Kavango Resources (LSE:KAV) was trading down slightly at 3.2p on Monday morning after launching a £500,000 placing to accelerate its exploration work in Botswana. The firm placed c.17.9m shares at 2.8p each, a premium to the 2.5p it raised at when it entered the London market last July.
Kavango holds 15 prospecting licences covering 9,231km2 of ground in Botswana, including most of the 450km long Kalahari Suture Zone (KSZ) magnetic anomaly in the southwest of the country. Here, the business is exploring for copper, nickel, and platinum group element-rich sulphide orebodies. The area is yet to be examined using modern drilling techniques. However, Kavango argues that it has a similar geological setting to the giant Norilsk copper/nickel deposits in Siberia.
In Monday’s update, chief executive Michael Foster said the proceeds from the placing will allow Kavango to accelerate its exploration programme on the KSZ.
At the end of January, the business announced that it plans to begin an initial 1,000m drill programme at its Ditau project on the anomaly this month. This is designed to intersect two ‘very compelling’ coincident geophysical and geochemical base metal conductor/anomalies.
Elsewhere, the firm has mobilised the second phase of an airborne electromagnetic survey over its 15 prospecting licences in the KSZ. The airborne EM survey is the first stage in the company’s efforts to identify sulphide orebodies. It detects and prioritises potential locations for these deposits, which Kavango can then follow up with more detailed groundwork and drilling.
Flying for the second phase of the survey is expected to take between four to six weeks to complete and will cover up to 2,062 line-kilometres in the Hukunstsi area of Botswana.
On Monday, Foster said: ‘Our current exploration programme in Botswana is on track, with both the airborne electromagnetic (AEM) survey (see RNS dated 21 January 2019) and the drilling at Ditau, which forms part of the KSZ project (see RNS dated 28 January 2019) progressing according to plan. Further information is expected to be available shortly on both these programmes which the Company will of course relay to the market at that time’.
Finally, he added that the placing funds will also allow Kavango to review other ‘highly selective but potentially very interesting natural resource opportunities in Botswana.’
It is also worth noting that each placed share also has a warrant attached. This is exercisable at 12p from the earlier of the date falling one year after the time of admission or the date of the publication of a prospectus until 31 July 2020.
What’s more, if exercised, the warrant gives the holder the right to an additional half-warrant exercisable at 24p before 31 July 2022. This ambitious target will likely send out a positive message to investors regarding management’s belief in where Kavango could be heading over the medium term.
Author: Daniel Flynn
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