Test Work Confirms the DMS Applicability, Mowana

Cradle Arc Plc / EPIC: CRA.L / Market: AIM / Sector: Mining

31 January 2018

Cradle Arc plc

("Cradle Arc" or the "Company")

Test Work Confirms the Applicability of DMS to the Mowana Copper Mine

Cradle Arc, the African focused base and precious metals exploration and production company, is pleased to announce that it has received an independent test report from SGS South Africa (Pty) Ltd. ("SGS") detailing grading analysis sampling results and confirming the applicability of Dense Media Separation ("DMS") for its flagship asset, the Mowana Copper Mine in Botswana ("Mowana"). Accordingly, it remains the Board's intention to pursue a DMS installation in due course and further updates will be provided as necessary as the development plan for the upgrades to the Mowana processing plant progresses.

Overview

· DMS identified as a low capex expansion option to potentially increase production at Mowana to approximately 22,000tpa of copper in concentrate

o DMS could increase throughput to approximately 2.6Mtpa with reduced cash costs, leading to an increased NPV of up to US$245 million (from the current base case NPV of US$87 million)*

· Test work has demonstrated that DMS pre-concentration can be deployed at Mowana on all low oxide ores (those that contain less than 25 per cent. acid soluble copper)

· The following key metrics were derived by the Company from the independent test work:

o A mass yield of 30-40%, and an expected copper recovery of in excess of 85% can be expected

o Mill feed grades in excess of 2% can be expected, nearly double the current ROM

o An optimal crushing top size of 10-12mm should be designed for with respect to the upgrade project

o Good rejection of gangue minerals is achieved, including carbon and silicon (with more than 75% being rejected)

· Based on the outcome of this test work, Cradle Arc intends to move forward with a development plan for the upgrades to the Mowana processing plant

· Initial DMS preparatory work to be completed within Q1 2018

· Cradle Arc is also generating a new block model for the resource at Mowana, which will enable the Company to complete new mining schedules that incorporate the DMS study results as well as the additional knowledge gained from a re-logging exercise

*NPVs are quoted in real terms, following debt servicing, using a 10 per cent. discount rate and an average copper price of US$2.84/lb and US$2.81/lb in the base case and DMS scenarios respectively. Through its holding in the project, 60 per cent. of the NPV value would be attributable to Cradle Arc.

To complete the technical aspects of the DMS upgrade project, Wardell Armstrong International Ltd have been appointed to re-model the Mowana resource. Such modelling includes the re-logging of drill core and confirmatory assay on selected samples allowing a fuller interpretation of the data base. As a result of this re-modelling and the abovementioned SGS work, the Company anticipates that it will then be able to update the Mowana Resource and Reserve statement.

Commenting today, Kevin van Wouw, CEO of Cradle Arc said:

"Our expectation that DMS upgrades should be deployed at Mowana has been confirmed by SGS's report. We are now focused on working closely with our selected contractors to finalise the budget and implement the strategy to upgrade the processing plant. We are confident that we can rapidly move the Mowana mine from operating at its current nameplate capacity capable of producing 12,000 tonnes Cu per annum, to operating at an improved capacity, that should enable copper production to increase to, potentially, more than 20,000 tonnes Cu per annum. This is expected to dramatically improve cash flows and the net present value. We currently anticipate that we will complete the initial phase of DMS preparatory work within Q1 2018 and further updates will be provided in due course.

"Concurrent with this work, we are generating a new block model for the resource at Mowana, which will allow us to complete new mining schedules incorporating these results as well as the additional knowledge gained from our re-logging exercise. We expect both of these work streams to be completed during this quarter, allowing the upgrade project to move forward expeditiously."

Further Information

In a report prepared by the independent third party engineering firm, SGS, entitled "Grading Analysis and Dense Media Separation on Three Copper Ore Samples from the Mowana Copper Mine" (the "SGS Report"), recently received by the Company, confirmatory test work has demonstrated that pre-concentration will be a highly effective and efficient processing method following the installation of a DMS plant at Mowana.

Historical third-party test work had previously demonstrated the amenability of the Mowana ores to pre-concentration using DMS process techniques. Such test work had included pilot plant trials, as well as a feasibility study, prepared by SGS Bateman in 2014/15, with pit optimisation completed by DRA Mining and metallurgical and engineering design also completed by SGS Bateman. However, as these studies were performed in three separate campaigns under prior mine ownership (by Mintek in 2007, SGS Bateman in 2015 and Bond Engineering in 2014), the Cradle Arc Board believed it prudent to confirm the provenance and suitability of the samples tested (beyond the broad identification of the domain of the samples as oxide, supergene and sulphide bearing ores).

The historical work indicated that the following recoveries and mass yields could be achieved with a DMS installation (source: NI 43-101 RSV Consulting 26 Nov. 2007), which has now been confirmed by the results from the recent SGS Report.

The non-DMS base case business plan relies on treating ROM through the mill at 1.1% Cu. As can be noted from the test work results, both the historical and the more recent SGS work, as a consequence of the installation of DMS pre-concentration the mill feed grade is improved to above 2%. Cradle Arc's business plan does not include processing of oxide material, where the level of oxidation is in excess of 25% Acid Soluble copper, as poor flotation recoveries are achieved. Accordingly, it was deemed appropriate to conduct confirmatory test work on ores selected from the Mowana pits that would most accurately represent the ores available over the first two years of operations for a process plant upgraded to incorporate DMS technology.

Three samples were generated by Cradle Arc geologists for testing by SGS, with the following characteristics:

1. High Carbon Supergene Zone (Sample 171)

2. Low Carbon Supergene Zone (Sample 172)

3. Oxide Sample (Sample 173)

Each sample was split into two and crushed into sizes of 16mm and 5.6mm, in order to ascertain the liberation characteristics of the copper and resultant DMS performance. A summary of the results are set out below:

The results of the latest test work clearly demonstrate that pre-concentration can be deployed at the Mowana Mine on all low oxide ores (those that contain less than 25% acid soluble copper that are amenable to downstream flotation) generated.

The following key metrics were derived by the Company from the independent test work:

· A mass yield of 30-40%, and an expected copper recovery of in excess of 85% can be expected.

· Mill feed grades in excess of 2% can be expected, nearly double the current ROM.

· An optimal crushing top size of 10-12mm should be designed for with respect to the upgrade project.

· Good rejection of gangue minerals is achieved, including carbon and silicon (with more than 75% being rejected).

**ENDS**

For further information, please visit www.cradlearc.com or contact:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.