African Battery Metals (LSE:ABM) has been on something of a roller coaster ride over the last few months. After its shares were suspended at the end of 2018, in the face of financial uncertainty, a successful refinancing programme allowed the company to return to trading in February with no debt and a healthy cash runway. Alongside this newfound financial security, the organisation has also undergone a significant management restructuring that has seen industry veterans Paul Johnson and Andrew Bell both become executive directors.

As it stands, African Battery’s shares sit at 0.4p to give the business a modest valuation of just £1.33m. In this two-part interview, Johnson talks us through Bell and his plans to build on this base by using the firm’s strong core offering to create value for both new and existing shareholders.

New beginnings

African Battery’s significant transition began in December last year with the suspension of its shares pending clarification of its financial position. In an accompanying statement, the company revealed that it had been unable to secure equity finance with its largest shareholders despite ‘protracted discussions’.

Following this considerable setback, the firm took a significant step forward at the end of January when it revealed a restructuring and refinancing package. This was centred around a £1m fundraise at 0.5p per share with two-year warrants attached. This would enable it to pay off all of its material creditors, leaving it debt free with a cash runway of at least 12 months. 

Critically, the arrangement also proposed that African Battery’s then-CEO Roger Murphy and executive director Matt Wood would step down from the firm’s board. Meanwhile, well-known AIM figures Andrew Bell and Paul Johnson would both join as executive directors and take part in the placing. Johnson is an experienced public company director who has previously served as chief executive of Metal Tiger, Metal NRG, and China Africa Resources. He has also been chairman of ECR Minerals and non-executive director of Greatland Gold, Papua Mining, and Thor Mining. Bell, meanwhile, has worked in the natural resources sector since the 1970s and is perhaps most recognised as chairman of Red Rock Resources and non-executive director of Jupiter Mines.

Johnson tells us that he and Bell’s engagement with African Battery arose from their long-standing interest in its operations. As a result of this awareness, the pair were keen to look at ways of fixing the firm’s financial situation as soon as they heard of its suspension:

‘African Battery has always had a healthy amount of interesting news flow,’ Johnson tells us. ‘When it announced that it had suspended, it seemed obvious to us to look into what problems existed and whether they were fixable. These days, AIM operating companies with some cash, no debt, and some potential forward momentum in operations can be highly valuable. We pretty quickly concluded that we could resolve the company’s issues, and felt that this represented a great opportunity.’

Johnson says he also feels that current market conditions represent an opportune moment to get exposure to battery metals. Indeed, once obscure materials like copper, cobalt, nickel, lithium, and manganese are now being hailed as the ‘new precious metals’ due to their use in the next generation of batteries. These have many applications, but their most notable us is arguably in electric vehicles (EVs).

Alongside supply-side limitations, many expect the anticipated, global shift towards EVs over coming years to lead to an explosion in the price of elements associated with their construction. For example, the market for cobalt alone is expected to double over the next four years and quadruple by 2028 due to an unsteady supply pipeline for the metal and its use in around three-quarters of EV batteries.

‘You just have to look at all the facts about battery metals like forward supply/demand dynamics and underlying factors that would drive demand to see an opportunity,’ Johnson explains. ‘There has not been growth in mining, exploration, project development, and new mines for these metals, and that is affecting supply. Meanwhile, as everyone knows, battery metal demand is increasing dramatically and is expected to continue rising.

This is really an unusual situation. We have actually got supply and demand factors that could hit prices positively at the same time. For example, do I think copper is going to stay at its current, depressed price forever? I doubt it. Likewise, nickel looks to be on a significant, overall, rising trend. I think we are set for an excellent growth period and this is the perfect place for us to be.’

Operational review

Several weeks after the refinancing was announced, Johnson and Bell’s proposals were passed by shareholders, prompting the pair’s appointment and the restoration of trading in African Battery’s shares. Since joining, the two executive directors have been busy completing a thorough strategic and operational review of the business.

On the financial side, this has seen them cut corporate costs to minimal levels and amend boardroom pay to ensure directors’ salaries are transparent and reflect both performance and African Battery’s cash position. Elsewhere, in early March, the business announced that it has now paid all material creditor balances through cash or share settlement. As such, it no longer has ‘material debt’ and substantial working capital.

Meanwhile, on the operational side, the pair are also conducting a review of each of African Battery’s existing project interests. To date, the company has committed to proceeding its 70pc-owned and operated Kisinka copper-cobalt project in the Democratic Republic of Congo (DRC). This decision followed a visit by Bell in February, which included meeting with project vendors and local technical advisers.

The company is now liaising with its geological team to prepare a next-stage exploration programme for Kisinka. This will be optimised using previous exploration data, and modifications have been made to earlier plans to maximise cost efficiency. Meanwhile, the organisation has now made all outstanding project payments to Kisinka’s vendor and completed all the changes required to comply with the DRC’s new Mining Act.

After reviewing historical data, African Battery has also committed to continuing its work in Cameroon. Through its subsidiary Cobalt Blue Holdings, the company holds four nickel cobalt licences in the country either adjacent to or within 50km of the Nkamouna/Mada project. This is the most significant undeveloped cobalt resource outside the DRC and has a NI 43-101 compliant resource of 323Mt at average grades of 0.21pc cobalt, 0.61pc nickel, and 1.25pc manganese. Cobalt Blue also holds two licence applications at Ntam Est and N'Gaoundere.

African Battery is now devising a forward work programme for Cobalt Blue’s assets that will prioritise the highest-profile targets as determined from work undertaken and reviewed to date. In an announcement, Johnson said the business would like to begin its work as soon as possible so it complete before heavy rains expected after June.

Bell and Johnson are now completing a review of African Battery’s final interest in Côte d’Ivoire. Through its subsidiary Regent Resources Interests, the business can earn into 70pc of the Lizetta II chrome, nickel, cobalt exploration licence in the country. An independent assessment of the project, which is based near the country’s commercial capital, has confirmed its potential to host cobalt, nickel, and chrome mineralisation of economic potential. It has also proposed an initial field programme consisting of historical data compilation, geological mapping, geophysical surveys, trenching, and RC drilling.

Johnson tells us that he and Bell are using a three-stage process to review African Battery’s existing portfolio:

‘The first stage of this process is to look at each project and its potential. Here, we want to work out if the asset can, on its own basis, engage the market, create value, and be a decent addition to African Battery’s portfolio. Then, if we do decide to proceed with a project, we will announce this to the market,’ he says. ‘Following this, the second stage is to review how best to take the project forward. We look at where we can spend the money in a way that creates the most value for shareholders. This could be on something like an exploration programme or a development programme. Once we have worked out the best approach possible, we will then announce this to the market. Finally, the third stage is to get on with the planned work and start taking the project forward.’

Author: Daniel Flynn

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

The article expresses the views of the Author solely and does not necessarily express the views of MiningMaven.com and Catalyst Information Services Ltd or their connected parties who are not responsible for its content or accuracy

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. Readers are recommended to seek the advice of appropriate professionals when considering investments in small capital.

African Battery Metals (LSE:ABM) has been on something of a roller coaster ride over the last few months. After its shares were suspended at the end of 2018, in the face of financial uncertainty, a successful refinancing programme allowed the company to return to trading in February with no debt and a healthy cash runway. Alongside this newfound financial security, the organisation has also undergone a significant management restructuring that has seen Paul Johnson and Andrew Bell both become executive directors. 

In the first part of our interview with Johnson, the AIM veteran discussed Bell and his reasons for approaching African Battery and their plans for the outfit’s existing portfolio. Here, he discusses the pair’s recent deal with AIM-listed Katoro gold and their plans to make the most of today’s ‘very poor’ funding climate for early-stage resource opportunities as they line up African Battery’s future.

Haneti opportunity

Johnson and Bell revealed African Battery’s first foray into new territory under their leadership last month, announcing an investment and option agreement with Katoro Gold (LSE:KAT). Under the contract, African Battery will be able to purchase up to 10m shares in Katoro at 1p each with three-year warrants attached. It also has the right to purchase up to 35pc in Katoro’s 100pc-owned Haneti nickel project in Tanzania, for a total consideration of up to £125,000.

Haneti comprises tenements covering an area of around 5,000km2 prospective for nickel, platinum-group-elements, cobalt, copper, gold, and lithium. Previous work has identified grades of up to 13.6pc nickel at the project, and an exploration programme this year will aim to confirm the existence of disseminated or massive sulphide mineralisation in the area. Alongside Haneti, Katoro owns a further two gold projects in Tanzania called Imweru and Lubando. Together, these host a JORC-compliant resource of 754,980oz gold.

As well as giving African Battery exposure to a new nickel project and a new jurisdiction, Johnson says he and Bell felt that Katoro’s looked undervalued:

‘Like all resource firms, Katoro has suffered recently. Its market cap currently sits at just £1m, which is unbelievably low considering that it has a large amount of gold in its portfolio, a potentially high-impact nickel project, and cash in the bank. We see plenty of upside on the stock, and think its market cap could go substantially higher.’

Johnson also highlights parallels between Katoro and Haneti’s previous owner Kibo Mining (now Kibo Energy), into which Metal Tiger entered a joint venture in 2014 when he was chief executive. Shortly after Metal Tiger made a £150,000 equity investment and launched the 50:50 project focused on its uranium-prospective portfolio in Tanzania, Kibo’s shares shot up from below 1.5p to more than 10p in intra-day trading.

This rise, which occurred very quickly, came after Metal Tiger’s investment supported Kibo in the delivery of a highly positive definitive mining feasibility study at its Rukwa coal to power project. With the deal earning Metal Tiger a significant profit in short order, Johnson hopes that alongside having an option over Hanet, African Battery can make a lot from its Katoro shareholding.

Broadening horizons

Alongside the Katoro deal, March also saw Johnson and Bell lay out their plans for African Battery’s future in a strategic and operational plan. The company said that the funding climate for early-stage resource opportunities is still ‘very poor’, thanks to depressed market conditions. As a result, it believes vendors are willing to undertake transactions on unusually reasonable terms. Using some of its remaining cash balance, the firm plans to take advantage of this by reviewing and – if appropriate – acquiring new opportunities that complement its existing portfolio and provide additional risk diversification.

In the update, African Battery said it has already received direct approaches from third parties with assets in battery metals, precious metals, and other commodity groups. As well as looking at new commodity groups, the firm said that, although it intends to remain focused on Africa, it would be willing to enter new jurisdictions if an attractive enough opportunity arose.

‘We are obviously very focused on reviewing what we can do with the existing portfolio,’ says Johnson. ‘However, we are also considering investment opportunities that can boost our balance sheet, bolster our financial strength and expose us to strategically attractive areas for future business development. For example, it would be good to get diversification across a wider geographical spread in Africa, rather than focusing solely on the West of the continent. There are a number of attractive opportunities out there in stable jurisdictions before offered at good valuations.’

Aside from maintaining and expanding African Battery’s portfolio, Johnson said another core goal for Bell and himself is to restore value for long-term shareholders. He highlights his stints at Metal Tiger, Greatland Gold, and Thor Mining as evidence of his ability to implement a successful business turnaround strategy.

‘African Battery has been through a period of difficulty, and it is now down to us to restore confidence in the company. There are a lot of people with personal money invested that have suffered a large capital loss. So, alongside making money for the investors that entered alongside us, we have got to try and make back as much of that cash that long-term shareholders have lost on paper as possible,’ he says.

‘Both Andrew Bell and I have enjoyed turnaround success at numerous businesses over the years, with good examples being Thor Mining, Metal Tiger, and Greatland Gold. We enter African Battery in a far more comfortable position than many of these examples. The company has no debt, a good strong cash balance, and some existing interests with value that can be taken forward. What’s more, we are at the bottom of the market, or at least close to it. That is the scenario you want if you are going to make a recovery. It is really a case of doing the same thing as we have done before: maintaining our strong core business model and grabbing new opportunities as and when they become available.’

Where next?

With one asset left to review and new projects on the agenda, the next few months are likely to see African Battery deliver plenty of newsflow for investors. What’s more, by a revitalised balance sheet devoid of debt and replete with cash complements this forward momentum. If the business’s two experienced bosses can strike the right chord with the retail market by meeting all of their strategic and operational goals, then the company could be poised for exciting growth.

Author: Daniel Flynn

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

The article expresses the views of the Author solely and does not necessarily express the views of MiningMaven.com and Catalyst Information Services Ltd or their connected parties who are not responsible for its content or accuracy

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. Readers are recommended to seek the advice of appropriate professionals when considering investments in small capital.

African Battery Metals (LSE:ABM) advanced 5.6pc to 4.8p on Monday afternoon after announcing that it has begun exploration activities at its copper-nickel project in Cameroon. The £1.7m business, which was trading at 0.47p on Tuesday morning, will carry out a pit excavation programme at the asset to a maximum depth of 15m per individual pit.

This work, which is due to start immediately so it can complete before the onset of heavy rains, will include mapping and sampling of each excavated pit. These samples will be tested in South Africa following completion of fieldwork and used to produce a database of prospect information complementing historical work carried out on site.

African Battery is testing for cobalt and nickel mineralisation at depth to reflect work conducted by Geovic Mining at its nearby licences. This demonstrated that mineralised horizons were below 6m. Specifically, African Battery wishes to test the theory that its licence interests show geological similarity to the nearby Nkamouna deposit. Here, Geovic published a NO 43-101-compliant total measured, indicated, and inferred mineral resource of 323Mt at 0.21pc cobalt, 0.61pc nickel, and 1.26pc manganese.

African Battery’s developments in Cameroon come around a month since it recommenced exploration at its 70pc-owned Kisinka copper-cobalt project in the DRC. Last week, the firm revealed that it had completed a field programme at the asset, collecting a total of 663 termite mound samples. The organisation is now carrying out sample preparation, which is scheduled to end shortly. After this, it will carry out X-ray fluorescence spectrometry analysis to identify anomalous levels of copper and cobalt.

In Monday’s update, African Battery’s executive director Paul Johnson said the firm’s approach to Cameroon would be similar to its work in the DRC.

‘As with Kisinka, we have opted to focus our initial exploration spend in a highly targeted manner, answering a simple exploration question and namely, do the identified target areas have geological similarity to the nearby Nkamouna deposit,’ he said. ‘If the answer is positive, the impact on the value of the project to the Company could be dramatic and certainly disproportionately beneficial against the underlying modest cost of conducting the planned pitting and sampling programme.’

Elsewhere, this month saw African Battery unveil a significant acquisition and earn-in agreement in Botswana. The business has acquired an 18.26pc stake in an exploration and geological consultancy company called Kalahari Key Mineral Exploration for $194,821.

Kalahari Key, established by Roger Key, Andy Moore, Simon Bate, and Rick Bonner in November 2014, is the 100pc owner of Molopo Farms Complex (MFC) project in south-west Botswana. Furthermore, African Battery has also secured the right to earn-in to a 40pc direct interest in MFC by spending $500,000 on the project by 31 December next year. This money would go towards ground exploration at the project, expected to include the drilling of high priority targets.

MFC is made up of three exploration licences covering 2,725km2 that are thought to be prospective for nickel, PGM, and copper mineralisation. As well as acquiring all of the project’s historical exploration data, Kalahari Key has undertaken a high-resolution, helicopter-borne electromagnetic and magnetic survey on the area. This work identified 17 key zones of conductive rocks now being used to construct a priority list of targets for follow-up ground exploration.

To read MiningMaven’s recent interview with Johnson on his plans for African Battery moving forward, please click here.

Author: Daniel Flynn

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

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

Catalyst Information Services 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 Catalyst Information Services Ltd are not responsible for its 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.

African Battery Metals (LSE:ABM) sat at 0.4p today after reporting that it is ‘extremely well positioned’ for a strong recovery in the natural resources sector.

In its results for the year ended 31 March 2019, the organisation revealed a loss of £0.32m, an improvement on the £0.79m loss it incurred in 2018.  It also reported that period-end net assets of £3m up from £2m on 30 September 2018.

In its update, African Battery’s executive chairman Paul Johnson highlighted that the results period cover little of the time the firm has spent under his and chairman Andrew Bell leadership. The pair replaced African Battery’s former management team in February as part of a restructuring and refinancing exercise. This saw the company raise £1m to support it in the clearance of creditors through a combination of discounted cash and share settlement payments.

Shortly after joining, the pair launched a strategic and operational review that has continued into the new annual results period. As part of a review of African Battery’s existing portfolio, the firm committed to continuing with the existing Kisinka copper-cobalt project in the DRC. A termite mound sampling programme covering the entire licence commenced in April, and a 7km copper anomaly was announced earlier this month.

Meanwhile, Johnson and Bell have also committed to continuing with African Battery’s Cameroon cobalt-nickel project interests in the ground near to the substantial Nkamouna deposit. A pitting and sampling programme to test how similar the firm’s land is to the Nkamouna geology is currently underway. Finally, a review of the business’s Ivory Coast opportunity is continuing.

Elsewhere, African Battery announced an option with Katoro Gold plc (LON:KAT) earlier this year to acquire up to a 35pc stake in its Haneti Nickel Project alongside the purchase of 10m ordinary shares in Katoro itself. After a period of due diligence, the company exercised this option in May.

Following this, African Battery announce an acquisition and earn-in agreement with Kalahari Key Mineral Exploration, a private company in Botswana, last month. The organisation has acquired an initial 18pc of Kalahari Key’s issued share capital. However, it also has an option in 2019 to earn-in to a 40pc direct project interest by supporting expenditure in respect of a 4-hole drilling programme. This will focus on targets derived from extensive airborne electromagnetic and ground geophysical surveys and related exploration.

Moving forward, Johnson said African Battery is continuing a review of various additional opportunities in a pipeline that is ‘bursting with potentially exciting natural resource projects’.

‘Despite the challenges in late 2018, ABM is now, in the opinion of the board, extremely well positioned for what we expect will be a strong natural resource sector recovery, particularly in respect of battery and electrification metals and storage metals,’ he added.

‘Notwithstanding the cleaning up of the outstanding creditors following the refinancing in February 2019, relaunching exploration programmes across two of our main projects, and acquiring new business interests we remain in a robust financial position.

‘The company's corporate cash costs are carefully monitored and controlled.  The ompany's operational costs are controlled and with modest with low cost programmes being undertaken, generally where the potential upside from positive exploration may be dramatic.

‘The company will be continuing to provide regular updates with regard to its corporate and operational activities over the coming weeks and months.  ABM will also release this month an update of the ongoing strategic and operational review, to provide an in-depth analysis of the business, its corporate strategy and how the individual operational activities will be undertaken to drive the company forward.’

Author: Daniel Flynn

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

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

Catalyst Information Services 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 Catalyst Information Services Ltd are not responsible for its 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.

African Battery Metals (LSE:ABM) jumped 12.5pc to 0.4275p on Monday morning after unveiling a major acquisition and earn-in agreement in Botswana. The business has acquired an 18.26pc stake in an exploration and geological consultancy company called Kalahari Key Mineral Exploration for $194,821.

Kalahari Key, established by Roger Key, Andy Moore, Simon Bate, and Rick Bonner in November 2014, is the 100pc owner of Molopo Farms Complex (MFC) project in south-west Botswana. Furthermore, African Battery has also secured the right to earn-in to a 40pc direct interest in MFC by spending $500,000 on the project by 31 December next year. This money would go towards ground exploration at the project, expected to include the drilling of high priority targets.

MFC is made up of three exploration licences covering 2,725km2 that are thought to be prospective for nickel, PGM, and copper mineralisation. As well as acquiring all of the project’s historical exploration data, Kalahari Key has undertaken a high-resolution, helicopter-borne electromagnetic and magnetic survey on the area. This work identified 17 key zones of conductive rocks now being used to construct a priority list of targets for follow-up ground exploration.

If African Battery chooses to complete its earn-in expenditure agreement, its effective interest in MFC would sit at 50.96pc. Meanwhile, company chairman Andrew Bell would be appointed to a new MFC Project operational committee, while director Paul Johnson would join the board of Kalahari Key.

Neither the committee members or the existing new directors of Kalahari Key would be remunerated for their services. Finally, if African Battery decides to exercise its earn-in agreement, a JV agreement would be established between the company and Kalahari Key that will determine strategy, operational management, and corporate structuring.

African Battery’s chairman Andrew Bell said he was ‘delighted’ to secure an opportunity in Botswana for African Battery’s shareholders.

‘Botswana is an exceptional country with exciting exploration opportunities and a superb operating environment,’he added. This significant opportunity comes to us after the MFC Project has already benefitted from extensive historical exploration that has already identified 17 targets through Airborne Electomagnetic Surveys.

‘There is some further Airborne Electromagnetic work to do, with ground exploration follow up and ongoing target prioritisation. However, the ultimate key to unlocking the value from exploration targets under sand cover is via the drill rig and we will be working with Kalahari Key to identify the quickest route to active drilling operations.’

Bell added that African Battery’s board considers the investment to be consistent with the company’s stated policy of seeking battery metal exposure in Africa.

‘We also believe that further exploration success at the MFC Project would, by virtue of the potential scale, have a transformative impact on the prospects of ABM and on investor sentiment towards it,’ he said. ‘I am delighted to be working with the Kalahari Key team and would like to emphasise the diligent work they have done to bring the MFC Project to its current position. These are exciting times and we anticipate further updates in respect of Botswana and our other business interests in the near future.”

Roger Key, chief executive at Kalahari Key, added: ‘Kalahari Key is very pleased to have reached this agreement with African Battery Metals and we look forward to a productive partnership. The work done on the MFC Project so far has reinforced our belief that we have a significant resource with a geological model analogous to Voisey Bay. We welcome the financial input from ABM that will enable us to move quickly into a drilling phase, and we also appreciate the management and organisational benefits that come from a close working relationship with ABM.’ 

African Battery is an AIM listed, Africa-focused, resource company exploring for the key metals that will be used in next-generation batteries fuelling the new electric vehicle revolution. Johnson and Bell joined the business earlier this year as part of a proposed restructuring and refinancing package that saw the firm ultimately return from suspension.

Shortly afterwards, the company revealed an investment and option agreement with Katoro Gold (LSE:KAT). Under the contract, African Battery will be able to purchase up to 10m shares in Katoro at 1p each with three-year warrants attached. It also has the right to purchase up to 35pc in Katoro’s 100pc-owned Haneti nickel project in Tanzania, for a total consideration of up to £125,000. 

Haneti comprises tenements covering an area of around 5,000km2 prospective for nickel, platinum-group-elements, cobalt, copper, gold, and lithium. Previous work has identified grades of up to 13.6pc nickel at the project, and an exploration programme this year will aim to confirm the existence of disseminated or massive sulphide mineralisation in the area. Alongside Haneti, Katoro owns a further two gold projects in Tanzania called Imweru and Lubando. Together, these host a JORC-compliant resource of 754,980oz gold.

To read MiningMaven’s recent interview with Johnson on his plans for African Battery moving forward, please click here.

Author: Daniel Flynn

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

The article expresses the views of the Author solely and does not necessarily express the views of MiningMaven.com and Catalyst Information Services Ltd or their connected parties who are not responsible for its content or accuracy.

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. Readers are recommended to seek the advice of appropriate professionals when considering investments in small capital.

African Battery Metals (LSE:ABM) jumped 12.5pc to 0.4275p on Monday morning after unveiling a major acquisition and earn-in agreement in Botswana. The business has acquired an 18.26pc stake in an exploration and geological consultancy company called Kalahari Key Mineral Exploration for $194,821.

Kalahari Key, established by Roger Key, Andy Moore, Simon Bate, and Rick Bonner in November 2014, is the 100pc owner of Molopo Farms Complex (MFC) project in south-west Botswana. Furthermore, African Battery has also secured the right to earn-in to a 40pc direct interest in MFC by spending $500,000 on the project by 31 December next year. This money would go towards ground exploration at the project, expected to include the drilling of high priority targets.

MFC is made up of three exploration licences covering 2,725km2 that are thought to be prospective for nickel, PGM, and copper mineralisation. As well as acquiring all of the project’s historical exploration data, Kalahari Key has undertaken a high-resolution, helicopter-borne electromagnetic and magnetic survey on the area. This work identified 17 key zones of conductive rocks now being used to construct a priority list of targets for follow-up ground exploration.

If African Battery chooses to complete its earn-in expenditure agreement, its effective interest in MFC would sit at 50.96pc. Meanwhile, company chairman Andrew Bell would be appointed to a new MFC Project operational committee, while director Paul Johnson would join the board of Kalahari Key.

Neither the committee members or the existing new directors of Kalahari Key would be remunerated for their services. Finally, if African Battery decides to exercise its earn-in agreement, a JV agreement would be established between the company and Kalahari Key that will determine strategy, operational management, and corporate structuring.

African Battery’s chairman Andrew Bell said he was ‘delighted’ to secure an opportunity in Botswana for African Battery’s shareholders.

‘Botswana is an exceptional country with exciting exploration opportunities and a superb operating environment,’he added. This significant opportunity comes to us after the MFC Project has already benefitted from extensive historical exploration that has already identified 17 targets through Airborne Electomagnetic Surveys.

‘There is some further Airborne Electromagnetic work to do, with ground exploration follow up and ongoing target prioritisation. However, the ultimate key to unlocking the value from exploration targets under sand cover is via the drill rig and we will be working with Kalahari Key to identify the quickest route to active drilling operations.’

Bell added that African Battery’s board considers the investment to be consistent with the company’s stated policy of seeking battery metal exposure in Africa.

‘We also believe that further exploration success at the MFC Project would, by virtue of the potential scale, have a transformative impact on the prospects of ABM and on investor sentiment towards it,’ he said. ‘I am delighted to be working with the Kalahari Key team and would like to emphasise the diligent work they have done to bring the MFC Project to its current position. These are exciting times and we anticipate further updates in respect of Botswana and our other business interests in the near future.”

Roger Key, chief executive at Kalahari Key, added: ‘Kalahari Key is very pleased to have reached this agreement with African Battery Metals and we look forward to a productive partnership. The work done on the MFC Project so far has reinforced our belief that we have a significant resource with a geological model analogous to Voisey Bay. We welcome the financial input from ABM that will enable us to move quickly into a drilling phase, and we also appreciate the management and organisational benefits that come from a close working relationship with ABM.’ 

African Battery is an AIM listed, Africa-focused, resource company exploring for the key metals that will be used in next-generation batteries fuelling the new electric vehicle revolution. Johnson and Bell joined the business earlier this year as part of a proposed restructuring and refinancing package that saw the firm ultimately return from suspension.

Shortly afterwards, the company revealed an investment and option agreement with Katoro Gold (LSE:KAT). Under the contract, African Battery will be able to purchase up to 10m shares in Katoro at 1p each with three-year warrants attached. It also has the right to purchase up to 35pc in Katoro’s 100pc-owned Haneti nickel project in Tanzania, for a total consideration of up to £125,000. 

Haneti comprises tenements covering an area of around 5,000km2 prospective for nickel, platinum-group-elements, cobalt, copper, gold, and lithium. Previous work has identified grades of up to 13.6pc nickel at the project, and an exploration programme this year will aim to confirm the existence of disseminated or massive sulphide mineralisation in the area. Alongside Haneti, Katoro owns a further two gold projects in Tanzania called Imweru and Lubando. Together, these host a JORC-compliant resource of 754,980oz gold.

To read MiningMaven’s recent interview with Johnson on his plans for African Battery moving forward, please click here.

Author: Daniel Flynn

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

The article expresses the views of the Author solely and does not necessarily express the views of MiningMaven.com and Catalyst Information Services Ltd or their connected parties who are not responsible for its content or accuracy.

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. Readers are recommended to seek the advice of appropriate professionals when considering investments in small capital.

The problems inherent in a battery metals supply chain supremely concentrated on China have been spotlighted by coronavirus, but the problems have been in play for years. 

The bottleneck was there for all to see long before the spread of Covid-19 shuttered factories across China. 

According to a Wednesday report by the Associated Press “the problem is supply chains. China’s are famously nimble and resourceful, but they lack raw materials and workers after the most intensive anti-disease measures ever imposed closed factories [and] cut off most access to cities with more than 60 million people.”

While companies have begun to re-open, there are ongoing higher costs and significant delays. A mid-February survey by The American Chamber of Commerce in Shanghai found that 78% of businesses in Shanghai, Suzhou, Nanjing and the wider Yangtze River Delta did not have enough staff to run full production lines. 

Nearly half said their global operations had already been affected by the shutdown and 58% said their output would be lower than normal until at least the second half of 2020.

Away from China

Manufacturers are looking for new suppliers but few can compete on price and almost none can match China’s levels of service.

These problems have been evident since President Donald Trump ignited the ongoing US-China trade war by imposing tariffs on imports from the trading giant. 

And shifting production away from the Chinese state and into perceived cheaper South East Asian alternatives comes with its own set of problems. 

A Wall Street Journal report written in the wake of the early stages of the trade dispute noted: “This should be Vietnam’s chance to shine. Instead it is becoming increasingly clear that it will be years, if ever, before this nation and other aspiring manufacturing destinations are ready to replace China as the world’s factory floor.”

The problem is even more acute for producers and users of battery metals. 

Mitchell Smith, chief executive and president of cobalt development company Global Energy Metals (TSX-V:GEMC) told MiningMaven: “Coronavirus is having a large disruptive effect on the overall commodity marketplace as we are already witnessing large builds in stockpiles of minerals given the inability to transport and handle material at Chinese ports. The same can be said about exports of refined product.”

Gigafactory

Battery metals are key to the growth of the renewables industry: lithium-ion batteries form the basis for powering electric vehicles, for example.

And while the explosion in the number of electric vehicles is set to drive the renewables revolution, the fact is that supply chains are simply not ready to produce the number of batteries that this wholesale change will require. 

Elon Musk’s Tesla is ahead of the curve. Its $4.5 billion Gigafactory 1 in Nevada opened in 2016. Musk said at least 100 of these gigantic electric vehicle assembly lines would be needed to power the future growth of the industry.

And yet Tesla has started building its latest Gigafactory not in the United States, but in China. Tesla has struggled to recruit enough engineers in America to run operations, an issue it believes — or believed, until coronavirus broke out — could be solved by China’s army of specialists. 

Europe’s first Tesla-inspired battery megafactory belongs to Sweden’s Northvolt. That company received a €350 million loan from the European Investment Bank in May 2019 to get the project started. But this is one of only a handful being built outside China. 

In 2017, there were 17 lithium-ion battery mega-factories under construction globally. Today, 46 of the 70 in construction are in China.

Another problem

There is vast and increasing demand for refined cobalt in the manufacturing of lithium-ion batteries. But few have tracked the scarcity of these in-demand resources. According to a MassifCapital report on risks in the supply chain: “If every battery manufacturing facility under construction today is built and operates at 100% capacity, then the next ten years will see an 8x increase in demand for lithium, a 7x increase in graphite anodes, a 19x increase in nickel and a 4x increase in cobalt.”

China’s domestic and foreign influence on the global cobalt supply chain also remains substantial. This dependence has already caused significant problems and industry experts expect the trend to continue. 

Mitchell Smith put it like this: “Prolonged economic disruption due to the coronavirus epidemic should make end-users in the automotive and electronics industries reflect on the over-reliance upon one country.” 

As a whole the industry desperately needs to consider diversification of supply and refinement of the materials critical for the new renewable world we will all be living in, Smith added.

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, does not 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.

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 1,723km²in 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

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

Could the Haneti project host large-scale nickel and platinum group metal mineralisation?

That’s the question on the lips of Power Metal Resources’ (LSE:POW)investors everywhere as the long anticipated inaugural diamond drilling kicks off at the Tanzania-based project.

Haneti’s potential was first discovered all the way back in the 1930s by private prospectors. However, technical limitations of the time meant the project largely fell by the wayside for many decades, save for some sampling in the early 1960s by the Tanzanian government.

Fast forward to today, and Power Metal, along with partner Katoro Gold (LSE:KAT)­,are using modern technology to reassess Haneti’s potential for the first time.

What’s intriguing them in particular is a geological feature known as the Haneti-Itiso Ultramafic Complex, or the HIUC, which crops out over an impressive strike length of 80km.

Samples from the HIUC have already graded up to 13.6% nickel and 2.33 g/t platinum/palladium. And, as a result, the project partners believe it could be highly prospective for “chonolith-type” mineralisation that is associated with many leading nickel sulphide discoveries worldwide.

Given the HIUC’s scale, Power Metal and Katoro Gold (who own 35% and 65% of the Haneti project respectively) are currently focusing on two highly prospective targets in particular. These are known as Mihanza Hill and Mwaka Hill, which were first identified as being drill ready by airborne surveying and subsequent analysis between 2012 and 2015.

The pair began by further establishing the potential of both targets for nickel-rich sulphides and PGM mineralisation with a large round Rotary Air Blast drilling in early 2021. And now, they are launching into a three-hole, 1,000m drill programme to target this mineralisation at depth for the very first time.

Mihanza Hill

Beginning with Mihanza Hill: As the image below shows, the target includes a sizeable, bullseye shaped magnetic high delineated from an airborne geophysical survey. Such highs generally correspond with mafic and ultramafic rocks, which are often the source of nickel-rich sulphides.

Interestingly, in this case, the magnetic high at Mihanza Hill is already established as being coincident with a strong nickel in soil anomaly as well as rock results that returned up to 13.6% nickel. And it is this anomaly, which can be seen in 3D in the model below, that Power Metal and Katoro plan to test with a single 495m deep drillhole during their ongoing programme.

As Power Metal’s exploration manager Oliver Friesen explains, the lessons learned here stand to be highly significant in the progression of Haneti as a whole:

“We are really excited about drilling this target. It’s never been drilled before, and based on what we are seeing at surface with the magnetics, the coincident nickel in soil anomaly, and rocks, we think that this is a very compelling drill target.”

Mwaka Hill

Moving on to Mwaka Hill, and Power Metal and Katoro plan to drill two diamond core holes at planned depths of 264m and 241m. These holes are designed to test two discrete, high-priority conductors, which were identified during ground-based electromagnetic surveying and are represented by the red dots in the image below.

Mwaka Hill is already presenting nickel sulphides at surface without the aid of any deep drilling. So, Friesen believes the opportunity to test these anomalies represents another “very exciting proposition” for Power Metal and Katoro as they work to establish Haneti’s true potential.

Pushing forward

As Power Metal’s chief executive Paul Johnson highlighted in a release this week, the commencement of drilling at Haneti has been “years in the making”.

Much more work will need to take place beyond these three holes in order to really establish a true understanding as to what this project might hold. However, the bottom line is that Haneti represents a district-scale opportunity with two extremely prospective drill targets which will finally be tested within the coming weeks.

With so many work programmes on the go at any one time, Power Metalcan never be accused of putting all of its eggs in one basket.

That being said, given Haneti’s vast scale and highly promising exploration potential, positive results from the ongoing drilling campaign stand to have a significant positive impact on the company’s valuation from here.

Kavango Resources (LSE:KAV) is one of this year’s few success stories in the small cap exploration space.

As the wider market has seen across the board declines in share prices of 30% to 50%, plucky Kavango’s stock has more than doubled. Excitement about the company’s drilling campaign in the Kalahari Suture Zone (“KSZ”) has certainly attracted investor interest, but there is much more happening on the ground in Botswana that points towards a bright future for this ambitious firm. Last week’s operational update is a perfect case in point.

A key part of for any company working to fulfil its promises is to ensure it has the right expert team members in place. For an exploration company, the quality of boots on the ground is essential…

Enter John Lauderdale, Kavango’s recently appointed Group Consulting Geologist.

New to the company, but certainly not to the exploration world, Lauderdale brings a wealth of experience to the firm that will help it greatly as it moves into its next exciting phase of growth.

Here, Lauderdale talks Mining Maven through his history before joining Kavango, and how he believes his experiences can benefit the company’s established operations in Botswana.

Strong pedigree and belief in Kavango’s potential

Lauderdale, a well-travelled industry veteran, has been working in Africa since 1984, shortly after graduating from the University of Bristol.

Over a celebrated career, he has worked in almost every country in the continent, from Morocco to South Africa, as well as also spending time in South America.

So, when someone with that much experience in minerals exploration describes the Kavango’s KSZ project as “potentially absolutely mind-blowing” – it’s certainly encouraging.

In fact, as Lauderdale himself puts it:

“The KSZ project could be a real company maker. There are some extremely good indicators already, but now Kavango needs more data, and that’s where the drilling program is going at the moment.”

Given his experience, Lauderdale is the perfect individual to guide Kavango as it continues to build up this picture.

Indeed, highlights of his career before joining the company include making the decision to “peg all the ground around the Gecamines holdings”when he was exploration manager at African Minerals.

African Minerals is a Central African subsidiary of the Ivanhoe Group, and the area around Gecamines is where the world-class Kamoa copper-cobalt discoveries were made.

Alongside this, Lauderdale also spent time running exploration programs for ENRC Group in Congo – a very efficient period where his small exploration team “drilled 250,000 metres in around two and a half years”.

Bottom line is, the lessons learned from these sorts of massively successful exploration projects will be extremely useful to Kavango as its investigation of the KSZ continues.

As Lauderdale himself highlights, the numerous and varied exploration programs he has run across Africa give him a wealth of insight that he can bring to his new role:

“I’ve done everything from tiny little operations the size of a wheelbarrow, designing exploration programs for guys who can’t afford a drill rig, right through to FTSE 100 companies with a $40 million to $80 million a year budget. Over the years, I’ve covered pretty much all of the kinds of projects that Kavango is looking at.”

Pushing forward in the Kalahari Copper Belt and at Ditau

Particularly relevant to Lauderdale’s new role is his previous work conducting exploration on the Central African Copper Belt.

This fits perfectly with Kavango’s growing project areas in the Kalahari Copper Belt (“KCB”). The KCB is an almost 1,000km mineral belt where, similar to the Central African Copper Belt, copper mineralisation is hosted in a sedimentary basin or rift.