16 July 2021

Power Metal Resources plc

("Power Metal" or the "Company")

Agreement - Canadian Lithium Properties

Power Metal Signs an Agreement to Earn-in to a 100% Interest in Lithium Exploration Properties in Quebec, Canada

Power Metal Resources plc (LON:POW), the AIM listed metals exploration and development company, is pleased to announce that the Company's 100% owned Canadian subsidiary Power Metal Resources Canada Inc. ("Power Metal Canada"), has signed an earn-in agreement (the "Earn-in Agreement") through which it may acquire a 100% interest in two Canadian lithium pegmatite exploration properties (the "Properties").

The Properties are highlighted on a map held on the Company's website and which may be viewed on the following link:

https://www.powermetalresources.com/quebec-lithium-properties/

HIGHLIGHTS:

-    Power Metal Canada may earn-in to a 100% interest in two lithium exploration properties, Authier North and Duval East, situated in the prolific Val D'Or mining camp in Quebec, Canada.

-      Authier North Property is adjacent to Sayona Mining's (ASX: SYA) flagship Authier Lithium Project which has reported JORC compliant Total Reserves of 12.1Mt at 1.0% Lithium Oxide (0.55% Li2O cut-off grade). Sayona has a current market capitalisation of c.AUD$393 million.

-    Duval East Property is immediately adjacent and east of a northwest-southeast trending lithium pegmatite dyke which  was drilled in 1955 with reported intersections equivalent to to 2m @ 1.38 Li₂O¹. The easternmost historical drill hole on this lithium bearing pegmatite dyke falls within the Duval East Property boundary and the dyke is postulated to extend into the claim.

Paul Johnson, Chief Executive Officer of Power Metal Resources plc, commented:

"Today's announcement brings a focussed and high-impact lithium opportunity into the Power Metal Canada business.

We believe that lithium is an important strategic commodity to have within our portfolio.  However, as an exploration and development company what matters most is the quality of opportunity, which we think we have with these two Earn-in properties.

One property is situated adjacent to a major lithium Reserve that offers significant exploration potential and the second property is interpreted to host the open eastward extension of a historical lithium deposit delineated in the 1950s, which holds potential subject to further drilling."

FURTHER PROPERTY INFORMATION

The Earn-in Agreement announced today concerns two properties, Authier North and Duval East.  Both properties are situated in the prolific Val'd'Or mining camp approximately 45km northwest of the city of Val-d'Or and approximately 500km northwest of Montreal, Quebec.

Quebec is recognised as the sixth highest ranking mining jurisdiction in the world, in the Investment Attractiveness Index in the 2020 Fraser Institute - Annual Survey of Mining Companies.

Quebec provides incentives for exploration and development companies within the province which include significant tax credits on all eligible exploration expenses incurred within the province on a annual basis.

Authier North Property

The Authier North Property consists of fifteen (15) mineral claims covering an area of approximately 560-hectares and is considered to be prospective for lithium-pegmatites and base metal mineralisation.

The Authier North Property shares an extended claim border with Sayona Mining's Authier lithium project which hosts a JORC (Joint Ore Reserves Committee) compliant Total Reserve of 12.1Mt at 1.0% Li₂O (Lithium Oxide).

Sayona Mining's shareprice (ASX: SYA) has increased eight-fold within the last year and currently has a AUD$393 million market capitalisation. Sayona Mining published a Definitive Feasibility Study ("DFS") on 11 November 2019 covering their flagship Authier Lithium Project. This DFS highlighted a net present value (discount factor 8%) of CAD$216 million and a pre-tax internal rate of return at 33.9%.

Additionally, in January 2021, Sayona announced a strategic partnership and offtake agreement with Piedmont Lithium Limited (ASX:PLL, Nasdaq:PLL) which includes a 25% ownership stake in Sayona Quebec (a wholly owned subsidiary of Sayona Mining), as well as  an offtake agreement for 60,000 tpa  or 50% of future production (whichever is the greater) from the Authier lithium project.

Sayona's Authier lithium project consists of a spodumene pegamatitic intrusion which dips to the north and it is postulated into the Authier North Property.

Very little historic exploration has been completed on the Authier North Property, with reports of five short boreholes (four of which returned elevated lithium and nickel assays) and only 4 rock samples which returned strongly anomalous chromium and nickel results (up to 0.42% Cr₂0₃ (Chromium (III) Oxide), and 0.21% nickel).

The Company's planned exploration will include geophysical surveys which aim to model the possible down dip extension of the lithium bearing pegmatite onto the Authier North Property.

Duval East Property

The Duval East Property consists of one (1) mineral claim covering an area of approximately 20-hectares and is located 3km east of the Authier North Property. Duvel East is immediately adjacent to and holds the postulated eastern extension to, a lithum bearing pegnamtite dyke that was drilled over an open 600ft strike length in 1955. With historical drill intersections of up to to 2m @ 1.38 Li₂O  lithium was confirmed at the deposit but a compliant mineral resource estimate has yet to be established and historical mapping shows there is potential for the dyke to extend eastwards further into the property.

The pegmatite dyke trends in a northwest-southeast direction and remains open on its eastern end which falls within the Duval East Property boundary. The Company's planned exploration on the property may include diamond drilling testing for extensions of the lithium bearing pegmatite dyke within the Duval East Property.

TRANSACTION TERMS

The Vendor of the Properties is Eagle Ridge Mining Limited, Barrie, Ontario, Canada.

The Earn-in terms are as follows:

Year 1 Payments

On signing of the Agreement Power Metal will, on behalf of Power Metal Canada, make initial earn in payments to the Vendors including a cash payment of CAD$15,000 (circa £8,777) and a share based payment of CAD$50,000 (circa £29,257) through the issue of 1,063,891 new ordinary shares of 0.1p each in Power Metal at a price of 2.75p per share ("new Ordinary Shares")("Initial Earn-in Shares").

During the first year Power Metal must expend CAD$25,000 (circa £14,628) on exploration costs on the Properties.

Year 2 Payments

Power Metal will make a cash payment of CAD$25,000 to the Vendors and a further share based payment of CAD$50,000 with the number of new Ordinary Shares based on the ten consecutive trading day volume weighted average Power Metal share price prior to the delivery of written confirmation to the Vendors that Power Metal Canada wishes to proceed to year 2 payments.

During the second year Power Metal must expend CAD$50,000 on exploration costs on the Properties.

Year 3 Payments

Power Metal will make a cash payment of CAD$25,000 to the Vendors and a further share based payment of CAD$75,000 with the number of new Ordinary Shares based on the ten consecutive trading day volume weighted average Power Metal share price prior to the delivery of written confirmation to the Vendors that Power Metal Canada wishes to proceed to year 3 payments.

During the third year Power Metal must expend CAD$100,000 on exploration costs on the Properties.

Overall

In summary the cash, Power Metal share payments and project work commitments under the Agreement are detailed in the table below:

Should all payments be made above the total cost to Power Metal, on behalf of Power Metal Canada, would be £242,832 over a maximum 3 year period, and following that expenditure Power Metal Canada will hold a 100% interest in the Properties.

Power Metal Canada can elect to accelerate all expenditures should it wish, at any time, to allow earlier completion of the Earn-in.

There is an existing 1.00% net smelter royalty ("NSR") over the Properties that will remain in place. In addition on completion of the Earn-in Power Metal will grant to the Vendors a further 1.25% NSR (the "Vendor NSR") and 0.5% of the Vendor NSR may be bought back by Power Metal Canada at any time for a cash payment of CAD$500,000.  In total therefore prior to any buyback, the total NSRs amount to 2.25% over the Properties.

References:

¹              Canton de LA MOTTE Township, Rapport Geologique - 160, 1976

COMPETENT PERSON STATEMENT

The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Mr O'Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Power Metal Resources PLC to provide technical support.

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the 1,063,891 Initial Earn-in Shares to be admitted to trading on AIM which is expected to occur on or around 23 July 2021 ("Admission"). The Initial Earn-in Shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

Following Admission, the Company's issued share capital will comprise 1,178,896,891 ordinary shares of 0.1p each. This number will represent the total voting rights in the Company and may be used by shareholders as the denominator for the calculation by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information please visit https://www.powermetalresources.com/ or contact:

Notes to Editors:

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration and development company seeking large scale metal discoveries.

The Company has a global portfolio of project interests including precious, base and strategic metal exploration in North America, Africa and Australia. Project interests range from early stage greenfield exploration to later stage exploration prospects subject to drill programmes.

The Board and its team of advisors have expertise in project generation, exploration and development and have identified an opportunity to utilise the Company's position to become a leader in the London market for investors wishing to gain exposure to proactive global metals exploration.