Results for the year ended 31 December 2018

RNS Number : 6060X

Kavango Resources PLC

30 April 2019

PRESS RELEASE

30 April 2019

KAVANGO RESOURCES PLC ("KAVANGO" OR "THE COMPANY")

Results for year ended 31 December 2018

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 present its audited financial statements for the year ended 31 December 2018. The full report is available on the Company's website at www.kavangoresources.com.

KEY HIGHLIGHTS

· Total assets - US$3.4M (2017 US$ 2.9M).

· (Loss) Income - (US$755,307) (2017 - US$126,955).

· The Group reports its results in US Dollars (USD). Its primary assets are in Botswana and are accounted for in Botswana Pula (BWP). Kavango Resources plc accounts for fundraisings in Pounds Sterling (GBP). In 2018 the BWP and GBP depreciated approximately 8% and 6% respectively against the USD which produced a net foreign exchange loss of US$221,065.

· The entire issued ordinary share capital of the Company was admitted to the Standard List segment of the Official List of the UK Listing Authority and to trading on the Main Market for listed securities of the London Stock Exchange ("Admission") on 31 July 2018 under the TIDM (Stock Code): KAV.

· On Admission, completion of a placement of 60,000,000 ordinary shares at 2.5p/share to raise £1,500,000 (before expenses); on 12 March 2019 a further placement of 26,785,713 ordinary shares at 2.8p/share to raise £750,000 (before expenses) was completed.

· Over 4,000 line-kms of airborne electromagnetic surveys have been concluded over the Company's prospecting licences, which cover an area of approximately 9,000km² in south west Botswana.

· Approximately 1,000m of drilling has now been concluded at the Ditau prospect where indications of high cobalt and elevated copper, nickel and zinc values have been identified; assays are eagerly awaited.

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

"We are pleased to announce our audited financial statements for the year ended 31 December 2018, our first since listing on the London Stock Exchange (Standard List segment) on 31 July 2018. Our mineral exploration activities in Botswana are on target having already achieved several significant milestones in this short period. They include completion of the airborne electromagnetic survey over a large part of our Kalahari Suture Zone (KSZ) Project, an area of 9,231km² of prospecting licences in the southwest of the country, and completion of 1,000m of drilling over some exciting base metal anomalies at the Ditau prospect, which is part of the KSZ Project. Results are eagerly awaited and will be announced as they become available. We look forward to an exciting programme of exploration in 2019."

The Chairman's Statement and Results are set out in the following pages.

Contacts

Kavango Resources plc
Michael Foster	+44 20 3651 5705
mfoster@kavangoresources.com

City & Westminster Corporate Finance LLP	+44 20 7917 6824
Nicola Baldwin

SI Capital Limited (Broker) +44 1483 413500

Nick Emerson / Alan Gunn

Forward looking statement

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities.

Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Chairman's Statement

It gives me great pleasure as Chairman of Kavango Resources plc, a mining group targeting the discovery of world class mineral deposits in Botswana, to report to all our shareholders the first set of final results as a listed company.

For the period from 1 January - 31 December 2018 the Group incurred a loss of US$755,307 (US$ 0.008 per ordinary share)

Kavango was admitted to the Standard List segment of the Official List of the UK Listing Authority and to trading on the Main Market for listed securities of the London Stock Exchange ("Admission") on 31 July 2018 under the TIDM (Stock Code): KAV and in the process raised £1.5m (before expenses). Subsequently a further £750,000 (before expenses) was raised during the first quarter of 2019 to accelerate the Company's exploration plans.

Phase 1 of the airborne electromagnetic ("AEM") geophysical survey at the Company's Kalahari Suture Zone Project ("KSZ") in southwest Botswana was completed both on time and on budget. Following completion of the survey, the Company's 100% owned subsidiary in Botswana has now been granted three additional PL's, extending the group's ground holding along the KSZ by a further 2,300km². Two of the three new PL's are contiguous and immediately adjoin the northern area covered by Phase 1 of the AEM survey. The Company now holds 15 PL's that cover approximately 80% of the KSZ, a 450 km long magnetic anomaly and where Kavango is exploring for Ni-Cu-PGE rich sulphide orebodies. The Company's 15 PL's on the KSZ Project now cover a total of 9,231 km².

Phase 2 of the AEM survey over the KSZ prospecting licences has been carried out by SkyTEM, a leading airborne geophysical survey company offering the acquisition and advanced processing of the highest quality helicopter-borne electromagnetic data. The AEM survey covered up to 2,062 line-kilometres in the Hukuntsi area of Botswana. Preliminary results indicate that SkyTEM's innovative new generation 312 HP (High Power) technology has achieved exceptional depth of investigation beneath the Kalahari sand cover and Karoo sediments due to the high moment (HM) mode with high current and low base frequency of 12.5 Hz. This system has been on the market since 2017 and therefore represents a major advance in AEM systems. The SkyTEM AEM data is currently being interpreted and modelled by our duly appointed external Consultants, Aarhus Geophysics in Denmark, in conjunction with SkyTEM with the results of the interpretation, expected to give priority targets for both ground follow-up and drilling.

Moving on to drilling at the Company's Ditau Prospect, which forms part of the KSZ, the first hole (DitDDH1) confirmed the intersection by diamond drilling of over 200 metres of intense alteration with significant anomalous base metal values. The hole encountered a 200 metre zone of intensely altered rock above the conductive drill target and exhibits significant sulphide alteration together with indicative cobalt values of up to 0.9% and a weighted average of 0.2% cobalt over 70 metres as well as elevated copper, zinc, lead and nickel values as per the RNS dated 25^th March 2019.

The core from DitDDH1 is to be sent to an accredited international laboratory for geochemical analysis and assaying. The results are eagerly awaited. DitDDH2 is now in progress and sited on a second conductive body (supported by surface soil geochemistry) situated 1.8km east of DitDDH1, within the Ditau intrusion. A water well has been successfully drilled at Ditau which will now alleviate the need to cart water over long distances and facilitate drilling.

The Company is also reviewing other highly selective but potentially very interesting natural resource opportunities in Botswana.

The period in question has been a very busy time for the Company with the expectation that the next 12 months will potentially be even busier especially on the drilling front.

Further information in respect of the Company and its business interests is provided on the Company's website at www.kavangoresources.com and on social media including Twitter #KAV.

On a final note, I would like to take this opportunity to thank my fellow directors and senior management who over recent months have worked tirelessly on progressing the Company against our stated objectives with special mention going to Hillary Gumbo our exploration manager and his team in Botswana.

DJ Wright

Chairman

30 April 2019

Chief Executive Officer's Report

Kavango Resources plc ("Kavango" or "the Company") acquired 100% of Navassa Resources Ltd ("Navassa"), a Mauritius holding company, in November 2017. Navassa owns 100% of Kavango Minerals (Propriety) Limited, a Botswana registered exploration company.

The Company is currently exploring the potential of gabbro intrusives associated with the Kalahari Suture Zone (KSZ) to host significant concentrations of nickel, cobalt, copper and other base metals. The KSZ is a 450km long north-south trending magnetic structure of continental proportions.

Kavango holds 15 Prospecting Licences (PL's) along the KSZ, covering an area of over 9,000km².

It is believed that most of the gabbros associated with the KSZ are of Karoo age and almost certainly are the feeder sills/dykes to the basalt lava flows, which at one time covered most of the Karoo sediments in southern Africa.

These gabbros are of a similar age, genesis and composition as the gabbros hosting the giant Norilsk Cu/Ni/PGE deposits in Siberia.

Some of the gabbros are close to surface and even outcrop. Others are buried under Kalahari sand and Karoo sediments. Previous researchers have drilled these intrusives in the 1980's and the cores of some of these holes have been re-logged and sampled by Kavango. Those sampled have been analysed for whole rock geochemistry. The results together with thin sections have been examined by Dr Martin Prendergast, consulting to the Company, who specialises in magmatic Cu/Ni/PGE deposits in southern Africa.

Dr Prendergast's observations suggest that the gabbro samples show a loss of Cu, Ni and especially PGEs together with sulphur at some stage before complete crystalisation of the intrusive magma. The implication is that the metal rich sulphides have been concentrated and deposited at some location within the magma chamber (gabbro) or within the surrounding rock formations.

Navassa initiated an exploration program four years ago by identifying the location of magmatic intrusive rocks from an analysis of the regional magnetic surveys published by the Botswana Government.

As part of the current exploration programme the Company has followed up the work of Navassa with two phases of an airborne electro-magnetic survey (AEM) covering approximately 4,000 line-kms, in the northern half of the KSZ licence area.

By using the latest generation of low frequency helicopter-borne EM, conductors lying up to 500m below the Kalahari/Karoo cover have been identified and these are now being followed up on the ground for further investigation.

The Company has started testing some of these conductors on surface with very high sensitivity soil sampling. This can detect metal ions transported from buried metal rich sulphide deposits associated with the emplacement of magmatic intrusive rocks. Kavango geologists have pioneered a high resolution soil sampling technique to detect ultra-fine metal particles which have been transported in solution from considerable depths of burial to the surface by capillary action and transpiration. Evaporation leaves the metal ions as accumulations within a surface "duricrust" which is then sampled and analysed. Zinc, which is the most mobile of the base metal elements (i.e. goes into solution easily) acts as a pathfinder to mineralization at depth.

Kavango is also using a ground based geophysical technique known as Controlled Source Audio frequency Magneto Tellurics (CSAMT) to identify the exact location of the conductors. Massive sulphide (base metal) deposits can be detected by CSAMT deep beneath the surface because they conduct electricity easily. The shape, orientation and depth of the conductors determines if the conductor should be drilled, particularly if the conductor coincides with zinc-in-soil (surface) anomalies.

KSZ Project: Ditau Prospect - drilling results

The Ditau prospecting licence (PL169) covers 469km² and is the most advanced of the Company's prospects. The Ditau Prospect is a 7km x 5km magnetic and gravity anomaly with significant zinc-in-soils anomalies. Geochemical soil sampling and geophysics (magnetic and gravity surveys as well as CSAMT) have identified a number of large conductive anomalies at depth (see below).

At the time of writing two diamond core drill holes have been completed to depths in excess of 300m.

Both holes encountered very intense alteration and deformation of the Karoo age rocks, which lie above a mafic intrusive (gabbro), which is almost certainly the source of the magnetic and gravity anomaly.

The alteration in the Karoo sediments appears to be in excess of 300m thick, whilst the alteration penetrates into the gabbro for at least another 75m. Iron and copper sulphide mineralisation is present throughout the altered Karoo sediments and the gabbro. Indicative cobalt mineralisation has been identified in both holes (portable XRF analyses).

The core from both holes has been cut and sampled in Botswana and has now been sent for assay and analysis at a laboratory in Australia.

KSZ Project: Airborne EM (AEM) Surveys

In August 2018 Kavango contracted Geotech Ltd to carry out Phase 1 of an AEM survey designed to identify conductive bodies over nearly 4,000km² of Kavango's licences on the KSZ. The VTEM survey started in September and the 2,000 line kilometres were completed before the end of the month. A total of 26 conductors were identified, 15 of which have now been followed up with ground surveys, high resolution soil sampling and CSAMT. Follow up investigations showed that several of the conductors extended into the Karoo sediments and these have been prioritised for possible drilling.

Although the VTEM survey was able to identify some of the conductors, the highly conductive overburden (Kalahari and Karoo sediments) restricted depth penetration such that some of the conductors may have been missed. For the Phase 2 AEM survey, Kavango contracted SkyTEM Surveys Ltd, who had recently brought out a low frequency (12.5Hz) system that promised far greater depth penetration. The Phase 2 survey which covered the northern part of the project area was begun on 4^th February and was completed in 28 days. SkyTEM's 12.5Hz system showed a significant improvement in average depth penetration.

Proposed work programme for 2019

During the first half of 2019, the Company will focus on modelling and interpretation of the extensive geological, geochemical and geophysical information now available for the exciting Ditau prospect. An assessment of the Ditau's potential will be made ahead of further work.

At the same time, the Company is expecting imminent results from the AEM survey on the northern part of the KSZ. The targets will be followed up on the ground with CSAMT surveys and/or geochemistry to delineate in more detail locations of conductors ahead of drilling.

Michael Foster

Chief Executive

30 April 2019

Consolidated Statement of Total Comprehensive Income

FOR THE YEAR ENDED 31 DECEMBER 2018

		2018	2017
	Notes	US$	US$
Continuing operations

Administrative expenses	6	(534,242)	(44,055)

Other income		-	50,000

Profit/(Loss) before taxation		(534,242)	5,945

Taxation	8	-	-

Profit/(Loss) for the year attributable to owners of the parent		(534,242)	5,945

Other comprehensive income:
Items that may be subsequently reclassified to profit or loss

Currency translation difference		(221,065)	207,258

Total comprehensive income for the year attributable to owners of the parent		(755,307)	213,203

Earnings per share from continuing operations attributable to owners of the parent
Basic and diluted (cents)	9	(0.76)	0.01

Consolidated Statement of Financial Position

AS AT YEAR ENDED 31 DECEMBER 2018

		31 Dec	31 Dec
		2018	2017
	Notes	US$	US$

Non-current assets

Property, plant and equipment	10A	22,751	1,610
Intangible assets	10	2,287,993	2,359,425

Total non-current assets		2,310,744	2,361,035

Current assets
Trade and other receivables	12	114,825	142,256
Cash and cash equivalents	13	954,372	386,417
Total current assets		1,069,197	528,673

Total assets		3,379,941	2,889,708

Current liabilities
Trade and other payables	13	70,782	146,241
Amounts due to shareholders	18 , 20	-	160,391
Total liabilities		70,782	306,632

Net current assets/(liabilities)		998,415	222,041

Net assets		3,309,159	2,583,076

Equity attributable to owners of the parent
Called up share capital	15	171,025	100,063
Share premium Share option reserve	15 16	4,981,362 189,956	3,760,890 -
Foreign Currency Exchange Reserve		(31,543)	189,522
Reorganisation reserve	11	(1,590,777)	(1,590,777)
Retained earnings		(410,864)	123,378

Total equity attributable to owners of the parent		3,309,159	2,583,076

This report was approved by the board and authorised for issue on 30 April 2019 and signed on its behalf by:

……………………

Michael Foster

Director

Company Statement of Financial Position

FOR THE YEAR ENDED 31 DECEMBER 2018

Company registration number: 10796849 (England and Wales)

		31 Dec	31 Dec
		2018	2017
	Notes	US$	US$

Non-current assets
Investment in subsidiaries	11	3,500,000	3,500,000

Total non-current assets		3,500,000	3,500,000

Current assets
Trade and other receivables	12	596,806	135,505
Cash and cash equivalents	13	937,124	348,653
Total current assets		1,533,930	484,158

Total assets		5,033,930	3,984,158

Current liabilities
Trade and other payables	14	62,967	133,603
Amounts due to shareholders	18, 20	-	23,143
Total liabilities		62,967	156,746

Net current assets		1,470,963	327,412

Net assets		4,970,963	3,827,412

Equity
Called up share capital	15	171,025	100,063
Share premium	15	4,981,362	3,760,890
Share option reserve	16	189,956	-
Foreign exchange reserve		187,789	-
Retained earnings		(559,169)	(33,541)
Total equity		4,970,963	3,827,412

Kavango Resources Plc has used the exemption grated under s408 of the Companies Act 2006 that allows for the non-disclosure of the Income Statement of the parent company. The after-tax loss attributable to Kavango Resources Plc for the period ended 31 December 2018 was US$337,839 (2017: US$33,541).

This report was approved by the board and authorised for issue on 30 April 2019 and signed on its behalf by:

……………………

Michael Foster

Director

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 31 DECEMBER 2018

	Share Capital	Share Premium	Reverse Acquisition Reserve	Foreign Exchange Reserve (restated)	Retained Earnings	Share Options	Total
	US$	US$	US$	US$	US$	US$	US$
As at 1 January 2017	1,200,000	-	-	(17,736)	117,433		1,299,697

Profit for the year	-	-	-	-	5,945		5,945
Other Comprehensive Income for the year - foreign currency exchange difference	-	-	-	207,258	-		121,010
Total comprehensive income for the year	-	-	-	207,258	5,945		126,955
Shares issued net of costs	709,223	-	-	-	-		709,223
Group reorganisation	(1,815,423)	3,440,545	(1,590,777)	-	-		34,345
Issue of shares net of issue costs	6,263	320,345	-	-	-		326,608
Total transactions with owners recognised directly in equity	(1,099,937)	3,760,890	(1,590,777)	-	-		1,070,176
As at 31 December 2017	100,063	3,760,890	(1,590,777)	189,522	123,378	-	2,583,076

Loss for the year					(534,242)		(534,242)
Other Comprehensive Income(loss) for the year - foreign currency exchange difference				(221,065)			(218,956)
Total comprehensive income for the year				(221,065)	(534,242)	-	(755,307)
Shares issued net of costs	70,962	1,220,472	-	-	-	-	1,291,434
Group reorganisation				-			-
Share options granted						189,956	189,956
Total transactions with owners recognised directly in equity	70,962	1,220,472	-	-	-	189,956	1,481,390
As at 31 December 2018	171,025	4,981,362	(1,590,777)	(31,543)	(410,864)	189,956	3,309,159

Company Statement of Changes In Equity

FOR THE YEAR ENDED 31 DECEMBER 2018

	Share Capital	Share Premium	Foreign Exchange Reserve (restated)	Share Options	Retained Earnings	Total
	US$	US$	US$	US$	US$	US$
Balance at 1 January 2017	-	-	-	-	-	-
Loss for the year			-		(33,541)
Total comprehensive loss for the year	-	-	-	-	(33,541)	-
Issue of shares net of costs	30,344	-	-	-	-	30,344
Shares issued as a consideration in the reverse merger, net of costs (Note 11)	59,456	3,440,544	-	-	-	3,500,000
Issue of shares net of costs	6,263	320,345	-	-	-	326,608
Total transactions with owners recognised directly in equity	79,963	3,760,890	-	-	-	3,840,853
Balance at 31 December 2017	100,063	3,760,890	-	-	(33,541)	3,827,412
Loss for the year	-	-	-	-	(525,628)	(525,628)
Foreign currency exchange difference			187,789			187,789
Total comprehensive loss for the year	-	-	187,789	-	(525,628)	(337,839)
Issue of shares net of costs	70,962	1,220,472	-	-		1,291,434
Share options granted				189,956		189,956
Total transactions with owners recognised directly in equity	70,962	1,220,472	-	189,956		1,481,390
Balance at 31 December 2018	171,025	4,981,362	187,879	189,956	(559,169)	4,970,963

Share Capital:	Amount subscribed for share capital at nominal value
Share Premium:	Amount subscribed for share capital in excess of nominal value
Merger Reserve:	Reserve created on issue of shares on acquisition of subsidiaries
Foreign Exchange differences:	Cumulative translation differences
Retained Earnings:	Cumulative net gains and losses recognised in the consolidated statement of comprehensive income
Share option reserve:	Amount reserved for share capital issued on exercise of share options

Consolidated Statement of Cash Flow

FOR THE YEAR ENDED 31 DECEMBER 2018

		2018	2017

	Notes	US$	US$

Cash flows from operating activities
(Loss)/Profit before taxation		(534,242)	5,945
Share option expense		189,965	-
Depreciation		7,068	-
Foreign exchange		-	122,872

Net cash flows generated from operating activities before changes in working capital		(337,218)	128,817

(Increase) decrease in trade and other receivables		27,431	(66,226)
Increase(decrease) in current liabilities		(75,459)	59,677

Net cash outflow from operating activities		(385,246)	(790)

Investing activities
Purchase of intangible assets, net Purchase of fixed assets	10	(272,581) (28,338)	(125,130) -


Net cash used in investing activities		(300,919)	(125,130)

Financing activities
Loans	18	(43,921)	43,921
Proceeds from issue of shares net of issue costs	15	1,291,434	326,609

Net cash generated from financing activities		1,247,513	370,530
Net increase/(decrease) in cash and cash equivalents		561,348	367,669

Cash and cash equivalents at beginning of year		386,417	18,748
Forex translation difference		6,552

Cash and cash equivalents at end of year	13	954,317	386,417

Company Statement of Cash Flow

FOR THE YEAR ENDED 31 DECEMBER 2018

		2018	2017

	Notes	US$	US$

Cash flows from operating activities
Loss before taxation		(525,628)	(33,541)
Share option expense		189,956	-
Foreign exchange		-	(187)

Net cash flows generated from operating activities before changes in working capital		(335,652)	(33,728)

(Increase) decrease in trade and other receivables		198,206	(100,974)
Increase(decrease) in trade and other payables		(70,635)	133,603

Net cash outflow from operating activities		(208,081)	(1,099)

Investing activities

Loans to group companies	12	(491,473)	-

Net cash used in investing activities		(491,473)	-

Financing activities

Loans	17	(23,143)	23,143
Proceeds from issue of shares net of issue costs	15	1,291,434	326,609

Net cash generated from financing activities		1,268,291	349,752
Net increase in cash and cash equivalents		568,737	348,653

Cash and cash equivalents at beginning of year		348,653	-
Forex translation difference		19,734

Cash and cash equivalents at end of year	13	937,124	348,653

Notes to the Financial Statements

FOR THE YEAR ENDED 31 DECEMBER 2018

1. Corporate information

Kavango Resources PLC ("the Company") was incorporated on 21 May 2017. It is domiciled in the United Kingdom at 46 New Broad Street London United Kingdom EC2M 1JH.

The Company is a holding company of Navassa Resources Ltd ("Navassa") which has a wholly-owned subsidiary Kavango Minerals (Pty) Ltd. Navassa is registered and domiciled in Mauritius while Kavango Minerals (Pty) Ltd is registered and domiciled in Botswana.

The principal activity of the Company and its subsidiaries (the "Group") is the exploration for base metals in Botswana.

2. Significant Accounting policies

Statement of compliance

The Group and Company Financial Statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretations Committee ('IFRS IC') as adopted by the European Union, the Companies Act 2006 that applies to companies reporting under IFRS and IFRS IC interpretations. The Group and Company Financial Statements have also been prepared under the historical cost convention,

The financial information is presented in UD Dollars ("US$"), which is the Group's presentational currency rounded to the nearest dollar.

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group and Company Financial Statements are disclosed in Note 3.

Changes in accounting policies and disclosures

i) New and amended standards adopted by the Group and Company

As of 1 January 2018, the Group and Company adopted IFRS 9, Financial Instruments ('IFRS 9'), which replaced IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 addresses the classification, measurement and recognition of financial assets and liabilities. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income ('FVOCI'), and fair value through the profit and loss statement ('FVTPL'). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the entity's business model and of the financial asset.

Investments in equity instruments are required to be measured at FVTPL with the irrevocable option at inception to present changes in fair value in other comprehensive income.

There is now a new expected credit losses model that replaces the incurred loss impairment model previously used in IAS 39. The Company has no other financial assets (except those at amortised cost) and as a result there is no impact of the new impairment requirements to the Financial Information.

From 1 January 2018, the Group and Company classifies its financial assets in the following measurement categories:

· Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

· Those to be measured at amortised cost.

At initial recognition, the Group and Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets are expensed and carried at FVTPL.

Financial Liabilities

The Group and Company reviewed the financial liabilities reported on its Statement of Financial Position and completed an assessment between IAS 39 and IFRS 9 to identify any accounting changes. The financial liabilities subject to this review were the trade and other payables. Based on this assessment of the classification and measurement model, impairment, and interest expense, the accounting impact on financial liabilities was determined not to be material.

For financial liabilities there were no changes to classification and measurement.

The Company has applied IFRS 9 but there have been no adjustments required following adoption other than changes in terminology.

Of the other IFRSs and IFRICs adopted, none have a material effect on the Group or Company Financial Statements.

ii) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows:

Standard	Impact on initial application	Effective date
IFRS 16	Leases	1 January 2019
IFRS 9 (Amendments)	Prepayment features with negative Compensation	1 January 2019
IAS 28 (Amendments)	Long term interests in associates and joint ventures	1 January 2019
2015-2017 Cycle	Annual improvements to IFRS Standards	1 January 2019
IFRS 3 (Amendments)	Business combinations	Not yet determined

Of the other IFRSs and IFRICs, none are expected to have a material effect on the Group or Company Financial Statements.

2. Significant Accounting policies (continued)

Basis of consolidation

The Group Financial Statements consolidate the Financial Statements of the Company and its subsidiaries made up to 31 December. Subsidiaries are entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· The contractual arrangement with the other vote holders of the investee;

· Rights arising from other contractual arrangements; and

· The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Investments in subsidiaries are accounted for at cost less impairment within the Company Financial Statements. Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used in line with those used by other members of the Group. All significant intercompany transactions and balances between Group enterprises are eliminated on consolidation.

Business Combination

Acquisition of Navassa Resources Limited

The company was incorporated on 31 May 2017 and entered into an agreement to acquire the entire issued share capital of Navassa Resources Limited on 7 December 2017. The acquisition was effected by way of issue of shares. Due to the relative size of the companies, Navassa Resources Limited's shareholders became the majority shareholders in the enlarged capital of the Company. The transaction fell outside of IFRS 3 ("Business Combinations") and as such has been treated as a group reconstruction.

2. Significant Accounting policies (continued)

Business Combination (continued)

Therefore, although the Group reconstruction did not become unconditional until 7 December 2017, these consolidated financial statements are presented as if the Group structure has always been in place, including the activity from incorporation of the Group's subsidiaries.

Furthermore, as Kavango Resources Plc was incorporated on 31 May 2017, while the enlarged group began trading on 7 December 2017, the Statement of Comprehensive Income and consolidated Statement of Changes in Equity and consolidated Cash Flow Statements are presented as though the Group was in existence for the whole year. On this basis, the Directors have decided that it is appropriate the reflect the combination using merger accounting principles as a group reconstruction under FRS 6 - Acquisitions and mergers in order to give a true and fair view. No fair value adjustments have been made as a result of the combination.

The comparative information presented for the Group is that of Navassa Resources Limited and its subsidiary.

Going concern

The Group and Company Financial Statements have been prepared on a going concern basis. Although the Group's assets are not generating revenues and an operating loss has been reported, the Directors are of the view that, whilst the Group has funds to meet its immediate working capital needs, the Group will need to raise funds later in the year to meets its planned exploration expenses that they wish to undertake over the next 12 months from the date these Financial Statements.

The Group has financial resources which the Directors consider is insufficient to fund the Group's committed expenditure both operationally and on some various exploration projects in the short term and thus acknowledge that additional funding will be required. The amount of funding the Group will be required to raise will be either via an issue of equity or through the issuance of debt. The Directors are reasonably confident that funds will be forthcoming and are actively talking to investors. Should additional funding not be forthcoming the Directors have agreed, if circumstances require, to defer payment of their fees until such time as adequate funding is received and if necessary scale back exploration activity.

The Directors have a reasonable expectation that the Group and Company will be able to raise the required funds and thus anticipate that adequate resources will be available to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the Group and Company Financial Statements.

These financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the group not continue as a going concern. The auditors have made reference to going concern by way of a material uncertainty in their audit opinion.

2. Significant Accounting policies (continued)

Intangible Assets

Exploration and evaluation costs

The Group capitalises expenditure in relation to exploration and evaluation of mineral assets when the legal rights are obtained. Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. Whenever the exploration for and evaluation of mineral resources does not lead to the discovery of commercially viable quantities of mineral resources or the Group has decided to discontinue such activities of that unit, the associated expenditures are written off to profit or loss.

Taxation and deferred tax

Income tax expense represents the sum of the current tax and deferred tax charge for the year.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases, and is accounted for using the balance sheet liability method.

Deferred tax is calculated at the tax rates that have been enacted or substantively enacted and are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Judgement is applied in making assumptions about future taxable income, including nickel prices, production, rehabilitation costs and expenditure to determine the extent to which the Group recognises deferred tax assets, as well as the anticipated timing of the utilisation of the losses.

Foreign currencies

The functional currency for the Company, being the currency of the primary economic environment in which the Company operates, is the US$. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which it operates (its functional currency).

The financial statements of the subsidiaries have been translated in to US$ in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires that assets and liabilities be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for the period). The foreign exchange differences on translation of subsidiaries are recognized in other comprehensive income (loss).

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit and loss.

Other income

Other income represents monies received in respect of an option agreement. Amounts are recognised when the right to receive the payment is established.

2. Significant Accounting policies (continued)

Borrowings

Borrowings are recorded initially at fair value, net of attributable transaction costs. Borrowings are subsequently carried at their amortised cost and finance charges, including any premium payable on settlement or redemption, are recognised in the profit or loss over the term of the instrument using the effective rate of interest.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Investment in subsidiaries

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

Property, plant and equipment

Property, Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight line basis at the following annual rates:

Geological and Field Equipment including Vehicles

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or fair value through profit or loss.

The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

· Financial assets at amortised cost (debt instruments)

· Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)

· Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

· Financial assets at fair value through profit or loss

Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Group and Company. The Group and Company measures financial assets at amortised cost if both of the following conditions are met:

· The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

· The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

· The rights to receive cash flows from the asset have expired; or

· The Group and Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group and Company has transferred substantially all the risks and rewards of the asset, or (b) the Group and Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

The Group recognises an allowance for ECLs for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. IFRS 9.5.5.1 ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. IFRS 9.4.2.1(a) Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.

Loans and borrowings and trade and other payables

After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.

This category generally applies to trade and other payables.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.

2. Significant Accounting policies (continued)

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of a company after deducting all of its liabilities. Equity instruments issued are recorded at the proceeds received net of direct issue costs.

Share capital represents the amount subscribed for shares at nominal value.

Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income, less dividends paid to the owners of the parent.

Share based payments

The Group operates a number of equity-settled, share-based schemes, under which the Group receives services from employees or third party suppliers as consideration for equity instruments (options and warrants) of the Group. The fair value of the third party suppliers' services received in exchange for the grant of the options is recognised as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the service provided. The value of the employee services received is expensed in the Statement of Comprehensive Income and its value is determined by reference to the fair value of the options granted:

· including any market performance conditions;

· excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and

· including the impact of any non-vesting conditions (for example, the requirement for employees to save).

The fair value of the share options and warrants are determined using the Black Scholes valuation model.

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Statement of Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.

When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

Financial risk management

Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.

Risk management is carried out by the London based management team under policies approved by the Board of Directors.

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern, to enable the Group to continue its exploration and evaluation activities, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the issue of shares or sell assets to reduce debts.

At 31 December 2018 the Group had borrowings of nil (2017: nil) and defines capital based on the total equity of the Group. The Group monitors its level of cash resources available against future planned exploration and evaluation activities and may issue new shares in order to raise further funds from time to time.

Given the Group's level of debt versus its cash at bank and cash equivalents, the gearing ratio is immaterial.

3. Critical accounting estimates and judgements in applying accounting policies

In the application of accounting policies the directors are required to make judgements, estimates and assumptions which affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. The estimates and associated assumptions are based on historical experience, expectations of future events and other factors that are believed to be reasonable under the circumstances. Actual results in the future could differ from such estimates. The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period.

a) Valuation of exploration, evaluation and development expenditure

Exploration and evaluation costs have a carrying value at 31 December 2018 of $2,287,993(2017: $2,359,425). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. The value of the Group's exploration, evaluation and development expenditure will be dependent upon the success of the Group in discovering economic and recoverable mineral resources, especially in the countries of operation where political, economic, legal, regulatory and social uncertainties are potential risk factors. The future revenue flows relating to these assets is uncertain and will also be affected by competition, relative exchange rates and potential new legislation and related environmental requirements. The Group's ability to continue its exploration programs and develop its projects is dependent on future fundraisings the outcome of which is uncertain. The ability of the Group to continue operating within Botswana is dependent on a stable political environment which is uncertain based on the history of the country. This may also impact the Group's legal title to assets held which would affect the valuation of such assets. There have been no changes made to any past assumptions.

b) Share-based payments

In accounting for the fair value of options and warrants, the Company makes assumptions regarding share price volatility, risk free rate, and expected life in order to determine the amount of associated expense to recognise.

4. Segmental disclosures

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‑maker. The chief operating decision‑maker, who is responsible for allocating resources and assessing performance of the operating segment and that make strategic decisions, has been identified as the Board of Directors. No revenue was generated during the period.

The Group has two reportable segments, exploration and corporate, which are the Group's strategic divisions, for each of the strategic divisions, the Board reviews internal management reports on a regular basis. The Group's reportable segments are:

Exploration: the exploration operating segment is presented as an aggregate of all Botswana licences held. Expenditure on exploration activities for each licence is used to measure agreed upon expenditure targets for each licence to ensure the licence clauses are met.

Corporate: the corporate segment includes the holding and intermediate holding companies costs in respect of managing the Group.

Segment result
	31-Dec	31-Dec
	2018	2017
Continuing operations	US$	US$

Exploration (Botswana)	-	50000
Corporate ((London and Mauritius)	(534,242)	(44.055)

Profit/(loss) before tax	(534,242)	5,945
Income tax	-	-
Profit/(loss) after tax	(534,242)	5,945

No profit and loss items were incurred in respect of the exploration activities as all relevant costs, in accordance with IFRS 6 (Exploration for and Evaluation of Mineral Resources), were capitalised to Intangible Assets for all of the periods presented.

Segment assets and liabilities

	Non-Current Assets		Non-Current Liabilities
	31-Dec	31-Dec	31-Dec	31-Dec
	2018	2017	2018	2017
	US$	US$	US$	US$
Intangible assets and equipment (Botswana)	2,310,744	2,361,035	-	-
Corporate (London and Mauritius)	-	-	-	-
Total of all segments	2,310,744	2,361,035	-	-

	Total Assets		Total Liabilities
	31-Dec	31-Dec	31-Dec	31-Dec
	2018	2017	2018	2017
	US$	US$	US$	US$
Exploration (Botswana)	2,313,179	2,369,035	1,119	10,088
Corporate (London and Mauritius)	1,066,761	520,673	69,663	296,544
Total of all segments	3,379,940	2,889,708	70,782	306,632

5. Other income

Other income relates to the payment received by the Group under an earn in agreement which was terminated in 2018. There was no income during 2018 from this agreement.

6. Expenses by nature

Expenses by nature

	Group
	31 December 2018 US$	31 December 2017 US$

Directors' fees	42,988	-
Stock exchange related costs (including public relations)	42,567	-
Auditor remuneration	42,563	33,541
Investor Relations	51,858	-
Travel & subsistence	23,016	-
Professional & consultancy fees including Legal	36,649	10,514
Insurance	9,029	-
Corporate advisory and Broker Fee	69,219	-
Share Option expense	189,956	-
Office and Other expenses	26,397	-
Total administrative expenses	534,242	44,055

Services provided by the Company's auditor and its associates

During the period, the Group (including overseas subsidiaries) obtained the following services from the Company's auditors and its associates:

Group

31 December

2018

31 December

2017

Fees payable to the Company's auditor and its associates for the audit of the Company and Group Financial Statements

42,563

33,541

7. Employees

Employment costs consist of:

Group	2018	2017
	US$	US$

Wages and salaries including any Social security costs	59,679	8,660

	59,679	8,660

The amounts detailed above were paid by Kavango Minerals (Pty) Ltd and capitalised in intangible assets.

Company

Directors during the year were paid USD2 42,988 which is included in Directors Fees in Note 6 and the Company Secretary was paid USD 19,347 which is included in Professional fees in Note 6.

Further details are provided in Directors Remuneration Report on Page 12

The average monthly number of employees during the period was:

Group	2018	2017
Directors	3	2
Employees	5	7

	8	9

Company	2018	2017
Directors	3	2
Employees	1	-

	4	2

8. Taxation

	2018	2017
	US$	US$
Current taxation	-	-
Deferred taxation	-	-
	-	-

Profit / (loss) before tax	(534,242)	5,945

Tax at the applicable rate of 19.8% (2017:19.2%)	(105,780)	1,142
Effect of different tax rates in other jurisdictions	1,706	(1,660)
Tax losses carried forward	104,074	518
Current tax	-	-

The weighted average applicable tax rate of 19.8% (2017: 19.20%) used is a combination of the 19% standard rate of corporation tax in the UK, 22% Botswana corporation tax and exempt from Mauritius corporation tax

Deferred tax has not been recognised in accordance with IAS 12 due to uncertainty as to when profits will be recognised against which the losses can be relieved. The Group has approximately US$2,165,667 (2017: US$2,700) of tax losses available to carry forward against future taxable profits. A deferred tax asset has not been recognised because of uncertainty over future taxable profits against which the lowers may be used.

9. Earnings per share

	31-Dec	31-Dec
	2018	2017
Earnings/(losses) per Share (basic) - cents	(0.76)	0.01

The basic loss per share is derived by dividing the loss for the period attributable to ordinary shareholders by the weighted average number of shares in issue. The weighted average number of shares is adjusted for the impact of the reverse acquisition as follows:

- Prior to the reverse acquisition, the number of shares is based on Navassa Resources Ltd, adjusted using the share exchange ratio arising on the reverse acquisition; and

- From the date of the reverse acquisition, the number of share is based on the Company.

	31-Dec	31-Dec
	2018	2017
Profit/(Loss) for the year from continuing operations (used in calculation of basic EPS from continuing operations) (US$)	(534,242)	5,945
Weighted average number of Ordinary shares in issue	99,169,996	39,905,457

In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 16.

10. Intangible assets

Group	31-Dec	31-Dec
Evaluation and Exploration Assets - Cost and net book value	2018	2017
Evaluation and Exploration Assets - Cost and net book value	US$	US$
At period start (1 January)	2,359,425	2,005,953
Additions, net	272,581	204,868
Translation difference	(344,013)	148,604
At period end (31 December)	2,287,993	2,359,425

The Group's intangible assets comprise wholly of Evaluation and Exploration assets in respect of the licences in Botswana.

Exploration projects in Botswana are at an early stage of development and there are no JORC (Joint Ore Reserves Committee) or non-JORC compliant resource estimates available to enable value in use calculations to be prepared.

The Directors have undertaken a review to assess whether circumstances exist which could indicate the existence of impairment as follows:

• The Group no longer has title to mineral leases.

• A decision has been taken by the Board to discontinue exploration due to the absence of a commercial level of reserves.

• Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and participation.

Following their assessment, the Directors recognised that no impairment charge is necessary.

10A Exploration Field Equipment

Group	31-Dec	31-Dec
Exploration Field Equipment	2018	2017
Exploration Field Equipment	US$	US$
Net Book Value at period start (1 January)	1,610	1,610
Additions Depreciation	(28,338) (7,068)	- -
Translation difference	(129)	-
Net Book Value at period end (31 December)	22,751	1,610

The Group's Exploration Field Equipment includes all fixed assets in Botswana, including vehicles used in field activities by geology staff. Depreciation of $ 7,068 was capitalised in Intangible assets.

11. Investments in subsidiaries

Company	2018	2017
	US$	US$
At incorporation	3,500,000	-
Additions	-	3,500,000
At period end (31 December)	3,500,000	3,500,000

Investments in subsidiaries are recorded at cost, which is the fair value of the consideration paid.

On 7 December 2017 the Company acquired all of the issued capital of Navassa Resources Limited for a consideration of US$3,500,000 which was settled by issuing 4,370,000 Ordinary Shares in the Company.

Principal subsidiaries

Name	Country of incorporation and residence	Nature of business	Proportion of equity shares held by Company

Navassa Resources Ltd Level 3, 35 Cybercity Ebene Mauritius	Mauritius	Holding	100%
Kavango Resources (Pty) Ltd Plot 1306 Government Camp Francistown Botswana	Botswana	Base Metals Exploration	100% via Navassa

These subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertaking held directly by the Parent Company does not differ from the proportion of ordinary shares held.

12. Trade and other receivables

	Group		Company
	31-Dec	31-Dec	31-Dec	31-Dec
	2018	2017	2018	2017
	US$	US$	US$	US$

Other receivables and prepayments	114,825	142,256	596,806	135,505

	114,825	142,256	596,806	135,505

Group Trade and other receivables are all due within one year. The fair value of all receivables is the same as their carrying values stated above.

Included in other receivables are amounts owed by subsidiaries of $491,473 (2017- $nil). This amount is interest free and repayable on demand.

13. Cash and cash equivalents

	Group		Company
	31-Dec	31-Dec	31-Dec	31-Dec
	2018	2017	2018	2017
	US$	US$	US$	US$

Cash and cash equivalents	954,371	386,417	937,124	348,653

	954,371	386,417	937,124	348,653

Cash and cash equivalents consist of balances in bank accounts used for normal operational activities.

14. Trade and other payables

	Group		Company
	31-Dec	31-Dec	31-Dec	31-Dec
	2018	2017	2018	2017
	US$	US$	US$	US$

Other payables	70,782	146,241	62,967	133,603

	70,782	146,241	62,967	133,603

Carrying amounts of trade and other payables approximate their fair value.

15. Share capital

	Number of shares	Share capital	Share premium	Total
Issued and fully paid		US$	US$	US$

As at 1 January 2016	1,000,000	1,000,000	-	1,000,000
Issue of shares at par	200,000	200,000	-	200,000
As at 31 December 2016/ 1 January 2017	1,200,000	1,200,000	-	1,200,000
Issue of shares at par	709,223	709,223	-	709,223
Group reorganisation	23,720,777	(1,874,879)	-	(1,874,879)
Shares issued as consideration for reverse merger	44,370,000	59,456	3,440,544	3,500,000
Issue of shares at US$0.06	4,169,996	6,263	330,942	337,205
Issue costs	-	-	(10,596)	(10,596)
As at 31 December 2017/ 1 January 2018	74,169,996	100,063	3,760,890	3,860,953
Issue of shares at US$0.0328	60,000,000	78,720	1,889,280	1,968,000
Issue costs IPO costs Foreign Exchange Loss (Gain)	- - -	- - (7,758)	(83,508) (345,048) (240,252)	(83,508) (345,048) (248,010)
As at 31 December 2018	134,169,996	171,025	4,981,362	5,152,387

On 7 December 2017 the Company acquired Navassa Resources Ltd for a purchase price of US$3.5 million (£2.6 million) through the issue 44,370,000 new ordinary shares of £0.001 and became the legal parent of the Group.

Due to the facts stated in note 2b) the Group is considered to have always existed. For 2016 the figures represent those of Navassa Limited and subsequent to 2016 those of Kavango Resources Plc.

Navassa Resources Limited shares are US$1.

Kavango Resources Plc shares are GBP 0.001.

In 2016 US$50,000 of intangible assets additions were settled through the issuing of 50,000 shares.

On 21 December 2017 4,169,996 shares were allotted and issued at a price of GBP 0.06(US$0.08) per Ordinary Share.

On 31 July 2018 60,000,000 shares were allotted and issued at a price of GBP 0.025(US$ 0.0328) per Ordinary Share.

16. Share based payments

Warrants

(i)During the share placement that completed on 21 December 2017 the Company issued 4,169,996 warrants to each of the subscribers. Each warrant entitles the warrant holder to subscribe for one ordinary share at a price of 12p (US$0.16) with a further warrant attached for each two ordinary shares subscribed for under those warrants, the new warrants entitling the warrant holder to subscribe for one further ordinary share for each such new warrant at a price of 24p (US$0.32). These warrants have not been recognised in the financial statements as their fair value is not material.

The fair value of the 4,169,996 Subscriber Warrants granted in 2017 was calculated using the Black-Scholes pricing model. The inputs in the model are as follows:

	12p warrants

Fair value of 1 warrant (US cents)	0.12s
Share price at the date of grant (US$)	0.081
Exercise price (US$)	0.16
Dividend yield	0%
Expected life, years	2.5
Annual risk-free interest rate	0.47%
Volatility	31%

The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices of comparable companies adjusted for lack of marketability. Should volatility be higher by 10%, fair value of the warrants would increase by US$14,000.

(ii)During the IPO share placement that was completed on 31 July 2018 the Company issued 60,000,000 warrants to each of the subscribers and 2,146,000 broker warrants. Each subscriber warrant entitles the warrant holder to subscribe for one ordinary share at a price of 12p (US$0.16) with a further warrant attached for each two ordinary shares subscribed for under those warrants, the new warrants entitling the warrant holder to subscribe for one further ordinary share for each such new warrant at a price of 24p (US$0.31). Each broker warrant entitles the warrant holder to subscribe for one ordinary share at a price of 2.5p (US$0.033). These warrants have not been recognised in the financial statements as their fair value is not material.

(ii)(a)The fair value of US$ 514 for the 60,000,000 Subscriber Warrants granted in 2018 was calculated using the Black-Scholes pricing model. The inputs in the model are as follows:

	12p warrants

Fair value of 1 warrant (US cents)	Nominal
Share price at the date of grant (US$)	0.033
Exercise price (US$)	0.16
Dividend yield	0%
Expected life, years	2.0
Annual risk-free interest rate	0.77%
Volatility	35%

(ii)(b)The fair value of US$ 14,271 for the 2,146,000 Broker Warrants granted in 2018 was calculated using the Black-Scholes pricing model. The inputs in the model are as follows:

	12p warrants

Fair value of 1 warrant (US cents)	0.67s
Share price at the date of grant (US$)	0.033
Exercise price (US$)	0.033
Dividend yield	0%
Expected life, years	2.0
Annual risk-free interest rate	0.77%
Volatility	35%

The warrants outstanding at the year end are:

Exercise price	Number outstanding	Average remaining contractual life	Weighted average exercise price
US$		Years	US$

0.16	4,169,996	2.0
0.16	60,000,000	2.0
0.33	2,146,000	2.0

66,315,996 2.0 (0.156)

Share Options

In 2018 the Company granted 13,500,000 share options to directors and management exerciseable at 2.5 pence for a period of 10 years from date of grant.

The fair value of the 2018 share options was calculated using the Black-Scholes pricing model. The inputs in the model are as follows:

	2.5p share options

Fair value of 1 share option (US cents)	1.42
Share price at the date of grant (US$)	0.033
Exercise price (US$)	0.033
Dividend yield	0%
Expected life, years	10.0
Annual risk-free interest rate	0.77%
Volatility	35%

The amount of US$ 189,956 calculated using the Black-Scholes model has been expensed.

17. Financial instruments

The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments or other hedging contracts or techniques to mitigate risk. The main risk affecting such instruments is foreign currency risk which is discussed below.

There is no material difference between the book value and fair value of the Group cash balances, and the short-term receivables and payables because of their short maturities.

Credit risk

Credit risk is the risk that a customer may default or not meet its obligations to the Group on a timely basis, leading to financial losses to the Group. Credit risk arises from cash and deposits kept with banks, advances paid and other receivables.

Financial assets which potentially subject the holder to concentrations of credit risk consist principally of cash balances. These balances are all held at a recognised financial institution. The maximum exposure to credit risk is US$954,371 (2017: US$386,417). The Company and Group does not hold any collateral as security.

Market risk

Interest rate risk

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in interest rates. The exposure to this risk is not considered, for the time being, to be material and as such no arrangements have been put in place to mitigate this risk.

Currency risk

Currency risk is the risk that the financial results of the Group will be adversely affected by changes in exchange rates to which the Group is exposed. The Group undertakes certain transactions denominated in foreign currencies. The majority of the Company's expenditures are denominated in Pound Sterling, while its exploration expenses are incurred in Botswana Pula, accordingly, the result for the year are adversely impacted by appreciation of the Pound Sterling against the US$ while the Group's assets are positively impacted by appreciation of the Botswana Pula against the US$. Currency risk is monitored on a regular basis by performing a sensitivity analysis of foreign currency positions in order to verify that potential losses are at an acceptable level.

The carrying amounts of monetary assets and liabilities denominated in Botswana Pula was not material ; the carrying amounts of monetary assets carried in GBP were as follows:

	Group and Company
	31-Dec	31-Dec
	2018	2017
	US$	US$
Assets
GBP	937,124	484,157
Liabilities
GBP	62,239	133,615
Net exposure	874,885	350,542

A 10% increase / decrease in the USD:GBP exchange rate would result in a loss / profit of US$ 87,489 (2017 - US$35,054.)

Liquidity risk

Liquidity risk arises from the possibility that the Group and its subsidiaries might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. In addition to equity funding, additional borrowings have been secured to finance operations. The Company manages this risk by monitoring its financial resources and carefully planning its expenditure programmes.

17. Financial instruments (continued)

Capital

The Group considers its capital to comprise its ordinary share capital and retained deficit. In managing its capital, the director's primary objective is to maintain a sufficient funding base to enable the Group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, through new share issues, the Group considers not only their short-term position but also their long term operational and strategic objectives.

18. Change in liabilities arising from financing activities

			Non cash movements
Group	1 January	Cash flows	Foreign exchange gain	Converted into shares	Capitalised exploration costs	31 December
	US$	US$	US$	US$	US$	US$

2017
Amounts due to shareholders	763,343	43,921	(16,777)	(709,223)	79,127	160,391

2018
Amounts due to shareholders	160,391	(49,273)	-	-	(111,118)	-

Company	1 January	Cash flows	31 December
	US$	US$	US$

2017
Amounts due to shareholders	-	23,143	23,143

2018
Amounts due to shareholders	23,143	(23,143)	-

19. Commitments

The Group's license expenditure commitments are:

	Group
	31-Dec	31-Dec
	2018	2017
	US$	US$

Within 12 months	1,278,000	874,000

At December 31, 2018 the Group had a contractual commitment of $269,000 to complete an aerial survey

20. Related party transactions

Prior to the acquisition by Kavango Resources plc in December 2017 , Navassa Resources Limited and its subsidiary Kavango Minerals (Pty) Ltd were financed as a private group by its four founders and managed by Charles M Moles and Hillary Gumbo. Since the acquisition and subsequent IPO the volume of related party transactions has been greatly reduced.

Related Party Transactions during 2018 and 2017 include:

· Rent, utilities and other administrative costs incurred by Kavango Minerals (Pty) Ltd paid to 3D Exploration Limited, a technical services company majority-owned by Hillary Gumbo, a Director of Kavango Minerals (Pty) Ltd;

· Directors Fees for all Group companies and fees paid to the Corporate Secretary.

· Technical and consulting services provided by 3D Exploration Limited to Kavango Minerals (Pty) Ltd ;

· Advance made to Group companies by Charles Michael Moles, a Director

The following table summarises related party transactions by year:

Group	Currency	2018	2017
		US$	US$

Included in capitalised exploration costs:
Costs billed by 3D Exploration (Hillary Gumbo)	USD	36,426	58,715
Directors fees billed by Hillary Gumbo	GBP	15,000
Consulting fees billed by Hillary Gumbo	USD	-	168,377
		55,626	227,092

Balances with the related parties are:

Group and

	Company Group		Company
	2018	2017	2017
	US$	US$	US$
Included in other payables:
Other related parties	-	-	52,129
	-	-	52,129
Net amounts receivable from (due to) related parties:
Charles Moles Douglas Wright	- -	(22,943)	-
Hillary Gumbo	-	(175)	-
3D Exploration	Note1	(98,375)	-
Michael Foster	-	(8,849)	(8,849)
John Forrest	-	(3,231)	(3,231)
	-	(133,573)	(12,080)



Note1: During 2018 $36,426 was billed by 3D Exploration and capitalised in Intangible assets

20. Related party transactions (continued)

Directors fees

Michael Foster was paid a Directors Fee of GBP 16,665 in 2018 (2017-Nil), Hillary Gumbo was paid a fee of GBP 15,000( 2017-USD 168,377) for acting as General Manager and Director of Kavango Minerals (Pty) Ltd and John Forrest was paid a fee of GBP 15,000 (2017-Nil) as Corporate Secretary. Douglas Wright was paid an advisory fee of GBP 40,000 (2017-Nil) for the 12 months beginning 1 August 2018

21. Events after the reporting date

In February 2019 the Group signed a contract with a local drilling contractor for an expenditure commitment of Botswana Pula 1,644,000 (approximately USD 150,000)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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