QRES Q Resources

TIDMQRES

RNS Number : 8172E

Q Resources Plc

13 April 2011

Q Resources Plc

Potential acquisition and equity fundraising

Q Resources Plc ("QRES" or "Company") announces that it has entered into a Memorandum of Understanding and 12 week exclusivity undertaking (the "MOU") with HPC Maria Ltd, a wholly-owned subsidiary of Pentagon Bernini Fund Ltd, Gottex ABL (Cayman) Limited, and Antofagasta Ltd (BVI) (together the "Vendors"), in relation to the potential purchase of the Montecristo Copper Mine and the Santo Domingo processing plant (together the "Montecristo Copper Project" or "MCP"), located in the Antofagasta Province of Chile, approximately 140km south of Antofogasta.

The MOU covers the potential acquisition of mining licences and all mining assets of the MCP for a consideration of US$110m (the "Potential Transaction"). The consideration for the acquisition of MCP will be satisfied by the issue of new ordinary shares of QRES and the issue of loan notes in QRES to the Vendors.

MCP operated as a copper mine for 11 years until 2008, at which point the mine was placed on care and maintenance as a result of the global financial crisis.

An exploration programme in 2008 provided a resource estimate and a project design for production of 10,000 tonnes per annum of copper in concentrate, and approximately 0.5 million tonnes of iron ore concentrate per annum at 68% Fe. The underground mine design comprises open stope mining with ore requiring conventional crushing, milling, floatation, and magnetic separation prior to delivery to the market. The existing Santo Domingo process plant would be acquired from the Vendors and comprises the substantial part of the required operating facilities. A dedicated small port will be required to be built to export the iron ore concentrate.

Simultaneous with the completion of the Potential Transaction, QRES intends to raise approximately US$110m from a placing of new ordinary shares of the Company.

It is expected that early production of copper will be achievable and, subject to permitting and modifications to the plant, treatment of existing tailings at the MCP will assist with the environmental clean up of the site. Applications for permits for treatment of the tailings and construction of the port have already been submitted.

The Potential Transactionremains subject to completion of satisfactory due diligence by QRES and the approval of the Company's shareholders.

The Company notes that the Potential Transaction contemplated would constitute a reverse takeover under the AIM Rules for Companies and will require the publication of an admission document in respect of QRES as enlarged by the acquisition of MCP and the consent of QRES shareholders in a general meeting.

The Company is not currently in a position to comply with the requirements of AIM Rule 14 insofar as publication of an admission document and convening of a general meeting are concerned. Consequently, the Company has requested that its securities are suspended from trading on AIM until such time as either the Company is able to publish an admission document or the Potential Transaction is no longer in contemplation.

Under the terms of the MOU QRES has agreed to pay to the Vendors GBP150,000 to cover their transaction costs and a further US$260,000 which may be recouped by QRES to the extent it incurs project-specific due diligence costs. Additionally, the MOU provides for a US$1.1m break fee which in certain circumstances the Vendors may be required to pay to QRES, or QRES may be required to pay to the Vendors.

Completion of the Potential Transaction is conditional (inter alia) upon agreement of formal documentation, QRES being satisfied with its legal, technical and commercial due diligence on the Montecristo Copper Project and the obtaining of any necessary government consents and QRES shareholder approval in accordance with the AIM Rules, and there is therefore no guarantee that the Potential Transaction will complete.

Speaking of the agreement, Bernie Pryor, CEO of Q Resources said:

"This is a unique opportunity for Q Resources. The Montecristo copper and iron ore project will provide low cost copper and iron ore from an existing facility that will be expanded to meet the desired production levels. The ability to utilise the tailings enhances early cash flow and the combination of copper and iron concentrates offer a mixed revenue stream for two strong commodities. We are delighted with this project which is well established and in a country with a strong mining history."

For further information contact:

Smithfield Consultants Limited

Financial PR

Alex Simmons

+44 (0)20 7360 4900

Fairfax I.S. PLC

Nomad and Broker

Ewan Leggat/Katy Birkin

+44 (0)20 7598 5368

Notes to Editors

About Q Resources

Q Resources is a newly incorporated Jersey public limited company which has been established for the purpose of identifying and acquiring, or making investments in Resources assets. Q Resources is seeking to make a sizeable acquisition, which will require Shareholder approval. The Company may acquire either operating, or close to operating, assets or licences. The Company's strategy is to take advantage of opportunities to acquire assets that need capital and possess potentially valuable resources and operations with an initial focus on the African region.

For further information please visit www.qresourcesplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

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