PRESS RELEASE

22 July 2022

KAVANGO RESOURCES PLC

("Kavango" or "the Company")

IOCG Target Conceptual Economic Viability Report

Botswana focussed metals exploration company Kavango Resources plc (LSE:KAV) ("Kavango") is pleased to release an Independent Conceptual Economic Viability Report (the "Viability Report") for the Iron Oxide Copper-Gold target (the "IOCG Target") at the Great Red Spot  within Target Area B in the northern (Hukuntsi) section of the Kalahari Suture Zone ("KSZ").

The IOCG Target at the Great Red Spot exhibits similar geophysical signatures to the Olympic Dam IOCG ore-deposit that is owned and operated by BHP in Australia. A full description of the IOCG Target can be found in the announcement made on 09 May (>>> link here).

Kavango commissioned the Viability Report to assess whether the IOCG Target would be an economically viable mine, should drill testing confirm mineralisation. The Viability Report was prepared by Executive Mining Group Ltd ("Executive Mining"), an established firm of mining executives with extensive experience in Africa.

The Viability Report is a conceptual study and should not construed as a definitive study and has been created to support further exploration of the IOCG Target, including future test drilling.

Executive Mining concludes that the IOCG Target would be economically viable at depths up to 2km below the surface, should sufficient bulk of mineralisation be discovered that is of sufficient grade.

Kavango plans to release an exploration plan for the IOCG Target in the coming weeks, which will describe the Company's approach to testing this target thoroughly.

Ben Turney, Chief Executive Officer of Kavango Resources, commented:

"The IOCG Target at the Great Red Spot is highly attractive because it is so large, and the geophysical indicators so compelling. Results from three separate surveying techniques (gravity, magnetics and CSAMT) appear to correlate with one another, while the established presence of magnetite from Hole KSZDD001 provides a further physical exploration lead.

To add further weight to ongoing pursuit of this deposit style at the estimated depths, we commissioned this Independent Conceptual Economic Viability Report by Executive Mining.

As this stage it is important to understand that the numbers presented are idealised. Until Kavango is able to drill test the IOCG Target we cannot know what the geological formations are nor whether any mineralisation is present.

The purpose of this report is to give Kavango confidence that the IOCG Target is worth pursuing. We've tried to be conservative with the input numbers, especially the estimated forward metal prices.

Clearly, as investors will see in the tables at the bottom of this announcement, this is a project of significant potential. We are very pleased with the results of the report and Kavango will continue further exploration of the IOCG Target, with a view to vectoring in on specific drill targets."

Exploration Background

The Great Red Spot is a 5km x 8km magnetic body on the western margin of the Kaapvaal Craton, which Kavango interprets as a promising location for magmatic intrusions and mineralising systems. It lies at the nexus of 4 interpreted regional geological structures.

Kavango's interpretation of available regional data leads the Company to conclude that the Great Red Spot is located in an enhanced position for the potential for multiple ore deposit models, including both the IOCG and Ni/Cu magmatic sulphide systems.

IOCG systems can host highly valuable copper, gold and uranium ores.  The large size and relatively simple metallurgy can produce extremely profitable mines. These systems are often multi-kilometre mineralised "overprints" of local host rocks. They can vary a great deal in their composition but do share several common characteristics.

IOCG systems are known as "alteration" systems, meaning that mineralisation formed during hydrothermal phase transitions. These hydrothermal phases are driven by deep magmatic intrusives that act as heat sources.  This means, an IOCG system can "overprint" the host rock lithology with both alteration and mineralization. 

The IOCG Target is a large-scale, 30 milliGal gravity anomaly that is coincident with a strong "crown-like" magnetic anomaly. Controlled Source Audio Magnetotelluric ("CSAMT") surveys performed by the Company appear to indicate multiple zones of potential alteration. The IOCG Target is a second possible mineralisation style at the Great Red Spot, in addition to the nickel-copper sulphide model.

The Economic Viability Report Project Brief

Kavango provided Executive Mining with the following project brief:

-     Kavango is developing a geophysical target based on an Olympic Dam model (resources below).

-     This target probably lies deeper than the Olympic Dam orebody, which lies beneath 300m of cover rock and is mined down to 900m depth. 

-     Kavango wishes to assess this target viability from an economic perspective, based on its location in the Western Kalahari near the town of Tshane, Botswana.

-     The target lies within Proterozoic rocks, below ~650-950m of Karoo sediments and ~50m of Kalahari sediments.

-     The target zone for possible mineralisation is certainly below 1000m depth.

-     Kavango's question is if an Olympic Dam type and scale of orebody could be economically viable if it was located at (i) 1000m, (ii) 1500m, or (iii) 2000m depth (3 cases), perhaps via the block caving or any other mining method?

-     Could the economies of scale of this very large target type enhance the economic viability?

-     Kavango is asking this question as a hypothetical, knowing that many variables such as rock type and rock competence are unknowns at this stage.  These must be assumed to be positive, for now.

-     It is important to demonstrate the Olympic Dam target type could be economically viable at the depths described. 

-     Resources (BHP Annual Report, 2018):

§ M, I & I: 10,100M t @ 0.78% Cu, 0.25kg/t U₃O₈, 0.33g/t Au, 1g/t Ag

§ Inc. Measured:

§ Open-cut Sulphides: 2,960M t @ 0.66% Cu, 0.21kg/t U₃O₈, 0.32g/t Au, 1g/t Ag

§ Underground Sulphides: 555M t @ 1.71% Cu, 0.50kg/t U₃O₈, 0.65g/t Au, 4g/t Ag

Viability Report Key Conclusions

-     Executive Mining confirms "the potential economic viability of mining an Olympic Dam lookalike IOCG deposit at depths greater than 1 km below the surface."

-     Results are based on 2 grade scenarios and 2 CAPEX scenarios

-     1km orebody depth and 2km orebody depth modelled

-     Kavango's forecast metal prices used for modelling:

-     Gold (Au) - $1,600/oz

-     Silver (Ag) - $18/oz

-     Copper (Cu) - $3.50/lb

-     Uranium (U₃O₈) - $28/lb

-     3 economic scenarios are presented using Kavango's estimated grades, forecast metal prices and BHP's reported mill feed grades (see tables below for full results):

-     Botswana government royalty of 3% applied

-     Discounted Cash Flow Rate of 10% applied

-     NPV¹⁰ estimates range from $3bn to $8.05bn*

-     Estimated Internal Rates of Return range from 17% to 31%*

-     Kavango will publish the Valuation Report on its website via the following link

https://www.kavangoresources.com/investor-relations/research-notes

*It is important to note these numbers are illustrative and represent an idealised interpretation should the IOCG Target conform to an Olympic Dam style collection of ore bodies. They should not be construed as a definitive study.

High Level Financial Evaluation Model Assumptions

Geology inputs include:

-     In plan view, the Olympic Dam Breccia Complex (ODBC) is irregular in shape, with hematite-granite breccia bodies arranged around the central barren haematite-quartz breccia core and a relatively long and narrow NW extension.

-     The halo of weakly altered and brecciated granite extends out 5-7 km from the core in all directions to an indistinct and gradational margin with the host granite.

-     The ODBC strike length of the hematite‐altered mineralised breccias within the complex is >5 km in a NW‐SE direction, and up to 3 km across. The ODBC locally extends to depths of >1.4 km ‐ the base of the complex has yet to be intersected by drilling.

-     Ore zones are a mixture of sub‐vertical elongate bodies varying from 100 to 300m wide, up to 1000m strike and in the basal units open at depth, and sub‐horizontal 'ore' is 50 to 100m thick with variable extents from 50 to 300m in width and length.

-     2 grade scenarios were tested:

Metallurgy inputs included:

-     Mill feed at 10Mtpa.

-     Plant recoveries, Payable value after refining less treatment and external refining charges.

-     The plant CAPEX assumes a processing plant and refining capability to produce Cu, Au, Ag metal and U₃O₈ yellowcake.

-     Inputs used to derive the Net Smelter Revenue (NSR)

-     Plant Recoveries

§ Cu 92%

§ Au 64%

§ Ag 62%

§ U₃O₈ 68%

-     Payable after refining

§ Cu 98.5%

§ Au 98.5%

§ Ag 98.5%

§ U₃O₈ 100%

-     Treatment and refining charges

§ Cu $65/t

§ Au $5/oz

§ Ag $0.8/oz

§ U₃O₈ $0/t

Mining OPEX and CAPEX inputs included

-     The assumption of multiple block caves based on the described ODBC deposit mineralisation geometry.

-     A relatively constant mill feed grade based on the 2 grade scenarios described above.

-     A 3-year construction period including initial 1 km u/g shaft to access the ore body.

-     Adequate mining reserves to support a 30 year mine life (300 Mtonne of recoverable ore).

-     OPEX

§ Block Cave Mining cost per tonne $12.00

§ Ore Recovery 90%

§ Plant processing costs per tonne $15/t

§ G&A per tonne $6/t

§ Sustaining CAPEX per tonne $10/t

-     UG Development CAPEX

§ Assume 2x2 deep shaft to access the ore body with multiple block caves producing ore at the agreed mill feed rate - US$3.5bn

-     Plant CAPEX

§ Assume similar requirements as Olympic Dam for recovery of all 4 metals. Copper smelter built on-site and uranium leach plan producing saleable grade yellowcake - US$1bn

Financial inputs include:

-     Consensus net metal prices were selected by Kavango based on a conservative approach, taking a long‐term view of historic trends and selecting a mid‐price of the 'normal' trading range, while capping spikes such as that seen for silver in 2011. A non‐inflation adjusted approach was used. The outlook for copper and uranium is considered to be exceptionally strong due to trends of electrification and decarbonisation. Significant upside potential is considered to remain when using these price assumptions:

-     Cu @ $3.50/lb; Au @ $1,600/oz; Ag @ $18/oz and U3O8 @ $28/lb.

-     The Financial model has been setup to calculate the NSR based on the metal price inputs and plant/refining recoveries with all ex‐plant processing costs. A Botswana metals royalty of 3% was used. As the final products are metal and yellowcake it is assumed the transport costs are incurred by the buyer and included in the net metal price.

-     The Financial model applies the OPEX costs and sustaining CAPEX against the NSR to generate the Pre-Tax Cashflow.

-     No Tax deductions have been applied.

-     The NPV and IRR are shown using a 10% DCF.

Presentation of Modelled Results

Further information in respect of the Company and its business interests is provided on the Company's website at www.kavangoresources.com and on Twitter at #KAV.

For further information please contact:

Kavango Resources plc                                                                                     

Ben Turney

[email protected]

+46 7697 406 06

First Equity (Joint Broker)

+44 207 374 2212

Jason Robertson             

SI Capital Limited (Joint Broker)                                                                          

+44 1483 413500

Nick Emerson

Kavango Competent Person Statement

The technical information contained in this announcement pertaining to geophysics have been read and approved by Mr. Malcolm Titley (BSc. Geology, Chemistry), Director and Principal Consulting Geologist of Executive Mining Limited, a company registered in England and Wales. Mr. Titley is a member of AIG and the AusIMM. Mr. Titley has sufficient experience that is relevant to geological interpretation applied to the styles of mineralization and types of deposits under consideration to act as a Qualified Person as defined under the The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ('the JORC Code').

Note to Editors:

THE KALAHARI SUTURE ZONE

Kavango's 100% subsidiary in Botswana, Kavango Minerals (Pty) Ltd, is the holder of 16 prospecting licences covering 8,831.1km² of ground, including 14 licences over a significant portion of the 450km long KSZ magnetic anomaly in the southwest of the country along which Kavango is exploring for Ni-Cu-PGE rich sulphide ore bodies. This large area, which is entirely covered by Cretaceous and post-Cretaceous Kalahari Sediments, has not previously been explored using modern techniques.

The area covered by Kavango's KSZ licences displays a geological setting with distinct similarities to that hosting World Class magmatic sulphide deposits such as those at Norilsk, Siberia (D. Holwell and D. Blanks, 2020).

KSZ DEFINITIONS

Chalcopyrite: A copper rich sulphide mineral (CuFeS₂), widely occurring in magmatic sulphide ore bodies.

EM Conductors: Bodies of highly conductive minerals such as graphite, magnetite and metal sulphides conduct electricity very effectively, provided the mineral grains are in contact with each other.  These respond to electromagnetic ("EM") surveys as conductors.

Gabbro/gabbroic: A coarse grained, medium to dark coloured rock, formed from the intrusion of mantle derived molten magma into the earth's crust. Gabbroic rocks (or "gabbros") are formed as the molten magma crystallizes and cools.

Gabbroic sills: Relatively thin, planar, horizontal bodies of solidified gabbroic magma that intruded into layers of sedimentary rock whilst still molten.

Karoo: The Karoo System covers 1.5 million km² of the semi-desert region of Southern Africa. Rocks in this system formed 180-310 million years ago.

Massive Sulphide: When mineralization consists almost entirely of sulphides it is termed "massive".  When these sulphides are in high enough concentration and the mineral grains are in electrical contact, they become electromagnetic conductors and detectable via TDEM surveys.

Metal/Magmatic sulphide: Deposits of sulphide mineral concentrations in mafic and ultramafic rocks, derived from immiscible sulphide liquids. To view a video of how metal/magmatic sulphides form please visit -

https://twitter.com/KavangoRes/status/1316004057895645186?s=20  

Norilsk Model: An ore deposit model pertaining to the Norilsk mining camp in Siberia, also referred to as the Talnakh and Kharaelakh Ni-Cu-PGE Deposits.  Norilsk is located 2,800km northeast of Moscow and accounts for 90% of Russia's nickel reserves, 55% of its copper and virtually all of its PGMs. Kavango's licenses in the KSZ display a geological setting with distinct geological similarities to the magmatic sulphide deposits at Norilsk.

Major Ni-Cu-PGE sulphide camps are associated with rifted environments along craton margins, where voluminous mafic-ultramafic magmas ('large igneous provinces') derived from mantle plumes were channeled up through lithospheric fault systems and emplaced into sedimentary basins that contain abundant sulphur-bearing country rocks. (D. Holwell and D. Blanks, 2020)

Magma plumbing systems that lie beneath food basalts are a key feature of these deposits, especially when they intersect Siberian type traps. Magma that intrudes into sedimentary basins digests coal as a sulphur source, triggering sulphur saturation, sulphide immiscibility and ore deposit formation.  These sedimentary basins tend to be erosionally preserved.

Pegmatitic: Pegmatites are very coarse grained igneous rocks having grain sizes in excess of 3cm. Pegmatites are thought to form as a result of very slow crystallisation and may contain exotic minerals from a volatile-rich melt.

Sulphide mineralisation: If there is sufficient sulphur in the molten magma, it will tend to combine with metals (Cu, Zn, Ni, Co, Pb, PGEs etc.) to form metal sulphide complexes, which may coalesce to form massive sulphide deposits. If the melt is sulphide poor, the metals will be taken up into the silicate minerals that form as the magma cools and will not usually form economic deposits.