Kavango Resources (KAV.L) Ongoing project progress in Botswana, and Covid-19

Kavango Resources plc (LSE: KAV), the exploration group targeting the discovery of world-class mineral deposits in Botswana, is pleased to provide an update on recent progress across its portfolio of three projects: the Kalahari Suture Zone (“KSZ”); the Kalahari Copper Belt (“KCB”) and Ditau; and Covid-19.

Highlights

Kalahari Suture Zone

– Kavango’s 10 prospecting licenses (“PLs”) cover a substantial portion of the 450km strike length of the KSZ ( 5,580 km2 ) (the “KSZ Licenses).

– The KSZ’s regional geology bears distinct similarities to world-class magmatic sulphide Copper-Nickel-Platinum Group Metal (“PGM”) deposits at Norilsk (Siberia) and Voisey’s Bay (Canada).

– Following the successful 2019 drilling campaign, the Company and its independent consultants are now constructing a computerized 3D underground map (model) of the northern part of the KSZ project area (the “3D Underground Model”).

– The goal is to identify future high-priority drill targets

– Data from multiple sources are being incorporated into the model including results from the recent drilling, ground geophysics and airborne surveys, as well as third party drilling data from other mineral exploration efforts and water bore holes.

– Dr David Holwell, a leading authority on magmatic sulphide deposits and a Professor at Leicester University in the UK, has recently carried out a detailed independent mineral systems review and the economic potential of the KSZ Licenses.

– The Company is now fully funded for the next phase of exploration work at the KSZ.

Kalahari Copper Belt (“KCB”)

– Further PLs under review to be included in the Kalahari Copper Belt Joint Venture (the “KCB JV”)

– Kavango also assessing other PLs, with a view to taking 100% direct interests

– Ongoing desktop examination and compilation of historical exploration data, reports, maps and research papers, including soil sampling results, airborne electro-magnetic surveys, drilling data from exploration and water boreholes over the entire Botswana segment of the KCB.

The Ditau Project (“Ditau”)

– Following the announcement in 2019 that Kavango was seeking a Joint Venture partner for the Ditau Project, Power Metal Resources (LSE:POW) (“Power Metals”) is conducting due diligence in anticipation of completing the acquisition of a 51% interest in Ditau (15 April 2020) where the Company holds 2 PLs (1,386 km2)

– Planned orientation work on the Falconbridge carbonatites (the “Falconbridge Orientation”), 25km to the north of Ditau:

– 3 carbonatites were discovered in the 1970s by Falconbridge Exploration Ltd. These now lie within a De Beers diamond exploration license

– De Beers has granted Kavango site access to its license area, subject to adoption of an environmental management plan

– Non-invasive geophysical work is planned, subject to Power Metals’ agreement

– The Falconbridge Orientation will be designed to guide future exploration of the “10 ring structure” magnetic targets thought to represent carbonatites at Ditau.

Covid-19 update

– Minimal disruption so far to the Company’s operations with recent work focused on analysis and modeling of all data collected over the last 18 months.

Michael Foster, Chief Executive Officer of Kavango Resources, commented:

“Following completion of our recent strategic financing, we are extremely pleased to report on the progress we have made over recent months. We have kept dilution to a minimum, as we now enter the next crucial phase of exploration across our portfolio of projects.

Our goal is to discover world-class metal deposits in Botswana. Thanks to the evidence we have gathered in the field from surveys and drilling we are well positioned to build sophisticated geological models to hone future high-priority target selection.

We are particularly encouraged by the initial results we’ve seen from Dr Holwell’s report and look forward to providing a comprehensive update on this soon.”

A glossary of geological terms is provided at the end of this announcement.

Kalahari Suture Zone Further Exploration

On 2 December 2019 Kavango announced that its most recent drilling programme in the KSZ had identified a magma plumbing system within the Karoo sediments. This was a significant step forward for the Company in its search for “Norilsk-Style” Copper-Nickel- PGM deposits.

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.

Typically, magma plumbing systems are composed of stacked horizontal sills connected to each other via vertical dykes.

A continuous flow of magma (containing “free” sulphur) through a magma plumbing system may have allowed the accumulation of metal sulphides in certain trap sites within the sills. This is because metal sulphides are heavy and tend to sink to the bottom of magma.

Over time, accumulations of metal sulphide could have led to the formation of economic deposits of Copper-Nickel-PGMs.

The data from the drilling campaign is now being incorporated into a computerized 3D Underground Model (an underground map) by the Company and its consultants. The 3D Underground Model also incorporates data from ground geophysics and airborne surveys, as well as third party drilling data from other mineral exploration programs and water boreholes.

The construction of the 3D Underground Model of those areas within the northern section of the KSZ that show the development of a high-level plumbing system will allow Kavango to identify “trap zones” within the intrusives (sills) that have the potential to host metal sulphide mineralization. Those zones will be tested with ground-based EM surveying using high powered transmitters that are designed to penetrate conductive overburden and saline groundwater. A contractor for this work has already been identified.

Kavango is fully funded for this next phase of development at the KSZ.

KSZ economic potential report

In parallel to further exploration work, the Company has commissioned Dr David Holwell to complete a comprehensive independent review of the minerals systems and the economic potential of the KSZ Licenses.

Dr Holwell is a leading authority on the development of Copper-Nickel-PGM magmatic systems, with over 40 peer-reviewed publications to his name.

The Company expects to release the findings of the report in the coming weeks.

The Kalahari Copper Belt

Further to the announcement on 17 February 2020, when the Company confirmed it had signed a Joint Venture with LVR GeoExplorers (Pty) Ltd (“LVR”) with respect to two PLs in the Kalahari Copper Belt, Kavango has continued to assess further prospecting licenses.

The Company is currently considering additional licenses in the KCB either for inclusion within a KCB JV or to by making fresh applications in its own name.

Kavango will make further updates on this in due course.

Ditau update

Further to the announcement on 15 April, Power Metals is conducting due diligence, in expectation of completing its acquisition of a 51% interest in the Ditau Project.

The Ditau Project comprises 2 prospecting licences (PLs), which cover an area of 1,386km2. Kavango originally identified a large 7km by 5km magnetic anomaly on the first of these two licenses, which presented an attractive exploration target.

Subsequent onsite exploration and drilling led the Company to recognise 9 additional geophysical “ring structures”, which are thought to represent structures related to carbonatite magmatism. Carbonatites are the primary source of niobium and Rare Earth Elements (“REE”).

In the first half of 2019, the Company completed the drilling of two exploration holes. Assay results from these, released last August, confirmed the presence of alkali metasomatism (fenitisation), which is associated with the emplacement of alkaline intrusives into the overlying Karoo sediments. This is a geological indicator of the presence of carbonatites.

Subsequently Kavango learned that in the early 1970s, while undertaking diamond exploration in the area, Falconbridge Exploration Ltd discovered 3 carbonatites that now lie within a diamond- exploration license area, owned by De Beers, 25km to the north of Ditau. Significantly, the carbonatites were reported by Falconbridge to lie immediately below the Kalahari (sand) cover. They are therefore “post Karoo” and not deeply buried.

The presence of the 3 “Falconbridge” carbonatites provides an opportunity for Kavango to undertake orientation tests, which will assist in the calibration of the Company’s geophysical equipment in the surveying of the 10 Ditau targets.

De Beers has granted the Company physical access to the Falconbridge carbonatites, subject to adoption of its environmental management plan.

The Company expects that the Falconbridge Orientation program will commence upon completion of Power Metals’ due diligence (Covid-19 dependent). In the meantime, the Company will prepare the necessary paperwork and adopt De Beers’ environmental management plan.

Covid-19

Botswana is currently into the third week of a 28-day lockdown in response to Covid-19. This has caused disruption to field work at Kavango’s operations. However, as described above, most of the Company’s efforts are now focused on analyzing and interpreting existing data to guide future exploration plans.

Due to the lockdown in the UK and Botswana, and under the temporary relief statement announced by the FCA on 26 March 2020, Kavango expects to publish the audited financial statements for the year ended 31 December 2019 in May 2020.

Kavango will provide further updates concerning its operations in relation the Covid-19 response if it becomes necessary.

New date for Admission of Placing Shares

As previously announced on 15 April 2020, the Company agreed to issue 27,250,000 new ordinary shares (the “Placing Shares”) at a price of 0.8p per share to raise £218,000 (the “Placing”). Admission of the Placing Shares to the Standard List segment of the London Stock Exchange (“Admission”) was expected to take place on 21 April 2020.

It is expected that Admission will now become effective and that dealings in the Placing Shares will commence at 8.00am on, or about, 28 April 2020.


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