16 September 2024

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

Interim Results

Kavango Resources plc (LSE: KAV), the Southern Africa focused metals exploration company is pleased to announce its unaudited financial results for the six months ended 30 June 2024.

SUMMARY

·   Successfully raised gross proceeds of £3,085,366 (US$3,909,375), via an underwritten accelerated bookbuild and subscriptions;

·   After the reporting period, on 23 August 2024, raised a further £2,000,000 (US$ 2,620,000) through a convertible loan note to Purebond Limited;

·   Commenced gold production at the Hillside project;

·   Gross profit from mining activities in Zimbabwe of US$41,000;

·   Net current assets of US$4,196,000, (including US$1,816,000 cash and cash equivalents, US$1,822,000 trade and other receivables, US$700,000 financial assets & US$408,000 loan receivables)

·   Expenditure in Botswana and Zimbabwe on exploration of US$828,000 and US$1,060,000 respectively;

·   Loss for the period of US$1,720,000 (June 2023 - US$1,417,000).

The Interim Management Report and financial results are set out in the following pages.

Contacts

INTERIM MANAGEMENT REPORT 30 JUNE 2024

Kavango continued to make good progress through the first half of 2024, with first production achieved in Zimbabwe, significant funding raised, and an expansion of exploration programs in both Zimbabwe and Botswana.

Financing

Kavango successfully raised £3,085,366 (US$3,909,375) by the issue of  257,113,862 New Ordinary Shares in the capital of the Company, via an underwritten accelerated bookbuild, at a price per share of 1.2 pence.

This equity investment demonstrates continued confidence in the Company by Purebond and other investors, in what has remained a challenging market for junior exploration companies. The Company has been able to deploy these funds to accelerate exploration in both Zimbabwe and Botswana, and has invested into development of production in Zimbabwe.

In August 2024 a further £2,000,000 of funding was provided by Purebond through a convertible loan note, enabling work to be accelerated on both production at Hillside and wider exploration.

A prospectus is presently underway for additional funding, and the Company recently announced proposals for a referral listing on the Victoria Falls Exchange in Zimbabwe.

Project status - Hillside, Zimbabwe

Kavango announced in May 2024 that it had agreed updated terms for exercise of the Hillside call option with the vendors of the Hillside and Leopard South Projects. Sale and Purchase Agreements for Hillside and Leopard South were entered into between Kavango and the sellers, and the Mining Claims are in the process of being transferred to Kavango's Zimbabwe subsidiary. The option on Leopard North has in parallel been extended to 30 June 2025.

The decision to exercise the Hillside option was based upon review by the Company of exploration results from the project, where positive results have included (from drillhole BRDD001) 7.2m @ 9.95 g/t gold from 50.64m depth and including 1.61m @ 31.57 g/t gold.

The Company has since expanded its drilling program at Hillside with the aim of assessing the strike continuation of the mineralisation intersected in BRDD001, as well as testing under an historic gold mine and extensive local artisanal workings, and testing the strike continuation of an Induced Polarisation ("IP") chargeability anomaly identified by the Company's surveying.

Production commenced at Hillside under a Mining Contract, with first revenue declared in March 2024. Kavango aims to increase production to 1 kilogram of gold per month over the course of 2024. This marks significant progress in Kavango's development by both providing a route to revenue, and also in enabling the Company to navigate the challenges associated with production ahead of the Company's aim of achieving larger scale production in the long term.

Project status - Nara, Zimbabwe

The Nara project is based on a call option agreement valid until June 2025. Kavango continues to gather data to enable it to evaluate the property prior to possible exercise of the option. In March 2024 Kavango released its maiden resource estimate, on two tailings deposits at Nara. This was subsequently upgraded in April 2024, as set out below:

Mineral Resource Statement

Nara Tailings Mineral Resource statement, effective date 12 April 2024

NOTES:

1.        The Mineral Resource is reported at a cut off grade of 0 (zero) g/t Au.

2.        Tonnage is based on a global density average of 1800kg/m³ estimated from density sampling carried out over the impoundment surfaces to a depth of 4m.

3.        Mineral Resource estimates are not precise calculations being dependent on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results.  Therefore, reporting of tonnage and grade figures reflects this relative uncertainty and figures are rounded to appropriate significant figures.  As a result, some error may be incurred when reporting global figures based on rounded values.

4.        The Mineral Resource Statement presented above has been classified in accordance with the requirements of the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012 Edition). The Competent Person who assumes responsibility for reporting of the Mineral Resource is Dr John Arthur who is a Competent Person as defined by the JORC Code 2012 Edition, having more than 5 years experience that is relevant to the style of mineralisation and type of deposit described herein, and to the activity for which he accepts responsibility. The effective date of the Mineral Resource statement is 12 April 2024.

5.        Resources are not constrained other than by the geological boundary limits of the Mineralised unit and search radii limits approximated from variographic analysis.  At this stage no consideration has been made as to what tonnes and grade would be reasonably expected to be extracted profitably. Notwithstanding, the Competent Person considers the distance constraints in both the dip and strike directions to be a reasonable approximation and expectation of potential mining extents.

6.        Mineral Resources which are not Ore Reserves do not have demonstrated economic viability.  The estimate of Mineral Resource reported may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

7.        The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to the Indicated Mineral Resource and must not be converted to an Ore Reserve.  It is reasonably considered that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.

8.        Currently, no Ore Reserves have been established for the Nara Project

On 13 August 2024 the Company announced assay results from its first six diamond holes drilled at Nara. These confirm the presence of a gold mineralising system at Nara, highlighting anomalous gold zones underneath and directly associated with surface artisanal gold-producing structures.

This followed a total of 85km of ground magnetic survey lines completed over the project area to identify geological structures and contacts that may be associated with gold mineralisation. The survey defined a 200m wide interpreted shear corridor along 5km of strike within the property, hosting a number of magnetic low lineaments interpreted as shear zones which may be associated with gold mineralisation.

Seven lines of Stacked Schlumberger Sections were also completed for 6,600m over selected target areas. The data from this is being inverted and modelled to provide further drill targets. Several new, previously unknown Induced Polarisation ("IP") anomalous zones have been identified, in addition to further extensions of the existing structures already hosting mines and artisanal workings. Kavango is now working to develop its understanding of these new zones, before testing them with follow-up drilling.

Kavango is working closely with a mining consultant to evaluate the economic viability of different possible future mining approaches at Nara. In parallel, metallurgical and economic studies are continuing on both tailings from the Nara dumps and on potential feed material from underground mines.

The combined work above is expected to provide the Company with the information it requires ahead of a decision on exercise of the call option.

Project status - KCB (Kalahari Copper Belt), Botswana

Kavango has interests in 18 prospecting licences, totalling over 6,000 km² in the KCB, where it is targeting copper-silver mineralisation.

Work has further accelerated in the period, and initially focussed on completion of an airborne geophysical survey together with production of inversions to model the data from this and integrate it with other data sets. The geophysical survey consisted of 2,374 line-km of helicopter airborne Time Domain Electromagnetic ("EM"), magnetic, and gravity data. The airborne survey successfully tested whether the copper/silver prospective geological and geophysical features it interpreted on some of the ground recently acquired from ENRG Elements Ltd ("ENRG"), extend into the Company's pre-existing adjacent licence areas. The data in particular allowed mapping of structure and lithology, and interpretation of basins.

A key finding was the definition of a WSW-ENE trending ~9 milliGal gravity high (Kara) underlying the Kara Anticline. This is one of two linear features in the regional gravity, that may indicate the presence of basement highs defining multiple edges between two deeper basins, one to the south (Ncojane Basin) the other to the northeast (Ghanzi Basin) with a sub-basin to the north (Talismanis Basin). Such basin margins along the KCB are considered prospective sites for Cu-Ag mineralisation.

Preliminary interpretation of magnetic data from this survey combined with re-processed regional magnetic data and satellite images, also clearly defined fold hinge targets in the D'Kar Formation (DKF) that correlate with preliminary AEM targets. Fold hinges are associated with mineralisation elsewhere on the KCB, such as at Sandfire Resources' (ASX:SFR) Motheo Mine. Historic drilling by ENRG, from whom Kavango in 2023 acquired a 90% interest in six licences, confirms the existence of lower DKF in the fold structures recently mapped and noted pathfinder minerals, pyrite, sphalerite, and galena.

This important work has allowed the definition of over 90 targets, with 10 priority targets selected for the Phase 1 drill programme, and which have subsequently been enhanced by Gradient Array Induced Polarisation ("IP") surveys on target areas that are interpreted to be underlain by lower DKF stratigraphy.

Resultant potential drill targets have then been ranked and a first phase of drilling, totalling approximately 5,000 m, designed to test trap site structures associated with doubly plunging fold targets and anticlines identified initially from modelling of AEM data as being relatively shallow, at ~200-300m, commenced in June 2024. This remains in progress at the time of writing.

Preliminary results are highly encouraging. The primary objectives of the drill campaign were to confirm copper mineralising fluids passed through the Karakubis Block and that structural trap sites for potential large-scale copper/silver deposits are present. Both objectives were met drilling the first target. Spot readings taken from handheld pXRF indicate the presence of copper, silver, zinc and lead, suggesting the mobilisation of copper sulphides in mineralising fluids within a large system. The Company has identified what it believes to be lower D'Kar Formation stratigraphy, and has also detected what it believes constitutes a wide zone of hydrothermal alteration. All of this may provide a vector towards larger-scale mineralisation.

This systematic approach is considered by the Company to offer a thorough methodology for identifying copper-silver mineralisation on the KCB. We look forward to sharing results as this important program progresses.

Project status - Ditau, Botswana

Kavango has interests in four licences at Ditau. During the period a National Instrument 43-101-Technical Report was completed by internationally recognised mining advisor, SLR Consulting (Canada) Ltd and recommends next steps for Kavango's exploration at Ditau. SLR conclude that Ditau is an attractive early-stage exploration project with the potential to host a variety of mineralisation styles, warranting a systematic exploration effort consisting of detailed geophysical surveying and a significant amount of drilling. Prospective mineralisation targets include for Banded Iron Formation ("BIF")-hosted orogenic gold, Iron oxide copper-gold ("IOCG"), and Rare earth element ("REE")-bearing carbonatites. SLR has made recommendations for future work programs, which Kavango is presently evaluating.

Project status - KSZ (Kalahari Suture Zone), Botswana

At KSZ the Company is exploring for nickel-copper-PGE mineralisation. During the period a National Instrument 43-101-Technical Report was commissioned from internationally recognised mining advisor, SLR Consulting (Canada) Ltd and is expected to build on the Company's extensive previous work to recommend next steps for Kavango's exploration. The Company will review these recommendations shortly.

Principal risks and uncertainties

The principal risks and uncertainties facing our business are monitored on an ongoing basis. The Board of Directors have reviewed the principal risks and uncertainties disclosed in the 2023 annual report and concluded that they remain applicable for the second half of the financial year. A detailed description of these risks and uncertainties is set out on pages 9 to 12 of the 2023 annual report.

Closing comments

I would like to thank Ben Turney, Hillary Gumbo, Brett Grist, Peter Wynter Bee, and Jeremy Brett for their input over the last six months, along with the operations teams in Botswana and Zimbabwe, and our senior geological consultants Dave Catterall and Steve Smith, who have been instrumental in the recent rapid advancement of our exploration programs. Brett Grist has provided notice to the Company and will be leaving his role of COO at the end of September 2024 for a new mining role in the Middle East; we would like to wish him continued success and thank him for his work in helping to develop and transform the Company over the last 2 ½ years. The recent addition of Alex Gorman and Donald McAlister to the Company's Board brings further market and financial experience to the Board and I am confident it will enable us to deliver as the Company grows.

We look forward to advancing the planned referral listing on the Victoria Falls Stock Exchange in Zimbabwe. This will provide an opportunity for Zimbabwe-based investors to participate in Kavango's exploration and mining development opportunities and will provide the Company with access to an enlarged pool of capital and shareholder base, and meet Kavango's strategic objective of promoting strong local ownership in its projects.

The appointment of Thamsanqa ("Tham") Mpofu as the Chairman of Kavango Zimbabwe (Private) Limited, the Company's wholly owned subsidiary in Zimbabwe, brings strong executive leadership on the ground as well as a wealth of commercial and board-level experience, which will help us to deliver our strategy in Zimbabwe.

I remain grateful for the continued support of our shareholders. Kavango has thanks to this support been able to deliver exploration success in a difficult market. The support of Purebond has been central to this, enabling Kavango to focus on delivering an accelerated program, and which is already delivering meaningful results that have the potential to add value for all shareholders.

Directors' Responsibility Statement

We confirm that to the best of our knowledge:

-      The condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standards 34, Interim Financial Reporting, as endorsed for use in the United Kingdom;

-      Give a true and fair view of the assets, liabilities, financial position and loss of the Group;

-      The Interim Management 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 Management 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 Management Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

David Smith, Chairman

16 September 2024

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Condensed Consolidated Statement of Total Comprehensive Income

For the Interim Period Ended 30 June 2024