While most of this relates to kalahari comments re Husab and Uranium (49%) relate to Extract. Some reading while bored
EQUITY RESEARCH
30th June 2006
Kalahari Minerals PLC. (AIM Code:KAH) RECOMMENDATION: Speculative Buy Note: Investment in Shares of Kalahari Minerals PLC should be considered speculative. Investors should seek appropriate advice before making a decision to invest in Kalahari Minerals PLC (see page 6). EXPLORING FOR URANIUM IN A SIGNIFICANTLY UNDER EXPLORED WELL-ENDOWED URANIUM PROVINCE IN CLOSE PROXIMITY TO WORLD CLASS OPERATING URANIUM PROJECTS. • Kalahari Minerals PLC is a junior resource company which recently listed on London’s Alternative Investment Market. The Company has four projects prospective for uranium, copper and gold, located in Namibia in South West Africa. • The Husab Uranium Project (Kalahari 49%), with known uranium mineralisation occurrences, has received little modern day exploration to date despite the Project being located between two world class uranium deposits: the Rossing Mine (Rio Tinto) and Langer Heinrich (Paladin Resources). • Drilling at Husab is now underway, testing identified uranium mineralisation on a geological horizon (believed to be the same stratigraphic horizon on which the Rossing Mine is located). We anticipate initial assay results to be reported around mid July 2006. • In addition the Company also plans to undertake a review into the potential for producing uranium at the Husab Fluorspar mine on the basis of elevated uranium values recorded within abundant fluorspar veins at surface. • Kalahari’s copper projects are located within the Kalahari Copper Belt (considered a stratigraphic equivalent of the world class Zambian Copper Belt to the northeast). The Projects are considered prospective for the discovery of large stratiform copper deposits analogous with the Zambian deposits in addition to evidence of Iron Oxide Copper Gold (IOCG) occurrences. • Previous operators have reported substantial outcropping copper oxide mineralisation occurring within the Company’s wholely owned Dordabis and Witvlei project areas, with basic but substantial mineral inventories calculated (250,000 tonnes contained copper). The exciting opportunity for KAH is to now evaluate, convert and upgrade the historical inventories to a JORC* standard for incorporation into a feasibility study considering mining 2mtpa for an Solvent Extraction— Electrowinning (SX-EW) operation over 5 years. *(JORC = Joint Ore Reserve Committee) INVESTMENT HIGHLIGHTS Price of Ordinary Shares (pence) 13.25 No. Ordinary Shares on issue (Million) 99.00 Market Capitalisation (GBP Million) 13.15 No. Options on issue (Million)* 9.75 No. Warrants on issue (Million)** 9.32 Cash Reserves (GBP Million as of 31/3/06) 6.30 Option & Warrant Details: *Options are exercisable at 8 pence on or before 30/06/2008. **Warrants are exercisable at 8 pence on or before 27/09/06. Directors: Mark Hohnen (Executive Chairman) Peter McIntyre (Executive Director) Glyn Tonge (Non-Executive Director) Major Shareholders (23/06/06): Credit Suisse Client Nominees (UK) Ltd 22.80% Coronet Resources Limited 16.16% Pershing Keen Nominees Limited 9.19% Willbro Nominees Limited 7.03% State Street Nominees Limited 6.74% Top 10 Shareholders as of 23/06/06 held 76.00% of issued capital. KEY AIM DATA PRICE CHART MONTAGU STOCKBROKERS PTY LTD
A.C.N. 009 368 432 A.F.S.L. 238 333 Level 2, Citibank House, 37 St George‘s Terrace. Perth WA 6000 Postal Address: PO Box Z5005 Perth St Georges Tce. WA 6831 General Enquiries (+618) 9225 2800 Facsimile (+618) 9325 4311 A Member Corporation of the Australian Stock Exchange Limited
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Background Information Kalahari Minerals Plc (Kalahari) is a new AIM-listed, junior exploration company targeting uranium, copper and gold in Namibia. The Company holds licences to four exploration projects covering over 3,000km2 in the west and central parts of the country.
Uranium the Current Focus
Kalahari’s early exploration activity (the majority of which was prior to listing) was focused entirely on copper exploration at its advanced Dordabis and Witvlei projects. A justifiable shift in exploration focus towards uranium has since been undertaken, reflecting not just a shift in market awareness and demand for investment in that commodity sector, but more importantly the strong recognition of the prospectivity of the Company’s ground for potential economic uranium occurrences.
The Kalahari Copper Belt & Its Importance
The Dordabis and Witvlei projects are geologically located in what is now generally referred to as the Kalahari Copper Belt. The significance of this belt is that the projects contained within it are believed to be prospective for large scale sediment-hosted copper mineralisation. The type of mineralisation identified on the Company’s projects is believed to be similar to the copper mineralisation found within the world-class Zambian Copper Belt located approximately 750km to the northeast.
The lightly explored, known substantial copper mineralisation outcropping in numerous occurrences identified within the Kalahari Copper Belt, the majority of which occurs on several prospects on the Company’s holdings, indicates that the Kalahari Copper Belt may be as prospective as the Zambian Copper Belt for large copper deposits.
The Opportunity
The exploration opportunity open for the Company is in our view two-fold:
• First, and as a priority, to explore for economic occurrences of uranium between two world class uranium deposits in a known but under-explored uranium province. • Secondly, to advance further and expand upon the known copper occurrences and resources the Company has identified on its tenements within the belt with the aim of delineating sufficient resources to undertake a feasibility study into the development of a centralised medium to large scale copper operation. The Project Portfolio at a Glance Kalahari’s project portfolio can be divided into two main geographical regions within Namibia: the uranium and gold focused Western projects (Husab and Ubib) and the copper focused Eastern Projects (Dordabis and Witvlei).
Uranium Focused—Western Projects:
Targeting predominantly uranium and gold mineralisation associated geologically with structural and intrusion related settings.
The Husab Project is strategically situated between two world class uranium projects. Considered Kalahari’s current flagship project prospective for primary and secondary uranium mineralisation. Known extensive uranium occurrences now being explored. Drilling (2 rigs) is now underway with results expected in July 2006.
Ubib is a large project situated along strike from the operating Navachab gold mine (AngloGold Ashanti) and the operating Rossing uranium mine. The Project is considered prospective for further uranium and gold discoveries.
Copper Focused-Eastern Projects:
Targeting sediment hosted copper mineralisation associated with deformed sedimentary and volcanic rocks analogous to the Zambian Copper Belt styles of mineralisation.
The Dordabis Project, located centrally within the Kalahari Copper Belt, is prospective for sedimentary hosted oxide and sulphide copper deposits. The Project has numerous known copper prospects and copper shows outcropping over several kilometres. To date Kalahari has concentrated exploration effort at the advanced Koperberg prospect where drilling has delineated an open medium grade copper deposit. Geophysics coupled with limited surface exploration and some drilling indicate that the prospect is located on a highly prospective 35km long mineralised sedimentary/volcanic contact prospective for further discoveries.
The Witvlei Project, also located centrally within the Kalahari Copper Belt, has numerous copper occurrences, the majority identified over a 20km strike where historical exploration allowed the previous owners to calculate mineral inventories on four of the known deposits. Whilst we note these mineral inventories are not JORC-compliant we are encouraged by their existence and the potential for the Company to confirm their validity and delineate further mineralisation (discussed later).
Located in Western Namibia, the single 555km2 granted Exclusive Prospecting Licence is bounded by the Khan River to the west and the Swakop River to the south.
Rio Tinto’s large scale granite (alaskite) hosted Rossing Uranium Mine is located approximately 20km west of the Husab project boundary. The Project is also located 30km from Paladin Resources’ Langer Heinrich calcrete hosted uranium deposit which is currently undergoing mine development.
The Project area falls entirely within the Namib-Naukluft National Park and as such the Project’s exploration activities are governed by the Ministry of Environment and Tourism. We understand that the Ministry allows monitored exploration activities to occur without hindrance.
Geology & Mineralisation
Regional structural history is complex. The Project predominantly consists of north-northeast trending structural domes cored with gneisses and meta-sedimentary rocks which in turn are surrounded by other suites of meta-sedimentary rocks. The area is covered in places by stranded occurrences of alluvials and flat lying calcretes.
The Project licence contains the historical small scale workings of the Ida Copper Mine and the Husab Fluorspar Mine, the latter where fluorspar is contained within a large number of steep dipping veins over an area of 400ha associated with a red granite. Importantly, in addition to the large scale occurrence of fluorspar, the veins are known to contain various concentrations of base metal sulphides and gold in addition to highly anomalous amounts of uranium.
Historically the fluorspar mining was undertaken manually by box cutting (open cut slotting) the veins down to a maximum depth of around 3 metres with the ore then hand sorted and shipped to Europe. The Prospect provides the Company with an exciting opportunity to commercially evaluate not only the fluorspar occurrence but the prospectivity of the veins for economic occurrences of uranium.
Despite the Husab Mine’s appealing immediate prospectivity, the Company is currently concentrating exploration activities further south on the Ida trend where stronger primary uranium mineralisation has been identified, through spectrometer work, within a steeply-dipping northeast-trending shear zone between gneiss rocks to the west and marbles to the east. The uranium mineralisation is believed to be related to an intruded alaskite granite which contains numerous pegmatite veins and xenoliths which are uranium mineralised. First pass drilling (two rigs) is underway testing this contact shear zone for medium grade uranium mineralisation.
In addition, the Project is also believed to be highly prospective for calcrete-related secondary uranium. This is highlighted by the reported occurrence of calcrete uranium mineralisation in an area known as the Welwitschia Flats exposed in erosion channels. This style of mineralisation is however not a priority target for the Company at this stage but nevertheless serves to highlight the potential for further uranium targets in the future.
Husab Prospectivity Summary
We are encouraged by the amount of reported uranium (and polymetallic) mineralisation occurrences over the Husab
project to date. We are also encouraged by the differing styles of mineralisation noted i.e. primary vein hosted (over several kilometers), intrusion related, secondary calcrete hosted as well as channel related styles all being present at the Project.
Whilst the Company’s exploration progress to date at Husab has been slow on the start up (the overcoming of initial logistical hurdles), it is now gathering momentum and we anticipate positive news from first drilling results in July 2006. We also note ongoing spectrometer work is also generating new drill targets which will likely be announced and ranked in due course.
Ubib Project (Kalahari Minerals 100%)
Location & Tenure
Located in Western Namibia, the single 950km2 granted Exclusive Prospecting Licence is situated south of the town of Usakos, 150km northeast of Swakopmund. The Project is located only 15km to the southwest of the operating 60-80koz Navachab Goldmine (Anglo Gold Ashanti). The Project is also located only 7km east of the Rossing Uranum Mine.
Geology & Mineralisation
The area is dominated by structural domes cored by Proterozoic meta-sediments, which in turn, have been strongly sheared. A series of granites have been intruded along the spine of the domes. The intrusion of these granites has resulted in some places in the formation of vein sets and skarns enriched with base and precious metals e.g. the Navachab Gold Mine.
Ubib Prospectivity Summary
The Project is underlain for the most part by a structurally complex basement demonstrated by geophysics. The numerous gold and copper occurrences particularly in the southwest of the project area suggest the area has potential for significant gold-copper-uranium mineralisation to occur. We note the Project is very under-explored to date despite strong early encouragement from what little exploration has been undertaken at the project.
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Dordabis Project (Kalahari Minerals 100%)
Location & Tenure
The Dordabis Project, located in Central Namibia, is comprised of a two granted Exclusive Prospecting Licences. The 875km2 project is situated 90km southeast of the capital Windhoek.
Geology & Mineralisation
The Dordabis Project consists predominantly of a northeast trending belt of Proterozoic basement rocks cut by northeast trending thrust faults that dip at a low angle to the west. The age and composition of these formations is very important in that the belt is believed to be similar in age and composition to the host lithologies which host the world class Zambian Copper Belt deposits to the northeast.
The Project area has numerous oxide and sulphide copper occurrences identified. The currently largest defined and principle deposit known to date is the Koperberg prospect where drilling by Kalahari and the prevous owners has defined zones of high grade oxide and sulphide copper mineralisation within a deformed package of sandstones, dolomitic sandstones and siltstones. Selected significant drilling results from Koperberg include:
13 metres grading 2.60% Cu from 74 metres 5 metres grading 3.43% Cu from 43 metres 10 metres grading 1.77% Cu from 31 metres 11 metres grading 1.56% Cu from 29 metres 4 metres grading 1.88% Cu from 68 metres 21 metres grading 1.44% Cu from 15 metres 9 metres grading 1.73% Cu from 11 metres
Dordabis Prospectivity Summary
Reverse circulation drilling in 2005 has confirmed the presence, of significant zones of high grade copper oxide and sulphide mineralisation at the Koperberg prospect. The drilling has demonstrated that the mineralisation is overall generally of medium grade. The strategy of the Company therefore, in the medium to long term, is to identify significant tonnages at the prospect and the neighboring prospects to allow the delineation of resources over time to support an economically viable mining operation. The Company believes that this can achieved through further exploration and resource delineation.
To date the Koperberg deposit remains open at depth and along strike providing significant scope for further delineation of mineralisation. In addition we note the prospect is geologically located on a 35km long lithological contact which remains largely untested by modern exploration methods. We also note the numerous copper occurrences over the Dordabis Project area which require further investigation and which could potentially supply further mill feed to a central processing plant. These include and are not limited to:
• Swartberg, located 2km north of Koperberg where outcropping hematite-altered andesite ridge averages grades of 0.5% copper and 1.2gpt silver. • Farm Protea 108, where copper mineralisation is located in argillite bands 500 metres from a red volcanic breccia. • Farm Onverwacht 270, southwest of Koperberg where several slugs of native copper weighing several tonnes each have been recovered. • Farm Hatsamas 92 to the north west of the Project area where drilling by earlier owners returned up to 1% copper from marble hosted copper-lead mineralisation. 4
Witvlei Project (Kalahari Minerals 100%)
Location & Tenure
Located in Central Eastern Namibia, the Witvlei Project comprises of a single granted Exclusive Prospecting Licence and an application for a Exclusive Prospecting Licence, totaling 650km2 situated 150km east of the capital Windhoek.
Geology & Mineralisation
The Project, which lies on the edge of the Kalahari Desert, is importantly believed to contain an approximately 50km strike length of rocks of the Kalahari Copper Belt. These lithologies, comprising predominantly of hematite altered volcanic breccia, red and grey sandstones and siltstones with interbedded marls and limestones, have been subject to a complex deformation history of broad folding on a northeast southwest trending axis in addition to northeast trending faulting. The cores of these folds have also had intruded into them mafic and intermediate intrusives.
Abundant occurrences of copper mineralisation are predominantly found in the sandstones and siltstones with oxidation typically down to 30 metres. The most significant mineralisation outlined to date has been at Malachite Pan where copper mineralisation hosted in thinly bedded sandstones and siltstones has been outlined for over 700 metres. The mineralisation is situated overlying an andesitic breccia unit of similar type to that at Dordabis.
Witvlei Prospectivity Summary
Exploration undertaken in the 1960’s amd 1970’s including substantial drilling identified and outlined a series of strata- bound copper deposits. A substantial part of the mineralisation outlined was copper oxides which at that time was of little interest due to poor recoveries from processing technology at the time. With the advancement of copper processing technology (SX-EW) the mineralisation now provides for Kalahari an exciting opportunity to build further on the outlined copper inventories (discussed below) for the potential of a 2 million tpa SX-EW operation in the future.
A series of substantial copper inventories were calculated in the 1970’s by a previous owner. These include:
Whilst these mineral inventories are not JORC-compliant and as such we are unable to consider them as a reliable resource, we nevertheless appreciate their importance and significance. Their existence alone lends significant encouragement that through a systematic exploration approach the Project has the potential to host multiple economic copper projects feeding a central milling facility.
The Company’s independent geological consultant RSG notes that the rocks that principally host the principal copper mineralisation identified to date within the Witvlei project extend for over 45km. RSG also note that the opportunity to identify a larger mineralised zone via a detailed structural assessment is considered viable and that there exists good potential for the discovery of primary copper mineralisation consistent with the sediment hosted copper style of mineralisation model.
Iron Oxide-Copper-Gold-Uranium Potential Historical exploration has been justifiably focused on sedimentary hosted copper-gold mineralisation models analogous to the Zambian Copper Belt. However the Company believes it can cite evidence that the region may be prospective for large iron oxide-copper-gold-silver-uranium deposits similar in style to Olympic Dam and Ernest Henry deposits in Australia, Candelaria in Chile and Salabo in Brazil.
Evidence now gathered from the Zambian Copper Belt indicates that that belt shows many characteristics to the iron oxide copper-gold model. We note that no attempt to apply the iron oxide copper-gold model has been undertaken in the Kalahari Copper Belt despite evidence identified by the Company including the presence of hematite-altered breccias of volcanic origin, massive quartz–iron oxide outcrops associated with major fault structures and positive gravity anomalies indicating iron altered rocks.
Whilst the evidence is currently inconclusive, it provides the Company with an exciting concept of another raft of major deposits the projects may be prospective for.
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Namibia Country Facts • An independent republic with a land area of 825,418km2 • Bordered by South Africa to the south, Botswana to the east and Angola to the north. • Capital city is Windhoek located centrally within the country. • The largest port servicing the country is Walvis Bay situated 300km west of Windhoek. • Population approximately 2.04 million people. 87.5% black, 6% white and 6.5% of mixed origin. 84% of the population is literate. • Official language is English though 60% speak Afrikaans and 32% speak German. • 80% of the population is Christian with the remainder of indigenous belief. • Economy is highly dependent on the extraction and processing of minerals. • Namibia is the fourth largest exporter of non-fuel minerals in Africa, the fifth largest producer of uranium and a significant producer of lead, zinc tin and tungsten. • Only 3% of the population is employed in mining and minerals processing with over half of the population reliant on subsistence agriculture. • The Namibian economy is closely linked to the South African economy with the Namibian dollar pegged to the South African Rand (1:1). Report Compiled by: Ian Spence Resource Consultant BSc (Joint Hons) Geology & Petroleum Geology, MSc Mineral Exploration & Mining Geology, MBA
Director Profiles Mark Hohnen (Executive Chairman)
Mr. Hohnen has been involved with the minerals business for over 26 years. He has extensive international business exposure as chairman/director in a wide range of industries including mining and exploration, property, software and agriculture.
Peter McIntyre (Executive Director)
Mr. McIntyre is an engineer with degrees in business and management. He has over 25 years of experience in the mining industry, including 15 years with WMC being involved in large base metals and gold projects, from development through to operational stage. Peter also has a broad range of exposure to most corporate and business management issues including strategic planning, risk management, asset management and investment returns. He is also Managing Director of Extract Resources Limited in addition to various other resource-based companies.
Prof. Glen Tonge (Non-Executive Director)
Professor Tonge has extensive international business, finance and management experience across a broad range of industries. He is Chairman of the Board of Governors and Pro Chancellor at Southampton Solent University. He is a Freeman of the City of London and is a Freeman and Liveryman of the Worshipful Company of World Traders. He has also recently been made a Fellow of the Royal Institution in London. Glen has also had experience as a senior partner in an international business management consulting company which was involved in advising the governments of Malaysia and Indonesia on the use for natural resources.
Key Management - Mr. Martin Spivey (Geologist)
Mr. Spivey has over 20 years involvement in resource exploration and development. Wide ranging experience in exploration for numerous commodities in various geological environments in both Australia and Africa.
Risks Associated with Investment in Kalahari Minerals PLC Potential Investors need to be aware that investment in Kalahari Minerals Limited, like all investments in junior mineral exploration and development companies, is of a speculative nature. Normal share market risk conditions apply including commodity price, currency fluctuations, sentiment, supply and demand and general economic outlook. Normal exploration, development, mining and processing risks also apply as well as operating, environmental and sovereign risks.
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The author of this publication, Montagu Stockbrokers Pty Ltd ABN 46 009 368 432 (‘Montagu’), its Directors and their Associates from time to time may hold shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those securities. Montagu and its Advisers will earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising from any advice mentioned in publications to clients.
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Montagu believes that any information or advice (including any financial product advice) contained in this document is accurate when issued. Montagu however, does not warrant its accuracy or reliability. Any opinions, forecasts or recommendations reflects the judgment and assumptions of Montagu as at the date of publication and may change without notice. Montagu, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.
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MONTAGU STOCKBROKERS PTY LTD
A.C.N. 009 368 432 A.F.S.L. 238 333 Level 2, Citibank House, 37 St George‘s Terrace. Perth WA 6000 Postal Address: PO Box Z5005 Perth St Georges Tce. WA 6831 General Enquiries (+618) 9225 2800 Facsimile (+618) 9325 4311 A Member Corporation of the Australian Stock Exchange Limited
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EXT Price at posting:
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