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Kavango Resources - Interim Results

RNS Number : 6859A
Kavango Resources PLC
01 October 2020
 

 

 

1 October 2020

 

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

Interim Results

Kavango Resources plc, an exploration company targeting the discovery of world class mineral deposits in Botswana, is pleased to report its unaudited financial results for the six months ended 30 June 2020.

 

SUMMARY

 

·  Issue of 27,250,000 ordinary shares at 0.8p (Refer Note 6)

·  Issue of £250,487 of convertible loan notes, convertible in Q1 2021 at 0.8p (Refer Note 5)

·  Operating loss of US$254,000 (2019 - US$ 295,000).

 

The Chairman's Statement and Interim 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

Kavango Resources plc

 

Michael Foster

 

[email protected] 

 

 

 

SI Capital Limited (Broker)                                                               +44 1483 413500

Nick Emerson / Alan Gunn                                           

 

 

INTERIM MANAGEMENT REPORT 30 JUNE 2020

 

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 2020 produced an operating loss of US$254,000.

 

First, let me begin with the ongoing COVID-19 pandemic, which has clearly presented many challenges. As stated at the time of the last final results the Company took swift pre-emptive action to ensure the safety of all staff and senior management. All of the Company's directors, senior management and staff are now mostly working from home. The Company initiated a business continuity plan well ahead of the UK Government's initial advice on home working.

 

Botswana has dealt admirably with COVID-19 and has already started to ease travel restrictions in the country. Whilst this has been helpful the company has still been somewhat restricted in the field, although this situation is now improving. In the meantime, planned extensive desktop research work has most certainly paid off especially on the Kalahari Suture Zone [KSZ].

 

Following on from Dr David Holwell's Mineral Systems Review, plus the updated Petrology Report for the KSZ which was prepared by Dr Martin Prendergast, the Company was extremely encouraged by the initial images from its computerised 3D geological modelling, developed from data obtained from the KSZ project in south-western Botswana.

 

These images confirm significant similarities between the northern (Hukuntsi) section of the KSZ and the giant Norilsk mining centre in Siberia. Norilsk accounts for 90% of Russia's nickel reserves, 55% of its copper and virtually all of its' platinum group metals.

 

The Company increasingly believes that Hukuntsi has the potential to host very significant copper, nickel and platinum group metal deposits.

 

The next steps at Hukuntsi will include our geologists selecting six of the most prospective "keels" at Hukuntsi for large loop, low frequency EM surveying to test for massive sulphide concentrations, which are known to be highly conductive.

 

The Company expects this work will result in the identification of high-priority targets for future drilling.

 

Most recently the Company formed a Strategic Joint Venture [SJV] with Power Metal Resources Plc who are also listed in London. The SJV will see the formation of a new, jointly owned, privately held company that is focuses on large-scale mineral exploration projects in Botswana. The SJV will enable the Company to inject new liquidity into its wider project portfolio, accelerate its plans for more extensive field exploration of the Kalahari Copper Belt Project (KCB) and focus its resources on target evaluation, followed by drilling, in the northern (Hukuntsi) section of the KSZ.

 

The SJV will be incorporated to enable a future separate listing, expected to be on either a Canadian or British stock exchange.

 

Given the likely number and scale of these "Norilsk style" targets, the Company is readying itself to prepare for a drill campaign to test the large regional structures it has identified on the KSZ. With such a large planned operational commitment, the board felt the Company would benefit from introducing a new development partner to two licences on the KCB, and at Ditau.

 

Each of these projects holds significant potential for discovery of substantial mineral deposits.

 

As we enter the last quarter of 2020, 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

 

30 September 2020

 

 

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

 

 30 September 2020

 

 

 

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 2020

 

Six Months to

Six Months to

Year to

 

 

30 June

30 June

31 December

 

Notes

2020

2019

2019

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

$ 000's

$ 000's

$ 000's

 

 

 

 

 

 

 

 

 

 

Administrative expenses

Impairment

 

(254)

-

(295)

-

  (472)

(1,000)

 

 

 

 

 

Operating loss

 

(254)

(295)

(1,472)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

(254)

(295)

(1,472)

 

 

 

 

 

Income tax expense

 

-

-

-

Loss for the period from continuing operations

 

(254)

(295)

(1,472)

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

Currency translation differences

 

(351)

(152)

(101)

Other comprehensive income for the period, net of tax

 

(351)

(152)

(101)

 

 

 

 

 

Total comprehensive income for the period

 

(605)

(447)

(1,573)

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the parent

 

(605)

(447)

(1,573)

 

 

 

 

 

Loss per share from continuing and discontinued operations

 

 

 

 

attributable to the owners of the parent during the period

 

 

 

 

(expressed in dollars per share)

 

 

 

 

- Basic and diluted

3

$ (0.001)

$ (0.002)

$ (0.009)

 

 

Group Statement of Financial Position as at 30 June 2020

 

 

As at

As at

As at

 

 

30 June

30 June

31 December

 

Notes

2020

2019

2019

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

$ 000's

$ 000's

$ 000's

ASSETS

 

 

 

 

Intangible assets

Fixed assets

 

                 2,249

                      53

           

2,825

77

         2,445

58

 

 

 

 

 

Total non-current assets

 

            2,302

            2,902

2,503

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

            223

               51

225

 

 

 

 

 

Cash & cash equivalents

 

            267

            808

124

 

 

 

 

 

Total current assets

 

                  490

                  859

            349

 

 

 

 

 

TOTAL ASSETS

 

         2,792

         3,761

         2,852

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Convertible loan notes

Trade and other payables

5

 

    (308)

      (83)

-

(10)

-

(139)

 

 

 

 

 

TOTAL LIABILITIES

 

   (391)

(10)

(139)

 

 

 

 

 

NET ASSETS

 

  2,401

3,751

2,713

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

Share capital

6

     240

                  204

                   207

Share premium

Share option reserve

 

            6,084

               289

               5,802

                  225

               5,867

                   246

Reorganisation reserve

 

             (1,591)

             (1,591)

                                                   (1,591)

Foreign exchange reserve  

 

                (484)

                (183)

                (133)

Retained earnings

 

             (2,137)

                (706)

              (1,883)

 

 

 

 

 

TOTAL EQUITY

 

               2,401

               3,751

               2,713

 

 

 

Group Statement of Changes in Equity for the Interim Period Ended 30 June 2020

 

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 2018 and 1 January 2019

171

4,981

190

(31)

(1,591)

(410)

3,310

(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

 

 

As at 31 December 2019 and 1 January 2020

207

5,867

246

(133)

(1,591)

(1,883)

2,713

(Loss) for the period

-

-

-

-

-

(254)

(254)

 

Foreign currency exchange difference    

-

-

-

(351)

-

-

(351)

Total Comprehensive Income for Period

-

-

-

(351)

-

(254)

(605)

Shares Issued of net of costs

33

217

-

-

-

-

250

Stock Options granted

-

-

43

-

-

-

43

Total transactions with Owners, recognised in Equity

33

217

43

(351)

-

(254)

(312)

As at 30 June 2020

240

6,084

289

(484)

(1,591)

(2,137)

2,401

 

 

 

Group Cash Flow Statement for the Interim Period Ended 30 June 2020

 

 

Six Months to

Six Months to

Year to

 

 

30 June

30 June

31 December

 

 

2020

2019

2019

 

 

(Unaudited)

(Unaudited)

(Unaudited)

 

 

$ 000's

$ 000's

$ 000's

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

(Loss) before tax

 

(254)

(295)

(1,472)

Stock Option expense

 

    43

30 

    56

Foreign exchange

Impairment

 

   ( 23)

 

 

    (81)

1,000

 

 

 

 

 

 

 

 

 

 

Operating loss before changes in working capital

 

(234)

(265)

(497)

 

 

 

 

 

 

 

 

 

 

(Increase)/decrease in trade and other receivables

 

 2

63

(110)

(Decrease)/increase in current liabilities

 

(56)

(60)

 68

Net cash used in operating activities

 

(288)

  3

         (539)

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

 

 

 

Purchases of intangibles

Purchase of property, plant and equipment

 

(126)

   (1)

(684)

(54)

      (1,157)

(56)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(127)

(738)

(1,213)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from issue of ordinary shares net of share issue costs

Convertible loan notes

     

              250

308

854

-

922

  -

Net cash inflow from financing activities

 

558

854

922

 

 

-

-

-

Net increase (decrease) in cash and cash equivalents

 

 

 

143

 

 

 

 

(146)

 

 (830)

 

Cash and cash equivalents at beginning of period

Foreign exchange

 

 

             124

 

     

             954

 

     

               

 

             954

                 

 

Cash and cash equivalents at end of period

 

267

             808

              124

 

 

NOTES TO THE INTERIM REPORT FOR SIX MONTHS ENDED 30 JUNE 2020

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. 

The Board of Directors approved this Interim Financial Report on 30 September 2020. 

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 2019, 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 2020 have not been audited or reviewed 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 2019. There have been no new accounting policies adopted since 31 December 2019.

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.

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 2019 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

 

2020

2019

2019

 

(Unaudited)

(Unaudited)

(Audited)

 

$ 000's

$ 000's

$ 000's

 

Net loss after taxation

 

(254)

 

                       (295)

 

       (1,472)

 

 

 

 

Weighted average number of ordinary shares used in calculating basic loss per share (000's)

172,309

151,633

     156,650

 

 

 

 

Basic & diluted loss per share

(0.002)

(0.002)

             (0.009)

 

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

2020

2019

2019

US$000s

US$000s

US$000s

At period start

2,445

2,288

2,288

Additions

Impairment

126

-

796

-

1,176

(1,000)

Translation difference

  (323)

(259)

(19)

At period end

2,249

2,825

2,445

 

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

 

During the period US$ 126,000 (2019: US$ 796,000) 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.

 

Following their review the Directors are of the opinion that no impairment charge is necessary.

5. Convertible loan notes

 

On April 15, 2020 the Company issued convertible loan notes in the amount of US$308,000 (the "Notes"). Approximately US$47,000 of these Notes were converted subsequent to 30 June 2020 and 4,750,000 shares have been issued. The balance of US$ 261,000 will convert upon regulatory approval of a prospectus which will enable the Company to admit for listing the 26,560,875 shares due upon conversion.

 

Each share issued on conversion of loan notes entitles the noteholder to receive a warrant at 1p exerciseable on or before 28 April 2023. If exercised on or before 28 April 2021, the warrantholder will receive a second warrant exerciseable at 2.50p on or before 28 April 2023.

 

6.  Share capital

The changes in authorised share capital of the Company and in called up and fully paid share capital during the six months ended 30 June 2020 were as follows:

A)  Authorised

 

                       

 

Unlimited Ordinary shares stated value £ 0.001

 

There were no Changes during the period

 

 

 

B)  Called up, allotted, issued and fully paid

Number of shares

                         Nominal value

As at 1 January 2020

160,955,709

207

 

 

 

Issued on 15 April 2020 at 0.8p (USD$0.0098) (1)

27,250,000

33

 

 

 

As at 30 June 2020

188,205,709

240

 

(1)  Each share includes a warrant at 1p exerciseable on or before 28 April 2023; if exercised on or before 28 April 2021, the warrantholder will receive a second warrant exerciseable at 2.50p on or before 28 April 2023.

 

The Share Premium account at 30 June 2020 was US$6,084,000 (30 June 2019 - US$ 5,802,000).

 

7.  Post balance sheet events

On 21 September 2020 the Company announced a strategic joint venture with Power Metal Resources plc (POW). Under the terms of the agreement the Company will receive in September 2020:

 

(i)         £ 75,000 in cash

(ii)        6,000,000 unrestricted shares

(iii)       5,000,000 warrants in POW which are exerciseable at 2.0p for a period of two years from the date of admission of the shares in (ii)

 

POW will receive a 50% interest in a new Botswana-based vehicle formed to hold the Company's two licenses in the Ditau area and its two licenses in the Kalahari Copperbelt. The new company will be jointly managed. POW will finance the first £ 75,000 of expenditure incurred by the new company in months 1 to 12 after which the Company can contribute or dilute. This arrangement will recur in months 13 to 24.

 

Further details concerning the transaction are available on in the news release which may be found on the Company's website.

   

8.  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 2020 or for earlier periods, but are derived from those accounts where applicable.

 

A copy of these interim financial statements are available on the Kavango's website: www.kavangoresources.com  

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