REG - Kavango Resources - ZIM: Capital Investment & Financing Programme

Kavango ResourcesAnnouncement

29/08/2024 07:00

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RNS Number : 1397C  Kavango Resources PLC  29 August 2024

29 August 2024

Kavango Resources PLC

("Kavango" or "the Company")

ZIM: Capital Investment & Financing Programme

 

Kavango Resources plc (LSE:KAV), the Southern Africa-focused metals
exploration company, is pleased to announce the launch of its Capital
Investment & Financing Programme (the "Cap-Ex Programme") to develop the
Company's mining projects in Zimbabwe.

The Cap-Ex Programme will comprise staged capital raises for investment into
specific value-generating projects. The primary objective will be to define
mineable gold resources and acquire plant and equipment for larger-scale
production.

The first phase of the Cap-Ex Programme will focus on the Hillside Gold
Project ("Hillside"), which Kavango believes has potential to host one or more
mineable ore bodies (announced >>> 28 August 2024
(https://polaris.brighterir.com/public/kavango_resources_plc/news/rns/story/rndn10x)
). To this end, Kavango has issued a £2million convertible loan note (the
"CLN") to Purebond Limited, its major shareholder. The CLN and accrued
interest will be convertible ordinary shares in the Company on publication of
a prospectus.

Ben Turney, Chief Executive Officer of Kavango, commented:

"We are extremely pleased with the rapid progress and achievements Kavango is
making in Zimbabwe. So far, this approach has delivered highly encouraging
results. In little over a year, we've gone from a standing start to being able
to launch today's capital investment programme at our Hillside Gold Project.
We have a number of work streams running in parallel to maximise our speed of
growth.

We commenced small-scale gold production at Hillside in March. Since then,
we've built our mining and production teams and made modest improvements to
the plant and site. We've also hosted several site visits by mining experts.
In parallel, our exploration team has worked hard to deepen our understanding
of Hillside's geology and structural setting. It is thanks to their efforts
that we are now able to move into resource drilling.

With the strong foundation we have put in place, we are ready to initiate the
first phase of our Capital Investment & Financing Programme. This will
involve a series of staged capital investments into revenue generating
opportunities for Kavango. Highlights of the first phase will include resource
drilling of our highest ranked deposits at Hillside and then, assuming results
are favourable, building a 100t/d modern gold processing plant.

If all goes to plan, we aim to commence production at the new plant by the end
of H1 2025."

 

First Phase of the Cap-Ex Programme

The first phase of the Cap-Ex Programme has been designed to maximise
near-term revenue generation in Zimbabwe, in a disciplined and focussed
manner. This will include the following activities:

·    Capital investment in Kavango Mining

Kavango has designed a capital expenditure program to enhance existing
small-scale gold production at Hillside, through improving existing processes
and bringing historic mine shafts back into production. The Company believes
this program will double existing gold production to 3kg a month by the end of
Q4 2024.

·    Resource drilling at the Hillside Gold Project, Zimbabwe

Prior to commencing larger-scale mining at Hillside, Kavango will complete the
current exploration drilling across its four highest ranked targets and then
conduct resource drilling on the most prospective deposit. The Company would
seek to establish a resource of at least 10,000 oz of gold defined within the
top 100 m (below the current zone of depletion by the contract artisanal
miners) with a further resource of at least 5,000 oz of gold defined in the
next 50 vertical metres below that. A diamond drill rig will be used, as
Kavango believes this approach will maximise the geological data gathered to
guide future mining decisions.

As a rough target, Kavango aims to identify 73,000 tonnes of mineable ore to
keep the Production Plant in continuous operation for two years.

·    Commissioning of 100tonne/day ("t/d") gold processing plant (the
"Production Plant")

Assuming Kavango meets its exploration targets at Hillside, Kavango Mining
intends to commission a 100t/d gold processing plant. Kavango has been in
close discussions with a South African manufacturer that has experience of
designing, building and installing modern gold production plants across Africa
(the "Manufacturer"). Kavango has sent rock samples from Hillside to the
Manufacturer for metallurgical testing. Results from this testing will guide
the design of the plant. Kavango aims to commence gold production at the
Production Plant in Q2 2025.

·    Investment in Equity Drilling Zimbabwe (Pvt) Limited ("Equity
Drilling")

Kavango will acquire a 45% stake in Equity Drilling for US$22,500, the
Company's drill partner in Zimbabwe. Kavango has identified a commercial
opportunity to build a supply chain to service metals exploration companies in
Zimbabwe. There has been little modern exploration in Zimbabwe. As such, local
service provision is limited. Kavango made an initial loan to Equity Drilling
of $240,000 in Q2 2024 and will lend a further $240,000 during Q3 2024 (the
"Start-Up Loans"). The Start-Up Loans are for the purchase of two drill rigs
(one diamond rig and one multipurpose rig) and will be repaid through gross
profit generated from drilling contracts.

Capital Investment & Financing Programme Structure

The Cap-Ex Programme will consist of a series of financing initiatives to fund
development of Kavango's mining and revenue generating activities. The board
initially expects to raise money through standard issues of equity, with
Purebond, the Company's largest shareholder, acting as cornerstone. As
Kavango's business grows and the Company establishes a track record of
success, the board anticipates accessing other pools of capital to fund
growth.

Convertible Loan & Prospectus

As part of the first phase of the Cap-Ex Programme, Purebond Limited has
agreed to advance the Company £2million through a convertible loan note (the
"CLN"). The CLN will carry an annual coupon of 10% and will have a
twelve-month term. The CLN and accrued interest will be convertible into
ordinary shares in the Company on publication of a prospectus.

The Company has drafted a prospectus, which has received preliminary approval
from the Financial Conduct Authority. Kavango will use the final published
prospectus as the listing document for application to trading of the Company's
ordinary shares on the Victoria Falls Stock Exchange (announced >>>
02 August 2024
(https://polaris.brighterir.com/public/kavango_resources_plc/news/rns/story/rmde28r)
).

Further information in respect of the Company and its business interests is
provided on the Company's website at www.kavangoresources.com
(http://www.kavangoresources.com/)  and on Twitter at #KAV.

For further information please contact:

Kavango Resources
plc

Ben Turney

bturney@kavangoresources.com

+46 7697 406 06

First Equity (Broker)

+44 207 374 2212

Jason Robertson

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