Kavango Resources Regulatory News (KAV)

08 July 2022

KAVANGO RESOURCES PLC

("Kavango" or "the Company")

Agreed Acquisition of 50pc of Kanye Resources

Botswana focussed metals exploration company Kavango Resources plc (LSE:KAV) ("Kavango") announces it has agreed terms with Power Metal Resources plc (AIM:POW) ("Power") to acquire Power's 50% of the Kanye Resources Joint Venture ("Kanye JV") (the "Acquisition").

The Kanye JV owns 100% working interests in:

- 10 prospecting licenses in the Kalahari Copper Belt ("KCB"), which cover 4,257km2

- 2 prospecting licences in the Ditau Camp Project that cover an area of 1,386km2

Kavango is the operator of the Kanye JV.

Ben Turney, Chief Executive Officer of Kavango Resources, commented:

"Today's deal is a very important step forward for Kavango. After a period of considerable support from Power Metal Resources, we are now in a position to regain complete ownership of our crucial prospecting licences in the Kalahari Copper Belt (KCB) and at Ditau. On completion of the transaction, Kavango will become one of the largest landholders for copper exploration in Botswana.

The Strategic Joint Venture has served both Kavango and Power well. It has demonstrated the success of Power's incubation model in the exploration space, while has provided Kavango with innovative and effective financing to develop its projects more quickly. This has enabled us to drill our recent campaign at Ditau and also to bring our interests in the KCB to the point of drill readiness.

From a commercial perspective, the deal with Power significantly strengthens Kavango. We are adding a supportive strategic investor to our shareholder register, at this crucial point in the wider market cycle.

With the operational progress we have made over the last two years, the talented people we have recruited to our team, and the financing measures we have put in place, we have significantly raised Kavango's chances of exploration success. We now have near-complete control of 16,000km2 of highly prospective ground in Botswana and an exciting future ahead of us."

Headline Terms of the proposed Agreement (Subject to and conditional upon the publication of a new prospectus by Kavango):

- The issue to Power Metal of 60 million new ordinary shares of Kavango at a deemed issue price of 3p per ordinary share, subject to a 12-month lock-in agreement

- The issue to Power of 60 million warrants, divided into two separate tranches:

- 30 million warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 4.25p for a period of 30 months

- 30 million warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 5.5p for a period of 30 months

- The issue to Power of 15 million variable price warrants ("VP Warrants") with a six-month life to expiry, with a minimum exercise price of 3p and an actual exercise price at a 15% discount to the volume-weighted average share price on the date of exercise

- Power Metal will receive a 1% Net Smelter Return ("NSR") ("Royalty") across all Kanye licence areas

In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above £7.5 million.

Detailed Transaction Terms:

The Kanye JV owns 100% working interests in:

- 10 prospecting licenses in the Kalahari Copper Belt ("KCB"), which cover 4,257km2. The PL numbers are PL108/2020, PL109/2020, PL110/2020. PL111/2020, PL046/2020, PL49/2020, PL052/2020, PL053/2020, PL036/2020 and PL037/2020.

- 2 prospecting licences (PL169/2012 & PL010/2019) in the Ditau Camp Project that cover an area of 1,386km2.

Kavango is the operator of the Kanye JV.

Subject to and conditional upon the publication of a new prospectus by Kavango including provision for this Acquisition (the "Prospectus") Kavango will acquire Power Metal's 50% interest in the Kanye JV.

Consideration:

Shares:

The issue to Power Metal of 60 million new ordinary shares of Kavango, credited as fully paid at a deemed issue price of 3p per ordinary share (Share Value £1,800,000 at 3p) ("Consideration Shares"). The Consideration Shares will be subject to a lock-in agreement whereby they may not be sold within 12 months without Kavango's written approval.

Warrants:

The issue to Power Metal of 60 million warrants, divided into two separate tranches (Tranche 1 and Tranche 2)("Consideration Warrants"). The two tranches of warrants include the following terms:

- Tranche 1 comprises 30m warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 4.25p for a period of 30 months from execution of the agreement

- Tranche 2 comprises 30m warrants with the right to subscribe for new ordinary shares in Kavango at an exercise price of 5.5p for a period of 30 months from execution of the agreement

The issue to Power Metal of 15 million variable price warrants ("VP Warrants") with a six month life to expiry from execution of the agreement, with a minimum exercise price of 3p and an actual exercise price at a 15% discount to the volume-weighted average share price on the date of exercise. Should all VP Warrants be exercised within 6 months from execution of the agreement, Power Metal will receive 15 million replacement warrants, on the same exercise terms and with a 12-month life to expiry from issue date ("Super VP Warrants").

Royalty:

Power Metal will receive a 1% Net Smelter Return ("NSR") ("Royalty") across all Kanye licence areas save in respect of any such licences which, at its sole discretion, Kanye Botswana allows to lapse. Costs for the preparation of a suitable separate Royalty Agreement shall be shared by the parties. In the event that Kavango is able to secure, within 2 years of execution of the agreement, a greater than 2% NSR or other royalty on any of the Kanye properties the total royalty above 2% would be split equally Power Metal/Kavango (e.g. a 3% NSR would see KAV/POW each receive a total 1.5% royalty), with Kavango retaining the balance.

Sale Premium:

In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above £7.5 million (the "Sell-On Premium"). (e.g. if Kanye is sold for £50 million in month 15, POW would receive £4.25million). The Sell-On Premium is 20% for 6 months from execution of the Agreement, 15% for 7-12 months from execution of the agreement, 10% for 13-18 months from execution of the agreement and 5% for 19-24 months from execution of the Agreement, after which the Sell-On Premium will lapse.

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.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

For further information please contact:

Kavango Resources plc

Ben Turney

bturney@kavangoresources.com

+46 7697 406 06

 First Equity (Joint Broker)

+44 207 374 2212

Jason Robertson

SI Capital Limited (Joint Broker)

+44 1483 413500

Nick Emerson

NOTES TO EDITORS

THE KALAHARI COPPER BELT PROJECT GEOLOGICAL SETTING

The Kanye Resources prospecting licences in the Kalahari Copper Belts include lengthy redox boundaries, close to surface, that represent excellent exploration targets.

The redox boundaries were formed several hundred million years ago in active sedimentary basins flooded by shallow seas. Organic matter accumulating on the sea floor created anoxic conditions, which formed a chemical barrier to metal ions rising upwards through the sediments as the basin subsided. The change in chemistry caused the precipitation of metal species (carbonates, sulphides etc.) including copper and silver on or just below the redox boundary.

Subsequent tectonic activity folded the sedimentary layers, which was often accompanied by the concentration of metals into the fold hinges and shear zones. Fold hinges pointing upwards are known as anticlines, while the downward pointing hinges are called synclines.

Several large copper/silver ore deposits have been discovered on the KCB in association with anticlines in areas now held under licence by Sandfire Resources (ASX:SFR) and Cupric Canyon (a privately owned mining development company). These deposits are relatively close to surface and many are amenable to open pit mining operations.

Accumulations of metals can be traced along the strike of geochemical reduction-oxidation ("redox") boundaries (sometimes for many kilometres) because they often contain iron and have a higher magnetic signature than the surrounding rock.

KALAHARI COPPER BELT EXPLORATION STRATEGY

The South Ghanzi PLs lie within the Central Structural Corridor of the KCB immediately south of the town of Ghanzi.

Sedimentary horizons hosting copper/silver mineralisation in the KCB are known to be conductive. AEM surveys are a recognised and tested exploration method for identifying high priority drill targets.

Kavango's strategy in the KCB is to identify conductive targets and then to complete follow up investigation, using other proven exploration methods including geological mapping and testing of soil geochemistry through extensive sampling. The correlation of positive zinc and copper soil geochemistry readings to positive AEM results is a highly encouraging exploration vector.

Given Kavango's understanding of the regional lithology and stratigraphy of the KCB, the Company is optimistic about the progress it has made in South Ghanzi over recent months.

Specifically, the identification of a number of smaller anticlines associated with conductors suggests there are seven large, promising drill targets at South Ghanzi.

THE DITAU CAMP PROJECT

The Ditau Camp Project comprises two Prospecting Licences ("PLs") (PL169/2012 & PL010/2019) that cover an area of 1,386km2. Geophysical analyses by Kavango in the two PLs have identified 12 "geophysical structures" of which 9 have clear indications of being "ring structures".

The "ring structures" have the potential to host carbonatite and other intrusive rocks.

Carbonatites are the principal source of rare earth elements ("REEs") including the much sought-after elements Neodymium (Nd) and Praseodymium (Pr), which are used in the manufacture of the new generation of electric vehicles (EVs), magnets and other high-tech applications. Other elements/minerals associated with carbonatites include Niobium, Phosphates, Monazite, Strontium, Magnetite and Copper.

Mafic intrusives have potential to host base and precious metals, as seen in the Molopo Farms Project, Selebi Phikwe and Tati Nickel deposits in Botswana.