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Is Kavango Resources ready to Erupt in 2021?

 

“…in light of Kavango Resources consistently strong news flow we continue to highlight this as a commodities prospect with real potential…”

 

Our regular readers will be familiar with the promise of the prospect being nurtured by UK-based mining company Kavango Resources (LSE:KAV).

Through interviews and analyses over the past few months we’ve charted the company’s progress towards clarifying the scope of its primary asset, a set of prospecting licences spanning a substantial slice of the Kalahari Suture Zone (KSZ), a 450km long geological formation in south-western Botswana that studies suggest may be rich in sulphide deposits suffused with copper, nickel and platinum group metals (PGMs).

The KSZ’s structure seems to bear comparison with the prolific copper, nickel and PGM mines at Voisey’s Bay and Raglan (Canada), Jinchuan (China), the Thomson Nickel Belt (Canada), and, most significantly, Norilsk, the cluster of Siberian mines that supplies 90pc of Russia’s nickel reserves, 55pc of its copper and virtually all of its platinum-group elements.

 

Telling the Kalahari Suture Zone story

 

Kavango has undertaken extensive research into the KSZ, which has long been of interest to geologists but has not previously been investigated using contemporary research methodologies and exploration techniques.

Last year the KSZ’s geology was probed by airborne electromagnetic surveys, and ongoing analysis by the University of Leicester, the most recent of which were published in October, has found ‘compelling evidence’ that the Zone was shaped under geological conditions similar to those that created the massive deposits at Norilsk. Further light has been shed over the past few months through the elaboration of a 3D magnetic model mapping the KSZ’s structure. The accumulated research has allowed Kavango to tell an ever more sophisticated story about the ancient geological forces that make the Zone such an enticing prospect.

Some 180 to 185 million years ago the land above the KSZ was a wild volcano-studded region seething with lava flows. The lava was forced up to the surface through the Zone, which at that time was a red-hot cavern churning with magma pushing up from the Earth’s basement rock through a narrow channel hundreds of metres below the surface. As the metal-suffused magma rushed up into and through the chamber it fused with the zone’s sulphur-rich sediments to form metal sulphides.

The sulphides clustered into ‘breccias’, rocks composed of mineral fragments cemented together by a fine-grained matrix.

Over five million years or so the KSZ cooled and the metal sulphides hardened, accumulating deposits along the Zone’s walls and within its base that may be rich in copper, nickel and PGMs.

The Zone sunk somewhat deeper below the surface over subsequent millennia, and is today covered by layers of sediment and loose sand 20 to 70m thick. Kavango’s 3D modelling has identified four high priority drill targets around 200 to 600 metres deep, where the most significant deposits might be concentrated.

Electromagnetic (EM) surveys to be undertaken over the coming weeks will further define the location and geometry of the targeted areas, allowing a drilling programme to be designed.

The surveys will involve the placing of 4km of copper wire in a square kilometre on the surface above the Zone, forming an open ‘Large Loop’. This area will allow the EM survey to cover a 9km2 target area. A transmitter will send electric currents underground that will bounce back up to the surface off the Zone’s metal deposits, to be picked up by a receiver moving along traverse lines set 200 metres apart.

The strength of the signals will indicate the size and position of the deposits.

Readers seeking further technical details about the KSZ should consult Kavango’s corporate presentation, and an extensive interview – incorporating an online presentation – recorded recently with the company’s Non-Executive Director Mike Moles. Kavango has also created a useful little video providing a graphical introduction to the Zone.

The Kalahari Copper Belt

 

The KSZ has always been Kavango’s primary focus. But progress has also been made this year towards realising the promise of its interest in the Kalahari Copper Belt (KCB), a prospect covering part of the DRC-Zambia copperbelt that runs some 1,000km from northern Botswana to central Namibia.

In September Kavango agreed a joint venture with Power Metal Resources (LSE:POW) to form a co-owned, privately held company focused on large-scale mineral exploration projects in Botswana. The new venture will inject fresh liquidity into the KCB project, allowing Kavango to retain its interest in the prospect without comprising its commitment to the KSZ. A subsequent announcement earlier this month announced the start of field exploration programmes on prospecting licences within the KCB held by the joint venture. Sampling and ground magnetic surveys will seek to delineate regional targets for future airborne electromagnetic surveying.

Serving a growing market for copper and nickel

 

Kavango’s progress dovetails with the strong market performance of copper and nickel this year. Earlier this month the price of copper reached a seven-year high as manufacturing activity in China and South Korea began to accelerate beyond expectations, sending the share prices of Glencore, Freeport-McMoRan and other major copper producers soaring.

In addition to the prospect of an immediate increase in demand as the global economy emerges from the pandemic, copper has robust long-term prospects. The metal is an essential feedstock for the evolving green economy – used to wire up wind turbines and other renewables to the grid, and a key component in electric vehicles – the momentum of which has been further boosted by European stimulus packages, China’s commitment to going carbon-neutral by 2060, and the election of Joe Biden. Copper’s price is also being pushed up by supply shortage concerns, as large high-grade copper deposits in mining-friendly jurisdictions become increasingly hard to find.

Demand for nickel is also rising as the world economy picks up, due both to its traditional role as an element used to strengthen steel, and its use in electric vehicles. Nickel demand is forecast to rise six-fold by 2030, and, as with copper, there are fears regarding supply channels: Tesla is just one of the major players in the energy transition to have voiced concerns about bottlenecks, with nearly all of the metal’s supply expected to come from Indonesia, where there are concerns about careless disposal of nickel mining waste.

Funded for 2021

 

Kavango’s progress towards realising the promise of its assets, together with favourable economic trends, puts it in a strong position as it enters 2021. The company concluded a fundraise last month for £2m to fund its programme for the new year, and has been further boosted by the easing of Covid-19 restrictions in Botswana, allowing field work to fully resume.

Kavango’s positive run of news has been reflected in a steady rise in its share price, which is now at around 2.65p, up from just over 2p at the start of the year. The price peaked at 3.45p in late October as announcements regarding the nature of the deposits at the KSZ rolled in. TMS has kept a close eye on Kavango this year, and in light of the company’s consistently strong news flow we continue to highlight this as a commodities prospect with real potential.

 

Founder and Non Executive Director Mike Moles caught up recently with Sarah Lowther in this Podcast.

 

 

The author was remunerated for this article but does not hold shares in the above named company.

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