Kavango Resources plc is to acquire Power Metal Resources’ 50% share of their two-year joint venture and regain control of its rare earth element (REE)-base metal projects in Bostwana.
KANYE RESOURCES
The partners’ company Kanye Resources owns working interests in 10 prospecting licences in the Kalahari copper belt (KCB), covering 4,257km2.
Kanye also owns two prospecting licences in the Ditau Camp REE project covering 1,386km2.
Kavango is the operator of the Kanye JV.
Kavango chief executive Ben Turney said that the company would regain ownership of licences totalling 16,000km2.
“On completion of the transaction, Kavango will become one of the largest landholders for copper exploration in Botswana.
“From a commercial perspective, the deal with Power significantly strengthens Kavango.
“We are adding a supportive strategic investor to our shareholder register, at this crucial point in the wider market cycle.”
TERMS
Kavango will issue 60 million new ordinary shares to Power Metal each at 3p per ordinary share, subject to a 12-month lock-in agreement
The company will also issue 60 million warrants in two separate tranches and 15 million variable price warrants to Power Metal.
Power Metal will receive a 1% net smelter return across all Kanye licence areas.
In the event that Kavango sells all or part of Kanye for in excess of £7.5 million, Power Metal will be paid a proportion of the gross excess received by Kavango above that figure.
VALUE
Power Metal chief executive Paul Johnson added that the transaction was a further step to crystallise value from the company’s project portfolio.
“The crystallisation of value from various Power Metal interests is a process we expect to continue.
“In doing so, we increase the financial strength of the company which will allow us to build a valuable and diverse portfolio of financial assets focused on the natural resource sector.”
As an additional result of the transaction, Power Metal also gains further exposure to Kavango’s Kalahari Suture Zone project.
Mr Johnson added that streamlining the company in such a way allowed it to focus time and financial resources on a more targeted exploration portfolio.