Kavango Resources : Annual Report and Financial Statements for the Year Ended 31 December 2023

Company registration number: 10796849 (England and Wales)

KAVANGO RESOURCES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

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KAVANGO RESOURCES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CONTENTS
Company Information	3
Chairman's Statement	4
Operations Report	5
Board of Directors and Senior Management	8
Strategic Report	9
Directors Report	14
Corporate Governance Report	16
Directors' Remuneration Report	26
Statement of Directors' responsibilities	30
Independent auditor's report to the members of Kavango Resources plc	31
Consolidated statement of total comprehensive income	37
Consolidated statement of financial position	38
Company statement of financial position	39
Consolidated statement of changes in equity	40
Company statement of changes in equity	42
Consolidated statement of cash flows	44
Company statement of cash flows	45
Notes to the financial statements	46

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KAVANGO RESOURCES PLC

ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

COMPANY INFORMATION

Directors

David Smith, Non-Executive Chairman

Peter Wynter Bee, Non-Executive Director

Matthew Benjamin Turney, Chief Executive Officer

Brett Grist, Chief Operating Officer

Hillary Nyakunengwa Gumbo, Founder & Executive Director

Jeremy S. Brett, Executive Director

Company Secretary

Brett Grist

Registered Office	Auditor
Salisbury House, Suite 425	PKF Littlejohn LLP
London Wall	15 Westferry Circus
London EC2M 5PS	Canary Wharf
	London E14 4HD
Registered Number
10796849 (England and Wales)	Solicitors
	Druces LLP
Registrars	Salisbury House
Share Registrars Limited	London Wall
3 The Millennium Centre	London EC2M 5PS
Crosby Way
Farnham	Principal Bankers
Surrey	NatWest Bank
GU9 7XX	120-122 Fenchurch Street
	London EC2M 5BA
Brokers
First Equity Limited	Website
Salisbury House	www.kavangoresources.com
London Wall
London EC2M 5QQ

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KAVANGO RESOURCES PLC

CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2023

I am pleased to present the financial results for Kavango Resources PLC, the Southern Africa focussed metals exploration company, for the year ended 31 December 2023.

In what has remained a challenging market for many junior exploration companies we believe Kavango has made significant progress through 2023. Of particular note are the entry of the company into Zimbabwe where we have acquired options over three projects, the consolidation of our position in Botswana on the Kalahari Copper Belt (KCB), and completion of a successful investment of £6 million by Purebond Ltd.

In purely financial terms, during 2023 the Group incurred a loss of US$ 3,293,000, equivalent to a loss of US$ 0.45 cents per share (2022: US$ 2,206,000, US$ 0.49 cents per share).

Kavango's 2023 drilling in the KCB and KSZ was largely led by geophysical data, and focussed on deep targets. This was always going to prove challenging; however, the programs were successfully and quickly delivered, and whilst they did not intersect mineralisation, did provide us with useful geological information to inform our strategy going forward.

As CEO Ben Turney describes in greater detail later in this report, a re-evaluation of our exploration on the KCB, carried out in conjunction with consultant David Catterall, suggests greatest potential for us to make a discovery on the KCB around our Karakubis licences, in western Botswana. Following this, during the year we acquired a 90% interest in an additional six licences, consolidating our position in this area. An airborne survey was commissioned over these at the end of 2023, with preliminary results announced in March 2024, and I look forward to seeing this work progress through 2024.

The entry of the Company into Zimbabwe and entering into option agreements over three exploration areas there was a significant milestone. The geological similarities of parts of Zimbabwe and western Australia are striking, yet Zimbabwe has hitherto seen very little modern exploration. We believe this represents a meaningful opportunity, adjacent to our existing operating base in Botswana, and offering some synergies in how we deliver exploration. Ben Turney's hands-on approach of moving to Zimbabwe is already helping us address the challenges of this additional jurisdiction.

A major corporate development during the year was the investment by Purebond Ltd of £6 million for new shares in the Company. This, at a time when funding to junior exploration companies has been generally limited, has enabled the Company to take a longer term and strategic view, to advance into the new ventures in Zimbabwe and to refocus its KCB exploration. We believe that this will ultimately maximise the opportunity for all shareholders to benefit from potential exploration success by Kavango in our areas of interest.

As announced in December 2022, we were pleased to welcome Peter Wynter Bee to the company as a Non-Executive Director in January 2023. Peter's wide experience of the industry, and in particular of financing mining development, has already proved instrumental to the Company's progress in 2023, and I am confident will continue to add to the Board's ability to deliver through 2024.

I should like to take this opportunity to thank our employees across Botswana and Zimbabwe for their hard work during the year and for adapting to Kavango's ongoing updated strategy. Exploration is challenging both intellectually and physically, and we are fortunate to have a dedicated team of employees and consultants. Their commitment to the Kavango cause is of course matched by the commitment shown by the executive directors throughout the year, and I am grateful to them all for the efforts they have made.

Kavango in common with other junior exploration companies has not seen the advances in the Company's share price in 2023 that we believe would be justified to recognise the progress made by, and to come from, the Company. There were significant purchases of shares by three of my co-directors during the year, which underscores the belief of the Board in the potential for the Company. Kavango has multiple work streams underway at present, any of which has the potential to lead to significant news flow. We look forward to updating the market in due course.

David Smith

17 April 2024

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KAVANGO RESOURCES PLC

OPERATIONS REPORT FOR THE YEAR ENDED 31 DECEMBER 2023

The past year has, I believe, been transformative for Kavango Resources. During the year we acquired options over three projects in Zimbabwe, where we commenced work at a rapid pace. We also acquired a 90% interest in six licences in the Kalahari Copper Belt from Australia-based ENRG Elements. As a result, Kavango consolidated a strong prospective mineral rights package in this prolific copper jurisdiction. In my view, this provides an excellent opportunity to make commercial discoveries in both countries in 2024.

The mineral rights package provides one half of what is needed for discovery. Financing is the other half, and in this regard conditions in 2023 remained challenging for most explorers. However, thanks to the outstanding support of Purebond Limited and their £6m investment for new equity during 2023, Kavango has been put in a position where it can swiftly advance its projects.

I am very pleased to report that our team has stepped up to this challenge and seized the opportunity put in front of them.

As well as enhancing our project portfolio, Kavango also strengthened its team. The Company has secured the services of two experts in their fields, to ensure that we have the appropriate technical firepower to achieve success. Dave Catterall brings with him vast geological knowledge of the Kalahari Copper Belt, Botswana, where he is credited with successful discovery of multiple orebodies. In Zimbabwe, Steve Smith has worked to understand and rank a range of gold exploration projects in Matabeleland, giving Kavango an important competitive edge and ability to make rapid progress in commencing exploration in a new country.

Other changes to our team in 2023 include the recruitment of Leon de Waal as Exploration Manager for southern Africa. Leon has extensive mineral exploration experience in the region and has been leading from the front in our field camps in both Botswana and Zimbabwe.

I would like to acknowledge the commitment made by my co-director Peter Wynter Bee, who during the year invested £500,000 of his own funds into shares in the Company, confirming his commitment to Kavango's vision and potential.

Key operational highlights over 2023 included:

• In February we completed drilling 1,885.59m across seven holes in the KCB using a combination of Reverse Circulation ("RC") and diamond drilling. This was targeted by Controlled-Source Audio Magnetotelluric ("CSAMT") survey data and soil sampling data. The program confirmed two out of three technical objectives and made significant progress on the third. Anticlines and synclines were correctly identified by CSAMT on PL082. Zones of structural disturbance, brecciation and alteration were also clearly interpreted via CSAMT and then confirmed in drill core. Kavango's geologists observed evidence of fluid flow, with consequent alteration. A final test was to intersect the interpreted Ngwako Pan / D'Kar contact. A massive sandstone unit was intersected. Although the contact was not intercepted, the massive sandstone unit matched the resistive signature on the CSAMT inversion.
  Drilling on PL082 evidenced that we are higher in the D'Kar sequence than we had originally interpreted. This meant we could make a clear decision to pause work on this licence for now and move to other targets that now appear more prospective.
  A geological review concluded that our four prospecting licences near the Namibian border offered evidence of shallower stratigraphy. Adjacent property holder ENRG Elements' (ASX:EEL) licences are understood to host signs of mineralisation and of domal structures. Kavango was able to negotiate terms and acquire a 90% interest in these during 2023.
• In March 2023 we published the outcome of a report from Dr Hamid Mumin, which identified a possible high potential Banded Iron Formation hosted Lode Gold model at the Ditau Project, and were based on logging of newly acquired third party drill core Kavango considers Target i10 could represent a large-scale, continuous system. This and other models including IOCG continue to offer potential at Ditau, and which the Company will continue to investigate with a particular focus on seeking a JV partner.
• In June 2023 we announced the completion of a first stage £1,400,000 equity investment into the Company via a non-brokered direct subscription, and we were pleased to welcome Purebond Limited as a shareholder. Following publication of a prospectus in October 2023, we were able to conclude the second stage of the investment, for a further £4,600,000. Purebond invested at a price of 1p per share, a premium to the then prevailing share price.

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KAVANGO RESOURCES PLC

OPERATIONS REPORT FOR THE YEAR ENDED 31 DECEMBER 2023 (Continued)

• The greenstone belts in Zimbabwe host prospective rocks for bulk-mineable gold deposits, based on Kavango's internal review and analysis. Many of these belts share notable similarities with some of Australia's most prolific gold-producing regions. Zimbabwe was therefore seen as a high-potential destination for Kavango to invest into, and in June 2023 we were pleased to announce our entering into a two-year option agreement for the Nara project, covering 45 gold claims in western Zimbabwe. Kavango has rapidly commenced exploration there and subsequent to the year end was able to declare a maiden resource for the tailings. These have the advantage of being low-cost to mine, at surface, and subject to further work may offer a stream of near-term cashflow, augmenting our financial resources (without dilution) to explore in Zimbabwe.
  Subsequently Kavango entered into an exclusive 6-month option, later extended to 23 April 2024, to acquire two gold exploration projects in Matabeleland, southern Zimbabwe, referred to as Hillside and Leopard. The Hillside project covers 409 hectares and contains a historic high-grade underground mine that produced a reported 18,000 ounces of gold from ore at a grade of 7.7 grams per tonne over a strike length of more than 350m.
  The Leopard project comprises two groups of claims within trucking distance of Nara and located on an adjacent greenstone belt. It is found in a favourable regional setting, surrounded by historical and modern gold producing mines. The Project is divided into two separate sites. Site One produced more than 2,000oz from ore grading 3.5g/t gold. Site Two contains three claims that are believed to be an extension of a historic mine (not part of the property) that is reported to have produced more than 1Moz gold from ore at an average grade of more than 15g/t. Kavango believes Hillside and Leopard each have the potential to host bulk mineable gold deposits.
• In July 2023 Kavango completed drilling of a hole on the Kalahari Suture Zone, KSZDD003, intended to test the B1 conductor target. This was successfully drilled to a depth of 606m, despite challenges of lack of water availability in the arid terrain, and sand cover. The hole passed through a sedimentary sequence and two intrusive bodies, thought to be of Karoo age. No sulphide was intersected, however a Downhole Electromagnetic ("DHEM") survey was completed and confirmed that the target had successfully been intersected. While we were disappointed that B1 did not turn out to consist of significant nickel or copper sulphide, we believe we have an answer on this target. It appears the thicker carbonaceous material, containing coincident graphite and pyrite rich bands, with minor pyrrhotite veining, is the most probable conductive source.
• Kavango completed a strategic investment into gold mining, exploration, and development company Pambili Natural Resources Corporation ("Pambili") (TSX-V:PNN), in the form of a US$250,000 convertible loan made to Pambili. Following the conversion, Kavango will hold 16% of Pambili's total issued share capital.
  Pambili is active in Matabeleland in southern Zimbabwe, having established operations there in 2022. Pambili's Golden Valley project has a history of high-grade underground mining and gold production. Golden Valley includes a functional gold processing plant and stamp mill, two historic shafts that present prospective exploration targets and near surface exploration potential to target a possible larger-scale deposit. Some small- scale gold production continues at Golden Valley by way of toll-millingthird-party ore through an on-site stamp mill.
  By taking a strategic interest in Pambili, Kavango is seeking to build on its first-mover advantage in Matabeleland by increasing its exposure to a third, highly prospective greenstone belt. Golden Valley is located on a separate greenstone belt to the one that hosts the Hillside and Nara projects for which we hold options, and a separate greenstone belt to the one that hosts the Leopard project over which we also hold an option. Involvement in an active operation will also provide Kavango with invaluable operating know-how in parallel with the ongoing development of its own operations to generate early cash-flow.
• During Q3, Kavango commenced a 1,306m diamond drill campaign at the Hillside Project in Zimbabwe. This completed in January 2024 and results are due to be delivered in Q2 2024.
• In December 2023, Kavango commenced an Airborne Electromagnetic and Gravity survey over its consolidated Kalahari Copper Belt project. Data is currently being processed, with drill targets to be confirmed. The Company expects to start drilling in the KCB in mid-Q2 2024.
• Subsequent to the year end, in March 2024, Kavango signed its first contract to commence immediate gold mining operations at the Hillside Project.

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KAVANGO RESOURCES PLC

OPERATIONS REPORT FOR THE YEAR ENDED 31 DECEMBER 2023 (Continued)

I believe Kavango has successfully transitioned to position itself with a portfolio of well-understood projects that may offer lower technical risk than previous projects, and in parallel has achieved strong financial backing. Our teams on the ground are working hard to deliver successful exploration outcomes from these in 2024, and I look forward to updating all our shareholders as results come in.

Matthew Benjamin Turney

Chief Executive Officer

17 April 2024

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KAVANGO RESOURCES PLC

BOARD OF DIRECTORS AND SENIOR MANAGEMENT

David Smith (Non-Executive Chairman)

David is a solicitor who has worked in corporate finance and the equity capital markets for over 30 years with considerable practical experience of corporate governance, regulatory and compliance issues, and advised junior mining companies extensively throughout his career. From January 2016 to March 2021, he was a partner in Druces LLP, the Company's solicitors.

Peter Wynter Bee (Non-Executive Director)

Peter is an experienced lawyer who has focused on financing and managing mining companies. He has a strong experience in joint venture negotiations and raised project finance. Peter has raised capital for the development of projects since 1990. He was a founder of Reunion Mining plc which developed a gold mine in Zambia, a copper mine in Zimbabwe and the Skorpion zinc mine in Namibia prior to its takeover by Anglo-American. He is currently Founder and Chairman of Moxico Resources plc a copper mining company with projects in Zambia and Saudi Arabia.

Matthew Benjamin ("Ben") Turney (Chief Executive Officer)

Ben is an experienced participant in London and North America's small cap financial markets. He joined Kavango's board in January 2021 and became CEO in June that year. Since then, he has played the lead role in overhauling the Company's business model. Ben has led all capital raises and managed shareholder relations. He has made key hires to the business, recruited strategic partnerships, and restructured all operations in Botswana and London. Ben has played a crucial role in upgrading the Company's exploration strategy and has worked with the board to deliver the Company's strategy.

Brett Grist (Chief Operating Officer)

Brett graduated in Mining Geology from the Royal School of Mines and has spent more than 25 years in mineral exploration and development across Africa, the Middle East and Europe, covering base and precious metals, for companies including Reunion Mining and CASA Mining. He has played a leading role on a range of projects, including in advancing from early exploration through resource definition, feasibility, and into development. Brett is an FAusIMM with CP status.

Hillary Nyakunengwa Gumbo (Executive Director)

Hillary was born in Matobo district of Zimbabwe in 1962. He graduated from the University of Zimbabwe (UZ) with a BSc in Geology and Physics (Honours) in 1984. In 1986, he graduated with an MSc Exploration Geophysics (UZ). He worked for Zimbabwe Mining Development Corporation from 1986 to 1990 when he joined Reunion Mining (Zimbabwe) Ltd until 1999. He has worked as a geophysical consultant for a number of companies in Africa and the Middle East such as Mawarid Mining and Rockover Resources. He was involved in the exploration and evaluation of Rockover's Dokwe Gold Project in Zimbabwe. He has been involved in a number of discoveries which include chrome at Anglo America's Inyala mine, Zimbabwe, Maligreen gold deposit and many kimberlites in Zimbabwe. In 2009 he setup 3D Earth Exploration in Botswana, a geophysical contracting and consulting company. In 2011, with Mike Moles he set up Kavango Minerals to explore for iron ore and base metals in Botswana. He is a Zimbabwean citizen, with Botswana residence status.

Jeremy S. Brett (Executive Director)

Jeremy is a senior Geophysical Consultant with 30 years of international mineral exploration in most commodities. He has a strong background in geology, structural geology, ore deposit models, project management and strategy. He has a B.Sc. in Geophysics and an M.Sc. in Geology from the University of Toronto. He has consulted to more than 100 of Canada's leading junior and major exploration and mining companies and governments on five continents. Jeremy is a Professional Geoscientist registered in Ontario, Canada.

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KAVANGO RESOURCES PLC

STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2023

The Directors present their strategic report on the group for the year ended 31 December 2023.

Principal Activity

Kavango Resources Plc ("the Company") is a public limited company which is listed on the main market of the London Stock Exchange and incorporated and domiciled in the United Kingdom. Its registered address is Salisbury House, London Wall, Suite 425, London UK EC2M 5PS.

The Company is the parent company of Kavango Minerals (Pty) Ltd ("Kavango Botswana"), and Kanye Resources (Pty) Ltd ("Kanye"), registered and domiciled in Botswana. The Company also owns 90% of Shongwe Resources

(Pty) Ltd, and 90% of Ashmead Holdings (Pty) Ltd, and Icon-Trading Company (Pty) Ltd, all registered and domiciled in Botswana. The Company owns 100% of Kavango Zimbabwe (Private) Limited, a company registered and domiciled in Zimbabwe. The Company is also the parent company of Navassa Resources Ltd, domiciled in Mauritius.

The principal activity of the Company and its subsidiaries (the "Group") is exploration for base and precious metals in Botswana and Zimbabwe.

Business Review

Details of the Company's strategy, exploration activities, results and prospects are set out in the Chairman's Statement and in the Operations Report on pages 5 to 7.

The Directors were pleased to welcome an investment in the period of £6,000,000 by Purebond Limited, which in challenging market conditions has allowed the Company to continue its exploration work and to expand into Zimbabwe. This investment consisted of the issue of 600,000,000 shares at a price of 1p, representing a premium to the then prevailing share price.

As a result of this the Company has been able to acquire additional licences in Botswana, consolidating an already extensive mineral exploration rights position in the copper belt of western Botswana, and to commence exploration on three projects in Zimbabwe.

Principal Risks and Uncertainties

The Directors have identified the following principal risks in regard to the Group's future. The relative importance of risks faced by the Group can, and is likely to, change as the Group executes its strategy and as the external business environment evolves.

Strategic risk

The Group's strategy may not deliver the results expected by shareholders. The Directors regularly monitor the appropriateness of the strategy, taking into account both internal and external factors, together with progress in implementing the strategy, and modify the strategy as may be required based on developments and exploration results. Key elements of this process are the Group's monthly reporting and regular Board meetings.

Concentration risk

The Group has six core exploration assets being licences covering the Kalahari Copper Belt ("KCB"), Kalahari Suture Zone ("KSZ") Project, and Ditau in Botswana, and options over claims covering the Hillside, Leopard, and Nara projects in Zimbabwe. This totals a large area, together in excess of 19,000km2, and also covers two countries, which the Board considers significantly mitigates against this risk. Nevertheless, the Board understands the importance of regularly reviewing its strategy and of regularly assessing other opportunities in the Botswana and Zimbabwe market and/or internationally.

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KAVANGO RESOURCES PLC

STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2023 (Continued)

Exploration risk

Exploration at the KCB, KSZ, Ditau, Hillside, Leopard, and Nara Projects may not result in success.

Whilst the Directors endeavour to apply what they consider to be the latest technology to assess projects, the business of exploration for and identification of minerals and metals, is speculative and involves a high degree of risk. The mineral and metal potential of the Group's projects may not contain economically recoverable volumes of minerals, base metals, or precious metals of sufficient quality or quantity. To mitigate this risk, the Group continues to evaluate additional opportunities, and where possible and appropriate, to acquire options over ground to enable some exploration to be conducted before completing an acquisition.

Even if there are economically recoverable deposits, delays in the construction and commissioning of mining projects or other technical difficulties may make the deposits difficult to exploit. The exploration and development of any project may be disrupted, damaged, or delayed by a variety of risks and hazards which are beyond the control of the Group. These include (without limitation) geological, geotechnical, and seismic factors, environmental hazards, technical failures, adverse weather conditions, acts of God and government regulations or delays.

Exploration is also subject to general industrial operating risks, such as equipment failure, explosions, fires and industrial accidents, which may result in potential delays or liabilities, loss of life, injury, environmental damage, damage to or destruction of property and regulatory investigations. The Group may also be liable for the mining activities of previous miners and previous exploration works. Although the Group intends, itself or through its operators, to maintain insurance in accordance with industry practice, no assurance can be given that the Group or the operator of an exploration project will be able to obtain insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims. The Group may elect not to become insured because of high premium costs or may incur a liability to third parties (in excess of any insurance cover) arising from pollution or other damage or injury.

Environmental, social, and related regulatory risks

In relation to the Group's existing projects the environmental impact to date is limited to activities associated with exploration. The ultimate development of any project into a mining operation will inevitably impact considerably on the local landscape and communities. Some of these projects sit in an area of considerable natural beauty, or in areas where local communities are engaged in artisanal mining, and therefore there could be opposition to mining by some parties. This may impact on the cost and/or the Group's ability to sell or move these projects into production.

While the Group believes that its operations and future projects are currently, and will be, in substantial compliance with all relevant material environmental and health and safety laws and regulations, including relevant international standards, there can be no assurance that new laws and regulations, or amendments to, or stringent enforcement of, existing laws and regulations will not be introduced.

Nevertheless, the Group will continue to vigorously apply international standards to the design and execution of any and all of its activities, including engagement and consultation with local communities, and non-governmental and Governmental organisations to ensure any impacts of current and future activities are minimised and appropriately managed. The Group has established a comprehensive suite of health, safety, environmental and community policies which will continue to underpin all future activities.

Financing

The successful exploration or exploitation of natural resources on any project will require significant capital investment. The only sources of financing currently available to the Group are through the issue of additional equity capital in the Company or through bringing in partners to fund exploration and development costs. The Group's ability to raise further funds will depend on the success of their investment strategy and conditions in financial and commodity markets. The Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce the scope of its investments or anticipated expansion.

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