Saturday, September 23rd 2023

Power Metal Resources PLC

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Exciting Results, favourable logistics and great infrastructure for the Power Metals Tati Gold project


“…The wholly-owned Tati Gold Project within the Tati Greenstone Belt near Francistown, Botswana, is a key priority, drilling undertaken this summer yielding compelling evidence of gold…”


With so many interests at every possible stage of development it can be hard to know how best to assess the kaleidoscopic portfolio accumulated by Power Metal Resources (AIM: POW). But the company currently has a sharp focus on a cluster of gold, nickel, copper and uranium prospects.

POW pursues precious, base and strategic metal exploration in North America, Africa and Australia, with interests encompassing projects at greenfield and drilling stages. The company develops prospects internally or through joint ventures until ready for disposal through outright sale or IPO. POW’s extensive portfolio covers uranium, gold, silver, nickel, copper, rare earths and base-metals: the company’s latest interim results and quarterly business offer essential overviews of its current holdings. Prospective investors should also make sure to follow POW’s fast-moving RNS and Twitter streams.

POW’s current priorities


The wholly-owned Tati Gold Project within the Tati Greenstone Belt near Francistown, Botswana, is a key priority, drilling undertaken this summer yielding compelling evidence of gold. The first set of assay results – published earlier this month – for nine holes drilled over 490 metres along strike and down dip extension of quartz reefs associated with the historical Cherished Hope gold mine, reported near-surface gold mineralisation in the first three holes. Key intersections included 1m @ 10.20g/t Au from 33m, 1m @ 5.57 g/t Au from 15m, and 3m @ 16.77 g/t Au from 5m, including 1m @ 47.17 g/t Au from 6m – a ‘bonanza grade gold’ indicator. Results for the remaining six holes, published a few days later, reported ‘significant near-surface dolerite and quartz reef hosted gold mineralisation’ in five of them, including 2m @ 23.17 g/t Au from 25m, including 1m @ 40.63 g/t Au from 26m, and 2m @ 6.59 g/t from 5m, including 1m @ 11.27g/t Au and 1m @ 11.16g/t from 54m.

POW CEO Paul Johnson said: ‘Naturally the 47.1g/t Au and 40.6g/t Au grades peak excitement, which they should, however more important is the continuity of gold mineralisation over the 175m strike drill tested thus far, which bodes well for the significant amount of the anomaly yet to be tested.’ The company drew attention to the Project’s favourable logistics: the gold mineralisation identified to date is near surface, and infrastructure from Cherished Hope is still available, with gold fines dumps available for processing at a local processing site within 20 minutes by road. POW intends to ‘accelerate its activity’ to undertake drilling to more fully test the gold-in-soil anomalies, prove up more extensive gold mineralisation and develop avenues for future gold production from the Project.

The company has also posted highly encouraging results from its Molopo Farms Complex Project, a nickel, copper and Platinum Group Element (PGE) metals prospect in Botswana. POW now has an 87.71pc interest following an agreement with project partner Kalahari Key Mineral Exploration Pty Limited. 

Preliminary survey results from two ground-based electromagnetic geophysics surveys conducted in August highlighted a large shallow dipping magnetic conductor, indicating nickel-sulphide mineralisation averaging 7.0m @ 0.443% Ni from 445m, including 0.6m @ 1.69% Ni, 0.55g/t Pt & 0.14g/t Au from 446.7m downhole. Mr Johnson said: ‘Today’s exploration news is, in my view, potentially one of the more significant the Company has released in its 3-year history as Power Metal.’ The company raised £1.08m the following month to support further drilling, which began later that month. The programme includes 2,600 metres of diamond drilling designed to further explore the location: The first two holes have been successfully completed to depths of 650 and 300 metres, with geophysics interpretation results expected shortly, and a third, targeted on the electromagnetic superconductor, is in progress.

 Mr Johnson has continued to highlight the venture’s importance to POW, stating that ‘Should the Company’s drill programme at Molopo Farms in Botswana prove successful and recognising the significance of that project, there will be an immediate cessation in the review of any new opportunities. This would allow the Company to devote more managerial & technical time as well as financial resources to that project.’ 

As covered extensively in TMS’s last look at POW, POW has assembled a considerable uranium portfolio, principally consisting in a set of 100pc-owned properties covering more than 800km2 of the Athabasca Basin, in Saskatchewan, Canada. The company’s most recent quarterly business update  stated that its ‘primary acquisition focus for the foreseeable future is on further uranium projects … Outside uranium, Power Metal will only engage with exceptional acquisitions which complement the existing portfolio.’

An exploration programme was completed this autumn covering several prospects within the Basin, including hyperspectral remote sensing review work. Assay results have noted multiple locations of anomalous radioactivity across three properties so far, with rock sample assay results currently awaited. Detailed data compilation has been completed and external datarooms have been opened for third parties: the conditional disposal of one property, Reitenbach, was announced in August. Another property, Badger Lake, surrounded by claims held by uranium focussed companies including Orano SA, Hathor Exploration and NexGen Energy Ltd, was acquired in October.

Spin-outs and disposals


In addition to developing Tati, Molopo and Athabasca, POW is prioritising the spin-out or disposal of a number of other projects. This summer the company announced the disposal of its Kanye Resources interest in Botswana to its joint-venture partner Kavango Resources, where drilling completed earlier in the year identified the potential for an iron oxide copper gold ore system at the Ditau project. POW will become a strategic investor in Kavango with an 9.85pc holding when Kavango goes public next week, carrying a value of some £1.25m. POW will also receive a net smelter royalty.

The company has a 83.13pc interest in gold and base metals miner Golden Metal Resources, located in Nevada, currently preparing for IPO. Results are awaited from a recent Induced Polarisation survey at Golden Metal’s Pilot Mountain Project, which may host one of the largest undeveloped tungsten deposit in the US. Golden Metal plans to press ahead with advanced exploration at Pilot Mountain with IPO funds. POW has a 62.12pc interest in another promising gold venture through the company’s holding in First Development Resources, focused on Western Australia. Last month First Development got the green light for drilling at the Wallal Project, targeting a large-scale gold-copper discovery.

POW has already disposed of its Hemlo-Schreiber interests, and now holds a 27.91pc interest, worth £2.6m, in gold and base metals miner First Class Metals PLC, which is analysing high grade nickel assays at Schreiber-Hemlo, in Ontario, and is seeking to IPO a 49.9pc interest in the New Ballarat Gold Corporation, which has a substantial licence footprint within the Victoria Goldfields, Australia, including one exploration target with a median target range of 246,812 ounces of gold and an upper target of 853,037 ounces, for which a drilling programme is being finalised.

Projects under consideration


POW is considering its next move in regard to several other projects. The company has an option for a 100pc earn-in to a lithium project operated by Authier North in Quebec; a 100pc interest in the Wilan Project in South Australia, where Iron-Oxide-Copper-Gold, diamond and uranium exploration targets have been established; a 35pc interest in the polymetallic Haneti Project in Tanzania; and a 30pc interest in the Silver Peak Project in British Columbia, where findings indicate significant high grade silver potential.

Commodities: long-term demand, short-term volatility


POW’s activity takes place against the backcloth of a volatile commodities market, but one in which supply indicators for several key metals are flashing red. 

Nickel prices are surging, driven by low liquidity since the London Metal Exchange suspended and cancelled billions of dollars worth of trades in the metal earlier this year in response to unprecedented price rises, and a production crunch. A major mine in New Caledonia, which supplies Tesla, is cutting forecasts, and fears of sanctions on Norilsk Nickel, a large Russian producer. One striking Financial Times report earlier this month noted that supply bottlenecks are motivating carmakers to secure battery metals – including lithium, nickel and cobalt – direct from mines, breaking traditional supply chains, in which battery producers, cathode manufacturers and mineral processors sit between the car companies and miners. Stellantis, owner of the Peugeot and Fiat brands, and GM are among those that have invested in early-stage mining companies in an attempt to secure resources, rather like Henry Ford set up rubber plantations in the Amazon, a steel mill in Michigan and coal mines across the US to supply his growing automotive empire. The International Energy Agency forecasts that soaring EV battery demand will require 50 new lithium projects, 60 nickel mines and 17 cobalt developments by 2030, a huge challenge for an industry that typically takes 15 years or more to develop a project.

Uranium’s value has risen by more than 30pc over the past year. Nuclear is increasingly accepted as a critical element of the global decarbonisation process and an important part of the global energy mix for the foreseeable future. Governments are seeking to renew their nuclear fleets, which are achieving official recognition as sources of sustainable energy, notably through inclusion in the EU’s revised Green Taxonomy. As with so many of the world’s other commodities, there is also a supply deficit. A fall in the price of uranium several years choked mining incentives: approximately 130 million pounds is being currently being produced each year – the world’s 440 nuclear power stations together use about 180 million annually.

Gold prices continue to be rather flat, restrained by rising yields on government debt as central banks raise rates to tackle inflation, as well as by a strong dollar. Spot gold was trading at about $1,760 on Friday afternoon, about 15 per cent lower than its record high in March and 8 per cent higher than its lowest point in late September. Some analysts believe the price of the yellow metal will only start rising once the market believes the US Federal Reserve has stopped raising interest rates, but some banks are more bullish, with RBC forecasting a base price of $1,795 next year.



Starting the year at 1.6p POW’s share price had drifted down to 0.8p by August, but shot right back up to 1.6p in the space of a week following news of the Molopo Farms Complex discovery, taking the company’s market cap back up to £23m. Developments at the Tati Gold Project have consolidated those gains. Molopo, Tati and the cluster of uranium interests at Saskatchewan are currently POW’s headline assets, but prospective investors should keep a close eye on the full range of the company’s interests: this is a natural resources small cap that does not stand still. Though POW’s stock has surged in recent weeks it’s worth remembering that it touched 3p just last year: it can, and has been higher. We continue to note POW, with a battery of interests offering a range of catalysts for price movements, as one of AIM’s livelier trades.

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