolidation statistics and the definitions used in the Chairman's letter, are set out in full at the end of this announcement.

Introduction

On 21 December 2016, the Company announced that it had entered into a conditional Acquisition Agreement to acquire the entire issued share capital of Cradle Arc for a consideration comprising £1 million payable in cash (the Cash Consideration) and the issue of new ordinary shares to the Vendor and its nominees representing, in aggregate, 60.0 per cent. of the enlarged share capital on Completion (the Consideration Shares). Cradle Arc is a holding company incorporated in Botswana which, via Leboam, its wholly owned subsidiary, has acquired conditionally the assets comprising the Mowana Copper Mine, a producing mine located in north east Botswana.

The purpose of this announcement is to provide you with information on and explain the background to the Proposals, to explain why the Directors consider the Proposals to be in the best interests of the Company and its Shareholders as a whole, and to seek Shareholder approval for the Proposals. This announcement also contains the Directors' unanimous recommendation that you vote in favour of all of the Resolutions.

The proposed Acquisition constituted a reverse takeover under the AIM Rules and trading in the Company's shares on AIM was suspended from 21 December 2016 pending publication of an admission document. On 5 July 2017, the Company announced that, due to the delay in publishing such admission document, the admission of the Company's shares to trading on AIM would be cancelled. Pursuant to AIM Rule 41, the admission of a company's shares will be cancelled where such shares have been suspended from trading for six months. Alecto's shares were suspended for more than six months and, although a short extension to the prescribed deadline for cancellation was permitted, cancellation took effect from 7.00 a.m. on 11 July 2017.

Both the Directors and the Vendor remain committed to the proposed acquisition of Cradle Arc by the Company, and to seeking re-admission of the Group, as enlarged by the Acquisition, to trading on AIM. Accordingly, the Company intends to complete the Acquisition as expeditiously as possible (currently anticipated to occur during September 2017) and, once completed, to then make application for admission of the Company's Ordinary Shares to trading on AIM.

In order to be able to complete the Acquisition, the Company needs to raise funding to enable it provide further working capital support to Leboam, for the Cash Consideration, transaction costs and general working capital purposes. The Company is therefore seeking the requisite authorities to issue new Ordinary Shares in connection with the Proposals, inter alia, to raise such finance. The Company had intended to complete a similar fundraising in connection with the reverse takeover, had that process proceeded as planned, during the second quarter of 2017. However, as such a fundraising was not completed prior to the cancellation of the Company's shares from trading on AIM, the Company intends to do so now to enable it to finance ongoing operations at Mowana, as well as the Group's ongoing costs, transaction costs and the Cash Consideration.

Accordingly, the Company now intends to raise up to £5.0 million (before expenses) for working capital purposes and to settle the Cash Consideration by way of a placing of new Ordinary Shares with institutional and other investors at a placing price at or around the Company's share price prior to suspension of trading in the Company's shares on the AIM market in December 2016, as adjusted by the proposed Share Consolidation (the Private Placing). The Company and its brokers have received a number of expressions of interest and expect to secure firm commitments over the course of the next few weeks. In anticipation of confirming final size, pricing and terms and conditions of such a placing, the Company is seeking the requisite authorisations from Shareholders for the Directors to issue such new Ordinary Shares other than on a pre-emptive basis.

The Company is also proposing to effect a share consolidation, whereby Shareholders will receive one New Ordinary Share and one A Deferred Share for every 300 Existing Ordinary Shares held. The Directors believe that the Share Consolidation will result in a more appropriate price per share for the New Ordinary Shares and will make the Private Placing more attractive to institutional investors.

Accordingly, the Board is convening a General Meeting at which Resolutions relating to the Proposals will be put to Shareholders. The General Meeting will be held at 11.00 a.m. on 31 July 2017 at the offices of Michelmores LLP, 12th Floor, 6 New Street Square, London EC4A 3BF and notice of which is set out at the end of the Circular.

The Vendor of Cradle Arc, its nominees and certain other related Shareholders are deemed to be acting in concert under the provisions of the City Code and, upon Completion, it is currently expected that the Concert Party will hold, in aggregate, more than 60 per cent. of the issued share capital as enlarged by the Proposals. A further circular will therefore be issued, requesting that independent shareholders vote on a Whitewash resolution to approve the grant of a waiver by the Panel of any obligation on the Concert Party to make a general offer to Shareholders under Rule 9 of the City Code, arising from the issue of the Consideration Shares to them pursuant to the Acquisition. This further

circular, which is intended to be issued shortly following completion of the Private Placing, will contain the information and resolutions required to approve the Whitewash, which is necessary to issue the Consideration Shares to the Vendor of Cradle Arc and its nominees, thereby enabling the Acquisition to complete in full, prior to the Company seeking the admission of its enlarged issued ordinary share capital to trading on AIM.

Shareholders should note that the Resolutions are all inter-conditional and, should any of the Resolutions not be approved, the Company will not be in a position to raise the required funds pursuant to the Private Placing and the Acquisition will not proceed. The Company will have incurred substantial costs in connection with the Acquisition and the Company would urgently need to raise additional funds by alternative means in order to meet such costs and the Group's ongoing working capital requirements. If the Company was not able to raise such funds on terms which the Directors believed were reasonable or was not able to do so in a timely manner, the Company would be at a significant risk of being forced into an insolvency process (be that administration or liquidation), as a result of which Shareholders should expect to lose the entire value of their holdings of Ordinary Shares. Overview of the Mowana Copper Mine

Production at the Mowana Copper Mine re-commenced in March 2017, having been idle for approximately 15 months. Since recommencement, over 5,000 tonnes of copper concentrate have been produced and on sold to Fujax. The mine is currently ramping up to produce approximately 4,000 tonnes of copper concentrate per month and is on track to produce and sell 12,000 tonnes to Fujax by the end of August 2017.

The Mowana Copper Mine consists of an open pit operation and a processing plant utilising standard flotation process technology that has been designed to produce saleable copper concentrate from the treatment of up to 1.2Mtpa of oxide, supergene and sulphide ores. Mowana has JORC Mineral Resources of 539,000 tonnes Cu in the Measured and Indicated categories at an average grade of 0.94 per cent. Cu, and a further 752,000 tonnes Cu grading at 0.76 per cent. Cu in the Inferred category. The Competent Person's Report in respect of Leboam's mineral assets is located on the Company's website at www.alectominerals.com.

Alecto has agreed a management contract for the Mowana Copper Mine with Leboam pursuant to which, following completion of financing, it is entitled to receive management fees equal to 20 per cent. of Alecto's corporate costs during the project phase of the work required to design, build and commission Mowana and 1.5 per cent. of the total revenue of Leboam during the production phase following recommencement of operations.

The Company has partnered with both PenMin (the Vendor's parent company) and Digmin to structure and deliver the Acquisition. Alecto and its partners have now completed extensive due diligence on the asset, concluding that, although the geological characteristics of the ores present at Mowana mean that it will be a challenging project, an appropriate mine plan has been developed to address the issues historically encountered by prior third party management. PenMin has re-designed

and re-mapped the mining operations based on a re-logging of the historical drill cores and a geological remodelling exercise to better define the ore types present and thereby increase the Company's understanding of the ore body.

In summary, the Company's future mining strategy is to treat low-oxide ores, which contain less than 25 per cent. acid soluble copper. The reason for excluding high oxide ores is predicated on the low recovery rates (30 to 40 per cent.) and low concentrate grades (approximately 15 per cent.) achieved when treating oxides in the Mowana processing plant historically. Therefore, whilst oxide ores are copper bearing, it is uneconomic to treat them using the current facilities and they will instead be stockpiled for future recovery. This approach will ensure higher recoveries are achieved in the processing plant and will also provide additional revenue potential from processing the stockpiled oxide ores in the future.

Potential Dense Media Separation (DMS) Process Route Upgrades

Detailed scoping studies have been completed previously by third-parties regarding the potential installation of a new DMS pre-concentration process and upgraded crushing plant at Mowana. Following completion of the Acquisition, and subject to sufficient financing being in place, upgrading of the DMS scoping study to a pre-feasibility level and further due diligence onsite, in order to qualitatively and quantitatively support the project, the Company plans to install the DMS process route upgrades. The capital cost of the upgrades is currently expected to be funded through asset based financing arrangements as described below.

Should the installation proceed, the DMS facility and associated upgrades are expected to (i) increase flotation plant throughput, (ii) reduce fine tailings production, (iii) enable mining of lower grade ore including carbonate mineralisation, and (iv) enable the rejection of carbon/graphite ahead of flotation. The ability to include carbonate mineralisation in the reported Mineral Resources provides the potential to increase the existing Mineral Resource base at Mowana.

Accordingly, the Directors believe that by installing a DMS plant and using pre-concentration, the Enlarged Group can further address the historical operational issues identified in their comprehensive due diligence exercise and also provide an additional level of automation and control. Following a review of an initial report from Minero Consulting (Pty) Ltd, Alecto believes that the upgrades could increase processing capability at the Mowana Mine from 1.2Mtpa to approximately 2.6Mtpa and achieve increased copper production of approximately 22,000 tonnes of saleable copper per annum.

PenMin has produced a financial model incorporating the base case future mining strategy and the key underlying data and assumptions which has been independently reviewed and reported on in the CPR (which is available on the Company's website). The model excludes the possible increase in throughput and efficiencies which are expected following the potential DMS process route upgrades.

The PenMin model indicates a life of mine (LOM) of 11 years (from known Mineral Resources with exploration upside potential), producing an average copper grade of 1.16 per cent. Cu, with average annual production of 11,875 tonnes Cu over the LOM. The model indicates a potential net present