Financing and 51% sale of Ditau

RNS Number : 6499J

Kavango Resources PLC

15 April 2020

 

PRESS RELEASE

15 April 2020

KAVANGO RESOURCES PLC

("Kavango" or "the Company")

Financing and 51% sale of Ditau

Kavango Resources plc (LSE: KAV), the exploration group listed on the Standard List segment of the main market of the London Stock Exchange and targeting the discovery of world-class mineral deposits in Botswana, is pleased to announce it has raised gross proceeds of £358,500 in a placing and subscription (the "Financing").

The Financing comprises of a £218,000 placing and subscription, the issue of £38,000 zero coupon convertible loan notes 2021 (the "First Loan Notes") and the issue of £102,500 of a series of 10% convertible loan notes 2021 (the "Second Loan Notes").

In addition, the Company is pleased to announce the conditional sale of a 51% interest in its prospective Ditau Project ("Ditau") to Power Metal Resources PLC (LSE: POW) ("Power Metal") for £150,000, subject to contract and a due diligence process (the "Transaction").

Funds raised will be used for general working capital, to carry out work across the Company's three project areas in the Kalahari Suture Zone ("KSZ"), the Kalahari Copper Belt ("KCB") and Ditau.

Highlights:

·  358,500 gross funds raised in the Financing as follows:

o  £218,000 placing at 0.8p per share

o  £38,000 subscription by Power Metal for the First Loan Note

o  £102,500 for the Second Loan Note

· Sale of 51% interest in the Ditau Project to Power Metal terms thus:

o  £150,000 payment to Kavango to be paid through the issue of 35,714,286 new ordinary shares in Power Metal

o  Power Metal to become operator of Ditau

o  Transaction expected to close as soon as practicable subject to contract and  Power Metal's due diligence

o  Accelerated work program planned.

Financing

The Financing comprises of three elements.

First, the Company will issue 27,250,000 new ordinary shares via a placing arranged by SI Capital at a price of 0.8p per share to new and existing shareholders to raise £218,000 (the "Placing").

Secondly, the Company will issue to Power Metal £38,000 of new zero coupon unsecured convertible loan notes, repayable on 31 March 2021, if not previously converted, to raise £38,000. Conversion of the First Loan Notes is at the election of the holder, and the conversion price is the same as the placing price of 0.8p per share. If converted a further 4,750,000 new ordinary shares would be issued.

Finally, the Company will raise £102,500 by the issue of £102,500 of a new series of unsecured convertible loan notes to a number of private investors.   The Second Loan Notes are repayable, if not previously converted, on 31 March 2021 and bear a coupon at the rate of 10% per annum.

Conversion of the Second Loan Notes, including accrued interest, is at the same conversion price as the Placing price, namely 0.8p per ordinary share, is at the election of the Company, and is conditional upon the Company filing a prospectus, which will enable the admission to listing of the new shares to be issued on conversion, if not available to be issued under the headroom available to the Company.  If the Company does not file a prospectus and obtain approval for the admission of these new shares to listing by 28 February 2021, and then exercise its conversion right, then the CLN will be repayable in full on 31 March 2021 together with the accrued interest. If fully converted, the £102,500 nominal Second Loan Notes issued in this financing will result in the issue of a further 12,812,500 new ordinary shares.

Participants in the Placing and subscribers for the First and Second Loan Notes will each receive one warrant for each share subscribed for in the Placing or underlying conversion of the First and Second Loan Notes. The warrant is exercisable at 1p and with a 3-year term from the date of Admission of the Placing (the "A" Warrants).

Warrant holders will receive a full replacement warrant ("B" warrants), exercisable at 2.5p, for every "A" Warrant they exercise within 12 months of the Admission of the Placing shares. "B" Warrants will have a 3-year expiry from the date of Admission of the Placing shares.

The "A" Warrants are, and the "B" Warrants will be, conditional upon the Company issuing, prior to 28 February 2021, a new prospectus, giving permission for the admission to listing of the new shares to be issued on exercise. They will also be conditional upon the Company's shareholders granting the necessary authorities under the Companies Act 2006 to enable the issue of such shares, outside the statutory pre-emption rights, and the Company intends to put these resolutions to shareholders at the 2020 AGM, which is expected to be held, subject to ongoing coronavirus restrictions, in mid-2020.

The Company is discussing with certain directors and senior managers the possibility of issuing further Second Loan Notes, on the same terms as described above. If agreement is reached a further announcement will be made.

Sale of 51% interest in Ditau to Power Metal

In parallel to the Financing, Kavango has agreed, subject to contract, to sell a 51% interest in its Ditau Project to Power Metal for £150,000.

The £150,000 will be payable through the issue of 35,714,286 shares in Power Metal, credited as fully paid at an issue price of 0.42p per share (the "Power Metal Shares").

The Power Metal Shares will be subject to a 6-month lock-in and 6-month orderly market provision thereafter, unless otherwise agreed in writing by Power Metal. The Power Metal Shares will represent approximately 6.46% of Power Metal's issued share capital after the transaction.

The Transaction is subject to contract and is also conditional, inter alia, upon a successful conclusion to the due diligence period which will end 30 days after the lifting of travel restrictions into Botswana. If successful, and on completion of the Transaction, Power Metal will become the operator of Ditau.

If formal agreement is reached, it is the intention that all future spending on Ditau will be conducted on a pro-rata "fund or dilute" basis.

A further announcement will be made in due course.

Application for admission

The Placing shares will rank pari passu in all respects with the existing Ordinary Shares. Application will be made for the 27,250,000 Placing shares to be admitted to trading on the Standard List segment of the main market of the London Stock Exchange ("Admission"). It is expected that Admission will become effective and that dealings in the Placing shares will commence at 8.00am on, or about, 21 April 2020.

Total Voting Rights

Following the issue of the Placing shares, the total issued share capital of the Company will consist of 188,205,709 Ordinary Shares. Therefore, the total number of voting rights in the Company is 188,205,709 and this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest, in the share capital of the Company. 

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

"We are pleased to have secured the Financing in extremely difficult market conditions.

Following successful drilling in 2019, when we made significant progress towards confirming our geological model in the Kalahari Suture Zone and identified prospective carbonatite targets at Ditau, we are now ready to enter the next phase of exploration.

We continue to maintain a tight control over all costs and plan to deploy the new funds for general corporate purposes and to accelerate our work programs.

We look forward to providing further updates on this in the near term and to welcoming Power Metal as our new partner at Ditau, once contracts have been signed and due diligence has been completed."

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   [phone]

Michael Foster

[e-mail]

SI Capital Limited (Broker)   [phone]

Nick Emerson

****************************ENDS**************************************

 

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