Kavango Resources Regulatory News (KAV)

PRESS RELEASE

26 November 2021

KAVANGO RESOURCES PLC

("Kavango" or "the Company")

Option to acquire up to 51.15% of Molopo Farms

Kavango Resources plc (LSE:KAV), the exploration company targeting the discovery of world-class mineral deposits in Botswana, is pleased to announce it has entered an exclusive, three month option (the "Option") to acquire 85.23% of Kalahari Key Mineral Exploration Proprietary Limited ("KKME") in a proposed all share-transaction (the "Proposed Acquisition"). Kavango can exercise the option at its sole discretion.

KKME is a privately owned company, which currently owns 100% of prospecting licences PL310/2016, PL311/2016 and PL202/2018 in Botswana, collectively known as the "Molopo Farms Project" ("MFP"). KKME holds no other interests and is debt free. Power Metal Resources plc (LSE:POW - "Power Metal") has an effective 40% project in the MFP, which it will convert into equity on a pro-rated basis in KKME should the Proposed Acquisition complete.

Following the Proposed Acquisition, Kavango would hold an interest of between 50.74% and 51.15% in KKME, Evrima Plc ("Evrima" - a currenty shareholder in KKME) would hold between 9.26% and 8.86% of KKME and Power Metal would own the remaining 40%. Power Metal and Evrima intend to retain their shares in KKME and will continue as project partners. Kavango would be the operator.

Rather than pay an option fee, Kavango will complete a work programme on the MFP (the "Work Programme"). This will enable the Company to complete technical due diligence, including fieldwork, prior to deciding whether to exercise the Option. As part of the Work Programme, Kavango will perform a review of all geological and geophysical data gathered from previous exploration of the MFP.

Highlights

Ø About the Molopo Farms Project:

- KKME owns 60% of the MFP, which is a Nickel/Copper/Platinum Group Elements ("PGEs")exploration project in sourthern Botswana

- The MFP covers 1,723km2

- Exploration targets lie under Kalahari Cover

- Primary exploration strategy led by advanced geophysics

- Spectral Geophysics ("Spectral") historically engaged to complete surface surveys

- KKME drilled 3 boreholes in October 2020 ("Targets 1, 2 & 3"), each of which encountered ultramafic rocks

- Nickel sulphides were identified in Borehole K1-6 ("Target 2")

- Power Metal to continue as project partner, with a 40% stake in the MFP

Ø The Work Programme will commence immediately, to include:

I. Spectral to perform a single "moving loop" survey over Target 1

II. Kavango to perform soil geochemical analysis over Target 2

III. Kavango to cut cores and send select samples from Target 3 for assay testing

IV. Kavango to create a unified regional 3D model of MFP using all available borehole data

V. Kavango to send thin sections of core samples, taken from Targets 1, 2 & 3, for university analysis

VI. Kavango to contract Bell Geophysics to perform gravity data analysis over the northern part of the MFP

Ø Acquisition Terms, should the Company exercise the Option:

- Value of the Proposed Transaction estimated to be between £1.17m & £1.875m (payable in stock), depending on the performance of Kavango's share price

- The Company anticipates closing the Proposed Transaction through the issue of 21,307,500 shares, pro-rated, to certain KKME shareholders (the "Vending Shareholders") at an issue price of 5.5p (the "Acquisition Shares"), valuing KKME at £1.375m

- Half the Acquisition Shares will be locked in for 6 months & the other half locked in for 12 months

- Kavango to issue 1-for-1 two-year warrants to the Vending Shareholders on the same terms as the 05 July placing (the "Acquisition Warrants"). The Acquisition Warrants are transferrable between the Vending Shareholders.

Ø Kavango CEO Ben Turney will host a live shareholder webinar via Twitter Spaces through the Company's Twitter account at 1900GMT on Monday 29 November to discuss the Proposed Acquisition and how it fits with Kavango's strategy (visit https://twitter.com/KavangoRes or use the handle @KavangoRes for more information)

Ben Turney, CEO of Kavango Resources, commented:

"Our vision is to build a world-class minerals exploration firm in Botswana. Our business model is based on making multiple, large-scale metal discoveries, which we can sell to major international mining firms.

Over the course of this year we've recruited senior technical staff, deployed the latest technologies into the field, invested heavily in our local operations and significantly increased exploration activity. The Kavango team has now put in place a strong foundation, upon which we can confidently grow the company.

The next important element in our strategy is to have a pipeline of high-quality projects we can acquire or earn into. In this respect, Molopo Farms could be a perfect fit. The fact that our close strategic partners, Power Metal Resources and Spectral Geophysics, are already heavily involved is potentially a big advantage. We look forward to working with Evrima too.

The terms of the deal are also appealing. An all-share transaction makes sound commercial sense, enabling us to preserve cash resources to use in the field. The structure of the Work Programme Option, means we can immediately start moving the project forward, while also performing detailed due diligence,

I look forward to reporting on our progress."

About the Molopo Farms Project

KKME is a privately owned company, which owns 100 per cent of prospecting licences PL310/2016, PL311/2016 and PL202/2018 in Botswana, collectively known as the "Molopo Farms Project" ("MFP"). The MFP is highly prospective for Nickel/Copper/PGE deposits and covers 1,723km2. All exploration targets lie under Kalahari Cover. The primary exploration strategy is the use of advanced geophysical surveys, data interpretation and modelling to identify drill targets.

Power Metal Resources (LSE:POW) owns 40 per cent of the MFP earned by financing part of the exploration work.

Evrima Plc currently owns 15.43% of KKME, which will dilute to an interest of between 9.26% and 8.86% on completion of the Acquisition.

KKME has engaged Spectral Geophysics to conduct geophysical surveys over the MFP. Spectral has specialist knowledge and expertise in mapping subsurface geology beneath Kalahari cover. Kavango separately entered into a strategic partnership with Spectral on 20 April 2021, for the Company's Kalahari Suture Zone ("KSZ") Project. The exploration challenges in the KSZ and MFP are notably similar.

In October 2020 KKME completed an initial drill campaign, which targeted three separate geological structures, with one borehole in each (Targets 1, 2 & 3).

Drilling at Target 1 appears to have closely missed the main conductive anomaly, but Kavango's team is encouraged by geophysical survey data. Spectral Geophysics will complete a "moving loop" survey over Target 1, with the aim of producing a more defined model of the conductive target.

Core retrieved from Target 2 ("Hole K1-6") contains visible nickel sulphides. A soil-sampling programme over Target 2 has been designed to test the surface extent of any possible underlying mineralisation, with a view to preparing future follow-up drilling.

The latest assay results from Hole K1-6 can be viewed in the announcement made by Power Metal on 24 September 2021 below;

https://www.investegate.co.uk/power-metal--pow-/rns/botswana-molopo-farms-complex---further-assays/202109241515069521M/.

Cores from Target 3 will be cut and sent for laboratory testing at the University of Witswatersrand.

The Work Programme Option

In return for being granted the Option, Kavango proposes to complete the following work programme (the "Work Programme")

I. Spectral to perform a single "moving loop" survey over Target 1, to be paid for by Kavango

II. Kavango to perform soil geochemical analysis over Target 2. KKME to provide details of an outline soil-sampling programme, to be signed off by Kavango's Exploration Manager. Kavango to provide a maximum of 2 teams for a maximum of 1 calendar month to perform the soil sampling programme.

III. Kavango to arrange for the remaining core from Target 3 to be cut and sent for analysis. KKME to provide confirmation of the quote received for lab analysis 

IV. Kavango to input the regional borehole data from Targets 1, 2 & 3 into a unified 3D model. KKME has indicated this data is in Microsoft Excel. KKME to provide Kavango with said data.

V. Kavango to send thin sections of core samples taken from the 3 bore holes drilled at Targets 1, 2 & 3 for university analysis

VI. Kavango to fund a contract agreed with Bell Geophysics for a reinterpretation and inclusion of gravity data for the northern part of the licence block

In the event that Kavango does not exercise the Option, Kavango may elect to turn over to KKME all data gathered from the Work Programme, which will then become the property of KKME.

Proposed Acquisition Terms

The Option has a 3-month term, valid commencing 25 November 2021, which gives Kavango the exclusive right (at its sole discretion) to acquire between 50.74% and 51.15% of the fully diluted share capital in KKME from the Vending Shareholders, in exchange for:

- 21,307,500 million shares in Kavango, issued at a price of 5.5p per share and credited as fully paid, with half the shares subject to a 6-month lock-in and half the shares subject to a 12-month lock-in (the "Acquisition Shares")

- If at the time of exercising the Option, the Kavango share price has traded below 5p on a 10-day Volume Weighted Average Price ("VWAP") (the "Lower Price"), then Kavango will issue £1,170,000 worth of shares at the Lower Price to the Vending Shareholders.

- If at the time of exercising the Option, the Kavango share price has traded above 8.8p on a 10-day Volume Weighted Average Price ("VWAP") (the "Upper Price"), then Kavango will issue £1,875,000 worth of shares at the Upper Price to the Vending Shareholders.

- 1-for-1 two-year warrants exercisable at 8.5p per share, which are subject to an acceleration clause, whereby if the Company's shares close above 17p for 5 trading days, the Company may write to warrant holders at any time providing 10 working days' notice of accelerated exercise, with 10 working days thereafter for payment (the "Acquisition Warrants")

- Kavango will issue the Acquisition Shares and Acquisition Warrants directly to the Vending Shareholders, prorated in their respective allocations

- The Acquisition Warrants will be transferable between KKME shareholders, with the written permission of Kavango

- No cash fee is payable in connection with the Option

Upon Option exercise:

Kavango will, if necessary, issue a prospectus as soon as is practicable and (if Kavango considers the same to be necessary or desirable) call a general meeting to seek shareholder approval for the Proposed Transaction, should Kavango exercise the Option.

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

For further information please contact:

Kavango Resources plc

Ben Turney

bturney@kavangoresources.com 

 First Equity (Joint Broker)

+44 207 374 2212

Jason Robertson

SI Capital Limited (Joint Broker)

+44 1483 413500

Nick Emerson