LOI for proposed placement of $75m Copper Bonds

Phoenix Copper Limited (AIM: PXC; OTCQX ADR: PXCLY), the AIM quoted, USA focused base and precious metals emerging producer and exploration company, is pleased to confirm that, further to its announcement on 14 November 2024, it has signed a Letter of Intent ("LOI") with an accredited US based investor (the "Investor") to subscribe for $75 million of the Company's listed, secured floating rate minimum 8.5% corporate copper bonds due 2029-2033 (the "Bonds").

Pursuant to the LOI, which is non-binding and subject to any further due diligence that may be required, placement of the Bonds is subject to the preparation and execution of definitive legal documentation, including the Bonds subscription letter. Phoenix expects the Bonds to be drawn down in three tranches: $30 million on execution of the legal documentation (the "First Tranche"), followed by two further tranches of amounts and on dates to be mutually agreed between Phoenix and the Investor (the "Bonds Drawdown") in due course.

The LOI also provides for the issue to the Investor of a preference share of no par value convertible at £0.05 per share into 25 million new ordinary shares of no par value, currently representing approximately 10.5% of the enlarged outstanding share capital of the Company, at any time between 1 September 2025 and 30 June 2028. The conversion rights will vest pro-rata to the Bonds Drawdown.

The Investor will also be allocated one board seat on the Company's Board, following payment of the First Tranche. The appointment of any director will be subject to the usual suitability assessment and other criteria.

Although the Directors are confident that any remaining due diligence will be completed in a timely manner and that the definitive legal documentation will be executed, there can be no certainty that the Bonds will be placed with the Investor. The Company looks forward to providing shareholders with further updates as appropriate.

Richard Wilkins, Chief Financial Officer of Phoenix, commented: "We have been in discussions with the Investor for a number of months, and we look forward to completing the appropriate legal documentation and welcoming the Investor on board as both a Bondholder and, through the proposed conversion of the preference share, a shareholder.

"This proposed placement of Bonds will provide the Company with the cash resources to complete construction of the Empire open-pit copper, gold and silver mine in Idaho, USA and proceed into production, as well as commencing an underground drilling programme on the Empire sulphide vein system, by way of driving an initial adit to the known high-grade (8.38% copper) zone."

Partial conversion of short-term loan

The Company also reports that its short-term loan provider[1] has converted $176,585 of outstanding principal into 4,853,208 new ordinary shares in the Company (the "New Ordinary Shares") at a price of 2.82 pence per ordinary share (the "Partial Loan Conversion").

Application has been made for the New Ordinary Shares, which rank pari passu with the existing ordinary shares of no par value ("Ordinary Shares") in issue, to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective and dealings will occur at 8:00am UK time on or around 18 June 2025.

Following the Partial Loan Conversion, the Company has 212,037,300 Ordinary Shares outstanding. Shareholders may use this number as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in, the issued share capital of the Company.

Since 2017, Phoenix has executed extensive drilling initiatives, resulting in an expansion of the Empire Open-Pit resource by over 200%. In May 2024 the Company published its inaugural mineral reserve statement for the Empire Open-Pit Mine. Proven and Probable mineral reserves are 10.1 million tonnes containing 109,487,970 lbs of copper, 104,000 oz of gold and 4,654,400 oz of silver. This reserve was estimated using assay data from 485 drill holes, extensive geological modelling, metallurgical recovery test work, geotechnical evaluation, and mine design. The reserve represents a combined 66,467 tonnes of copper equivalent metal.

In addition to the Empire Mine, Phoenix's holdings in the district also encompass the Horseshoe, White Knob, and Blue Bird Mines, all of which have been producers of copper, gold, silver, zinc, lead, and tungsten from underground operations, a new high-grade silver and lead orebody at Red Star, and the Navarre Creek gold exploration project, which was first drilled in 2023. The Company's land package at Empire spans 8,434 acres (34 sq km).

[1] The Terms of the Company's short term loan were initially announced on 24 March 2023. Further updates were provided in the Company's announcements dated 19 February 2024 and 4 March 2024.