Proposed Agreement to Settle Cosmo Gold Loan

Adelong Gold Limited (ASX:ADG) (Adelong Gold or the Company) is pleased to announce that it has entered into a non-binding Memorandum of Understanding (MOU) with Cosmo Gold Limited (Cosmo) and Sarama Resources Ltd. (ASX:SRR) (Sarama) to accept fully paid ordinary shares and options in Sarama in full settlement of the loan obligations owed by Cosmo to Adelong Gold.

HIGHLIGHTS

• Adelong Gold agrees to proposed settlement of outstanding loan to Cosmo Gold
• Non-Binding Agreement with both Sarama Resources Ltd. and Cosmo Gold Ltd.
• Agreement reached as part of a proposed transaction between Adelong Gold and those companies

Adelong Gold Chairman Ian Hastings commented:

“Adelong Gold is pleased to reach in principal agreement to settle the outstanding loan owed to it by Cosmo by agreeing to accept shares and options in Sarama Resources Ltd, with whom Cosmo is pursuing a transaction to transfer the Cosmo project to Sarama. Whilst the proposed transaction is subject to numerous Conditions Precedent and approvals, Adelong Gold is pleased to support it. Together with the initial consideration received by Adelong Gold when it sold the project to Cosmo, Adelong Gold is pleased to now potentially recover much of its Cosmo loan.”

Background

On 27 August 2020, the Company announced its intention to sell its Cosmo Newbery gold project to Cosmo, its then wholly owned subsidiary, and for Cosmo to undertake an initial public offering (IPO) and seek admission to the ASX. As consideration for the transfer of the Cosmo project, Cosmo would pay $750,000 to Adelong for costs incurred in relation to the Cosmo project (of which $500,000 has been received by the Company).

On 25 June 2021, Adelong Gold announced that Cosmo had withdrawn the IPO following delays associated with obtaining the required ministerial approvals of a mining permit for part of the Cosmo project caused by the then-recent Western Australian (WA) election. The IPO initially received commitments in excess of the $5 million target raising. However, the continued delays in receiving the mining permit from the WA government resulted in the withdrawal of the IPO.

The Company has continued to advance loan funds to Cosmo for its operations pursuant to a secured loan arrangement, where the amount presently owed by Cosmo to Adelong Gold is $1,538,957.

Proposed settlement of Loan

The Company has executed a non-binding MOU with both Sarama and Cosmo, pursuant to which it is intended that Cosmo will sell 80% of its interest in the project to Sarama and Sarama taking on certain funding obligations for the project. The transaction is subject to numerous Conditions Precedents (as set out in the MOU and below), including full settlement of the loan owed by Cosmo to the Company. The loan is proposed to be fully settled in consideration of the Company receiving 25 million fully paid ordinary shares in Sarama (SRR Shares) and 7.5 million options to acquire shares in Sarama exercisable within 2 years at $0.05 per option (SRR Options) issued to Cosmo under the transaction. Based on the closing SRR share price of $0.022 on 14 June 2024, the SSR Shares to be transferred to the Company as part settlement of the loan to Cosmo are valued at $550,000.

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