TIDMKAV
RNS Number : 5040Z
Kavango Resources PLC
21 September 2020
PRESS RELEASE
21 September 2020
KAVANGO RESOURCES PLC
("Kavango" or "the Company")
Botswana Strategic Joint Venture with Power Metals
Kavango Resources plc (LSE:KAV), the exploration company
targeting the discovery of world-class mineral deposits in
Botswana, is pleased to announce the formation of a Strategic Joint
Venture with Power Metal Resources Plc (LSE:POW) ("Power
Metals").
The Strategic Joint Venture will see the formation of a new,
jointly owned, privately held company that is focussed on
large-scale mineral exploration projects in Botswana (the
"Strategic Joint Venture").
The Strategic Joint Venture will enable Kavango to inject new
liquidity into its wider project portfolio, accelerate its plans
for more extensive field exploration of the Kalahari Copper Belt
Project (KCB) and focus its resources on target evaluation,
followed by drilling, in the northern (Hukuntsi) section of the
Kalahari Suture Zone (KSZ).
Highlights
v Formation of new Botswana focussed exploration company
- Jointly-owned and operated by Kavango and Power Metals
- Privately held initially, with prospecting licenses covering
2,680km(2) of highly prospective land
v Kavango to transfer to the Strategic Joint Venture:
- Its two rare earths & copper prospecting licenses that cover the Ditau Project
- Two wholly owned copper prospecting licenses PL036/2020 and PL037/2020 on the KCB
v Power Metals to pay:
- GBP75,000 cash to Kavango
- The first $75,000 of exploration expenditure in the Strategic
Joint Venture over two consecutive years (totalling $150,000, with
additional exploration costs to be pro-rated thereafter)
- Up to GBP10,000 to cover costs of incorporating the Strategic Joint Venture
v Power Metals to issue:
- 6,000,000 shares in Power Metals to Kavango at 1.25p per share
- 5,000,000 warrants in Power Metals to Kavango, exercisable at
2p per share with a two-year life & 1 for 1 replacement
warrants, exercisable at 5p per share over two years
v Kavango to initiate immediately the next phases of field
exploration on the two KCB licences and at Ditau
v The Strategic Joint Venture will be incorporated to enable a
future separate listing, expected to be on a Canadian or British
stock exchange.
Michael Foster, Chief Executive Officer of Kavango Resources,
commented:
"We are delighted to confirm our Strategic Joint Venture with
Power Metals.
Over the course of completing the due diligence for the sale of
the interest in our Ditau Project it became clear there was a much
greater opportunity for both parties.
Thanks to our extensive experience of working in Botswana,
Kavango has been able to secure large-scale exploration projects.
Each of these holds a great deal of potential, but our primary
focus has always been on the KSZ.
Now that we have confirmed the Strategic Joint Venture with
Power Metals, we can leverage the expertise and energy of the two
companies to drive forward our current interests on the KCB.
We expect this will lead to a significant acceleration of our
exploration efforts across both areas and we look forward to
reporting our progress."
Background & rationale to the Strategic Joint Venture
Further to the announcement on 15 April, when Kavango announced
it had entered into a provisional agreement to sell a 51% interest
in the Ditau Project to Power Metals, the Company has now entered
into a much more comprehensive agreement.
Power Metals' due diligence into Ditau was interrupted by the
COVID-19 pandemic. However, over recent months it became
increasingly clear to the directors of Kavango and Power Metals
that there was a more advantageous opportunity for both companies
than originally anticipated.
Both sets of directors have extensive experience of operating
mineral exploration projects in Botswana and the two companies felt
they could leverage one another's expertise and energy to great
effect.
In parallel to this, Kavango has made significant progress over
the summer developing its project on the KSZ. The Company is in the
final stages of analysis work on the northern (Hukuntsi) section of
the KSZ.
Given the likely number and scale of these "Norilsk style"
targets, Kavango is readying itself to prepare for a drill campaign
to test the large regional structures it has identified on the
KSZ.
With such a large planned operational commitment, the board of
Kavango felt the Company would benefit from introducing a new
development partner to two licences on the KCB, and at Ditau.
Each of these projects holds significant potential for discovery
of substantial mineral deposits.
Power Metals is an ambitious exploration company that has
assembled a portfolio of global exploration interests. It is the
ideal partner to work with Kavango's technical team.
Kavango welcomes the opportunity to work closely with Power
Metals to accelerate exploration across two KCB prospecting
licenses and at Ditau.
Terms of the Strategic Joint Venture
Kavango and Power Metals will own the Strategic Joint Venture
equally and will be joint operators.
Kavango will transfer into the Strategic Joint Venture:
- Its two prospecting licenses that make up the Ditau Project.
These licenses cover 1,386km(2) of prospective land for rare earths
and copper. The Company has identified 10 carbonatite-like 'ring
structures' here that represent sizeable exploration targets.
- Its two wholly owned prospecting licenses PL036/2020 and
PL037/2020 on the KCB. These licenses cover 1,294km(2) and are
highly prospective for copper/silver mineralisation.
Power Metals will invest into the Strategic Joint Venture:
- The first $75,000 of exploration expenditure over two consecutive years, totalling $150,000.
- Up to GBP10,000 in set up costs, to cover the incorporation of
the vehicle in line with local regulations and an appropriate
holding company structure.
Additional exploration expenditure incurred by the Strategic
Joint Venture, beyond the initial investment from Power Metals,
will be on a pro-rated, "fund or dilute" basis.
To complete the transaction, Power Metals will:
- Pay GBP75,000 to Kavango
- Issue 6,000,000 shares in Power Metals to Kavango, at an issue
price of 1.25p per share (the "Acquisition Warrants")
- Issue 5,000,000 warrants in Power Metals to Kavango,
exercisable over 2 years at an exercise price of 2p per share
Should the Power Metals Volume Weighted Average Share Price
("VWAP") meet or exceed a price of 7.5p for five consecutive
trading days, Kavango will then have 14 calendar days to exercise
the Acquisition Warrants and make payment to Power Metal or the
Acquisition Warrants will be cancelled.
Should Kavango exercise the Acquisition Warrants within 12
months of issue, they will receive 1 for 1 replacement warrants to
subscribe for Power Metal shares, exercisable over an additional
two years at an exercise price of 5p per share (the "Super
Warrants").
Should the Power Metal Volume Weighted Average Share Price
("VWAP") meet or exceed a price of 10.0p for five consecutive
trading days Kavango will then have 14 calendar days to exercise
the Super Warrants and make payment to Power Metal or the Super
Warrants will be cancelled.
Plan for the Strategic Joint Venture
The vision for the Strategic Joint Venture is to create a
Botswana-focussed minerals exploration company, which will
ultimately seek a separate listing on either a Canadian or British
stock exchange.
The immediate aim for this new company will be to make rapid
progress in the field, across its portfolio of large-scale
exploration projects. The new company may also seek to acquire
additional prospecting licenses, building on the good standing its
directors have in Botswana
Kavango will immediately initiate the next phases of field
exploration at its KCB prospecting licenses and at Ditau.
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
Michael Foster
mfoster@kavangoresources.com
SI Capital Limited (Broker)
+44 1483 413500
Nick Emerson
Note to Editors:
Kavango's 100% subsidiary in Botswana, Kavango Minerals (Pty)
Ltd, is the holder of 12 prospecting licences covering 8,324.7km(2)
of ground, including 10 licences over a significant portion of the
450km long KSZ magnetic anomaly in the southwest of the country
along which Kavango is exploring for Copper-Nickel-PGM rich
sulphide ore bodies. This large area, which is entirely covered by
Cretaceous and post-Cretaceous Kalahari Sediments, has not
previously been explored using modern techniques.
The area covered by Kavango's KSZ licences displays a geological
setting with distinct similarities to that hosting World Class
magmatic sulphide deposits such as those at Norilsk (Siberia) and
Voisey's Bay (Canada).
The Norilsk mining centre is about 2,800km northeast of Moscow
and accounts for 90% of Russia's nickel reserves, 55% of its copper
and virtually all of its PGMs. Kavango's licenses in the KSZ
display a geological setting with distinct geological similarities
to the magmatic sulphide deposits at Norilsk. Magma plumbing
systems are a key feature of these deposits.
Kalahari Copper Belt (KCB)
The KCB Project is located within an area of newly discovered
sediment-hosted copper deposits, such as Cupric Canyon's Zone 5
deposit and MOD's T3 deposit, both of which are now being developed
as mining operations. The KCB extends 1,000kms by 250kms from NE
Botswana to central Namibia.
Kavango has working interest in two separate Joint Ventures in
the KCB. The first Joint Venture is with LVR GeoExplorers (Pty) Ltd
("LVR") and covers two PLs, PL082/2018 & PL 082/2018, which
cover 1,091km(2) and are not part of the Strategic Joint Venture
with Power Metals The LVR PLs are strategically located in this
belt and therefore represent an attractive exploration target. PL
082/2018 lies 30km north of MOD Resources' T3 mine development and
is completely surrounded by MOD/Metal Tiger/Sandfire PLs including
their T5, T6, T9, T10, T14 and T15 targets. The PL lies astride the
main Ghanzi - Maun tarred highway. PL 083/2018 is close to the
Namibian border south of the Trans-Kalahari Highway and adjacent to
a block of PL's held by Kopore Metals Limited.
The second Joint Venture is with Power Metals and covers two PLs
PL036/2020 and PL037/2020, which cover 1,294km(2) and lie in a
prospective area immediately south of the District capital of
Ghanzi:
No modern exploration has been carried out on the area covered
by these prospecting licenses.
Ditau
Ditau comprises of two prospecting licences (PLs), which cover
an area of 1,386km(2) . Kavango originally identified a magnetic
anomaly at the first of these two licenses, which the directors
believed presented an attractive exploration target.
In February 2019 the Company drilled two holes into the
"original" Ditau magnetic anomaly (the "Ditau Camp Prospect").
Assay and whole rock geochemistry results from these two holes,
released in early August, demonstrated the presence of an extensive
zone of highly altered Karoo sediments sitting above a mafic
intrusive body. The alteration extended to over 300m in depth in
both holes, which were 1.8km apart.
The geochemistry obtained from the drill core suggested that the
alteration was due to "fenitization", a type of extensive
alteration associated with alkali magmatism and carbonatites.
Carbonatites are the major global source of Rare Earth Elements
(REEs).
Economic Potential of Carbonatites
Until recently carbonatites were regarded as unusual and
academically interesting geological bodies but significant interest
was only generated once the demand for REEs was established (in the
last few years). Hitherto many carbonatites were mined for their
phosphate content (fertilizer), or for economic deposits of
Niobium, Strontium, Uranium, Thorium, Magnetite, Barium and
Vermiculite. One of the world's most productive carbonatites,
Palabora, has been in production continuously since 1953 and is
South Africa's principal source of copper. About one out of nine
carbonatites world-wide have been mined commercially (Simandi &
Paradis 2018).
Both the market and production of REE's is dominated by China
who are also leading the research into the technological
application of these metals. Western countries have recently become
alarmed about the strategic advantage that China now exerts over
REE technology such that new deposits of these elements are in high
demand.
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