Broker sees huge upside in Kavango Resources with major Botswana discovery on the cards (KAV)

AIM-listed Kavango Resources (LSE: KAV) has the potential to produce a near-term 76% share price gain, according to a new note by First Equity. 

The copper and nickel explorer could hit 5.2p in short order, the broker said, from its current 2.8p.

Analyst Jason Robertson said the copper and nickel explorer also has “a medium to high probability of making a major exploration discovery within the next 18 months.”

Kavango is seeking world-class Norilsk-style nickel sulphide deposits from its 100%-owned flagship project at the Kalahari Suture Zone (KSZ) in Botswana. 

Investors may be wise to position themselves in the stock ahead of any potential landmark discoveries being made in the coming year as the Group ramps up its exploration activities,” the analyst added.

Norilsk in northern Russia hosts the planet’s richest supply of copper-nickel-PGM metals. The huge Siberian mine accounts for 50% of the world’s palladium production, along with 20% of global nickel and platinum. 

Success on this level for Kavango in Botswana would attract not only new investors but also possible big player industrial participants, Robertson said. 

Derisking the play is a recent JV with fellow AIM-listed Power Metal Resources (LSE: POW). And Kavango is also now fully-funded for a 2021 drill campaign after it successfully raised £2m from a heavily oversubscribed 10 November placing. 

At the time, CEO Michael Foster noted the company was now “well-funded to pursue ambitious exploration plans and unlock what we believe is the KSZ’s considerable potential.” 

KSZ potential booms

Kavango has a drill programme of 5,000 metres planned for 2021. In December 2020, it revealed it had identified four Norilsk-style ‘mega targets’ in the northern Hukuntsi section of the KSZ.

To confirm these targets, Kavango used proprietary techniques to produce the first ever 3D geological models of the region, followed by intensive ‘large loop’ surveys which are much more precise than standard airborne electromagnetic analysis. These give the £8.9m market cap company “a crucial competitive advantage” to determine high-priority drill targets, Robertson noted.

Previous work has confirmed important similarities between the KSZ and other major global metal sulphide deposits, including Norilsk and Voisey’s Bay in Canada. 

The broker note also focuses on Kavango’s management team, which it says has a successful track record in minerals discovery and realising value from exploration projects. 

Director Mike Moles “added significant value to several early-stage assets, including a Mozambique coal project that was sold to Riversdale, and then subsequently acquired by Rio Tinto for a sizeable US$4bn,” the note mentions. 

Joint venture

In 2020, Kavango signed terms with Power Metal Resources for a JV covering two of its Kalahari Copper Belt (KCB) licences and two licences at the Ditau Project for a 50% interest. Field explorations are currently underway.

The partners could seek to list a separate investment vehicle on UK or North American markets, enhancing additional value for shareholders, Robertson notes. 

The focus is an exploration-rich target area of west-central Botswana, which is near many world-class copper and silver discoveries made in the last 15 years such as Cupric Canyon’s Zone 5 and Sandfire Resource’s T3, T4 and A4 deposits.

POW CEO Paul Johnson “previously added considerable value to a Botswana project via a similar style JV” in his previous position at Metal Tiger (LSE:MTR), the note adds. 

Exploration drilling could follow in 2021 if results prove positive. 

Given the management’s experience in adding considerable value to resource projects in previous ventures, and high likelihood of finding similar world class deposits to those nearby and currently controlled by Cupric Canyon and Sandfire in the Kalahari Copper Belt,“ investors should watch Kavango Resources for an entry point in early 2021, Robertson concluded. 

Author: Mark Sheridan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Kavango Resources identifies four ‘Norilsk-style’ mega-targets (KAV)

Kavango Resources (LSE:KAV) has the potential to be one of next year’s most exciting plays in the junior metal exploration space. Having recently raised £2 million, the company is fully funded to pursue its ambition of making a major metal discovery in the Kalahari Suture Zone (KSZ) in southwest Botswana.

On Tuesday Kavango announced the next phase of exploration at the KSZ, with the exciting revelation the company has identified 4 ‘Norilsk style’ targets in the Hukuntsi project area. This could be a huge development for the firm.

Kavango believes these ‘Norilsk style’ targets could host world-class deposits of copper, nickel and PGMs. Now that is has four of these to test, the upside potential is enormous.

Each target was selected using the latest geophysical data from 3D magnetic models developed by a joint team of Kavango and Mira Geoscience experts. Kavango is the first company ever to produce such a 3D geological model of the KSZ.

The four targets are all located in the northern Hukuntsi section of the KSZ. And the next step is to carry out vital field exploration to determine more precise drill targets. 

Looping up

To confirm the best drill targets at Hukuntsi, Kavango will carry out ‘large loop’ surveys using more intensive analysis than is possible from airborne electromagnetic (AEM) surveys. 

AEMs are a standard tool in identifying potential mineral targets, but are limited by being unable to distinguish between electrically conductive groundwater and underground metal deposits.  

By contrast, large loop surveys use ground-based equipment to transmit a powerful electrical current into the earth through extremely long copper wires. Low-frequency electrical signals are bounced from the wire underground, in much the same way as sonar, to identify metallically conductive targets. 

Direct ground surveys of this type can not only penetrate through groundwater supply — that AEMs cannot — they can also distinguish the difference between metal deposits and water tables. The main focus here is to find high-speed electromagnetic conductors that are associated with magmatic sulphide mineralisation: the exact type of rocks that contain the world’s largest copper-nickel-PGM deposits. 

These loop surveys remain a relatively low cost way to more precisely identify specific drill targets, in precisely defined areas. 

“We are in advanced discussions with a local specialist contractor who will undertake the large loop surveys,” said CEO Michael Foster, “and we look forward to providing further updates in the coming weeks.”

Fully-funded for a shot at the big time

All the news is pointing in the right direction for Kavango at present. 

The company’s extensive geological analysis of the KSZ has added significant weight to its theory the region plays host to one or more very large copper-nickel-PGM deposits.

Laboratory analysis of rock chip sampling, completed in late October this year by Dr David Howell (a leading authority on the subject of copper-nickel-PGM sulphides), suggests compelling evidence of the precise type of underground metal transport systems required to form mineable mineral deposits. 

These include primary magmatic sulphides in 50-metre thick “gabbroic sills”, along with strong evidence of sulphur saturation and cumulate rocks. Structures of this type suggest that metal sulphides may have accumulated in vast underground trap zones, making the metals easier to access than would be possible otherwise.

Earlier, in August 2020, independent consultants identified the presence of the same key cumulate rocks and crucially, sulphide liquid fractionation. 

The latest thinking is that the KSZ experienced the same geological conditions that created massive sulphide deposits at Norilsk in Siberia, Jinchuan in China and the Thomson Nickel Belt in Canada. 

The Norilsk mining centre is one of the world’s richest supply of copper-nickel-PGM metals. The huge Siberian mine accounts for 50% of the world’s palladium production, along with 20% of global nickel and platinum. 

Finding even a small proportion of ‘Norilsk-style’ deposits would clearly transform the fortunes of the £5.7m market cap explorer.

In fact, if even one of its four targets bears fruit, Kavango Resources could become a nine-figure market cap company overnight. The upside potential here is immense. 

Trading up

Investor interest is intensifying as Kavango makes these preparations. 

At 3p, the share price has rebounded to a level not seen since July 2019.

On the trading side, multiple bullish signals abound. The Kavango share price has seen a pattern of increasing higher lows since early April 2020, while KAV remains above its 50 day moving average and 200 day moving average with strong support in these areas. 

Volatility is low intraday, with Bollinger Bands squeezing tighter and volume building on rising share price days. In our opinion a breakout to the upside is the most likely scenario from here. 

And it’s not only investors whose interest has been piqued. Scientists too are turning their attention to the conditions in the KSZ. 

Kavango’s exploration is now also the subject of a Masters research project with the University of Leicester, beginning in January 2021 and completing at the end of Q2 next year. Kavango will supply core samples and exploration data for the thesis entitled: “Mineralogy, Petrology and Geochemistry of the Karoo Gabbros of the KSZ and the similarities with world-class magmatic sulphide deposits of the world.”

Hot copper

All of this is playing out against a macroeconomic backdrop of soaring copper prices. 

In September 2020 global intelligence agency Fitch raised its price forecast for the metal to $6,000/tonne backed by buoyant demand from China and the short-term recovery of global economic activity. 

This bullish forecast surpassed the average $5,790/tonne price in the first nine months of the year, while China’s copper consumption rose nearly 25% from January to July 2020. 

Then copper hit a seven-year high of $7,250/tonne on 29 November. 

Bloomberg reported that inflation fears were driving investors into the bellwether metal at new record rates, with the market “experiencing a wave of investor interest the likes of which it hasn’t seen for a decade.” 

This certainly isn’t the end for rising copper prices. 

Traders are preparing themselves for a major bull market and believe copper could challenge the $10,000/tonne price last seen in 2011. 

Certainly, global economic recovery could spur further inflation worries as governments devote vast amounts of capital to metals-intensive stimulus packages, Bloomberg say.

And any explorer in the right place at the right time with a potential world-class deposit on its hands could see major riches flow. 

Author: Mark Sheridan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Kavango Resources raises £2 million to push forward enormous KSZ opportunity in Botswana (KAV)

Kavango Resources (LSE:KAV) has raised £2 million in an oversubscribed placing to push forward across its portfolio of exciting exploration projects in Botswana.

The London firm placed 72.7 million shares with institutional, high-net-worth, and retail investors at 2.75p each, also adding on 30-month warrants with a 4.25p exercise price on a one-for-one basis. These new shares will represent approximately 27% of Kavango’s enlarged share capital.

The funds will primarily be used to complete “large loop” electromagnetic surveys across Kavango’s project in mining-friendly Botswana’s Kalahari Suture Zone (“KSZ”). It aims to identify high-priority targets for a major 2021 drill campaign.

The KSZ is a 450km-longe magnetic anomaly in the southwest of Botswana where Kavango is exploring for copper, nickel, and platinum group metals-rich sulphide ore bodies. It offers a distinctly similar geological setting to the Norilsk mining centre in Siberia, which accounts for 90% of Russia's nickel reserves, 55% of its copper, and virtually all of its platinum group metals.

Meanwhile, Kavango also plans to commit working capital to the further exploration of its interests in Botswana’s Kalahari Copper Belt (KCB) as well as its nearby Ditau project. Many of these licences are held within a strategic joint venture with the firm’s London exploration peer Power Metal Resources (LSE:POW).

On the placing, Kavango’s chief executive Michael Foster said: "We are very pleased to have received such strong backing from investors, as we now enter an exciting phase of Kavango's development. The Company sought to raise a maximum of £2 million and I am happy to report that the placement was over-subscribed.

“We are now well funded to pursue our ambitious exploration plans and unlock what we believe is the Kalahari Suture Zone's ("KSZ") considerable potential. We have taken great strides over recent years to validate our overall exploration hypothesis that the KSZ is host to one or more large Copper-Nickel-PGM deposits.

“Over recent weeks we have continued further analysis of the extensive geological data we have compiled and will announce shortly our highest priority target areas."

Kavango’s placing comes on the back of expert analysis of exploration data that recently confirmed the potential for a massive, transformational nickel and copper discovery at the Kalahari Suture Zone.

Towards the end of last month, the firm confirmed that conditions were right about 180 million ago in the KSZ to create highly concentrated pools of super valuable and sought-after base metals, such as nickel and copper. With this confirmed data in hand, Kavango can move to exploit its virgin territory, which covers 12 licences stretching nearly 7,000km2.

Under the Kalahari sands lie vast rock formation (see image, marked in red) where huge pools of molten metal could have been trapped over time.

This is a territory that has never been explored. Results from Kavango’s three years of field work and laboratory testing have consistently pointed to a Norilsk-size Nickel project. Now the company has the analysis that seems to conclude it and the funds in place to seize the opportunity on offer.

Author: Daniel Flynn

The Author holds a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Kavango's hunt for elephant-scale deposits intensifies as modelling confirms Norilsk potential in Botswana (KAV)

Kavango Resources (LSE:KAV) was trading at 2020 highs on Tuesday after confirming "spectacular" geological similarities between its vast land package in Botswana and the giant Norilsk mining centre in Russia.

Over the past few months, Kavango has been building a 3D model for the 450km-long Kalahari Suture Zone ("KSZ") magnetic anomaly, where it is targeting world-class mineral deposits. The area is entirely covered by Cretaceous and post-Cretaceous Kalahari sediments and has never been explored using modern techniques.

Kavango secured thousands of data points from its own extensive aerial surveying and 2019 drill campaign, as well as from third-party historical exploration drilling and water boreholes, to build a comprehensive picture of the region’s prospectivity. On Tuesday, the company rocketed to 2.7p a share after confirming its 3D model had established critical similarities between the KSZ's northern "Hukuntsi" section and Norilsk.

Based in Siberia, Norilsk is one of the world's biggest mining centres, accounting for 90% of Russia's nickel reserves, 55% of its copper, and virtually all of its platinum group metals ("PGMs").

Specifically, Kavango's model depicts ten district-scale horizontal "sills" at Hukunsti covering over 300km2. Sills are relatively thin, planar, bodies of coarse-grained rock known as "solidified gabbroic magma" that intruded into layers of sedimentary rock while still molten during volcanic activity about 150 million years ago.

According to Kavango, these sills display dozens of "gull wing" and "keel" formations that are characteristic of those containing metal-rich massive sulphides at Norilsk. Two examples can be seen in the images below.

Cross section A-B from Hukunsti, KSZ

Cross section C-D from Hukunsti, KSZ

The similarities between these formations and the Norilsk schematic below are extremely striking.

As can be seen in the Norilsk schematic below, the copper, nickel, and PGM content in the upper "gull wings" is low. Much of this metal combines with free sulphur and gravitates down as a heavy sulphide liquid into the lower "keel" sector of the sill – which can then act as a trap zone or “bowl” for massive sulphide accumulations.