Aim-listed Power Metal Resources (POW) has started the process of acquiring a 51% interest in the Ditau project, in Botswana, from fellow Aim-listed Kavango Resources for £150 000 in shares.
POW will issue about 35-million new ordinary shares of 0.1p each, at an issue price of 0.42p apiece, to Kavango.
The company will start doing the required due diligence for the acquisition once Covid-19-related international travel and work restrictions are lifted, or on September 1, whichever happens earlier.
The Ditau project is targeting the discovery of commercial deposits of rare earth elements.
“The POW team has a strong connection with research leaders in the area of carbonatite geology and we believe that know-how, when applied to the extensive information gathered by Kavango to date, will help augment the forward direction for the project and open up new commercial avenues for rapid project advancement,” says POW CEO Paul Johnson.
Ditau comprises two prospecting licences covering an area of 1 386 km2. Kavango’s work on the project and historical data has identified ten separate magnetic “ring structures” within the licence area.
Meanwhile, Kavango has raised £358 500 in a placing and subscription exercise.
Kavango will issue 27-million new ordinary shares through a placing arranged by SI Capital at a price of 0.8p apiece to new and existing shareholders to raise £218 000.
Secondly, the company will issue to POW new zero coupon unsecured convertible loan notes, repayable on March 31, 2021, if not previously converted, to raise £38 000.
Conversion of these first loan notes is at the election of the holder, and the conversion price is the same as the placing price of 0.8p a share. If converted, a further 4.7-million new ordinary shares would be issued.
Finally, Kavango will raise £102 500 through the issue of a new series of unsecured convertible loan notes to a number of private investors. These second loan notes are repayable, if not previously converted, on March 31, 2021 and bear a coupon at the rate of 10% a year.
Kavango will use the funds for general working capital and to carry out work across the company’s three project areas, including Ditau, the Kalahari Suture Zone and the Kalahari Copper Belt.