ZIM: Capital Investment & Financing Programme

Kavango Resources plc (LSE:KAV), the Southern Africa-focused metals exploration company, is pleased to announce the launch of its Capital Investment & Financing Programme (the "Cap-Ex Programme") to develop the Company's mining projects in Zimbabwe.

The Cap-Ex Programme will comprise staged capital raises for investment into specific value-generating projects. The primary objective will be to define mineable gold resources and acquire plant and equipment for larger-scale production.

The first phase of the Cap-Ex Programme will focus on the Hillside Gold Project ("Hillside"), which Kavango believes has potential to host one or more mineable ore bodies (announced >>> 28 August 2024). To this end, Kavango has issued a £2million convertible loan note (the "CLN") to Purebond Limited, its major shareholder. The CLN and accrued interest will be convertible ordinary shares in the Company on publication of a prospectus.

Ben Turney, Chief Executive Officer of Kavango, commented:

"We are extremely pleased with the rapid progress and achievements Kavango is making in Zimbabwe. So far, this approach has delivered highly encouraging results. In little over a year, we've gone from a standing start to being able to launch today's capital investment programme at our Hillside Gold Project. We have a number of work streams running in parallel to maximise our speed of growth.

We commenced small-scale gold production at Hillside in March. Since then, we've built our mining and production teams and made modest improvements to the plant and site. We've also hosted several site visits by mining experts. In parallel, our exploration team has worked hard to deepen our understanding of Hillside's geology and structural setting. It is thanks to their efforts that we are now able to move into resource drilling.

With the strong foundation we have put in place, we are ready to initiate the first phase of our Capital Investment & Financing Programme. This will involve a series of staged capital investments into revenue generating opportunities for Kavango. Highlights of the first phase will include resource drilling of our highest ranked deposits at Hillside and then, assuming results are favourable, building a 100t/d modern gold processing plant.

If all goes to plan, we aim to commence production at the new plant by the end of H1 2025."

First Phase of the Cap-Ex Programme

The first phase of the Cap-Ex Programme has been designed to maximise near-term revenue generation in Zimbabwe, in a disciplined and focussed manner. This will include the following activities:

Capital investment in Kavango Mining

Kavango has designed a capital expenditure program to enhance existing small-scale gold production at Hillside, through improving existing processes and bringing historic mine shafts back into production. The Company believes this program will double existing gold production to 3kg a month by the end of Q4 2024.

Resource drilling at the Hillside Gold Project, Zimbabwe

Prior to commencing larger-scale mining at Hillside, Kavango will complete the current exploration drilling across its four highest ranked targets and then conduct resource drilling on the most prospective deposit. The Company would seek to establish a resource of at least 10,000 oz of gold defined within the top 100 m (below the current zone of depletion by the contract artisanal miners) with a further resource of at least 5,000 oz of gold defined in the next 50 vertical metres below that. A diamond drill rig will be used, as Kavango believes this approach will maximise the geological data gathered to guide future mining decisions.

As a rough target, Kavango aims to identify 73,000 tonnes of mineable ore to keep the Production Plant in continuous operation for two years.

• Commissioning of 100tonne/day ("t/d") gold processing plant (the "Production Plant")

Assuming Kavango meets its exploration targets at Hillside, Kavango Mining intends to commission a 100t/d gold processing plant. Kavango has been in close discussions with a South African manufacturer that has experience of designing, building and installing modern gold production plants across Africa (the "Manufacturer"). Kavango has sent rock samples from Hillside to the Manufacturer for metallurgical testing. Results from this testing will guide the design of the plant. Kavango aims to commence gold production at the Production Plant in Q2 2025.

• Investment in Equity Drilling Zimbabwe (Pvt) Limited ("Equity Drilling")

Kavango will acquire a 45% stake in Equity Drilling for US$22,500, the Company's drill partner in Zimbabwe. Kavango has identified a commercial opportunity to build a supply chain to service metals exploration companies in Zimbabwe. There has been little modern exploration in Zimbabwe. As such, local service provision is limited. Kavango made an initial loan to Equity Drilling of $240,000 in Q2 2024 and will lend a further $240,000 during Q3 2024 (the "Start-Up Loans"). The Start-Up Loans are for the purchase of two drill rigs (one diamond rig and one multipurpose rig) and will be repaid through gross profit generated from drilling contracts.

Capital Investment & Financing Programme Structure

The Cap-Ex Programme will consist of a series of financing initiatives to fund development of Kavango's mining and revenue generating activities. The board initially expects to raise money through standard issues of equity, with Purebond, the Company's largest shareholder, acting as cornerstone. As Kavango's business grows and the Company establishes a track record of success, the board anticipates accessing other pools of capital to fund growth.

Convertible Loan & Prospectus

As part of the first phase of the Cap-Ex Programme, Purebond Limited has agreed to advance the Company £2million through a convertible loan note (the "CLN"). The CLN will carry an annual coupon of 10% and will have a twelve-month term. The CLN and accrued interest will be convertible into ordinary shares in the Company on publication of a prospectus.