Kavango Resources’ Shares Surge 19% After Commencing Hillside Gold Production

8 March 2024 16:41

Kavango Resources (LSE:KAV) has achieved a significant milestone, announcing its move into revenue generation by the end of the month, as gold production is set to commence at its Hillside Project in Zimbabwe.

The announcement comes directly on the heels of Kavango delivering an enviable Indicated Mineral Resource of 293,000 tonnes at 0.62 grams per tonne for its Nara Project.

Golden Revenue

The company has signed its first contract to begin production at Hillside and will commence production immediately, having formed a new subsidiary to manage production at Hillside in Kavango Mining.

Under the contract, Kavango will exclusively finance operations at Hillside, enabling the company to retain 100% of the revenue generated. The Project has maintained profitability for three consecutive years, currently yielding an estimated monthly revenue of US$30,000.

Eyes on Growth

The company noted that the mine’s profitability comes in spite of the capital constraints that hindered expansion, something it hopes to change.

Kavango’s current agenda involves doubling its gold production from 500g to 1kg per month by year-end, with plans to incorporate a third stamp mill at Hillside and finance additional plant and equipment upgrades.

Additionally, Kavango intends to foster community-led gold extraction initiatives and enhance near-term production by transforming the Project into a mining “Growth Point.” This involves nurturing modern mining skills within the local community and facilitating access to equipment through strategic capital investments.

Looking Ahead

The company emphasised that it is still in the process of renegotiating terms for the complete acquisition of the Hillside Project, clarifying that the mining contract discussed has no impact on this acquisition.

“Current revenue at Hillside amounts to around $30,000 per month and the operation there is already profitable. Continuous production at Zimbabwe gold projects secures the ground and forms an important part of any long-term development plan,” Chief Executive Ben Turney said.

“Our objective is to become a significant gold producer in this country, and this is our first step towards achieving this goal. If all goes well, there are other production opportunities we hope to bring to Kavango. Gold production at Hillside has been consistently profitable for the last 3 years, despite capital constraints.”

“We aim to double production to 1kg of gold a month at Hillside, over the course of 2024. Meanwhile, we will continue our wider exploration at Hillside as we seek to discover larger-scale bulk mineable gold deposits.”

KAV’s London Stock Exchange-listed share price has risen 19.31% and is currently trading at 0.86 pence (4.30pm UTC+ 8 hours).

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