Kavango Resources (LON: KAV) on Tuesday announced great news on top of yet more great news, with both a strategic partnership and the likely identification of a large electro-magnetic anomaly in its Kalahari Suture Zone (“KSZ”) project in Botswana. The company is looking for large-scale nickel-copper deposits, at a time when both metal prices are soaring.

In the first of yesterday’s announcements, Kavango revealed it had found what looks to be a large conductive body in Target Area A in the Hukuntsi section of the KSZ. 

The compelling anomaly was found using data from a Time Domain Electro-Magnetic (“TDEM”) survey and seems to be located between 250 and 700 metres from the surface. With a 1km strike length, the suggestion is this is a highly promising future drill target for the company, in its quest to uncover a major mineral deposit.

Spectral Geophysics conducted the survey, which showed that the anomaly appears to be in the lower parts of a gabbro ‘keel’. This was predicted by Kavango’s proprietary 3D-Underground Model, announced back in September 2020.

In what chief executive Michael Foster called a “prudent step”, Kavango sought “expert independent verification of the TDEM data” as well confirmation that it has been correctly gathered in the field. Interestingly, the company did not rush to publish news that it had identified the anomaly in February. Instead, the directors chose to go through this rigorous verification process, to gain as much confidence as they could that what they believed they had discovered could be relied upon.

So far, analysis confirms that Spectral’s work was high quality, as anyone would expect from “one of Southern Africa’s leading firms” in the exploration space.

The fact that Spectral has proven its ability to provide good data makes it all the more impressive that Kavango is bringing Spectral in as a partner.

The two firms have already signed a strategic partnership, under which Kavango will issue 3.0 million shares at 3p each, tied in for 12 months, as well as 3.0 million warrants with a 4.25p per share exercise price.

Spectral is to share technical knowledge with Kavango, helping the company optimise future KSZ underground remote surveys.

Not only that, but Spectral will also prioritise assigning its advanced surveying technologies to the zone for a 24-month period. This looks significant for the future development of this enormous project.

Meanwhile, Kavango is to share results from its independent assessments of remote survey data with Spectral. The firm’s field exploration team will also lend additional support to Spectral to help deploy sensing technologies to target areas more quickly.

Ben Turney, executive director at Kavango, said the deal has “guaranteed Spectral’s focused attention” when it comes to unlocking the KSZ. This is “absolutely” expected to accelerate progress in the area, given that Spectral’s interests now align with Kavango’s and its shareholders.

Given the share tie-in, Spectral can only make the most of the deal in the event of “significant medium-term success”, Turney said. This means Spectral is “extremely motivated” to make the project work and provide Kavango with “the best-quality drill targets”.

The KSZ is located in Botswana and includes 14 prospective licences spanning 7,573.1 square kilometres.

Of the 14 licences, 12 are over a sizeable chunk of the 450-kilometre long KSZ magnetic anomaly. This is where Kavango is exploring for metal sulphide ore bodies rich in copper, nickel, and platinum group metals (“PGM”).

One of the draws of the KSZ is its similarity to the Norilsk mining centre, located in the Arctic Circle in Siberia and quite probably the largest mine on earth. Norilsk produces around 20% of the entire world’s nickel, 10% of its cobalt, and 3% of global copper.

This shows up in the 3D Underground Model according to Turney, who highlighted the encouraging similarity in morphology between the KSZ and Norilsk.

With the latest TDEM results, Kavango can be even more sure of the model itself and is now feeling, as Turney put it, “very confident” in its accuracy.

“The fact that we found this conductor in the right position, as projected by our model, is a very encouraging sign,” Turney said.

The next step for Kavango will be re-surveying the potential anomaly on two to three other survey lines from the new TDEM loop position, which should provide additional confirmation. This is on top of completing independent verification of the Spectral results.

Foster noted that, while the company had been “hopeful” of the possibilities from the first TDEM surveys of the KSZ, the firm was “encouraged to have identified a conductive body of this size, in this geological setting so early in the programme.”

This was echoed by Turney, who said this new development was “definitely ahead” of Kavango’s expectations at the current project stage.

Kavango has been charging head-on in Botswana. It is set to see drilling later in 2021 from its interests both in the KSZ and the Kalahari Copper Belt (“KCB”). 

Most recently, in late March, Kavango unveiled a new joint venture announcement in the KCB, involving two signed agreements to acquire eight KCB prospecting licences. The JV is part of a Kanye Resources subsidiary, established in Botswana and known as Kanye Resources (Pty) Ltd (“Kanye Botswana”).

Kavango and Power Metal Resources (LSE:POW) each have a 50% interest in Kanye, with an exciting London listing planned later this year.

Kavango is also earning a 90% interest in the KCB’s LVR project, which will be held in a JV with LVR GeoExplorers.

Preliminary data plots from all airborne electromagnetic (“AEM”) surveys at the KCB so far have conformed to the company’s models, with further definitive results expected soon.

With so much happening for Kavango in Botswana, this latest news from the KSZ highlights the wealth of opportunities in the country – as well as the company’s strong position to capitalise on these opportunities. Now, with Spectral on board as a partner and powerful surveying technology at its disposal, Kavango is gathering speed. The company looks like it is ready to make plenty of progress over the coming months.

Author: Anna Farley

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