• Bawdwin now substantially de-risked with new local partner, East Asia Power (Mining) Company Limited (EAP) investing in the project.
  • EAP has significant mining and processing expertise as managers of Longh Keng zinc mine and Lashio zinc refinery in Myanmar.
  • EAP has a strong affiliation with one of Myanmar’s largest industrial conglomerates.
  • WMM and EAP will hold 49% of Bawdwin and MYL will hold a majority 51% interest and operational control.
  • EAP to reimburse a proportion of costs incurred to date by MYL on Bawdwin, including the cost of option fees and extension fee totalling US$3 million.
  • EAP will contribute pro rata to all future costs including the Bawdwin option exercise fee of US$20 million – MYL’s contribution to option fee now reduced to US$13.9 million.
  • Bawdwin’s development now underpinned by substantially invested local companies and MYL’s expertise and access to global capital markets.

Myanmar Metals Limited (“MYL” or “the Company”) advises that together with its local partner, Win Myint Mo Industries Co., Ltd (WMM), it has secured EAP, a company with strong affiliations to one of Myanmar’s largest and most respected industrial companies, as a project-level investor in the development of the global tier-1 polymetallic Bawdwin Mine.

In a transaction that substantially de-risks the future development and financing of Bawdwin, MYL is delighted to have agreed terms with East Asia Power (Mining) Company Limited (EAP), where EAP will effectively acquire a 24.5% share of the Bawdwin Concession and Mine in return for reimbursing costs MYL have incurred to date and sharing in the payment of the pending option fee that secures the tenure over Bawdwin.

EAP owns and operates a manganese mine and a coal mine in Myanmar and also manages the operations of the Longh Keng high grade zinc mine and Lashio zinc refinery on behalf of Cornerstone Resources Myanmar Limited; shareholders of which include Mark Creasy’s Yandal Investments. Its mining expertise is significant.

As a result, the final post-option exercise ownership of equity in Bawdwin between the three parties will be MYL 51%, EAP 24.5% and current shareholders WMM 24.5%. This places total ownership by local Myanmar companies at 49%, with MYL retaining a majority interest and management control over the construction, development and operation of Bawdwin.

EAP will acquire the rights to Bawdwin in return for reimbursing MYL’s costs to date on a pro rata basis. MYL will likely be reimbursed approximately US$1.4 million in the near term as a result. EAP will contribute pro rata to all future costs including the Bawdwin option exercise fee of US$20 million. MYL’s contribution to option fee reduces to US$13.9 million. WMM’s carried interest in the project will be repaid from future dividends.

EAP Background

EAP was established in 2006 for the sole purpose of acquiring and developing mineral resource projects in Myanmar.

EAP currently owns and operates a manganese mine and a coal mine in Myanmar. Since 2012 EAP has also managed the construction, commissioning and operations of the Lashio zinc refinery in the northern Shan State and the high grade Longh Keng zinc mine in the southern Shan State on behalf of Cornerstone Resources Myanmar Limited. Mark Creasy’s Yandal Investments is a major shareholder in Cornerstone Resources Myanmar Limited.

The entire construction and commissioning of the plant was completed on time and on budget within a two-year period. This modern EW zinc refinery commissioned in April 2015 is believed to be the only operating modern zinc refinery in South East Asia at present and is primed for expansion. The refinery has a nameplate capacity of 10,000MT of refined LME grade zinc per annum. The Cornerstone Resources zinc mine at Longh Keng and the refinery at Lashio collectively employ approximately 500 workers.

EAP, its directors, key shareholders and affiliated companies are experienced and heavily invested in major industrial projects throughout Myanmar. Collectively they employ over 5,000 people and have a record of successfully joint venturing with international companies.

A Strong, Strategic Partnership Established to Develop a Global Tier-1 Polymetallic Mine

With EAP’s participation in the project secured and with Win Myint Mo’s ongoing involvement, MYL has assembled the best possible local partners to develop Bawdwin. They provide operational expertise, lobbying strength, solid and effective government relations skills, and they hold a very strong position within the Myanmar economy.

As well, EAP and WMM’s participation addresses the three key aspects of project investment risk in foreign jurisdictions: having a balanced ownership structure that satisfies local ownership requirements, retaining ownership of the asset throughout its life, and operating the asset efficiently in-country.

Together with MYL’s ASX-listed status and access to international capital markets, the three parties collectively have the necessary complementary skills to successfully develop Bawdwin.

Management Commentary

Myanmar Metals CEO John Lamb commented:

“The value of EAP’s investment in Bawdwin is a very significant development for MYL, it de-risks the project considerably, and we now have two well recognised and respected local Myanmar companies that will both hold large stakes in the Bawdwin concession.

Their participation will assist immeasurably with Bawdwin’s development, it gives us excellent in-country connections and recognition and means that a large percentage of Bawdwin’s ownership stays within Myanmar. It is the right model for a foreign company like MYL investing in such a rapidly emerging and fast-growing economy.

EAP’s principal shareholders and directors have a strong track record of partnering with foreign companies. This gives us great confidence, as does their sector expertise operating Myanmar’s only zinc refinery at Lashio, and zinc mine at Longh Keng.

MYL is well funded to execute on its current works program. Our financial obligations for the pending option payment have reduced materially, and interest in the Bawdwin project from investors, commodity traders and global mining companies is growing all the time. EAP’s investment as a de-risking catalyst will certainly increase investor appeal for Bawdwin.

We look forward to providing further progress updates that are pending on more corporate and operational developments.”

Bawdwin Concession and Option

As per MYL’s ASX release dated 6 March 2018, the total updated Mineral Resource estimate for Bawdwin is 76.9 Mt at 4.6% Pb, 2.3% Zn, 0.24% Cu and 118 g/t Ag in the Inferred category, comprising a high-grade primary resource and low-grade halo in the open-pittable zone (above 750mRL) as reported previously on 17 October 2017 and 1 December 2017.

The Bawdwin Concession is currently owned 100% by WMM. MYL is a party to an Option Agreement with WMM, executed on or around 22 May 2017 (Option Agreement). Under the Option Agreement, MYL is granted an option (Option) to acquire an 85% interest in the mineral production concession for the Project (Concession), as held by WMM. The Concession principally comprises a Production Sharing Agreement between WMM and State-owned company No.1 Mining Enterprise (ME 1) over the 38km2 Bawdwin concession, as well as ancillary assets such as two hydro-electric power stations, transmission line, railway, historical tailings area and many buildings and other fixed plant assets.

MYL has now signed an agreement (Binding Heads of Agreement, “HofA”) with EAP. Under the HofA, MYL and EAP have agreed that EAP will participate in the Option by acquiring a 24.5% interest in the Concession. Pursuant to the Option Agreement, and subsequent

arrangements agreed between MYL and the shareholders of WMM, it is intended that, following exercise of the Option the shareholders in WMM will buy back an aggregate 9.5% interest in WMM from MYL, such that the final participating interests in the Concession will be: 51% MYL; 24.5% EAP; and 24.5% current shareholders of WMM.

It has been determined that Win Myint Mo will continue to be the vehicle to hold the Bawdwin Concession; thus, the concession does not need to be transferred and remains in force throughout. In due course EAP and MYL will take direct shareholdings in WMM, such that it becomes an incorporated joint venture vehicle.

Next Steps on Bawdwin Project

A diamond drilling programme is underway at Bawdwin. This drilling initially targets the ‘starter pit’ and will lead to an update of the Mineral Resource estimate by the end of Q2 2018, with the aim of reclassifying a significant proportion of the Mineral Resource within the initial open pit as Indicated.

This will lead to an updated Scoping Study, which will also incorporate results of metallurgical test-work that is currently underway.

The Company is focused on exercise of the option by 21 May 2018; thereafter a bankable feasibility study will be prepared.

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