First Equity Broker Note Kavango Resources (LON: KAV)

At the end of last week, Kavango Resources (KAV.L) announced two important projects RNS’s in Botswana.

In the first announcement on Friday, Kavango revealed it had signed an agreement (MOU) to accelerate its ownership of the LVR Joint Venture (JV) in the Kalahari Copper Belt (KCB) licences. Instead of earning into the project to increase its direct ownership from 25% to 90% under the original terms of the JV, Kavango will now issue LVR with 2m shares (at 5.5p per share) and 2m warrants (ex. @8.5p for 2-years) to gain a 90% interest.

Kavango also announced it had entered into an exclusive three-month option to acquire an effective project interest of around 51% in the Molopo Farms Complex Project (MFP) for an all share consideration of around £1.2m to £1.9m, plus the issue of 1 for 1 warrants (ex. @8.5p for 2 years) by acquiring an interest of 85.23% in holding company KKME.

FEQ Comment.

The acquisition of a majority stake in MFP, gives Kavango a further project in Botswana and helps improve its footprint as one of the largest junior exploration companies in the country in terms of its land size licence area. The purchase will see a more simplified ownership structure for KKME, which thereby reduces the number of private shareholders and should lead to quicker exploration decisions being made. Kavango will also be working alongside its existing partners Power Metal Resources plc (which owns 40% of MFP) and Spectral Geophysics.

The technical and management team at Kavango will be looking to build upon the exploration knowledge gained to date from the successful, albeit limited, drilling of three deep holes, which identified the presence of a possible nickel mineralised system. The work programme at MFP is set to commence immediately with various exploration activities being undertaken over the three targets drilled in October 2020. We anticipate initial exploration news-flow from MFP very soon, most likely by the end of December.

The acceleration of work on the LVR JV, could prove interesting given its closeology potential, with the project being near to discoveries and mining activities, and having excellent infrastructure.

The acquisition of the MFP stake gives the Group five main projects, all of which hold the potential to become a company maker in their own right, by finding a world-class discovery in the exciting emerging metals exploration destination of Botswana. To this end, we continue to rate Kavango as a ‘Buy’.

We would also encourage you to listen to the live webinar that is taking place later today at 7.00 pm (UK time) via Twitter Spaces through Kavango’s Twitter account, where the CEO will discuss the new MFP project and LVR JV ownership acceleration, along with outlining the business plan and objectives for 2022.

RNS 1 - LVR

RNS 2 -MFP

Jason Robertson

D: +44 (0)20 7330 1883
E: jasonrobertson@firstequitylimited.com

*First Equity Limited act as Joint Broker to the Company.

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DISCLAIMER

This is a non-independent marketing communication under the FCA Conduct of Business Rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of dissemination of the investment research. First Equity Limited (FEQ) has procedures in place to manage any conflicts which might arise in the production of investment research, including Chinese Wall procedures. The views expressed in this marketing communication are those of FEQ’s Analyst. They are based on information believed to be reliable but no warranty or representation, express or implied, is made about the accuracy or completeness of this information, which may be subject to change without notice. Any opinion given reflects the analyst’s judgement as at the date of this document’s publication. Any or all statements about the future may turn out to be incorrect. This marketing communication is designed for information purposes only and does not constitute a personal recommendation, offer or invitation to buy or sell any investment referred to within it. Investors should form their own conclusions and/or seek their own advice to determine whether any particular transaction is suitable for them in the light of their investment objectives, the benefits and risks associated with the transaction and all other relevant circumstances.


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