BRITISH miner, Kavango Resources Plc, has raised US$5 million by issuing a convertible loan note facility to a consortium of Zimbabwean pension funds to support its mining and exploration activities.
A loan note facility is a type of financing arrangement in which a lender agrees to provide funds to a borrower and in return, the borrower issues loan notes — formal written promises to repay the borrowed amount, often with interest, on agreed terms.
“We are delighted to have secured this US$5 million investment facility from the Comarton Managed Pension Funds Investments Consortium. A key driver of our strategy in Zimbabwe is to promote local shareholder ownership. The country’s goldfields are incredibly rich and it is important that citizens are offered the opportunity to participate in their future success, through long-term equity investment,” Kavango chief executive officer Ben Turney said in a statement yesterday.
“Today’s announcement sends a strong message that Zimbabwe is open for business. We look forward to this investment acting as a cornerstone for our introduction to the Victoria Falls Stock Exchange, a little later this summer.
“The consortium is an influential group of individual pension funds in Zimbabwe that collaborates on investments. Twenty-eight consortium members have the mandate to invest in equities and have indicated their intention to participate in the Kavango investment facility.”
He said the facility reflected the strong progress the miners’ team has made in less than two years of operations in Zimbabwe.
“We now intend to use the Comarton funds for mine development and construction of our first gold processing plant,” Turney said.
“Kavango currently aims to bring Prospects 1, 3 and 4 at the Hillside Project into production over the next 12 months, using modern mechanised mining.”
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The consortium’s agent and administrator is Comarton Consultants (Private) Limited, which has signing authority on behalf of the consortium.
The convertible is interest-free and subject to Kavango maintaining good standing of the agreement with Comarton.
The convertible loan can be drawn down by the company over 12 months in three tranches.
Under the first tranche, at least US$500 000 will be paid and drawn down immediately for mine development in Zimbabwe.
The second tranche will see a US$1,5 million equivalent paid through conversion of ZiG into United States dollars at the Bank of England’s exchange rate via the Reserve Bank of Zimbabwe. This will be drawn over the next 12 months for the importation of mining equipment into Zimbabwe.
The US$3 million will be paid and drawn over the next 12 months for mine development in Zimbabwe.
“All conversion shares will be issued for 1p per share, with the USD/GBP exchange rate calculated on the mid spot price as quoted by the Bank of England at 1630GMT/BST, on the working day of receipt of a conversion notice (or next working day if received after 1630GMT/BST),” Kavango said.
The conversion of the convertible into the conversion shares is automatic on satisfaction, or waiver by the company, of certain conditions precedent, including the planned Victoria Falls Stock Exchange (VFEX) referral listing.
“Conversion shares will be issued directly to participating consortium members on a pro-rata basis and admitted to trading on the VFEX, once the company has secured its referral listing,” Kavango said.
“A separate announcement on Kavango’s planned referral listing on the VFEX will be issued shortly.”
Kavango has three projects in Zimbabwe, with the firm focusing on its most promising project, Hillside, which consists of 44 gold claims covering 503 hectares.
The other two mining projects are the Nara Gold and Leopard Projects. The former covers four historic mines near Bulawayo with a total recorded production of more than 90 000 ounces (oz), while the latter comprises two groups of claims that have produced 2 000oz.
