REG - Kavango Resources - Interim Results
13/09/2023 17:30
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RNS Number : 3671M Kavango Resources PLC 13 September 2023
13 September 2023
KAVANGO RESOURCES PLC ("KAVANGO" OR "THE COMPANY")
Interim Results
Kavango Resources plc, an exploration company targeting the discovery of world
class mineral deposits in Botswana and Zimbabwe, is pleased to announce its
unaudited financial results for the six months ended 30 June 2023.
SUMMARY
· Successfully completed a placing raising gross proceeds of £1,400,000
(US$1,773,000);
· Expenditure in Botswana on exploration of US$1,162,000;
· Loss for the period of US$1,417,000 (June 2022 - US$883,000);
The Interim Management Report and financial results are set out in the
following pages.
Contacts
Kavango Resources plc
Ben Turney +46 7697 406 06
First Equity
Jason Robertson +44 207 374 2212
INTERIM MANAGEMENT REPORT 30 JUNE 2023
Kavango continued to make good progress through the first half of 2023, with
significant funding achieved in a challenging market, an expansion announced
into Zimbabwe, and significant work programmes on all three of our Botswana
projects.
Financing
Kavango successfully raised £1,400,000 by the issue of 140,000,000 New
Ordinary Shares in the capital of the Company ("New Ordinary Shares") at a
price per share of 1 penny to Purebond Limited ("Purebond").
A second stage of this financing comprises the conditional issue of
460,000,000 new ordinary shares of £0.001 each (the "Stage 2 Subscription
Shares") at the Subscription Price per share (the "Stage 2 Subscription").
Stage 2 is subject to the approval by the Financial Conduct Authority of a
prospectus and the approval by independent shareholders of a waiver in
accordance with Rule 9 of the Takeover Code (Whitewash) (among other
conditions).
This £6.0 million equity investment demonstrates significant confidence in
the Company by Purebond, in what is a challenging market for junior
exploration companies. If the second stage is approved this will enable the
Company to accelerate its exploration programs, in particular in Zimbabwe and
at Karakubis on the Kalahari Copper Belt (KCB).
Project status - KSZ, Botswana
On the Kalahari Suture Zone (KSZ), where the Company is exploring for
nickel-copper-PGE mineralisation, drillhole KSZDD003 was drilled. This
completed just after the period end, and was successfully drilled to a depth
of 606.00 m to test the remodelled B1 Conductor. As in hole KSZDD002, the hole
passed through a sedimentary sequence and two intrusive bodies, thought to be
of Karoo age. No sulphide was intersected that is considered to explain the
28,700 Siemens response. While we are disappointed that B1 has not turned out
to be significant nickel or copper sulphide, we believe we have an answer on
this target. It appears that thicker carbonaceous material (when compared with
KSZDD002), containing coincident graphite and pyrite rich bands, with minor
pyrrhotite veining, is the most probable conductive source. A downhole
electromagnetic (DHEM) survey was carried out and remodelled to further
investigate the B1 Conductor. Preliminary modelling of this confirms that
the hole successfully penetrated the conductor and that this has therefore
been adequately tested.
Kavango acquired one additional licence on the KSZ in the period, and is
presently reviewing options to develop the portfolio in future.
Project status - Ditau, Botswana
Kavango has interests in four licences at Ditau. These have been explored for
rare earth elements and are presently being explored for banded iron formation
vein gold style mineralisation.
Work in the period included a review of two drillholes completed by a third
party. These holes were logged and assayed by Kavango. Hole X077 confirmed at
least 470m of geological strike of the Banded Iron Formation host rock
identified in DITDD004. Pyrite was observed, plus (at 147m) blebs of
chalcopyrite were seen. Hole X08, a further 3.4km away, was weathered and
contains extensive relict textures after pyrite, and iron oxides in veins,
with clear signs of locally intense hydrothermal activity.
Anomalous results were received as below, and are similar to those previously
seen in DITDD004.
Hole ID From m To m Width m* Cu % Au ppm
X077 146.93 147.10 0.17 1.77 0.014
X077 154.50 155.50 1.00 2.48 0.061
X081 117.00 118.00 1.00 0.03 0.167
X081 118.00 119.00 1.00 0.06 0.134
*All widths are apparent thicknesses
A review of the mineral exploration potential of the Ditau Project, Botswana,
was carried out for Kavango by Dr. Hamid Mumin, Professor and Former Chair of
the Department of Geology at Brandon University, Manitoba, Canada. The review
identified a possible high potential Banded Iron Formation hosted Lode Gold
model at the Ditau Project. Further work remains ongoing by Dr Mumin,
including Scanning Electron Microscopy on samples from DITDD004.
Kavango acquired an additional two new licences at Ditau in the period,
applications for which were submitted based on the new potential identified.
Kavango and its consultants have carried out a review of the geological model
of, and potential at, Ditau, and have proposed an exploration program that
builds on the above data. This is being evaluated against the potential of
Kavango's other projects as part of a Stage Gated review, so that funding is
directed to where Kavango considers it may best deliver exploration success.
Project status - KCB, Botswana
Kavango has interests in 12 prospecting licences, totalling over 5,000
km(2) in the KCB, where it is targeting copper-silver mineralisation.
Work in the period initially focussed on PL082 in the east of the KCB, where
between October 2022 and February 2023 Kavango drilled a total of 1,885.59m
across seven holes using a combination of Reverse Circulation ("RC") and
diamond drilling.
Drilling was targeted by Controlled-Source Audio Magnetotelluric ("CSAMT")
survey data and soil sampling data. The program confirmed two out of three
technical objectives and has made significant progress on the third.
1) Anticlines and synclines were correctly identified by CSAMT on PL082.
This agrees with the interpretation of PL082 by expert KCB consultant Dave
Catterall of Tulia Blueclay Limited. Mr Catterall has been consulting to
Kavango since October 2022.
2) Zones of structural disturbance, brecciation and alteration were
clearly interpreted via CSAMT and then confirmed in drill core, in particular
in KCBRD005. Kavango's geologists observed evidence of fluid flow, with
consequent alteration.
3) The final test was to intersect the interpreted Ngwako Pan / D'Kar
contact. A massive sandstone unit was intersected from 540.10m to end of
hole in KCBRD007. Although the contact was not intercepted, the massive
sandstone unit matches the resistive signature on the CSAMT inversion.
Kavango has concluded that in PL082 the D'Kar/Ngwako Pan contact lies at a
greater depth than interpreted from CSAMT data, and that the CSAMT is
successfully identifying stratigraphic boundaries.
Kavango's attention then moved to its Karakubis KCB licences further to the
west, where interpretation of wider sedimentary geology in the KCB indicates
that the D'Kar/Ngwako Pan contact lies closer to the surface. Kavango's
technical team have carried out an intensive review of this area, including
geological mapping, additional soil sampling with pXRF analysis, and
integration of Airborne Electromagnetic ("AEM") and CSAMT survey data.
Preparation is now underway for an Induced Polarisation ("IP") survey, a
method which is often used to specifically target sulphides. These methods
together are aimed at delivering relatively shallow higher confidence drill
targets.
Project status - Nara, Zimbabwe
Kavango announced in June 2023 that it had signed an exclusive 2-year Option
to acquire a producing gold exploration project in Matabeleland, southern
Zimbabwe.
The Nara Project comprises 45 contiguous gold claims. Kavango believes the
Nara Project has potential to host a bulk mineable gold deposit.
The Nara Project area has supported historic high-grade underground mining and
continuous surface small-scale mining and custom milling over the last 30
years. This has generated approximately 150,000 to 250,000 tonnes of tailings,
which present a separate opportunity for potential near-term revenue
generation.
Under the terms of the Option, Kavango has full access to the Nara Project
area to conduct field due diligence, through a comprehensive exploration
program. This program is planned to include (but not be limited to) surface
mapping and geochemistry, geophysics, surface drill testing, underground
sampling, underground drill testing and assessing the commercial potential for
processing the Tailings.
Work has now commenced, and preparations are underway for a forthcoming drill
program.
Principal risks and uncertainties
The principal risks and uncertainties facing our business are monitored on an
ongoing basis. The board of directors have reviewed the principal risks and
uncertainties disclosed in the 2022 annual report and concluded that they
remain applicable for the second half of the financial year. A detailed
description of these risks and uncertainties is set out on pages 10 to 13 of
the 2022 annual report.
Closing comments
I would like to thank Ben Turney, Hillary Gumbo, Brett Grist, Peter Wynter
Bee, and Jeremy Brett for their input over the last six months, along with
the operations team in Botswana, and our new colleagues in Zimbabwe. Ben's
work has been instrumental both in the recent financing and in the bringing on
board of the new Zimbabwe assets. Peter Wynter Bee joined the Board in
January, bringing to Kavango significant industry experience, which has added
greatly to the Board's capabilities. Jeremy Brett also joined the Board in
January, having worked extensively with the Company on its geophysics
programs, and brings in additional geophysical expertise.
I am also grateful for the continued support of our shareholders. The sector
has seen continued challenging times, and Kavango has been no exception to
this, with a fall in our share price in recent months. The continued support
of Purebond however offers a renewed opportunity for Kavango to focus an
intensive level of exploration on those projects which in our opinion are most
likely to provide exploration success in the short to medium term. As a
result, we have an excellent opportunity to rapidly deliver meaningful results
that have the potential to add value for all shareholders.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
- The condensed consolidated interim financial statements have been
prepared in accordance with International Accounting Standards 34, Interim
Financial Reporting, as endorsed for use in the United Kingdom;
- Give a true and fair view of the assets, liabilities, financial
position and loss of the Group;
- The Interim Management Report includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred during the first
six months of the financial year and their impact on the set of interim
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
- The Interim Management Report includes a fair review of the
information required by DTR 4.2.8R of the Disclosure and Transparency Rules,
being the information required on related party transactions.
The Interim Management Report was approved by the Board of Directors and the
above responsibility statement was signed on its behalf by
David Smith, Chairman
13 September 2023
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Statement of Total Comprehensive Income
For the Interim Period Ended 30 June 2023
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
US$'000 US$'000
Continuing operations
Administrative expenses 4 (1,043) (794)
Pre-licence exploration costs (249) -
Other losses - loss on fair value of financial assets (125) (89)
Loss before taxation (1,417) (883)
Taxation - -
Loss for the period attributable to owners of the parent (1,417) (883)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Currency translation differences 627 (451)
Other comprehensive income, net of tax (790) (1,334)
Total comprehensive loss for the period attributable to owners of the parent (790) (1,334)
Earnings per share from continuing operations attributable to owners of the
parent:
Basic and diluted loss per share (cents) 5 (0.20) (0.21)
Condensed Consolidated Statement of Financial Position
For the Interim Period Ended 30 June 2023
30 June 2023 31 Dec 2022
(Unaudited) (Audited)
Notes US$'000 US$'000
Assets
Non-current assets
Property, plant, and equipment 129 172
Intangible assets 6 11,530 9,679
Total non-current assets 11,659 9,851
Current assets
Trade and other receivables 7 1,047 1,151
Financial assets at fair value through profit or loss 8 226 -
Cash and cash equivalents 1,515 2,265
Total current assets 2,788 3,416
Total assets 14,447 13,267
Liabilities
Current liabilities
Trade and other payables 492 571
Total current liabilities 492 571
Total liabilities 492 571
Net assets 13,955 12,696
Equity
Share capital 9 1,081 904
Share premium 9 20,873 19,296
Shares to be issued - 7
Share option reserve 1,215 913
Warrant reserve 328 650
Foreign exchange reserve (392) (1,019)
Reorganisation reserve (1,591) (1,591)
Retained losses (7,559) (6,464)
Total equity attributable to owners of the parent 13,955 12,696
Condensed Consolidated Statement of Changes in Equity
For the Interim Period Ended 30 June 2023
Share Share Premium Reorganisation Reserve Share Option Reserve Warrant Reserve Foreign Exchange Reserve Retained deficit Shares to be issued Total
Capital
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
As at 1 January 2022 544 10,985 (1,591) 457 1,764 (474) (4,258) 363 7,790
Loss for the period - - - - - - (883) - (883)
Other comprehensive loss:
Foreign currency exchange difference - - - - - (451) - - (451)
Total comprehensive loss for the period - - - - - (451) (883) - (1,334)
Warrants issued - - - - 204 - - - 204
Issue of ordinary shares 37 884 - - (9) - 9 - 921
Costs of share issues - (49) - - - - - - (49)
Share-based payments - expensed - - - 197 - - - - 197
Share-based payments - capitalised - - - - 48 - - 463 511
Total transactions with owners 37 835 - 197 243 - 9 463 1,784
As at 30 June 2022 581 11,820 (1,591) 654 2,007 (925) (5,132) 826 8,240
As at 1 January 2023 904 19,296 (1,591) 913 650 (1,019) (6,464) 7 12,696
Loss for the period - - - - - - (1,417) - (1,417)
Other comprehensive income:
Foreign currency exchange difference - - - - - 627 - - 627
Total comprehensive loss for the period - - - - - 627 (1,417) - (790)
Warrants issued - - - - (322) - 322 - -
Issue of ordinary shares 177 1,596 - - - - - - 1,773
Costs of share issues - (19) - - - - - - (19)
Share-based payments - expensed - - - 302 - - - - 302
Share-based payments - capitalised - - - - - - - (7) (7)
Total transactions with owners 177 1,577 - 302 (322) - 322 (7) 2,049
As at 30 June 2023 1,081 20,873 (1,591) 1,215 328 (392) (7,559) - 13,955
Condensed Consolidated Statement of Cash Flows
For the Interim Period Ended 30 June 2023
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
Notes US$'000 US$'000
Cash flows from operating activities
Loss before taxation (1,417) (883)
Adjustments for:
Share option expense 295 204
Directors' fees settled in shares - 20
Fair value adjustments 125 83
Net cash used in operating activities before changes in working capital (997) (576)
Decrease / (increase) in trade and other receivables 120 (436)
Decrease in trade and other payables (79) (11)
Net cash used in operating activities (956) (1,023)
Investing activities
Payments for property, plant and equipment (6) (57)
Payments for financial assets at fair value through profit or loss (344) -
Payments for intangible assets (1,162) (961)
Net cash used in investing activities (1,512) (1,018)
Financing activities
Proceeds from issue of share capital and warrants 9 1,773 1,080
Cost of share issue 9 (19) (16)
Net cash generated from financing activities 1,754 1,064
Net decrease in cash and cash equivalents (714) (977)
Cash and cash equivalents at beginning of period 2,265 2,308
Effects of exchange rates on cash and cash equivalents (36) (205)
Cash and cash equivalents at end of the period 1,515 1,126
NOTES TO THE INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2023
1. Basis of preparation
These condensed consolidated interim financial statements include results of
Kavango Resources Plc ("the Company") and its subsidiaries ("the Group") and
have been prepared under the historical cost convention except for revaluation
of certain financial instruments and on a going concern basis and in
accordance with UK-adopted International Accounting Standards.
In the opinion of the directors, the condensed consolidated interim financial
statements for this period fairly presents the financial position, results of
operations and cash flows for this period.
The board of directors approved these condensed consolidated interim financial
statements on 13 September 2023.
Statement of compliance
These condensed consolidated interim financial statements have been prepared
in accordance with International Accounting Standard 34 'Interim Financial
Reporting'. They do not constitute statutory accounts as defined in s434 of
the Companies Act 2006.
The condensed consolidated financial statements should be read in conjunction
with the audited consolidated annual financial statements for the year ended
31 December 2022, which have been prepared in accordance with UK-adopted
International Accounting Standards.
The condensed consolidated financial information for the year ended 31
December 2022 does not constitute the Company's statutory accounts for that
year, but is derived from those accounts. Statutory accounts for the year
ended 31 December 2022 have been delivered to the Registrar of Companies. The
auditors reported on those accounts and their report was unqualified and did
not contain a statement under s498(2) or (3) of the Companies Act 2006, but it
did draw attention to material uncertainty regarding going concern and an
outstanding balance of share placing proceeds (detailed in note 9).
The condensed consolidated interim financial statements for the period ended
30 June 2023 have not been audited or reviewed in accordance with the
International Standard on Review Engagements 2410 issued by the Auditing
Practices Board.
Accounting policies
The condensed consolidated interim financial statements have been prepared
using applicable accounting policies and practices consistent with those
adopted in the statutory audited consolidated annual financial statements for
the year ended 31 December 2022. A number of amendments to accounting
standards have became applicable for the current reporting period. The Group
did not have to change its accounting policies or make retrospective
adjustments as a result of adopting these amended standards.
Critical accounting judgements and estimates
The preparation of the condensed consolidated interim financial statements
requires directors to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
judgements and estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the audited consolidated financial statements for the year
ended 31 December 2022.
Going Concern
The condensed consolidated interim financial statements have been prepared on
a going concern basis. Although the Group's assets are not generating revenue
and an operating loss has been reported, the directors have concluded that,
subject to successful completion of the second share placing with Purebond
Limited for £4,600,000, the Group will have sufficient funds to meet its
working capital requirements and planned exploration expenditure for at least
12 months from the date of approval of these interim financial statements.
2. Financial risk management and financial instruments
Risks and uncertainties
The Board continually assesses and monitors the key financial risks of the
business. The key financial risks that could affect the Group's medium-term
performance and the factors that mitigate those risks have not substantially
changed from those set out in the Group's 2022 Annual Report and Financial
Statements, a copy of which is available from the Group's website:
www.kavangoresources.com. The key financial risks are market risk (including
currency risk), credit risk and liquidity.
3. Segmental disclosures
The Group has two reportable segments, Exploration and Corporate, which are
the Group's strategic divisions, for each of the strategic divisions, the
Board reviews internal management reports on a regular basis. The Group's
reportable segments are:
Exploration: the exploration operating segment is presented as an aggregate of
all licences in which the Group has economic interest as well as pre-licence
expenditure. Expenditure on exploration activities for each licence is used to
measure agreed upon expenditure targets for each licence to ensure the licence
clauses are met.
Corporate: the corporate segment includes the holding and intermediate holding
companies' costs in respect of managing the Group.
Loss after tax for each segment is detailed below:
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
US$'000 US$'000
Continuing operations
Corporate (London and Mauritius) (1,168) (883)
Exploration (Zimbabwe) (249) -
Loss before tax (1,417) (883)
Taxation - -
Loss after tax (1,417) (883)
Segmental assets and liabilities are detailed below:
Non-current assets Non-current liabilities
30 June 31 Dec 30 June 31 Dec
2023 2022 2023 2022
(Unaudited) (Audited) (Unaudited) (Audited)
US$'000 US$'000 US$'000 US$'000
Exploration - intangible assets and equipment (Botswana) 11,659 9,851 - -
Corporate (London) - - - -
Total of all segments 11,659 9,851 - -
Total assets Total liabilities
30 June 31 Dec 30 June 31 Dec
2023 2022 2023 2022
US$'000 US$'000 US$'000 US$'000
Exploration (Botswana) 12,086 10,112 155 106
Corporate (London) 2,361 3,155 337 465
Total of all segments 14,447 13,267 492 571
4. Administrative expenses
Administrative expenses for the period ended 30 June 2023 of US$ 1,043,000 (June 2022: US$ 794,000) include a share-based payment charge of US$ 295,000 (June 2022: US$ 197,000) in relation to the Company's share options (note 10).
5. Loss per share
The calculation of earnings per share is based on the loss attributable to
equity holders divided by the weighted average number of shares in issue
during the period.
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
US$'000 US$'000
Loss for the period from continuing operations 1,417 883
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
Number Number
Weighted average number of ordinary shares for the purpose of calculating 717,945,005 424,158,024
basic earnings per share
Six months to 30 June 2023 Six months to 30 June 2022
(Unaudited) (Unaudited)
US Cents US Cents
Basic and diluted loss per share 0.20 0.21
6. Intangible assets
Intangible assets comprise entirely of exploration and evaluation assets.
Six months to 30 June 2023 12 months to 31 Dec 2022 (Audited)
(Unaudited)
US$'000 US$'000
At 1 January 9,679 5,075
Additions 1,203 3,594
Acquisition of Kanye JV - 1,530
Translation differences 648 (520)
At period end 11,530 9,679
During the period ended 30 June 2023, the additions balance relates to the
Group's exploration activity in Botswana. Details on the exploration activity
can be found in the Interim Management Report.
Impairment review
The directors have undertaken a review to assess whether the following
impairment indicators existed as at 30 June 2023 or subsequently prior to the
approval of these condensed consolidated interim financial statements:
1. Licences to explore specific areas have expired or will expire in
the near future and are not expected to be renewed;
2. No further substantive exploration expenditure is planned for a
specific licence;
3. Exploration and evaluation activity in a specific licence area
have not led to the discovery of commercially viable quantities of mineral
resources and the Board has decided to discontinue such activities in the
specific area; and
4. Sufficient data exists to indicate that, although a development
in the specific area is likely to proceed, the carrying amount of the
exploration and evaluation asset is unlikely to be recovered in full of
successful development or by sale.
Following their assessment, the directors concluded that no impairment
indicators exist and thus no impairment charge is necessary.
7. Trade and other receivables
30 June 2023 31 Dec 2022 (Audited)
(Unaudited)
US$'000 US$'000
Amounts due from shareholders 635 693
VAT recoverable 126 335
Other receivables and prepayments 286 123
1,047 1,151
Further details on the amounts due from shareholders are included in note 9.
8. Financial assets at fair value through profit or loss
30 June 2023 31 Dec 2022 (Audited)
(Unaudited)
US$'000 US$'000
Listed securities 101 -
Convertible loan notes 125 -
226 -
Listed securities
In January 2023 the Company acquired 11,000,000 shares in Power Metal
Resources, an AIM-listed metal exploration company, for a total consideration
of US$ 194,000. The fair value of the shares is based on their unadjusted
quoted market price, which represents a Level 1 input within the fair value
hierarchy of IFRS 13 Fair value measurement ("IFRS 13"). The fair value of the
shares declined to US$ 101,000 as at 30 June 2023 with a loss of US$ 94,000
recognised in profit or loss.
Convertible loan notes
During the period ended 30 June 2023, the Company subscribed to a convertible
loan notes ("CLNs") issued by an exploration company listed on the TSX Venture
Exchange, for a total cash consideration of US$ 150,000. The CLNs carry no
interest but are redeemable in October 2023 with a redemption premium of US$
50,000. The redemption will be in company's shares (together with potential
warrants) at a set conversion price subject to adjustments in the event of a
fundraise.
The CLNs are derivative financial assets measured at fair value through profit
or loss. The fair value of the instruments was estimated using a Monte Carlo
simulation as at subscription dates and 30 June 2023. The estimation of fair
values required a significant use of unobservable inputs, such as the expected
conversion price and share price on redemption, which represent Level 3 inputs
within the fair value hierarchy of IFRS 13. In the period ended 30 June 2023,
a net loss of US$ 31,000 was recognised in profit or loss with respect to the
CLN.
9. Share capital and share premium
Ordinary shares Share Share premium Total
capital
No. US$'000 US$'000 US$'000
At 1 January 2023 705,569,314 904 19,296 20,200
Share placing 140,000,000 177 1,596 1,773
Issue costs - - (19) (19)
At 30 June 2023 845,569,314 1,081 20,873 21,954
On 14 June 2023, the Company successfully raised £1,400,000 (US$ 1,773,000)
gross proceeds by placing 140,000,000 new ordinary shares at 1p.
In November 2022 the Company raised US$ 4,164,000 through the issue of
194,444,437 shares and 194,444,437 3p warrants. Of this amount, as at 30 June
2023 and the date of approval of these condensed consolidated interim
financial statements, £500,000 (June 2023: US$ 635,000; December 2022: US$
605,000) remain outstanding from one subscriber, Arigo Capital, and are
included within the trade and other receivables balance (note 7). The
directors are in continued discussions with Arigo Capital on arranging a
settlement solution and expect this to be resolved in the second half of 2023.
However, should the funds ultimately not be received, the directors have the
ability to issue the shares to a new subscriber for a similar premium or may
cancel the shares. Therefore, no expected credit loss provision has been
recognised as at 30 June 2023 (December 2022: US$ nil).
10. Share-based payments
On 3 February 2023, the Company granted 32,820,000 of new options to the
Group's directors, employees and contractors. The Company also amended the
vesting conditions and exercise price of 10,000,000 existing share options to
align them with the new grant.
The directors have elected to account for the amendment as a cancelation of
the existing options, leading to an accelerated recognition of the remaining
option charge of US$ 200,000 in the period ended 30 June 2023, and treating
the replacement options as a new grant.
Of the 42,820,000 new and amended options granted, 37,820,000 are subject the
following vesting conditions:
(i) a minimum service period, ranging between 6 and 18
months; and
(ii) the Company share price closing at 6p or above on any
5 trading days; or
(iii) the Company share price closing at 7.5p or above on
any 5 trading days; or
(iv) change of control of the Company.
The exercise of the options is subject to continuous employment or commercial
engagement with the Group on the day of exercise, unless terminated by the
Group or the usual 'good leaver provisions' apply.
The vesting period of the options is therefore variable and linked to
market-based performance conditions. A Monte Carlo model was used to calculate
the fair value of the options at the date of grant and to estimate their most
likely vesting periods.
The options are valid for 7 years from the date of grant (or 7 years from the
date of original grant for the amended options) with the exercise price of 5p.
The remaining 5,000,000 options were granted to the Company CEO on the same
terms as above except there is no continuous employment requirements.
Therefore in accordance with applicable accounting standard their fair value
was recognised in full on the date of grant.
For the period ended 30 June 2023 a total charge of US$ 302,000 (June 2022:
US$ 197,000) was recognised in profit or loss in relation the Company's share
options.
Movements in the Company's share options during the period ended 30 June 2023
are detailed below:
Number of options Average exercise price
US$'000 US$'000
At 1 January 2023 45,475,000 4.24
Cancelled (10,000,000) 5.00
Granted 42,820,000 3.00
At 30 June 2023 78,295,000 3.46
Exercisable at 30 June 2023 22,225,000 2.60
11. Significant events after the reporting date
On 25 July 2023, the Company signed an exclusive 6-month option to acquire two
gold exploration projects in Matabeleland, southern Zimbabwe. The Company can
exercise the exclusive options at its sole discretion. The option period will
allow Kavango to perform an appropriate exploration program to assess the
potential of the Hillside and Leopard Projects.
On 5 August 2023, 39,890,911 warrants issued by the Company in connection with
its share placing in July 2021 lapsed unexercised.
12. Other matters
A copy of the Interim Management Report and the condensed consolidated interim
financial statements is available on Kavango's website:
www.kavangoresources.com (http://www.kavangoresources.com)
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