Kavango Resources (LSE:KAV) - Zimbabwe Gold Developer Secures £6.5M for Fast-Track Production Plans

Dec 20, 2024

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Interview with Ben Turney, CEO of Kavango Resource PLC

Our previous interview: https://www.cruxinvestor.com/posts/kavango-resources-lsekav-unlocking-southern-africas-gold-copper-potential-through-exploration-5078

Recording date: 19th December 2024

Kavango Resources (LSE:KAV) is advancing a two-pronged strategy in southern Africa, combining near-term gold production in Zimbabwe with copper exploration potential in Botswana. The company has recently secured £6.5 million in funding to accelerate its transition to becoming a cash-generating producer in 2025.

In Zimbabwe, Kavango is fast-tracking two gold projects toward production. Prospect 4, their high-grade underground project, has shown promising initial results with drilling intersecting 2.5m at 29 g/t gold. The company plans to implement a spiral decline mining method with an initial target of 200 tonnes per day at 3 g/t gold, projected to generate $500,000 in monthly free cash flow. Within three years, the company believes this single 90-hectare block could generate between $2.5-3 million in monthly free cash flow.

Their second project, Prospect 3, is being developed as an open-pit heap leach operation. The company aims to process 30,000 tonnes monthly, targeting 15 kg of gold production per month for approximately $1.2 million in monthly revenue, with estimated free cash flow of $200,000 per month by mid-2025.

Kavango's strategy differs from traditional mining development approaches. Rather than building up a large resource before seeking project finance, the company is pursuing a staged development approach, starting small and using cash flow to fund expansion. This strategy is designed to avoid the pitfalls that have led to failures among larger London-listed mining companies.

The company sees significant potential in Zimbabwe's underexplored greenstone belts, comparing the opportunity to Western Australia 50 years ago but with the advantage of modern technology and mining methods. Their ultimate goal is to prove up a 10-million-ounce gold resource in this virgin terrain.

In Botswana, Kavango holds what it describes as the last large remaining land package in the Kalahari Copper Belt, neighboring projects operated by major mining companies including Rio Tinto, BHP, and Sandfire. While still at the grassroots stage, the company's exploration results are showing promise, with drilling vectoring in on several prospective targets.

The company has brought in an experienced Australian mining engineer to oversee the implementation of modern mining methods, particularly the mechanized spiral decline approach, which they believe will provide significant advantages over traditional shaft mining in Zimbabwe.

This strategy is to have both near-term production potential in gold and longer-term exploration upside in copper, with management focused on creating value through an aggressive but staged development approach.

View Kavango Resources' company profile: https://www.cruxinvestor.com/companies/kavango-resources