Agreement signed for potential acquisition

AURASIAN MINERALS SIGNS HEADS OF AGREEMENT TO ACQUIRE SERBIAN PROPERTIES THROUGH ACQUISITION OF MOROCCAN MINERALS

Dec 1, 2015

AURASIAN Minerals plc ("Aurasian" or the "Company") is pleased to announce that it has signed a heads of agreement (the "HoA") with a Jersey based private exploration company Moroccan Minerals Ltd ("Moroccan" or "MML"), to acquire all the outstanding shares of MML (the "Proposed Acquisition").

Background

Moroccan was set up in 2013 to explore for gold and base metals throughout Northern Africa and Eurasia. After an extensive search of projects Moroccan has signed an earn in agreement with a local partner, Balkan Mineral Corporate d.o.o., to earn up to an 80% interest in a polymetallic project ("Chadine") located in South-west Serbia near the border with Montenegro.

Chadine is contained within a 25 kilometre long exploration permit, measuring 100km2, centred on an historic former Yugoslav polymetallic deposit explored in the 1980s. Chadine is a carbonate hosted replacement style deposit with a non-compliant resource, calculated by the Yugoslav Geological Survey of 7.7 million tons of 1.1% Cu, 2.6% Zn, 1.0% Pb plus Au and Ag credits. Of greater interest to the Board of Aurasian is that little regional exploration work has been carried out on the area's potential. There was minimal earlier work carried out by the then Yugoslav Geologic Survey and the main zone of mineralisation is open down dip. Aurasian's geologists believe there is strong potential to increase both the grade and the size of the deposit and, in particular, the board of Aurasian believes that additional potential exists to discover a whole new district of mineralisation.

A number of zones of outcropping gossan have never been drill tested and the project has not been subject to modern geophysical techniques to explore for buried or covered mineralisation. In addition, assaying for gold and silver was not routinely undertaken during Yugoslav times and potential exists to add significant value through identifying higher grade precious metal zones or standalone gold and silver deposits.

Chadine occurs within a much larger Tethyan Volcanic belt which dates from the late Cretaceous to the Middle Miocene and contains a number of viable mineral deposits including Reservoir Minerals' recent discovery, Timok, which is a Porphyry Copper project located in Serbia (291 million tons @ 7.2% Cu), and Eldorado Gold's Olympias polymetallic deposit located in Greece (4.2 million Oz of Au @ 7.6 g/t Au, plus Ag, Pb and Zn). Of particular interest is that Olympias is of a similar style of mineral deposit to Chadine.

The Board of Aurasian believes that Serbia offers a combination of a stable government which is pro-mining, a competitive fiscal regime, government incentives for mining, strong prospectivity and being very under explored. Corporate tax rates in Serbia are low at 15% and royalties competitive at 5%. This compares favourably with other jurisdictions in which Aurasian has been reviewing projects.

Terms of the HoA

Proposed Consideration

Pursuant to the HoA, Aurasian has proposed to acquire all of the outstanding shares in Moroccan (the "MML Shares") and issue to holders of MML Shares ("MML Shareholders) 4.22 ordinary shares in the capital of Aurasian ("Aurasian Shares") for every 1 MML Share held. Moroccan currently has 19,200,647 MML Shares outstanding and accordingly Aurasian would issue a maximum of 81,026,730 Aurasian Shares (equating to 19.4% of the current number of Aurasian Shares in issue) pursuant to the Proposed Acquisition. If the Proposed Acquisition completes on the terms envisaged under the HoA MML Shareholders would, on completion, hold 16.3% of the Aurasian Shares then in issue.

The MML Shares were valued at CAD 3 cents, a premium to their latest financing completed in June 2015 at 2 cents. Aurasian Shares were valued at 0.35 pence using a 30 day VWAP of the Aurasian Shares traded on the London market between Oct 21 and Nov 20 2015.

In addition Aurasian proposes to issue warrants to the MML Shareholders in lieu of options over MML shares that have been granted to them previously. Such warrants will grant the MML Shareholders to right to subscribe for 1,899,000 Aurasian Shares (pro rata to their shareholding in MML). Of these warrants 844,000 will have a strike price of 0.7 pence per Aurasian Share and 1,055,000 will have a strike price of 0.58 pence per Aurasian Share.

Peter Mullens, CEO of Aurasian and Tim Coughlin, Non-Executive Director of Aurasian, hold 7.3% and 2.1% respectively of the MML Shares currently in issue.

Appointment of Directors

Subject to completion of the Proposed Acquisition, it is intended that Didier Fohlen, an existing director of MML, will be appointed to the board of directors of Aurasian as Non-Executive Director. In addition, Fabian Baker, also a current director of MML, will take up the position of Chief Operating Officer for Aurasian.

Didier has an engineering degree from the School of Geology and Mines of Nancy, France, and 33 years' experience in mining operations and closures, with a focus on investing in emerging markets. His career included 15 years with the World Bank / IFC, working on mining investments. Fabian is a geologist with seven years of exploration experience including as Chief Geologist for Lydian Resources on their Amulsar gold project located in Armenia. He is a co-founder of Moroccan and was responsible for acquiring MML's interest in the Chadine project.

Lock-In Agreements

The HoA envisages that Didier Fohlen and Fabian Baker will agree not to deal in the Aurasian shares for a period of 12 months from completion, and for a further 12 months thereafter only to deal in said shares in an orderly fashion through the Company's broker and in any event at a maximum discount of 10% to the prevailing mid-market share price. The remaining MML Shareholders would agree similar restrictions but for a period of six months in each case. .

Exclusivity

Pursuant to the HoA, Aurasian has paid MML £40,000 to secure exclusive rights to negotiate the Proposed Acquisition until 15 February 2016. This payment will be refunded to Aurasian if the Proposed Acquisition does not complete by 15 February 2016 or MML were to agree terms with another party during this exclusivity period.

Further Conditions

The Proposed Acquisition remains subject to the drafting and execution of a binding document of sale between Aurasian and the MML Shareholders and MML Shareholders holding more than 50% of the issued share capital of MML agreeing to sell their shares to Aurasian in accordance with the terms of such agreement. 

In addition, such agreement will require that Aurasian commits to funding 1,000 metres of drilling and surface mapping and sampling at Chadine at a cost of C$75,000 before 15 April 2016. Such work will earn Aurasian, through MML, an initial 20% interest in the Chadine project.

Peter Mullens, CEO of Aurasian Minerals, stated; "We are very excited by this transaction, with the Chadine project having the ability through successful exploration to deliver an entire district of mineral deposits. The project is located along a 25 kilometre thrust fault with small scale untested zones of mineralisation occurring along it. While we had not originally anticipated acquiring further exploration projects outside our area of focus in Africa and Asia, this opportunity fits with our intended strategy to acquire high impact assets at a good price for Aurasian shareholders."

Aurasian Minerals are at Mines and Money London this week from 1 December to 3 December and can be found at display stand E26. If any investors would like to discuss the Proposed Acquisition then the management of both Aurasian and Moroccan will be available.

For further information please contact:

Aurasian Minerals Plc

Peter Mullens (CEO) [email protected]

finnCap Limited - Nominated adviser

Christopher Raggett / Scott Mathieson +44(0)2072200500

Qualified Person Review

This release has been reviewed by Peter Mullens, Chief Executive of Aurasian, who is a Fellow of The Australian Institute of Mining and Metallurgy with 33 years' experience in exploration and management. Mr. Mullens has consented to the inclusion of the technical information in this release in the form and context in which it appears.

ABOUT AURASIAN MINERALS

Aurasian Minerals PLC is an AIM listed junior exploration company exploring for copper and gold. Aurasian has an experienced board and technical team headed up by Chris Goss, Chairman, previously a leader in mining project finance for emerging markets for the IFC, International Finance Corporation. The company is well funded in a difficult market with approximately GBP 600,000 in the bank and a further US $ 750,000 due to the company for the sale of its stake in the Wamum project in Papua New Guinea (see press release dated March 13 2015).