GCM Resources : Extension of Consulting Agreement with Dyani

29 June 2020

GCM Resources plc

('GCM' or the 'Company')

(AIM:GCM)

Extension of Power Plant and Mine Consulting Agreement with Dyani

GCM Resources plc, an AIM quoted mining and energy company, announces that, further to its announcement of 26 October2018, it has agreed a further extension of the consulting agreement ('Agreement') with Dyani Corporation, Ltd. (泰安利有限公司)('Dyani'), for an additional two years, on the same terms as previously announced. Details of the key terms of the Agreement are set out at the conclusion of this announcement.

The GCM board (the 'Board') notes that significant progress has already been made with Dyani, under the Agreement, and believes that this extension enables the Company to continue towards the formation of strategic partnerships to develop the Company's proposed world class high grade coal resource of 572 million tonnes (JORC 2004 compliant) and 6,000MW of mine mouth power plants at the Phulbari Coal and Power Project in North-West Bangladesh (the 'Project').

The Board believes that Dyani has been instrumental in the agreement of the memorandum of understanding ('MoUs') with China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd. ('NFC') and Power Construction Corporation of China, Ltd. ('PowerChina'), as well as the significant progress that has already been made with NFC and PowerChina under the MoUs.

Board assessment and related party transaction

The Board believes that securing the interest of Chinese State-owned enterprises ('SOEs')as strategic partners is critical to achieving the Company's goals. The Board believes Dyani has been instrumental in enabling GCM's progress to-date in line with its strategy and the Company believes the extension of the Agreement will provide the continuing framework to make further significant strides towards its objectives.

The Chairman has sought to negotiate the best possible terms, on behalf of the Company, and the Board has not found any other alternative party who can deliver the services in as effective a manner as Dyani, whilst also being willing to be paid entirely in shares and with no other reimbursable (unless approved by the Company) expenditure. Accordingly, in view of the Company's present circumstances, the Board believes that an agreement with Dyani is the only realistic option for the Company to achieve its strategy.

As Dyani is currently a substantial shareholder, with a notified holding of 14.1%, entering into the Agreement is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules. The directors consider, having consulted with its nominated adviser, Strand Hanson Ltd, that the terms of the agreement are fair and reasonable insofar as the Company's shareholders are concerned.

Key terms of the contract

Under the terms of the Agreement, which will now expire on 30 June 2022, Dyani shall provide services to assist the Company in:

· Securing the interest of Chinese SOEs acceptable to the Company to joint venture, cooperate or invest in each of the three proposed groups of power plants of up to 2,000MW (up to 6,000MW in total); and

· Securing the interest of a Chinese SOE acceptable to the Company to joint venture, cooperate or invest in the proposed mine.

For each of the prospective strategic partners in relation to the three groups of power plants, Dyani will be required to deliver the following key milestones: a MOU; a legally binding framework agreement in relation to a joint venture, cooperation or investment; a legally binding definitive agreement in respect to a joint venture, cooperation or investment; and a legally binding agreement for the engineering, procurement and construction of the power plant. Several of these milestones have already been achieved as noted below.

In obtaining a strategic partner for the mine, Dyani will be required to deliver the following key milestones: a MOU; a legally binding framework agreement in relation to a joint venture, cooperation or investment; and a legally binding definitive agreement in respect to a joint venture, cooperation or investment.

In return for their services, Dyani shall receive share-based success fees on achieving milestones as well as a monthly retainer fee. The retainer fee is £25,000 per month from 1 July 2018, and shall be paid quarterly in arrears by the issuance of new ordinary shares in the Company at 14p per share.

The share-based success fees will be paid in lieu of any cash payment, and will be paid only upon achieving the key milestone in question, as evidenced by the signing of documents in forms agreeable to the Company. The fees will be satisfied by the issue of new shares, equal to a percentage of the issued capital of the Company at the date each milestone is reached, as follows:

Acceptable Strategic Partner for:	MOU	Framework Agreement	All Definitive Agreements
Mine	2%	3%	4%*
Power plant group 1 (up to 2,000MW)	N/A**	N/A**	5%
Power plant group 2 (up to 2,000MW)	N/A**	N/A**	N/A**
Power plant group 3(up to 2,000MW)	N/A**	N/A**	4%*

* In the event that a framework agreement was not signed prior to the completion of all definitive agreements, the fee shall be 6% of issued capital

** The relevant milestone has already been achieved in respect of these power plant groups

Other principal terms under the Agreement are as follows:

· Any share issue to Dyani is conditional upon the Dyani's interest, together with the interest of any parties with which it is in concert, remaining below 30% of the Company's issued capital

· With the exception of the monthly retainer, Dyani is restricted from disposing of any shares received under the consulting agreement for a period of six months from issue.

· Notwithstanding the milestones as set out above, the total shares issued under the Agreement as well as the previous agreement (announcements dated 18 May 2017 and 2 July 2018) will be capped to 45% of the enlarged issued share capital of the Company. In the event that this occurs, Dyani shall remain obliged to continue the services, even though no further shares will be issued.

· The number of shares to be issued upon reaching each milestone will be adjusted proportionately in the event that the issued capital of the Company increases or decreases following the date of the Agreement in order to maintain the percentages as set out above.

· Dyani is contracted on a non-exclusive basis.

· The Company has entered into a separate relationship agreement to safeguard shareholder interests and Board independence, which takes effect only upon Dyani being interested in 25% or more of the issued share capital.

· The entry into any of the agreements with strategic partners is at the discretion of the Company.

· The Company has the right to terminate the Agreement with two months' notice provided discussions with the partners introduced by Dyani have ceased.

The Executive Chairman of GCM, Datuk Michael Tang PJN, stated:

'I would like to express my appreciation for the valuable work undertaken by Dyani Corporation Limited for the benefit of GCM. The relationship is an important part of a broader strategy of combining the Company's mine proposal with up to 6,000MW of power generation, together with credible, internationally recognised strategic partners, and thus delivering a practical power solution that is amenable to the Government of Bangladesh.'

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

For further information:

GCM Resources plc Keith Fulton Finance Director [phone]	Strand Hanson Limited Nominated Adviser and Broker Stuart Faulkner Rory Murphy James Dance [phone]
GCM Resources plc
Tel: [phone]
[e-mail];www.gcmplc.com

About GCM Resources

GCM Resources plc (LON:GCM), the AIM listed mining and energy company, has identified a high quality coal resource of 572 million tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project (the Project) in north-westBangladesh.

Utilising the latest highly energy efficient power generating technology the Phulbari coal mine is capable of supporting power plants of up to 6,000MW. GCM is awaiting approval from the Government of Bangladesh to develop the Project. The Company has a strategy of combining the Company's mine proposal with up to 6,000MW of power generation, together with credible, internationally recognised strategic partners. GCM aims to deliver a practical power solution to provide low cost electricity in the country, in a manner amenable to the Government ofBangladesh.