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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

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.

*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 km² 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

Link here for the full announcement and financial statements