Monday morning saw Katoro Gold (LSE:KAT) jump by more than a fifth to 1.14p a share after confirming third-party interest and expanded exploration plans for two of its gold projects in northern Tanzania.
The £1.92m business said that it had received expressions of interest around a purchase of - or joint venture agreement on - its Imweru and Lubando gold projects in the Lake Victoria Goldfields. Although no suitable agreement has yet been made, Katoro said the interest shows a ‘clear appreciation of the inherent value’ of the projects, which have a combined JORC-compliant gold resource of 754,980oz.
With gold prices rising and a recent review confirming exploration upside potential at both Imweru and Lubando, Katoro said the best way to create near-term value would be to build up the projects’ resource inventory. Indeed, it is targeting an initial target of 1MMozs of gold across both sites, an increase of nearly a third on existing resources.
The firm’s focus will initially be on Imweru, as it is the more advanced of the two sites. Here, it will work to identify the lowest-cost route to adding ounces and quantify gold in extensions to mineralisation along strike and at depth. As it stands, just 30pc of Imweru’s priority one exploration ground has been explored fully. Meanwhile, the site’s previous owner Kibo Energy estimated that its resource expansion potential could sit at between 40pc and 80pc.
Alongside this work, the business said it would continue to work with Tanzania’s Ministry of Minerals on completing a pre-feasibility study for Imweru and securing all relevant mining approvals. Katoro’s executive chairman Louis Coetzee said that reaching this initial 1MMoz resource target across Imweru and Lubando is not only ‘entirely feasible’, but will demonstrate the ‘substantial nature’ of its gold projects.
‘The board believes that Imweru has the potential to deliver 50,000oz per annum gold production should the conditions allow and suitable financing for development and construction be secured,’ he added. ‘In this regard, we continue to work with the Tanzanian authorities to chart the correct course for the development of the Projects in a beneficial manner for the region and country, and also in a manner that generates commercial returns for the company supporting the investment decision required for mine development.’
The news also prompted a response from Power Metal Resources (LSE:POW) which holds a 5.95p stake in Katoro. The organisation, which was sitting at 0.45p in midday trading, said it was ‘pleased to draw investors’ attention’ to Katoro’s update.
Power Metal also owns a 25pc direct interest in Katoro’s Haneti Nickel project, which can be increased to 35pc through a £25,000 cash payment. Based in Central Tanzania, Haneti is a nickel sulphide project made up of near-contiguous tenements covering around 5,000km 2 of land. Much of the project lies on top of a highly-prospective belt of rocks called the Haneti-Itsio Ultramafic Complex (HIUC), which is made up of metamorphosed ultrabasic rocks like dunite and peridotite called serpentinites.
Before Katoro or Power Metal’s involvement at Haneti, previous owners such as Kibo Mining (LSE:KIBO) had completed around $1.5m worth of exploration work. These efforts identified strong prospectivity for nickel in the block across four key drill-ready targets along with additional gold, cobalt, platinum credits, and some significant lithium anomalies. The most prospective of these sites is Mihanza Hill, which covers an 80km-long ultramafic zone known as ‘the central zone’ and has returned grades of 13pc nickel and 2.33 grams per tonne of palladium and gold.
Beyond these efforts, additional, independent work by Western Geophysics proposed that Haneti could host a significant nickel sulphide deposit. Likewise, the Geological Survey of Tanzania completed a high resolution airborne geophysical survey covering c.12,000km between 2012 and 2013 that extended the footprint of the project’s known nickel sulphide-prospective belt.
After acquiring Haneti in November last year, Katoro immediately began a review of all the historic work completed on the block. This led it to the exciting conclusion that the asset may host a chonolith-type nickel sulphide deposit.
Katoro and Power Metal, which entered Haneti earlier this year, are now working to establish whether disseminated or massive sulphide mineralisation exists across the project’s key targets ahead of drilling.
Towards the end of May, the pair revealed that 1,500 soil samples from the project had extended the strike length of its existing exploration targets and well as identifying an entirely new target. Following this, in June, the partners revealed that they had decided to carry out a drill programme on two of Haneti’s key targets – Mihanza Hill and Mwaka Hill. This decision came after 3D modelling on a magnetic anomaly at Mihanza Hill.
Finally, in July, Katoro and Power Metal announced that they had identified several pegmatite outcrops within two abandoned artisanal pits at Haneti during exploration work. These were found to contain coarse quartz, red and black tourmaline and- most critically- lepidolite - which contains significant amounts of lithium. These results indicate that lithium minerals such as spodumene and petalite – as well as rare earth elements like tantalite-columbite – may be present at Haneti. As such, the pair have applied for five new exploration licences covering zones of interest and are developing a work programme to identify any lithium-bearing minerals and assess the extent of any lithium mineralisation.
Author: Daniel Flynn
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