Last checked at 5 Aug 2019 07:00
PRESS RELEASE
5 August 2019
KAVANGO RESOURCES PLC ("KAVANGO" OR "THE COMPANY")
Interim Results
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 its unaudited financial results for the six months ended 30 June 2019.
SUMMARY
·; Issue of 26,785,713 ordinary shares at 2.8p
·; Expenditure in Botswana on exploration of US$ 738,000.
·; Operating loss of US$ 295,000.
The Interim Management Report and Results are set out in the following pages.
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.
Contacts
For further information please contact:
Kavango Resources plc +44 20 3651 5705
Michael Foster
mfoster@kavangoresources.com
SI Capital Limited (Joint Broker) +44 1483 413500
Nick Emerson
Turner Pope Investments (Joint Broker) +44 20 3657 0050
Andy Thacker
INTERIM MANAGEMENT REPORT 30 JUNE 2019
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 provide this management report to all our shareholders. The unaudited financial results for the six months ended 30th June 2019 produced an operating loss of US$295,000.
Since my last report the drilling at the Ditau prospect has concluded. Whilst the assay results from these two holes have fallen short of expectations, the alteration and deformation in both the intrusive gabbro and the overlying sediments continues to suggest that Ditau is a prospective target for mineralisation. The Company now needs to confirm if the extensive zone of alteration is related to the carbonatites discovered nearby by Falconbridge in the 1970s. The discovery of carbonatite at Ditau would represent a major advance towards the identification of economic mineralisation at this prospect. Further geological investigation of Ditau is now being undertaken and an update will be published soon.
On the KSZ, the combination of SkyTEM's new high resolution 12.5Hz EM surveying system together with the advanced data processing provided by Aarhus Geophysics represents a major breakthrough in our exploration for sulphide orebodies lying below Kalahari and Karoo cover in the northern part of the KSZ. The ability of our geologists to view the deeper rocks using 3D models provides them with exploration tools that will allow for the identification of mineralized zones which have remained completely hidden until now.
The data processing has identified numerous conductors of interest on the KSZ, the longest of which is 4.5km long. The most compelling conductors are currently being surveyed by ground based geophysical techniques together with detailed soil geochemistry. The objective is the identification of the best looking targets so that drilling can commence next month.
As we enter the 2nd half of 2019, the Company looks forward to the challenges and opportunities that lay ahead. We have a great team, prospective areas under licence and with the support of our shareholders we can achieve great results.
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.
DJ Wright
Chairman
On behalf of the Board
2 August 2019
Responsibility Statement
We confirm that to the best of our knowledge:
- The Interim Report has been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as adopted by the EU;
- Gives a true and fair value of the assets, liabilities, financial position and Loss of the Group;
- The Interim Report includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year and
- The Interim Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules, being the information required on related party transactions.
The Interim Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by
DJ Wright
Chairman
2 August 2019
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.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Group Statement of Comprehensive Income for the Interim Period Ended 30 June 2019 |
| Six Months to | Six Months to | Year to |
|
| 30 June | 30 June | 31 December |
| Notes | 2019 | 2018 | 2018 |
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| (Unaudited) | (Unaudited) | (Audited) |
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| $ 000's | $ 000's | $ 000's |
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Administrative expenses |
| (295) | (36) | (534) |
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Operating loss |
| (295) | (36) | (534) |
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Loss before tax |
| (295) | (36) | (534) |
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Income tax expense |
| - | - | - |
Loss for the period from continuing operations |
| (295) | (36) | (534) |
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Other comprehensive income |
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Items that may be reclassified subsequently to profit or loss: |
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Currency translation differences |
| (152) | (294) | (221) |
Other comprehensive income for the period, net of tax |
| (152) | (294) | (221) |
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Total comprehensive income for the period |
| (447) | (330) | (755) |
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Attributable to: |
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Owners of the parent |
| (447) | (330) | (755) |
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Loss per share from continuing and discontinued operations |
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attributable to the owners of the parent during the period |
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(expressed in dollars per share) |
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- Basic and diluted | 3 | $ (0.002) | $ (0.0005) | $ (0.005) |
Group Statement of Financial Position as at 30 June 2019
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| As at | As at | As at |
|
| 30 June | 30 June | 31 December |
| Notes | 2019 | 2018 | 2018 |
|
| (Unaudited) | (Unaudited) | (Audited) |
|
| $ 000's | $ 000's | $ 000's |
ASSETS |
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Non-current assets |
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Intangible assets | 4 | 2,825 | 2,023 | 2,288 |
Fixed assets |
| 77 | 23 | 23 |
Total non-current assets |
| 2,902 | 2,043 | 2,311 |
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Current assets |
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Trade and other receivables |
| 51 | 305 | 115 |
Cash and cash equivalents |
| 808 | 356 | 954 |
Total current assets |
| 859 | 661 | 1,069 |
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TOTAL ASSETS |
| 3,761 | 2,704 | 3,380 |
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LIABILITIES |
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Current liabilities |
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Loan from Shareholders Trade and other payables |
| - (10) | (158) (364) | - (71) |
TOTAL LIABILITIES |
| (10) | (522) | (71) |
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NET ASSETS |
| 3,751 | 2,182 | 3,309 |
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SHAREHOLDERS' EQUITY |
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Share capital | 5 | 204 | 98 | 171 |
Share premium Share option reserve |
| 5,802 225 | 3,692 - | 4,981 190 |
Reorganisation reserve |
| (1,591) | (1,591) | (1,591) |
Foreign exchange reserve |
| (183) | (104) | (31) |
Retained earnings |
| (706) | 87 | (411) |
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TOTAL EQUITY |
| 3,751 | 2,182 | 3,309 |
Group Statement of Changes in Equity for the Interim Period Ended 30 June 2019
| Share capital | Share premium | Stock Options | Foreign exchange reserve | Re- organisation reserve | Retained earnings | Total equity |
| $ 000's | $ 000's | $ 000's | $ 000's | $000s | $ 000's | $ 000's |
As at 31 December 2017 and 1 January 2018 | 100 | 3,761 | - | 190 | (1,591) | (123) | 1,167 |
Profit/ (Loss) for the period | - | - | - | - |
| (36) | (36) |
Other comprehensive income for the period | (2) | (69) | - | (294) | - | - | (365) |
Foreign exchange | - | - | - | - | - | - | - |
Total comprehensive income for the period | (2) | (69) | - | (294) | - | (36) | (401) |
Total transactions with Owners, recognised in Equity | (2) | (69) | - | (294) | - | (36) | (401) |
As at 30 June 2018 | 98 | 3,692 | - | (104) | (1,591) | 87 | 2,182 |
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As at 31 December 2018 and 1 January 2019 | 171 | 4,981 | 190 | (31) | (1,591) | (411) | 3,309 |
(Loss) for the period | - | - | - | - | - | (295) | (295) |
Foreign currency exchange difference | - | - | - | (152) | - | - | (152) |
Total Comprehensive Income for Period | - | - | - | (152) | - | (295) | (447) |
Shares Issued of net of costs | 33 | 821 | - | - | - | - | 854 |
Stock Options granted | - | - | 35 | - | - | - | 35 |
Total transactions with Owners, recognised in Equity | 33 | 821 | 35 | (152) | - | (295) | 442 |
As at 30 June 2019 | 204 | 5,802 | 225 | (183) | (1,591) | (706) | 3,751 |
Group Cash Flow Statement for the Interim Period Ended 30 June 2019
|
| Six Months to | Six Months to | Year to |
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| 30 June | 30 June | 31 December |
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| 2019 | 2018 | 2018 |
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| (Unaudited) | (Unaudited) | (Audited) |
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| $ 000's | $ 000's | $ 000's |
Cash flows from operating activities |
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(Loss) before tax |
| (295) | (36) | (534) |
Stock Option expense |
| 30 | - | 190 |
Depreciation |
| - | - | 7 |
Operating loss before changes in working capital |
| (265) | (36) | (337) |
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(Increase)/decrease in trade and other receivables |
| 63 | (163) | 27 |
(Decrease)/increase in current liabilities |
| (60) | 216 | (75) |
Net cash used in operating activities |
| 3 | 17 | (385) |
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Cash flows used in investing activities |
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Purchases of intangibles |
| (684) | (47) | (273) |
Purchase of property, plant and equipment |
| (54) | - | (28) |
Net cash used in investing activities |
| (738) | (47) | (301) |
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Cash flows from financing activities |
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Proceeds from issue of ordinary shares net of share issue costs |
| 854 | - | 1,291 |
Loans |
| - | - | (44) |
Net cash inflow from financing activities |
| 854 | - | 1,247 |
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Net increase (decrease) in cash and cash equivalents
|
| (146) | (30) | 561 |
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Cash and cash equivalents at beginning of period |
| 954 | 386 | 386 |
Foreign exchange |
| - | - | 7 |
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Cash and cash equivalents at end of period |
| 808 | 356 | 954 |
NOTES TO THE INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2019
1. Basis of preparation
The condensed consolidated interim financial statements have been prepared under the historical cost convention and on a going concern basis and in accordance with International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS").
The condensed consolidated interim financial statements contained in this document do not constitute statutory accounts. In the opinion of the directors, the condensed consolidated interim financial statements for this period fairly presents the financial position, result of operations and cash flows for this period. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.
Statutory financial statements for the year ended 31 December 2018 were approved by the Board of Directors on 30 April 2019 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified but had a material uncertainty paragraph related to Going Concern.
The Board of Directors approved this Interim Financial Report on 2 August 2019.
Statement of compliance
The Interim Report includes the consolidated interim financial statements which have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The condensed interim financial statements should be read in conjunction with the annual financial statements for the period ended 31 December 2018, which have been prepared in accordance with IFRS as adopted by the European Union.
Accounting policies
The condensed consolidated interim financial statements for the period ended 30 June 2019 have not been audited, nor have they been reviewed by the Company's auditors in accordance with the International Standard on Review Engagements 2410 issued by the Auditing Practices Board. The figures were prepared using applicable accounting policies and practices consistent with those adopted in the statutory annual financial statements for the year ended 31 December 2018.
Changes in accounting policies and disclosures
i) New and amended standards adopted by the Group and Company
The following IFRSs and IFRICs became effective for the first time on 1 January 2019 and have been adopted by the Company:
Standard | Impact on initial application |
IFRS 16 | Leases |
IFRS 9 (Amendments) | Prepayment features with negative Compensation |
IAS 28 (Amendments) | Long term interests in associates and joint ventures |
2015-2017 Cycle | Annual improvements to IFRS Standards |
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There were no IFRSs and IFRICs adopted that 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 3 (Amendments) IAS 1 & IAS 8 (Amendments) | Business combinations Definition of material | 1 January 2020* 1 January 2020* |
Of the other IFRSs and IFRICs, none are expected to have a material effect on the Group or Company Financial Statements.
Going Concern
The condensed consolidated interim financial statements have been prepared on a going concern basis. Although the Group's assets are not generating revenue and an operating loss has been reported, the Directors have concluded that the Company has funds to meet its immediate working capital requirements and that during the next 12 months from the date of the interim financial statements the Company will need to raise funds to meet its planned exploration expenditures.
Cyclicality
The interim results for the six months ended 30 June 2019 are not necessarily indicative of the results to be expected for the full year ending 31 December 2019. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.
Critical accounting estimates and judgements
The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. The critical accounting estimates and judgements made are in line with those made in the audited financial statements for the year ended 31 December 2018.
2. Financial risk management and financial instruments
Risks and uncertainties
The Board continually assesses and monitors the key risks of the business. The key risks that could affect the Group's medium term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2018 Annual Report and Financial Statements, a copy of which is available from the Group's website: www.kavangoresources.com. The key financial risks are market risk (including currency risk), credit risk and liquidity.
3. Loss per share
The calculation of earnings per share is based on the loss attributable to equity holders divided by the weighted average number of shares in issue during the period.
| Six Months to | Period from Incorporation to | Year to |
| 30 June | 30 June | 31 December |
| 2019 | 2018 | 2018 |
| (Unaudited) | (Unaudited) | (Audited) |
| $ 000's | $ 000's | $ 000's |
|
|
|
|
Net loss after taxation | (295) | (36) | (534) |
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Weighted average number of ordinary shares used in calculating basic loss per share (000's) | 151,633 | 74,170 | 99,170 |
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Basic & diluted loss per share | (0.002) | (0.0005) | (0.005) |
Any share options would result in a decrease in the earnings per share; they are considered to be anti-dilutive, and as such, a diluted loss per share is not included.
4. Intangible assets
Group | 30-June | 30-June | 31-Dec |
Evaluation and Exploration Assets - Cost and net book value | 2019 | 2018 | 2018 |
US$000s | US$000s | US$000s | |
At period start | 2,288 | 2,339 | 2,359 |
Additions | 796 | 52 | 273 |
Translation difference | (259) | (368) | (344) |
At period end | 2,825 | 2,023 | 2,288 |
The Group's intangible assets are comprised of Evaluation and Exploration assets in respect of the licences in Botswana.
During the period US$ 796,000 (2018: US$52,000) of exploration expenses were capitalised by the Group.
The Directors have undertaken a review to assess whether circumstances exist which could indicate the existence of impairment as follows:
• The Group no longer has title to mineral leases.
• A decision has been taken by the Board to discontinue exploration due to the absence of a commercial level of reserves.
• Sufficient data exists to indicate that the costs incurred will not be fully recovered from future development and participation.
The directors have also taken into consideration the content of the Competent Person's Report which is available at the Group's website.
Following their review, the Directors are of the opinion that no impairment charge is necessary.
5. Share capital
The authorised share capital of the Company and the called up and fully paid amounts at 30 June 2019 were as follows:
A) Authorised |
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Unlimited Ordinary shares stated value £ 0.001 |
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| USD |
B) Called up, allotted, issued and fully paid | Number of shares | Nominal value |
As at 1 January 2019 | 134,169,996 | 134,170 |
Issued on 25 February 2019 at 2.8p (US$ 0.0367) | 17,857,142 | 17,857 |
Issued on 05 March 2019 at 2.8p (US$ 0.0368) | 8,928,571 | 8,929 |
Foreign Exchange and rounding |
| 43,044 |
As at 30 June 2018 | 160,955,709 | 204,000 |
6. Post balance sheet events
There were no post balance sheet events.
7. Other matters
The condensed consolidated interim financial statements set out above do not constitute the Group's statutory accounts for the period ended 30 June 2019 or for earlier periods but are derived from those accounts where applicable.
A copy of these interim financial statements is available on the Company's website: www.kavangoresources.com