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). 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).
Further information in respect of the Company
and its business interests is provided on the Company's website
at 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