Mr. Danny Keating reports

GIYANI SECURES US$16 MILLION OF DEVELOPMENT FINANCING FROM THE IDC

Giyani Metals Corp. has signed definitive agreements for $16-million (U.S.) of financing with the Industrial Development Corp. of South Africa Ltd. (IDC) in the form of convertible loan facilities.

Highlights:

• The IDC financing is the cornerstone of a $26-million (U.S.) financing package that will, over the next 15 months, progress K.Hill to a final investment decision (FID), including an optimized feasibility study for the project and operating the company's demonstration plant which will produce battery-grade manganese (high-purity manganese sulphate monohydrate (HPMSM)) for qualification testing by potential customers.
• Giyani and its wholly owned subsidiaries have secured $16-million (U.S.) via long-term convertible loan facilities with the IDC, which will enable Giyani to progress to FID, while minimizing shareholder dilution at this time.
• The IDC is a major South African development financing institution with over 80 years of experience investing in industrial companies and the mining sector, with $8.5-billion (U.S.) of assets and which typically invests over $1-billion (U.S.) each year in mining and infrastructure-related projects.
• The remaining $10-million (U.S.) of financing is in the process of being secured from a strategic investor who has signed a non-binding term sheet, completed its due diligence and is currently in the final documentation stage.

Danny Keating, president and chief executive officer of the company, commented:

"We are delighted to announce the IDC funding as a resounding vote of confidence in K.Hill. This brings on board a strategic partner with significant mining and industrial development experience. The investment provides the majority of the financing that Giyani requires to derisk the project through to FID and introduces a partner with a vision and ambition to be involved in the development and capital funding of the project.

"The demand for HPMSM projects with robust economics has never been stronger as financial institutions begin to understand the enormous demand for this critical mineral as the world moves definitively towards electric vehicles. We look forward to commencing operations at the demonstration plant to enable the distribution of samples to potential customers as we finalize our sales and offtaker strategy for the commercial-scale plant to be built in Botswana."

Joanne Bate, chief operations officer of IDC, commented:

"The IDC has developed a value chain strategy which focuses not only on the new minerals critical for net zero, but also on their processing towards precursor materials, through conversion into cell manufacturing, battery development, assembly and recycling.

"We are excited by the potential of Giyani and see K.Hill as an important step in IDC's strategy to help initiate the development of a battery minerals industry in Southern Africa."

Summary of key terms of IDC facility:

• The $16-million (U.S.) IDC facility will be split into two separate facilities with similar terms attached. A $12.5-million (U.S.) convertible loan facility for use by Giyani Metals South Africa Pty. Ltd. (GMSA) and a $3.5-million (U.S.) convertible loan facility for use by Menzi Battery Metals Pty. Ltd., both wholly owned subsidiaries of the company. Both will be provided in South African rand equivalent up to a maximum of 300 million South African rand.
• The IDC facility may be drawn down in tranches by Giyani's local subsidiaries in South Africa (GMSA) and Botswana (Menzi) to complete the final stages of construction and commissioning of the demonstration plant, and importantly, finance the operational phase to produce final product for offtaker testing and potential customers. Alongside this, the optimized FS will be prepared, building on both the feasibility study completed in 2022 and the recently released 2023 preliminary economic assessment (PEA) (see Giyani news release dated July 31, 2023) to define the final construction economics and enable FID.
• Interest will accrue in South African rand on drawn amounts on a daily basis from the relevant drawdown date, compounded monthly in arrears at the South African prime rate (currently 11.75 per cent) plus 3 per cent. The equivalent rate in U.S.-dollar terms can be calculated using the U.S. dollar/South African rand exchange rate.
• The company will be able to draw down the funds until March 31, 2025, with any portions of the IDC facility that have not been drawn down at that time being cancelled without penalty.
• The final repayment date of the IDC facility, if not converted, will be 48 months from the first drawdown date.
• Certain criteria are attached to the IDC facility including (i) completion of the construction and commissioning of the demonstration plant by the first anniversary of the first drawdown date, provided that this date may be extended to no later than June 30, 2025, subject to Giyani demonstrating that it has secured sufficient project development financing to achieve FID; and (ii) completion of the optimized FS within 90 days after construction and commissioning of the demonstration plant has been completed and is producing HPMSM within defined specifications.
• The IDC has the option to convert the outstanding amount of the IDC facility into shares (and shareholder loans) in Thabatala Holding Pty. Ltd. (Project HoldCo) or shares in Giyani. The option is exercisable by the IDC on two occasions, the first being after completion of the optimized FS and successful operation of the demonstration plant, and the second being after Giyani has achieved FID. The conversion will occur at a 20-per-cent discount to the then prevailing 30-day volume-weighted average price of the Giyani shares, subject to a minimum share price equal to the closing price of the Giyani shares on the trading day immediately prior to this announcement. The percentage shareholding acquired by the IDC following conversion will be limited to a maximum shareholding of 19.9 per cent, or such higher percentage as may be approved by the TSX Venture Exchange, Giyani and its shareholders.
• If the IDC elects to convert the outstanding amount of the IDC facility into shares (and shareholder loans) in Project HoldCo, then the IDC will have a further option, exercisable upon the project achieving sustained commercial production, to exchange its shares and shareholder loans in Project HoldCo for Giyani shares. The conversion will occur at the then prevailing 30-day volume-weighted average price of Giyani shares, subject to the minimum share price and the maximum shareholding percentage.
• The IDC facility will be comprehensively secured in favour of the IDC through a guarantee given by Giyani and each of the subsidiaries associated with the project in favour of the IDC, along with pledges of their respective shares and loan accounts, and security granted by Menzi, GMSA and Thabatala Technology Company Pty. Ltd. over the K.Hill assets.
• If the IDC elects to exercise its option(s) and acquire shares in either Giyani or Project HoldCo then: (i) for so long as the IDC holds at least 10 per cent of the outstanding Giyani shares or the Project HoldCo shares, the IDC will be entitled to nominate one person for appointment to the board of Giyani or Project HoldCo, as the case may be, and shall be entitled to nominate one additional person to the relevant board for so long as it holds an additional 15 per cent of the outstanding Giyani shares or the Project HoldCo shares; (ii) for so long as the IDC holds at least 10 per cent of the outstanding Giyani shares, the IDC will be entitled to direct the sale of up to 10 per cent of HPMSM production from the project to a nominated offtaker in the Southern African development community, on terms no less favourable than any other offtake agreement negotiated by Giyani; and (iii) for so long as the IDC holds at least 10 per cent of the outstanding Giyani shares, the IDC will have a right of first refusal to provide and act as co-lead arranger for the project finance facilities sought by Giyani for the development of the project, provided that the terms of such facility(s) and arrangements shall not be less favourable than those available to Giyani on the open market.
• The IDC facility is subject to various drawdown conditions, including Giyani securing the remaining $10-million (U.S.) of financing to be fully financed to FID, as well as other conditions customary for facilities of this nature.
• The IDC facility otherwise contains such undertakings, warranties, and terms and conditions as would be standard and customary in financing arrangements of this nature.

The IDC facility and the Giyani shares issuable on conversion remain subject to receipt of the requisite TSX-V approval(s).

This foregoing summary of key terms of the IDC facility as signed on Nov. 29, 2023, is qualified in its entirety by the full text of the IDC facility, copies of which have been or will be filed under the company's profile on SEDAR+.

Summary of $10-million (U.S.) financing terms

In parallel with finalizing and signing the IDC facility, the company has engaged with a strategic investor to secure the remaining $10-million (U.S.) of financing, which process is now post due diligence and is in the final documentation stage, following signing of a non-binding term sheet on July 21, 2023. In terms of this financing arrangement, the company will raise at least $10-million (U.S.), which may be split between a royalty and an equity component, which will satisfy the relevant drawdown conditions to the IDC facility. The equity component of such financing, which is subject to a maximum shareholding in Giyani of 19.9 per cent, is expected to be completed through the issuance of units at a price of 15 cents per unit, with each unit consisting of one Giyani share and one common share purchase warrant, where each warrant entitles the holder thereof to acquire one additional Giyani share at a price of 22.6 cents per Giyani share exercisable for a period of five years from its date of issue. Complete details of this additional financing will be included in a further news release once the definitive documentation has been finalized and signed. This financing arrangement remains subject to receipt of the requisite TSX-V approval(s).

Project execution and optimized feasibility study

The company is now progressing critical workstreams to move K.Hill to FID. These major workstreams include, but are not limited to, the following:

• Advancing discussions with the multiple Tier 1 offtakers that have expressed interest in bringing K.Hill into their battery raw material supply chains, a number of whom have already visited Giyani's facilities;
• Completing construction, commissioning and entering the operational phase of the demonstration plant in Johannesburg. The IDC facility has been secured in South African rand which is aligned with the company's foreign exchange exposure as the demonstration plant will be constructed and operated using South African contractors. The demonstration plant will be used for a number of different purposes, all of which will be critical in preparing the company for the commercial project construction stage:
  • The plant will be capable of producing up to 600 kilograms per day of dry HPMSM crystals for shipment to offtakers for product qualification and negotiation of sales contracts, starting mid-2024;
  • Provie to financial institutions and offtake partners that the product can be produced using the Giyani flowsheet on a consistent basis;
  • Give greater understanding of the operating costs, especially reagent consumption, at a significant scale;
  • Training of staff, including personnel recruited from Botswana who can gain technical and operational skills prior to the construction and operation of the commercial plant, which will help to minimize the ramp-up period.
• Completion of an optimized FS based on the updated mineral resource estimate (MRE) and PEA from July, 2023, for K.Hill, and utilizing data and learnings from the operation of the demonstration plant, that will meet the requirements of project finance banks and lenders. It is also anticipated that the contract for the optimized FS will be South African rand-denominated to align with the IDC facility.

About Giyani Metals Corp.

Giyani's mission is to become a sustainable, low-carbon producer of battery materials for the electric vehicle (EV) industry. The company has developed a hydrometallurgical process to produce high-purity manganese sulphate monohydrate, a lithium-ion battery cathode precursor material critical for EVs, directly from ore from its manganese oxide deposits in Botswana, wholly owned by its Botswana subsidiary Menzi. The company's assets include K.Hill and the Otse and Lobatse manganese prospects, each of which has seen historical mining activities.

Qualified persons/NI 43-101 disclosures

A National Instrument 43-101 technical report including results of the PEA and the MRE can be found on SEDAR+ and made available on the company's website.

Jacques du Toit, CEng, PrEng, MscEng, PMP, is a qualified person, as defined by National Instrument 43-101. Mr. du Toit is the vice-president, technical services, and has reviewed and approved the scientific and technical content contained in this news release but is not independent for the purposes of NI 43-101.

Luhann Theron, MSc, PrSciNat 400184/15, of Lambda Tau, is registered with the SACNASP and last visited the K.Hill project site in August, 2023, and is a QP, as defined by NI 43-101. Mr. Theron is the chief geologist for the company and has reviewed and approved the scientific and technical content contained in this news release but is not independent for the purposes of NI 43-101.

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