REG - Power Metal - Kavango Option - Kalahari Key Botswana

Power Metal ResourcesAnnouncement

26/11/2021 07:00

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RNS Number : 6639T  Power Metal Resources PLC  26 November 2021

26 November 2021

Power Metal Resources PLC

("Power Metal" or the "Company")

Kavango Option - Kalahari Key Botswana

Kavango Resources plc Secures Option to Acquire Up to 51.15% of Kalahari Key
Mineral Exploration Pty Ltd which will own 100% of the Molopo Farms Complex
Project, Botswana

 

Power Metal Resources PLC (LON:POW) the London listed exploration company
seeking large-scale metal discoveries across its global project portfolio
announces a 3 month option has been signed (the "Option") whereby Kavango
Resources plc (LON:KAV)("Kavango") may acquire up to 51.15% of the issued
share capital of Kalahari Key Mineral Exploration Pty Limited, Botswana
("Kalahari Key") ("KKME") (the "Acquisition").

Kalahari Key, which would be restructured on Option exercise as outlined
below, currently has an effective 60% interest in the Molopo Farms Complex
Project (the "MFC Project" or the "Project") after Power Metal completed the
earn-in to an effective 40% direct Project interest announced 22 April 2021
(the "Earn-In").

Paul Johnson, Chief Executive Officer of Power Metal Resources plc commented:
 

"It has been clear for some time that the ownership structure of Kalahari Key
needed to be streamlined and that we needed to ensure a heightened level of
operational efficiency on the ground in Botswana.

We are therefore pleased to see Kavango demonstrate an interest in the MFC
Project through this Option announced today which helps achieve both outlined
objectives.

Power Metal has an existing working relationship with Kavango in the Kanye
Resources joint venture covering a number of projects in Botswana and we are
confident that should Kavango exercise the Option, we look forward to a
positive working relationship with them as MFC Project partners going forward.

Notably the Option fee is covered by an immediate Option work programme that
will provide valuable additional information about the MFC Project and
whatever the Option outcome will move the Project considerably forward from a
technical perspective.

We believe that the MFC Project is a considerable opportunity based on real
world evidence already secured from Project exploration to date, including
assay samples of up to 1.7% nickel sulphides in the second drill hole,
KKME1-6.  Now is the time to accelerate the MFC Project and we look forward
to getting on with that."

TRANSACTION HIGHLIGHTS

Should Kavango exercise the Option it will acquire the majority of Kalahari
Key shares in issue including the 5,313 shares currently held by Power Metal,
but excluding the 3,802 shares held by one shareholder, Evrima plc (LON:EVA).

Power Metal will retain its 40% Project interest secured through the
Earn-In.  This interest will not be at Project level, but through a 40%
shareholding in Kalahari Key which will be restructured following the Kavango
Option exercise.

 

Following Option exercise and restructuring the new ownership structure of
Kalahari Key is expected to be as follows:

 Kavango Resources                                    51.15%
 Power Metal Resources                                40.00%
 Evrima Plc                                           8.85%

 

 

 

CONSIDERATION RECEIVABLE BY POWER METAL

On Option exercise Power Metal will sell its 5,313 Kalahari Key shares to
Kavango and will receive Kavango new ordinary shares of 0.1 pence each
("Kavango Shares") and warrants with an exercise price of 8.5p and a life to
expiry of 2 years ("Kavango Warrants").

The number of Kavango Shares to be paid is variable and dependent on the price
of Kavango Shares at the time of Option exercise - but Power Metal expects to
receive as payment approximately 5,162,500 Kavango Shares equating to disposal
consideration of between £283,938  (at 5.5p per Kavango Share) and £454,300
(at 8.8p per Kavango Share), plus 5,162,500 Kavango Warrants.

Further detailed consideration terms are provided below.

THE KAVANGO OPTION WORK PROGRAMME

In return for being granted the Option, Kavango proposes to complete the
following work programme at the MFC Project (the "Work Programme"):

I.     Spectral to perform a single "moving loop" survey over Target 1, to
be paid for by Kavango.

II.    Kavango to perform soil geochemical analysis over Target 2. KKME to
provide details of an outline soil-sampling programme, to be signed off by
Kavango's Exploration Manager. Kavango to provide a maximum of 2 teams for a
maximum of 1 calendar month to perform the soil sampling programme.

III.   Kavango to arrange for the remaining core from Target 3 to be cut and
sent for analysis. KKME to provide confirmation of the quote received for lab
analysis.

IV.  Kavango to input the regional borehole data from Targets 1, 2 & 3
into a unified 3D model. KKME has indicated this data is in Microsoft Excel.
KKME to provide Kavango with said data.

V.    Kavango to send thin sections of core samples taken from the 3 bore
holes drilled at Targets 1, 2 & 3 for university analysis.

VI.  Kavango to fund a contract agreed with Bell Geophysics for a
reinterpretation and inclusion of gravity data for the northern part of the
licence block.

In the event that Kavango does not exercise the Option, Kavango will turn over
to KKME all data gathered from the Work Programme, which will then become the
property of KKME.

 

TRANSACTION HIGHLIGHTS

-      Kavango has signed a 3 month Option commencing 25 November 2021 to
acquire all the shares of  Kalahari Key excluding the 3,802 shares which will
be retained by existing holder Evrima plc.

 

-      On a fully diluted basis Kalahari Key will have 25,733 shares in
issue (assuming 1,100 Kalahari Key share options are exercised) and, assuming
all Kalahari Key options are exercised, 21,931 Kalahari Key shares would be
acquired by Kavango.

 

-      Power Metal holds 5,313 shares (or 20.65% of Kalahari Key on a
fully diluted basis, or 24.23% excluding the Evrima holding) and this Power
Metal holding will be sold to Kavango as part of the transaction.

 

-      Following Option exercise the capital structure of Kalahari Key
will be restructured.

 

-      Power Metal will exchange its 40% direct MFC Project interest for
a 40% shareholding in the restructured Kalahari Key.

 

-      Following Option exercise and restructuring the new ownership
structure of Kalahari Key will be as follows:

 

 Kavango Resources                                    51.15%
 Power Metal Resources                                40.00%
 Evrima Plc                                           8.85%

 

-    The Option has been secured by Kavango in exchange for completion of
a Kavango funded defined Option exploration work programme at the MFC Project.

 

-    The consideration for the Acquisition will be satisfied through the
issue of  new ordinary shares of Kavango ("Kavango Shares") at a price to be
determined as detailed further below and the grant of Kavango warrants with an
exercise price of 8.5p each with a 2-year life to expiry (the
"Consideration").

 

-    Should Kavango exercise the Option the number of Kavango Shares to be
issued is variable. However, should the Kavango price remain in the range of
5.0p to 8.8p, the Consideration will comprise 21,307,500 Kavango Shares and
21,307,500 Kavango Warrants.  Full details of the calculation method is
outlined below.

 

-    The Consideration value is between £1,170,000 and £1,875,000
(dependent on the price of Kavango Shares at the time the Option is
exercised), plus the value of the Kavango Warrants awarded.

 

-    Should Kavango exercise the Option, on a fully diluted basis as
described above, and assuming the share price of Kavango remains in the 5.0 -
8.8p range Power Metal expects to receive 5,162,500 Kavango Shares equating to
disposal consideration of between £283,938  (at 5.5p per Kavango Share) and
£454,300 (at 8.8p per Kavango Share). In addition Power Metal expects to
receive 5,162,500 Kavango Warrants as described above.

 

-     Should the Kavango share price on a volume weighted average share
price in the ten days prior to the Option exercise fall below 5.0p or rise
above 8.8p the number of Kavango shares to be issued would change but the
Consideration value would remain unchanged. Please see below for further
information in respect of the disposal consideration and the calculation of
Kavango Shares and Kavango Warrants that could be issued.

 

-    Further transaction information is available below and in the Kavango
market news announcement released today and below.

 

CONSIDERATION SHARES/WARRANTS CALCULATION

The Option has a 3-month term, valid commencing 25 November 2021, which gives
Kavango the exclusive right (at its sole discretion) to acquire 100% of the
fully diluted share capital in KKME, in exchange for:

-    21,307,500 million Kavango Shares, issued at a price of 5.5p per share
and credited as fully paid, with half the shares subject to a 6-month lock-in
and the remaining shares subject to a 12-month lock-in, both from the Option
exercise date (the "Acquisition Shares").

-    If at the time of exercising the Option, the Kavango share price has
traded below 5p on a 10-day Volume Weighted Average Price ("VWAP") (the "Lower
Price") in the ten trading days immediately preceding the Option exercise
date, then Kavango will issue the Acquisition Shares at the Lower Price for a
total consideration of £1,170,000.

-    If at the time of exercising the Option, the Kavango share price has
traded above 8.8p on a 10-day Volume Weighted Average Price ("VWAP") (the
"Upper Price") in the ten trading days immediately preceding the Option
exercise date, Kavango will issue Aquisition Shares at the Upper Price for a
total consideration of £1,875,000.

-    1-for-1 two-year warrants exercisable at 8.5p per new Kavango Share,
which are subject to an acceleration clause, whereby if Kavango's shares close
above 17p for 5 trading days, Kavango may write to warrant holders at any time
providing 10 working days' notice of accelerated exercise, with 10 working
days thereafter for payment (the "Acquisition Warrants").

-    Should Kavango exercise the Option, on a fully diluted basis as
described above, and assuming the share price of Kavango remains in the 5.0 -
8.8p range Power Metal expects to receive 5,162,500 Kavango Shares equating to
disposal consideration of between £283,938  (at 5.5p per Kavango Share) and
£454,300 (at 8.8p per Kavango Share). In addition Power Metal expects to
receive 5,162,500 Kavango warrants as described above.

-    Kavango will issue the Acquisition Shares and Acquisition Warrants
directly to KKME shareholders, pro-rated in their respective allocations.

-    The Acquisition Warrants will be transferable between KKME
shareholders, with the written permission of Kavango.

             -     Kavango will complete the Work Programme in
exchange for the Option

 

MOLOPO FARMS PROJECT - FURTHER INFORMATION

 

-    KKME has a 60% interest in the MFC Project, which is a
nickel/copper/platinum group elements exploration project located in southern
Botswana

-    The MFC Project covers 1,723km(2)

-    Exploration targets lie under Kalahari Cover

-    Primary exploration strategy led by advanced geophysics

-    Spectral Geophysics ("Spectral") historically engaged to complete
ground-based surveys

-    KKME drilled 3 boreholes in October 2020 ("Targets 1, 2 & 3"),
each of which encountered ultramafic rocks

-    Magmatic nickel sulphides were identified in Borehole K1-6 ("Target
2";
https://www.londonstockexchange.com/news-article/POW/botswana-molopo-farms-complex-further-assays/15148836
(https://www.londonstockexchange.com/news-article/POW/botswana-molopo-farms-complex-further-assays/15148836)

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

For further information please visit https://www.powermetalresources.com/
(https://www.powermetalresources.com/) or contact:

 Power Metal Resources plc
 Paul Johnson (Chief Executive Officer)                                          +44 (0) 7766 465 617

 SP Angel Corporate Finance (Nomad and Joint Broker)
 Ewan Leggat/Charlie Bouverat                                                    +44 (0) 20 3470 0470

 SI Capital Limited (Joint Broker)
 Nick Emerson                                                                    +44 (0) 1483 413 500

 First Equity Limited (Joint Broker)
 David Cockbill/Jason Robertson                                                  +44 (0) 20 7330 1883

 

 

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration
company which finances and manages global resource projects and is seeking
large scale metal discoveries.

The Company has a principal focus on opportunities offering district scale
potential across a global portfolio including precious, base and strategic
metal exploration in North America, Africa and Australia.

Project interests range from early-stage greenfield exploration to later-stage
prospects currently subject to drill programmes.

Power Metal will develop projects internally or through strategic joint
ventures until a project becomes ready for disposal through outright sale or
separate listing on a recognised stock exchange thereby crystallising the
value generated from our internal exploration and development work.

Value generated through disposals will be deployed internally to drive the
Company's growth or may be returned to shareholders through share buy backs,
dividends or in-specie distributions of assets.

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results
awaited, as outlined below:

 Project                     Location   POW %            Work Completed or Underway                                                    Results Awaited

 Alamo Gold Project          USA        Earn-in to 75%   Excavation of multiple test pits and mapping & sampling.                      Field results from on-site work programme.
 Athabasca Uranium           Canada     100%             Phase I field exploration completed                                           Laboratory assay results of samples collected for uranium and REEs
 Authier North Lithium       Canada     Earn-in to 100%  Soil & rock sampling completed                                                Laboratory assay results of samples collected
 Silver Peak                 Canada     30%              Following drill programme demonstrating bonanza grade silver, overlimit       Overlimit analysis results
                                                         testing being undertaken where sample grade exceeded previous assay method
                                                         detection limits
 Ditau Project               Botswana   50%              Preparatory exploration work underway on target I10 leading to planned        Field programme findings and defined drill targets for near term drilling.
                                                         accelerated drilling targeting rare-earth elements and base metals

 Kalahari Copper Belt        Botswana   50%              Exploration programme underway across the South Ghanzi Project and further    Field programme findings and defined drill targets for near term drilling
                                                         exploration at the more recently acquired South Ghanzi Extension and Mamuno
                                                         licence areas
 Tati Gold/Nickel            Botswana   100%             Reverse circulation drill programme completed                                 Laboratory assay results awaited
 Victoria Goldfields         Australia  49.9%            Ongoing exploration across 848km(2) of granted exploration licences           Results from field programme including drill targets for near term drilling

 Wallal Gold/Copper Project  Australia  83.33%           Passive seismic and 2D seismic processing work programme completed            Results awaited

 

 

 

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