Power Metal Resources (LON:POW) welcomed news of a deal last week that stands to accelerate exploration considerably at one of its highly prospective Botswana-based projects.

On Friday, Kavango Resources (LSE:KAV) announced that it had signed a three-month option that, if exercised, would see it acquire 51.15% of the Molopo Farms Complex (“MFC”) project in an all-share transaction. Under the terms of the deal, Power Metal would continue to hold on to a 40% stake in the asset, which it secured earlier this year, while London peer Evrima (LSE:EVA) would hold on to the remaining 8.85%.           

Covering 1,723km2 in south Botswana, the MFC project is highly prospective for nickel, copper, and platinum group elements (“PGEs”)–all metals that are currently enjoying strong demand in the face of limited supply. As the map below shows, the asset also sits firmly in a key area of mining activity, in the vicinity of projects being explored by peers such as Rio Tinto Exploration, Premier Gold Resources, and Kumo Resources.

Last year, Kalahari Key drilled three holes at the MFC project, with all three encountering ultramafic rocks that stand to be prospective for nickel, copper, and PGEs. One even identified magmatic nickel sulphides, which form the basis of globally important mining projects such as the Norilsk mining centre in Siberia. 

However, as Power Metal’s chief executive Paul Johnson highlighted in a release last week, the exploration work needed to follow up on these encouraging results has not yet taken place:

“It has been clear for some time that the ownership structure of Kalahari Key needed to be streamlined and that we needed to ensure a heightened level of operational efficiency on the ground in Botswana.”

This could now be set to change, however, as Kavango will immediately begin a work programme over the MFC project as part of its technical due diligence instead of paying an option fee.

Alongside fieldwork across the MFC project and a thorough data review, this will see it further investigate all three of last year’s holes using techniques developed at its flagship Kalahari Suture Zone project in Botswana.

Specifically, at Target 1, Kavango will complete what is known as a “moving loop” survey alongside its surveying partner Spectral Geophysics. The goal of this work is to produce a more defined model of a conductive target that last year’s drilling appears to have narrowly missed.

Meanwhile, at Target 2, the company has designed a soil sampling programme to test how deep mineralisation could stretch in preparation for future drilling after core retrieved last year identified visible nickel sulphides. Finally, the firm plans to cut core from Target 3 and send it to the lab for further analysis.

Pointing to this work, Johnson highlighted that the immediate work programme has the potential to move the MFC project forward considerably and quickly from a technical perspective:

“We believe that the MFC Project is a considerable opportunity based on real-world evidence already secured from project exploration to date. Now is the time to accelerate the MFC Project and we look forward to getting on with that."

Kavango’s CEO Ben Turney, meanwhile, said an all-share transaction will allow the company to preserve cash that will help it to continue pushing the MFC project forward at pace if it decides to exercise its option. Describing the asset as a “perfect fit” for Kavango’s vision of building a world-class minerals exploration firm in Botswana, he added:

“The structure of the work programme option means we can immediately start moving the project forward, while also performing detailed due diligence. I look forward to reporting on our progress.”

Friday’s deal builds on an existing and well-established exploration relationship between Power Metal and Kavango in Botswana.

The pair also operate a joint venture known as Kanye Resources, which is focused on making discoveries across an underexplored geological feature known as the Kalahari Copper Belt in the African nation. Several major discoveries have been made here in recent years, including Cupric Canyon’s Zone 5 deposit, which hosts a 9.17 million tonne copper/silver resource and Sandfire’s T3 project which currently hosts a 60.2 million tonne mineral resource.

Beyond Botswana, Power Metal is continuing to complete work programmes across a wide variety of global exploration projects in countries such as the USA, Canada, and Australia. 

Most recently, the company revealed that it had begun a much-anticipated test pitting programme at the Alamo gold project in America, where it has the right to earn into a 75% interest. The asset is thought to be highly prospective following the discovery of native nuggets of yellow metal near the surface in several locations.

With so many irons in the fire, several projects were potentially already on track to fulfil Power Metal’s goal of making large-scale metal discoveries. Now, as a result of Friday’s deal and imminent work programme, the MFC project in Botswana is the latest name to join this growing list. 

Author: Daniel Flynn

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