BRITISH miner Kavango Resources Plc has assured shareholders that its current working capital is adequate to cover operational needs for the next 12 months, despite reporting limited revenues and an operating loss.
The group highlighted that any additional share issuances to raise funds for working capital were expected to occur beyond this period.
Kavango operates three gold mining projects in Zimbabwe, which are Nara Gold, Leopard, and Hillside.
“Although the group’s assets are to date only generating limited revenues and an operating loss has been reported, the directors are of the view that, while, taking into account the net proceeds, the working capital available to the group is sufficient for its present requirements, that is for at least the next 12 months from the date of this document,” Kavango said in a recent prospectus to shareholders.
“Any shares that could potentially be issued to raise funds for working capital are as at the date of this document, expected to be issued outside of the aforementioned working capital period.
“In the event that any mineralisation is identified, and established with increased certainty after several drill holes, the group will have further funding requirements to define further such mineralisation with the aim of delineating a JORC compliant resource and completing feasibility studies.”
JORC or Joint Ore Reserve Committee is a professional code of practice that promotes robust standards for the public reporting of exploration results, mineral resources and ore reserves.
“If the group cannot obtain the funding required on terms it considers reasonable, or in the then required timeframe, this will have a material adverse effect on the financial condition and/or prospects of the company and its investors and could include the loss of the relevant licences,” Kavango said.
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“The group’s future revenues, profitability and growth, as well as the carrying value of its mining properties depend to a degree on prevailing commodity prices.”
The miner noted that its ability to borrow and to obtain additional funding on attractive terms depended upon the then prices.
“So, if prices are unfavourable, the company may not be able to borrow or choose not to borrow,” Kavango continued.
The mining company reminded shareholders that prices were subject to fluctuations in response to relatively minor changes in the supply and demand, uncertainties within the market and a variety of other factors beyond the group’s control.
“The group faces governmental jurisdictional, regulation and regulatory risk. The group’s PLs (prospecting licences) are currently geographically concentrated in Botswana and Zimbabwe,” Kavango said.
“As a result of this concentration, the group may be disproportionately exposed to the impact of significant changes in governmental regulation, which could affect its prospecting licences, depending on any future changes to governmental regulation in respect of prospecting licences.”
The miner said the production and sale of metals were subject to various state and local governmental regulations.
The firm had total assets worth US$21,02 million as of June 30, 2024.
