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Power Metal Resources #POW Establishes A New Strategic Joint Venture In Botswana

Power Metal Resources plc (LON:POW) the AIM listed metals exploration and development company is pleased to announce the acquisition of a 50% interest in a 2,680 km2 portfolio of base and strategic metal project interests in Botswana (the “Acquisition”) to be held in a new strategic joint venture holding company further details of which are provided below. 

BACKGROUND

On 15 April 2020 Power Metal and Kavango Resources plc (LON:KAV)(“Kavango”) announced a conditional acquisition agreement in respect of the Ditau Camp project in Botswana, held 100% by Kavango.

In recent months the companies have been involved in discussions, the outcome of which is a new strategic joint venture (“JV”) agreement to create a new joint exploration company, with the objective of floating the company as a Botswana-focused vehicle on a major stock exchange in 2021.

HIGHLIGHTS

–     Power Metal to acquire a 50% interest in four Botswana prospecting licenses currently 100% owned by Kavango and forming a new JV between the companies.

–    Two prospecting licenses prospective for copper and covering 1,294.2km2 are situated in the Kalahari Copper Belt in central west Botswana located directly to the southwest of Sandfire Resources’ T3 and A4 Dome copper-silver discoveries;

–      Two further licenses comprise the Ditau Camp project covering 1,386km2 and prospective for rare earths in south west Botswana;

–     Consideration for the acquisition payable to Kavango comprises £75,000 in cash, 6 million new ordinary shares of 0.1 pence each in the Company (“new Ordinary Shares”) at a price of 1.25p each and 5 million Power Metal warrants at 2.0p with a two year life to expiry and in the event of early exercise of 2.0p warrants, replacement warrants at 5.0p;

–     In addition, Power Metal commits to sole funding of US$150,000 over a two year period for exploration expenditure across the Ditau Camp and Kalahari Copper Belt projects to ensure expeditious and proactive project exploration with any further expenditure above US$150,000 being funded jointly by Power Metal & Kavango;

–      The four project licenses are to be held in a new Botswana private holding company, with an appropriate holding company structure to enable the possibility of the new vehicle to seek a listing on a Canadian or UK stock exchange in 2021.

Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:

“The new acquisition announced today is a significant development for Power Metal, adding further strategic metal projects into the business portfolio and in the secure, stable and supportive operating jurisdiction of Botswana.  The acquisition also complements Power Metal’s interest in the Molopo Farms Complex project, which is seeking a large-scale nickel-platinum group metal discovery in Botswana, and where a maiden drill programme is planned.

We are keen to develop more insight into the potential of the Ditau Camp project, and this can only be achieved through proactive ground exploration which we intend to undertake with our JV partners.  Moreover, the addition of two key Kalahari Copper Belt licences brings the Company into a highly prospective copper territory which, as I have personally experienced, has the potential to deliver considerable discoveries.  Again, ground exploration is key, and we intend to be proactive.

It is a pleasure to be working with the Kavango team who have considerable operational experience and a commitment to finding a new large-scale metal discovery in Botswana. This commercially focussed outlook is what we share at Power Metal.  We have found the two teams have complementary skills and intend to blend our resources in the search for a metal discovery.”

FURTHER INFORMATION:

Transaction Terms 

Power Metal is to acquire a 50% interest in the two licenses comprising the Ditau Camp project (PL169/2012 and PL010/2019) and two licenses in the Kalahari Copper Belt (PL036/2020 and PL037/2020).

Consideration for the acquisition comprises payment to Kavango as follows:

–      An immediate payment £75,000 in cash;

–      The issue to Kavango of 6,000,000 Power Metal new Ordinary Shares at a price of 1.25p each, for value of £75,000 (the “Acquisition Shares”);

–      The issue to Kavango of 5,000,000 warrants to subscribe for Power Metal new Ordinary Shares at a price of 2.0p each with a two year life to expiry from admission to trading on AIM of the Acquisition Shares (the “Acquisition Warrants”).

Should the Power Metal Volume Weighted Average Share Price (“VWAP”) meet or exceed a price of 7.5p for five consecutive trading days Kavango will then have 14 calendar days to exercise the Acquisition Warrants and make payment to Power Metal or the Acquisition Warrants will be cancelled.

Should Kavango exercise the Acquisition Warrants within 12 months of issue, they will receive replacement warrants to subscribe for Power Metal new Ordinary Shares at a price of 5.0p each with a two year life to expiry from admission of the Acquisition Shares (the “Super Warrants”).

Should the Power Metal VWAP meet or exceed a price of 10.0p for five consecutive trading days Kavango will then have 14 calendar days to exercise the Super Warrants and make payment to Power Metal or the Super Warrants will be cancelled.

Power Metal will pay the first US$75,000 toward Ditau Camp and KCB exploration spend within 12 months of today’s date and a further US$75,000 in the subsequent 12 months (the “Initial Spend”).  Power Metal may at its sole discretion accelerate the Initial Spend into the first 12 months.

Kavango and Power Metal must pay their share of additional spend after the Initial Spend on Ditau Camp or the KCB licenses or will dilute their percentage interest in line with standard industry provisions. 

Kavango and Power Metal will be joint operators.

The Ditau Camp and KCB projects will be transferred into a new private Botswana company which will be held 100% by a UK or overseas public company which will seek a listing on a Canadian or UK stock exchange targeting a listing in 2021.

Power Metal will provide a fund of up to £10,000 to cover the costs of the above corporate structuring which will be undertaken in line with local regulations for the licenses and the holding companies and which will seek regulatory approvals where relevant.

Kalahari Copper Belt Project (“KCB”)

The KCB stretches 1,000 km from northern Botswana to central Namibia and is prospective for copper-silver deposits. The KCB is relatively underexplored and is a key emerging trend globally, located in stable and pro-mining jurisdictions.

In recent years the KCB has attracted substantial exploration interest. This has resulted in significant copper-silver discoveries including:

Cupric Canyon’s Zone 5 deposit (“Zone 5”), which hosts a mineral resource of 91.7 million tonnes (“Mt”) grading at 2.1% copper and 14 grams a tonne (“g/t”) of silver.

MOD Resources’ and Metal Tiger’s (LON:MTR) commercial discovery at T3, which was subsequently acquired by Sandfire Resources (ASX:SFR) (“Sandfire”) in October 2019.

The T3 Project currently hosts a mineral resource of 60.2Mt grading at 1.0% copper and 14.0g/t silver and an Ore Reserve of 342,700 tonnes of contained copper and 14.6 million ounces (“Moz”) of silver.

Sandfire’s A4 Dome satellite discovery, which is located directly to the west of T3 and is subject to an ongoing resource drilling campaign. 

Prior to applying for any Prospecting Licenses (“PLs”), Kavango undertakes extensive desktop and due diligence studies. In addition, Kavango analyses publicly available exploration data to enhance its geological and geophysical understanding of the area.

Kavango was granted two PLs, in April 2020 and which lie in a highly prospective area immediately south of the District capital of Ghanzi. The PLs covering a total of 1,294.2 km2 are as follows:

–      PL 036/2020 – (590.20km2) for initially 3yrs to 31 March 2023 — Yr1 exploration expenditure BWP 548,000 (about £37,500) – currently 100% owned by Kavango

–      PL 037/2020 – (704.00km2) for initially 3yrs to 31 March 2023 — Yr1 exploration expenditure BWP 548,000 (about £37,500) – currently 100% owned by Kavango

The JV plan to commence field work on the two KCB licenses shortly and will likely comprise both regional and detailed soil geochemistry. Planned work also includes a ground magnetic survey to refine the positions of the prospective geological contacts, below Kalahari sand cover, with the option of follow-on electromagnetic survey work to identify potential conductors associated with those contacts.  Controlled-source audio-frequency magnetotellurics (“CSAMT”) surveying will be carried out over soil anomalies to define the stratigraphy, structures and mineralisation.

Drilling is planned by the JV partners when suitable targets have been identified.

Ditau Camp Project

Ditau comprises of two prospecting licenses (PL169/2012 and PL010/2019), which cover an area of 1,386km2. Surface prospecting work by Kavango has involved geochemical soil sampling and magnetic and gravity geophysical surveys. Analysis of results from this work, and pre-existing airborne magnetic geophysics data, has enabled the identification of 10 separate magnetic “ring structures” within the Ditau license area. 

One of these ring structures is a 7km by 5km magnetic and gravity anomaly (the “Ditau Prospect”). In Q1 2019 Kavango conducted an initial 1,000m diamond drill programme at the Ditau Prospect across two holes, 1.8km apart. 

Drill core assay and whole rock geochemistry results from the two holes were released in August 2019 and whilst they did not identify economic mineralization, the results confirmed the presence of highly altered Karoo sediments, sitting above a mafic intrusive body. The alteration observed in the drill cores stretched to >300m depth.

These results were considered encouraging because the age of the Karoo rocks (c.120million years), the high level of their alteration and the fact this alteration stretched to >300m depth; valuable geological pointers, when exploring for potentially economic mineral deposits.

Further, the geochemistry obtained from the drill core of the two Ditau Prospect holes suggested the metasomatic alteration encountered was due to a process known as fenite alteration or “fenitization”. Fenite alteration is particularly associated with carbonatite intrusions, where it occurs as an aureole or halos around the carbonatite intrusive, and it has significant potential to be used as an exploration tool to find mineralised intrusions in a similar way alteration patterns are used in other ore systems, such as porphyry copper deposits.

Carbonatites and alkaline-silicate rocks are the most important sources of Rare Earth Elements and niobium. REEs include much sought after elements, such as Neodymium and Praseodymium, which are used in the manufacture of the new generation of electric vehicles (EVs) and other high-tech applications.

By way of comparison, Kavango consider the post-Karoo age of the fenitized rocks intersected by drilling at the Ditau Prospect, is comparable to the post-Karoo at the Longonjo carbonatite which is being developed as a neodymium and praseodymium open pit mine, by Pensana Metals Limited in Angola.

Subsequent to the release of the August 2019 drill results from Ditau, Kavango learned that Canadian miner Falconbridge Limited (“Falconbridge”) drilled into 3 carbonatites (the “Falconbridge Carbonatites”) in the early 1970s at a location less than 50km from Ditau and hosted by similar Karoo country rocks.

Falconbridge was looking for kimberlites in this area, which lies within a cluster of over 20 kimberlites discovered at the same time. Kimberlites, otherwise known as “diamond pipes”, are the most important source of diamonds mined today. However, carbonatites have similar looking magnetic and gravity anomalies to these diamond-bearing formations.

The carbonatites that Falconbridge intersected were just below the Kalahari sand cover and therefore would have been amenable to open pit mining. This implies they are post-Karoo age and therefore potentially comparable to the Ditau ring structures. 

Although the Falconbridge Carbonatites are located outside of the Kavango held ground the company is reviewing the Falconbridge results and designing an orientation study to assist in the characterisation and exploration vectoring for the Ditau ring-structures. As part of this orientation study the Falconbridge Carbonatites will be surveyed using ground magnetic and gravity geophysics and soil geochemistry.

The JV partners will provide further updates, concerning future work plans at Ditau Camp project in due course.

NEXT STEPS

Commencement of exploration at both the Ditau Camp and KCB projects.

COMPETENT PERSON STATEMENT

The technical information contained in this disclosure has been read and approved by Mr Nick O’Reilly (MSc, DIC, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules – Note for Mining and Oil & Gas Companies. Mr O’Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Power Metal Resources PLC to provide technical support.

ADMISSION AND TOTAL VOTING RIGHTS

Application will be made for the 6,000,000 Acquisition Shares to be admitted to trading on AIM which is expected to occur on or around 28 September 2020 (“Admission”). Following Admission of the Acquisition Shares, POW’s ordinary issued share capital will comprise 816,066,542 ordinary shares of 0.1 pence each.

This number will represent the total voting rights in the Company, and following Admission, may be used by shareholders as the denominator for the calculation by which they can determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules. The new shares will rank pari passu in all respects with the ordinary shares of the Company currently traded on AIM.

REGULATORY STATEMENT

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company’s obligations under Article 17 of those Regulations.

CONTACT INFORMATION

For further information please visit https://www.powermetalresources.com/ or contact:

Power Metal Resources plc 
Paul Johnson (Chief Executive Officer)+44 (0) 7766 465 617
  
SP Angel Corporate Finance (Nomad and Joint Broker) 
Ewan Leggat/Charlie Bouverat+44 (0) 20 3470 0470
  
SI Capital Limited (Joint Broker) 
Nick Emerson                                                                                                           +44 (0) 1483 413 500
  
First Equity Limited (Joint Broker) 
David Cockbill/Jason Robertson+44 (0) 20 7330 1883

NOTES TO EDITORS

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration and development company seeking a large scale metal discovery.

The Company has a global portfolio of project interests including precious metal exploration in North America and Australia together with base metal exploration in Africa. Project interests range from early stage greenfield exploration to later stage drill ready prospects.

The Board and its team of advisors have expertise in project generation, exploration and development and have identified an opportunity to utilise the Company’s position to become a leader in the London market for investors wishing to gain exposure to proactive global metals exploration.

Alan Green presents the investment case for Kavango Resources #KAV and ECR Minerals #ECR on StockBox Media Research Talks

Alan Green presents the investment case for Kavango Resources #KAV and ECR Minerals #ECR on his weekly Stockbox Media Research talk.

Alan Green presents the investment case for Blencowe Resources #BRES & Kavango Resources #KAV on StockBox Research Talks

Alan Green presents the investment case for Blencowe Resources #BRES & Kavango Resources #KAV on his weekly StockBox Media Research talks.

Power Metal Resources #POW – Conversion of Kavango Resources Loan Notes

Power Metal Resources plc (LON:POW) the AIM listed metals exploration and development company is pleased to  announce that the Company has now converted its loan notes in Kavango Resources plc (“Kavango”)(LON:KAV) into new ordinary shares of 0.1 pence each (the “Kavango Shares”).

BACKGROUND

On 15 April 2020, Power Metal announced a Conditional Acquisition – Botswana, centred around a transaction to acquire a 51% ownership interest in the Ditau Camp project held outright by Kavango.  This announcement may be viewed on the Company’s website through the following link:

https://www.powermetalresources.com/n/n189/conditional-acquisition-botswana

Within the conditional acquisition agreement signed with Kavango, and in parallel, Power Metal subscribed £38,000 to a convertible loan note (“Kavango CLN”) as outlined in the announcement.

CONVERSION NOTICE

Power Metal has today served a notice to convert its entire £38,000 Kavango CLN into 4,750,000 new ordinary Kavango Shares at a conversion price of 0.80p and equating to 2.46% of Kavango’s issued share capital following this conversion.

Power Metal will under the terms of the Kavango CLN agreement be issued with warrants to subscribe for a further 4,750,000 new ordinary Kavango Shares at an exercise price of 1.0p and with a three year life to expiry to 21 April 2023, (the “Kavango Warrants”).

The Kavango Warrants contain an early exercise provision so that should Power Metal exercise any of its Kavango Warrants within one year of 15 April 2020, a replacement warrant will be issued to subscribe for a further new ordinary Kavango Share of 0.1p each at a price of 2.50p, also expiring three years from 21 April 2020.

DITAU CAMP DUE DILIGENCE

Power Metal and its technical team continues to work with Kavango in relation to the conditional acquisition of a 51% ownership interest in the Ditau Camp project in Botswana and further updates will follow as appropriate.

CHIEF EXECUTIVE OFFICER STATEMENT

Paul Johnson, Chief Executive Officer of Power Metal Resources commented: “The share price of Kavango has moved up a little since the April 2020 transaction which is positive, however we remain of the view that the market has yet to fully appreciate the size and potential of their projects in Botswana, which is a superb jurisdiction for resource exploration juniors.

We will continue to watch the wider Kavango story unfold whilst working on Ditau Camp project due diligence.” 

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company’s obligations under Article 17 of those Regulations.

For further information please visit https://www.powermetalresources.com/ or contact:

Power Metal Resources plc

Paul Johnson (Chief Executive Officer)

+44 (0) 7766 465 617

SP Angel Corporate Finance (Nomad and Joint Broker)

Ewan Leggat/Charlie Bouverat

+44 (0) 20 3470 0470

SI Capital Limited (Joint Broker)

Nick Emerson                                                                                                           

+44 (0) 1483 413 500

First Equity Limited (Joint Broker)

David Cockbill/Jason Robertson

+44 (0) 20 7330 1883

 

Notes to Editors:

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration and development company seeking a large scale discovery of precious or base metals.

The Company has a portfolio including key interests in Australia, Botswana, Cameroon, The DRC and Tanzania.  The interests represent large scale exploration projects targeting mainly cobalt, copper, gold, nickel and platinum group metals. Project interests range from early stage greenfield exploration to later stage drill ready prospects.

The Board and its team of advisors have expertise in project generation, exploration and development and have identified an opportunity to utilise the Company’s position to become a leader in the London market for investors wishing to gain exposure to proactive metals exploration.

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