Botswana focussed metals exploration company Kavango Resources plc (LSE:KAV) (“Kavango”) announces it has agreed terms with Power Metal Resources plc (AIM:POW) (“Power”) to acquire Power’s 50% of the Kanye Resources Joint Venture (“Kanye JV”) (the “Acquisition”).
The Kanye JV owns 100% working interests in:
– 10 prospecting licenses in the Kalahari Copper Belt (“KCB”), which cover 4,257km2
– 2 prospecting licences in the Ditau Camp Project that cover an area of 1,386km2
Kavango is the operator of the Kanye JV.
Ben Turney, Chief Executive Officer of Kavango Resources, commented:
“Today’s deal is a very important step forward for Kavango. After a period of considerable support from Power Metal Resources, we are now in a position to regain complete ownership of our crucial prospecting licences in the Kalahari Copper Belt (KCB) and at Ditau. On completion of the transaction, Kavango will become one of the largest landholders for copper exploration in Botswana.
The Strategic Joint Venture has served both Kavango and Power well. It has demonstrated the success of Power’s incubation model in the exploration space, while has provided Kavango with innovative and effective financing to develop its projects more quickly. This has enabled us to drill our recent campaign at Ditau and also to bring our interests in the KCB to the point of drill readiness.
From a commercial perspective, the deal with Power significantly strengthens Kavango. We are adding a supportive strategic investor to our shareholder register, at this crucial point in the wider market cycle.
With the operational progress we have made over the last two years, the talented people we have recruited to our team, and the financing measures we have put in place, we have significantly raised Kavango’s chances of exploration success. We now have near-complete control of 16,000km2 of highly prospective ground in Botswana and an exciting future ahead of us.”
Headline Terms of the proposed Agreement (Subject to and conditional upon the publication of a new prospectus by Kavango):
– The issue to Power Metal of 60 million new ordinary shares of Kavango at a deemed issue price of 3p per ordinary share, subject to a 12-month lock-in agreement
– The issue to Power of 60 million warrants, divided into two separate tranches:
– 30 million warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 4.25p for a period of 30 months
– 30 million warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 5.5p for a period of 30 months
– The issue to Power of 15 million variable price warrants (“VP Warrants”) with a six-month life to expiry, with a minimum exercise price of 3p and an actual exercise price at a 15% discount to the volume-weighted average share price on the date of exercise
– Power Metal will receive a 1% Net Smelter Return (“NSR”) (“Royalty”) across all Kanye licence areas
In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above £7.5 million.
Detailed Transaction Terms:
The Kanye JV owns 100% working interests in:
– 10 prospecting licenses in the Kalahari Copper Belt (“KCB”), which cover 4,257km2. The PL numbers are PL108/2020, PL109/2020, PL110/2020. PL111/2020, PL046/2020, PL49/2020, PL052/2020, PL053/2020, PL036/2020 and PL037/2020.
– 2 prospecting licences (PL169/2012 & PL010/2019) in the Ditau Camp Project that cover an area of 1,386km2.
Kavango is the operator of the Kanye JV.
Subject to and conditional upon the publication of a new prospectus by Kavango including provision for this Acquisition (the “Prospectus”) Kavango will acquire Power Metal’s 50% interest in the Kanye JV.
Consideration:
Shares:
The issue to Power Metal of 60 million new ordinary shares of Kavango, credited as fully paid at a deemed issue price of 3p per ordinary share (Share Value £1,800,000 at 3p) (“Consideration Shares”). The Consideration Shares will be subject to a lock-in agreement whereby they may not be sold within 12 months without Kavango’s written approval.
Warrants:
The issue to Power Metal of 60 million warrants, divided into two separate tranches (Tranche 1 and Tranche 2)(“Consideration Warrants”). The two tranches of warrants include the following terms:
– Tranche 1 comprises 30m warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 4.25p for a period of 30 months from execution of the agreement
– Tranche 2 comprises 30m warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 5.5p for a period of 30 months from execution of the agreement
The issue to Power Metal of 15 million variable price warrants (“VP Warrants”) with a six month life to expiry from execution of the agreement, with a minimum exercise price of 3p and an actual exercise price at a 15% discount to the volume-weighted average share price on the date of exercise. Should all VP Warrants be exercised within 6 months from execution of the agreement, Power Metal will receive 15 million replacement warrants, on the same exercise terms and with a 12-month life to expiry from issue date (“Super VP Warrants”).
Royalty:
Power Metal will receive a 1% Net Smelter Return (“NSR”) (“Royalty”) across all Kanye licence areas save in respect of any such licences which, at its sole discretion, Kanye Botswana allows to lapse. Costs for the preparation of a suitable separate Royalty Agreement shall be shared by the parties. In the event that Kavango is able to secure, within 2 years of execution of the agreement, a greater than 2% NSR or other royalty on any of the Kanye properties the total royalty above 2% would be split equally Power Metal/Kavango (e.g. a 3% NSR would see KAV/POW each receive a total 1.5% royalty), with Kavango retaining the balance.
Sale Premium:
In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above £7.5 million (the “Sell-On Premium”). (e.g. if Kanye is sold for £50 million in month 15, POW would receive £4.25million). The Sell-On Premium is 20% for 6 months from execution of the Agreement, 15% for 7-12 months from execution of the agreement, 10% for 13-18 months from execution of the agreement and 5% for 19-24 months from execution of the Agreement, after which the Sell-On Premium will lapse.
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.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) (“UK MAR”). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
For further information please contact:
Kavango Resources plc
Ben Turney
+46 7697 406 06
First Equity (Joint Broker)
+44 207 374 2212
Jason Robertson
SI Capital Limited (Joint Broker)
+44 1483 413500
Nick Emerson