• Invictus Receives Priority Project Status from Zimbabwe Government
• Technical Committee formed by the Zimbabwe Government to undertake negotiations for a Production Sharing Agreement
• Meetings held with the Chiefs representing Muzarabani and Mbire Rural Districts and Cultural Ceremony to be conducted to welcome Invictus
• Final EIA submissions received by Environmental Management Authority
• Placement with Strategic Investor at a premium

Invictus Energy provides an update of its activities for the quarter ending March 2020.

SG 4571: Zimbabwe Gas-Condensate Exploration Project
During the quarter, the Company made significant progress on our 80% owned and operated Special Grant 4571 licence (Cabora Bassa Project).

Managing Director Comments
The Company has made significant progress during the quarter and I am particularly pleased with the engagement from the Government to deliver the regulatory framework required to implement a Production Sharing Agreement (PSA) with the Republic of Zimbabwe. Whilst we are disappointed that we could not conclude some of the milestones due to the delays caused by COVID-19 related shutdowns and restrictions, we remain on track to deliver these once the restrictions have been lifted and business resumes.

Whilst there has been significant volatility in the oil and capital markets that has caused some delays, the Company remains well placed to deliver a farmout transaction that will unlock significant value. Our project has a unique combination of low-cost entry, long dated and relatively low cost work commitments due to its onshore location with good infrastructure, significant scale in terms of prospectivity and running room upon success, and importantly, multiple monetisation pathways. We see a huge opportunity in the energy market in the region which is chronically undersupplied and likely to become even more challenging. With the regional gas market a focus for the Company rather than overseas exports means that the gas sale agreements are generally fixed price, long life contracts over 10-20 years which results in stable pricing and remain unaffected by the sort of volatility we are witnessing in the oil and LNG market at present. We have strong local demand as evidenced from our gas sale MOUs with Sable Chemicals and Tatanga Energy as well as lucrative premium priced regional markets that are facing severe supply shortfalls in the near future.

All of these factors make our project an attractive and material portfolio addition for any company we are working diligently to deliver the best value to shareholders in this respect.

In light of the global market and oil industry environment, the Board and Management has focused on reducing costs within its control. To this end, the Company has made cuts in various categories of its corporate costs in Australia from its already low overheads. The Board and Management have agreed to reduce their annual fees and remuneration by 25-50 percent effective 1 April 2020. Securing funding from Mangwana ensures that the project spending is unaffected and our exploration program remains on track. The Board believes that the Company’s cost base is now at a more appropriate level for the current circumstances and sees the Company fully funded to deliver a farmout of SG 4571.

Subsequent to the end of the quarter we also announced a Strategic Investment into the Company by Mangwana Opportunities which has been placed at a significant premium of 91% to the 5 day VWAP and 40% to the last closing price. I am particularly pleased to have a local institutional investor on the register and the support of the Mangwana team in country. We are also delighted to welcome Joe Mutizwa, Chairman of Mangwana Capital, who will become a director of our wholly owned local subsidiary. Joe is one of Zimbabwe’s most senior and respected businessmen who will add a tremendous amount of value to the Company and the Cabora Bassa project. Joe served for ten years as Chief Executive of Delta Corporation, one of Zimbabwe`s largest listed companies before taking early retirement in 2012.

He currently sits on the Presidential Advisory Council (PAC), a body appointed by Zimbabwe’s President, His Excellency CDE E.D Mnangagwa, which is comprised of experts and leaders drawn from diverse sectors to advise and assist the President in formulating key economic policies and strategies in the country. Joe served on the board of the Reserve Bank of Zimbabwe (2015-2019) and currently chairs the board of Star Africa Corporation Zimbabwe (ZSE: SACL), a local sugar refiner; as well as the board of the Infrastructure Development Bank of Zimbabwe (IDBZ).

We look forward to working with him and Mangwana closely to deliver the goals of the Company and the country in this potentially game changing project for the region.

Invictus Receives Priority Project Status from Zimbabwe Government

During the quarter the Company’s Cabora Bassa project at Muzarabani held through the Company’s 80% interest in Geo Associates (Private) Limited has been classified as a priority development project by the Office of the President and Cabinet of Zimbabwe.
The Company’s Cabora Bassa project has been classified as one of the key projects within Zimbabwe that can provide a significant economic benefit to the economy in pursuit of the vision of becoming a Middle Income Economy by 2030.

Technical Committee formed by Zimbabwe Government to undertake PSA negotiations

During the quarter the Government of Zimbabwe setup a Technical Committee to undertake negotiations for a Production Sharing Agreement (PSA) with Geo Associates (Private) Limited. The Technical Committee is chaired by the Secretary for Finance and Economic Development with the Permanent Secretaries for Mines and Mining Development and Energy and Power Development as members together with officials from the Reserve Bank of Zimbabwe (RBZ), Zimbabwe Investment and Development Agency (ZIDA), Office of the President and Cabinet (OPC), Office of the Attorney General and Local Government and Public Works.

Due to the COVID-19 enforced national shutdown enacted on 30 March, the Company has been delayed in making a presentation to the Technical Committee until restrictions in the country are lifted. However, the Company and its attorneys have been corresponding with the legal representatives from the Technical Committee during the shutdown period and expect to resume negotiations shortly.

Final EIA Submissions received by Environmental Management Authority

During the quarter the Environmental Management Authority (EMA) received final submissions from the various government, NGO and local stakeholder groups relating to the Company’s Environmental Impact Assessment (EIA) submission. EMA representatives have undertaken a site visit to the project area.

Placement with Strategic Investor at a premium

Subsequent to the end of the quarter, the Company entered into a binding share subscription agreement with the Mangwana Opportunities Fund.

Mangwana Opportunities Fund is an investor owned, closed end investment company which is managed by Mangwana Capital. It is funded by Zimbabwean institutional investors including pension funds and invests primarily in the fields of Agriculture, Mining and Tourism with an investment horizon of 10 years. The Fund has prescribed asset status and has been granted tax exempt status by the Ministry of Finance.

The share subscription agreement raises the equivalent of $AUD0.44 million through the placement of 12,564,143 shares at a share price of $0.035; a 91% premium to the preceding 5 day VWAP of $0.0183 and a 40% to premium to the last closing price of $0.025. The condition precedent to the completion of the placement is subject to approval by the Reserve Bank of Zimbabwe Exchange Control which is expected shortly. The shares issued to Mangwana will be held in escrow for 6 months from the date of 

Funds raised from the placement will be used advance the Cabora Bassa Project including on the ground activity and preparatory works in the project area, our CSR program within the Muzarabani and Mbire Districts and other in country activities. The agreement makes provision for a further equity investment by Mangwana for the project over the next 12-24 months.

KeyFacts Energy: Invictus Energy Zimbabwe country profile