Power Metal Resources (AIM:POW) is banking on a set of monster results from an upcoming drill campaign in Botswana.

The Molopo Farms project is targeting prospective massive nickel sulphide mineralisation in the southwest of the country.

The company now reports that its privately-held JV partner Kalahari Key Mineral Exploration Pty Ltd (“KKME”) has carried out electromagnetic surveys across the license area, highlighting eight high-priority targets prospective for the valuable metal.

Four of the best targets have now been selected for drill testing, and fieldwork has confirmed that each of these shows good depth extension.

The surveys show that conductivity also increases with depth, which indicates probable large mineralisation deep in the rock substrata.

Nickel is highly conductive of electricity, which makes it a superb metal for use in industrial alloys for stainless steel and especially electric car batteries.

This property also means nickel deposits can be identified with relative ease underground by electromagnetic surveys.

Chief executive Paul Johnson told the market:

“These results show very good correlation to both the ground and high-resolution airborne EM results, adding significant resolution to the depth, size and shape for prospective massive nickel sulphide targets.

“We are looking forward to receiving the full geophysical analysis and report ahead of KKME commencing drilling.”

Worldwide shortage

If the drill results point towards big nickel sulphide deposits as expected, then Power Metal could be approaching an entirely transformational period.

The price of nickel has risen by over 30% since March, and industry analysts suggest a worldwide nickel shortage is on the cards as demand rockets for electric vehicles.

Shares in the London-headquartered explorer have already gained over 225% since December’s placing, hitting 1.3p.

Power Metal has an 18.26% stake in Kalahari Key and took a 40% earn-in interest in Molopo Farms by electing to spend US$500,000 (£371,025) on the drill campaign.

When the earn-in is complete, Power Metal will have a 50.96% economic interest in the project.

The AIM-listed company raised £700,000 in December 2019, with £400,000 specifically ringfenced to progress Molopo Farms. Johnson and his chairman Andrew Bell each subscribed for £25,000 in the 0.4p placing, highlighting their enthusiasm for its prospects.

At the time, Johnson said the move demonstrated that the financing would “secure material progression of the company through exploration in Botswana, rather than to cover general corporate and business overheads.”

That promise has now been borne out for investors as the earn-in progresses.

Johnson said his company had established a dedicated US dollar account for the $500,000 earn-in cost of the drill programme. This cash is fully covered by Power Metal’s existing resource, the CEO said.

As of 27 August, Power Metal had a strong £1.65 million ($2.23 million) in cash and cash equivalents on its balance sheet.

Upcoming

Drilling on the four key targets at Molopo Farms is expected to start in September 2020. 

In the meantime, Botswanan industry is normalising in the wake of the outbreak of Covid-19. The country has seen fewer cases than New Zealand, and recorded only six deaths since January. 

Formerly one of Africa’s poorest nations, Botswana is now the fourth-richest country on the continent, driven by an explosion in mining wealth.

Author: Mark Sheridan

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