LONDON (ResourceInvestor.com) -- As copper becomes ever hotter property and the tantalising price of $3/lb heaves into view, at least for the optimistic among us, companies with their focus on the metal naturally become more interesting. A recent newcomer to the London market, Kalahari Minerals [AIM: KAH] can offer investors no less than three copper projects, with a uranium joint venture thrown in to add piquancy to the proposition.
Altogether, Kalahari can already boast an estimated 250,000t of copper in the ground across its Namibian ground, which makes it clear that the company has moved beyond exploration and into the pre-feasibility phase with its two key projects. The area in which the company is operating was explored preliminarily by other players back in the 1970s, and a sizable portion of the presently known resources originate from this spell, but failure by those then exploring to come across any very large targets plus a deteriorating political situation in Namibia brought proceedings to a halt.
Now that the copper market looks very different and the politics of Namibia have improved, Kalahari’s ground is a lot more desirable. Indeed, the company’s Chairman Mark Hohnen admits that it has been lucky to have been able to stake the areas it has, which essentially amount to a large slice of the Namibian section of the Kalahari copper belt, which has some geological similarities with the much storied Zambian copper belt.
Kalahari’s first order of priority is the Dordabis project, within which it has homed in on a deposit known as Koperberg. Drilling here has identified oxide and sulphide zones of mineralisation and recorded some good intersections, the highlight of which has been 5m graded at 3.43% copper. A small scale pilot processing plant is already recovering copper cathode on site.
The Koperberg resource is still open, and an alluring possibility raised by Hohnen is that it could conform to the Olympic Dam geological model. That is, a massive body of IOCG (iron oxide copper gold) mineralisation with significant smatterings of uranium. It is too early to tell whether this is the case or not, but such a scenario is certainly something pleasant to dream of for Kalahari shareholders, and the company has allocated funds specifically towards testing this hypothesis.
Kalahari’s second key project goes by the name of Witvlei, and hosts five known copper deposits along with a number of prospects. The next step for the company will be to try and expand the existing deposits and define resources at the prospects in order to come up with a total resource of a potentially economic size.
If this resource development programme comes up with the goods, Hohnen suggests that an attractive option for Kalahari at Witvlei may be the tried and tested development model of establishing initial cash flow from oxide material before moving on to trickier-to-process sulphides. The same development path could also be worth considering at Koperberg if the Olympic Dam model is not found to hold true there.
Kalahari’s only grassroots stage project is Ubib, which has been is known to host copper gold mineralisation with a hint of uranium but needs appraising more thoroughly before much more than this can be said. The project is located some 15km from Anglo Gold Ashanti’s Navachab gold mine, which obviously auspicates well. Current work is centred on stream sampling to help identify prospective target zones for the application of more advanced exploration techniques.
The Husab uranium project, which is a joint venture with Extract Resources (ASX: EXT) structured to give Extract 51% and Kalahari the remainder, has surprised both companies. Hohnen says that little was thought of Husab until last year, when some “great radiometric anomalies” were turned up. The presence of uranium along with other metals has now been confirmed, and diamond drilling to test the deposit at depth begins in the next couple of weeks.
Husab is located right between the Rossing uranium mine, owned by Rio Tinto, and the Langer Heinrich deposit, which is being developed by the uranium darling of the Australian market, Paladin Resources [ASX: PDN]. Extract has already gained significant recognition from its constituency of investors for Husab, and if drilling confirms the joint venture partners’ optimism, then the project could well help win Kalahari some fans in the London market, where uranium plays are not as numerous as they could be, and hence much in demand.
Investment Outlook
Kalahari has raised £6m by way of its AIM listing, and intends to devote the largest portion of this sum to work at Dordabis. Therefore, this is the project that investors should be keeping their weather eye on. Significant progress down the road to feasibility is sure to add value to the company, other things, such as the copper market, being equal.
But in addition to Dordabis, there is scope for either or both of Witvlei and Ubib to shape up and grab investors’ attention. Husab already stands out, and with a high level of market interest in new uranium projects still apparent, it is a nice asset for Kalahari to have.
EXT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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