Blackthorn has upgraded the Kitumba resource within its 100%-owned Mumbwa copper project in Zambia. The resource has increased from 87Mt at 0.94%Cu to 187Mt at 1.14%Cu (0.5% cut-off), lifting contained copper by 161% to 2,132kt. This positions Kitumba among the largest IOCG deposits globally, with further upside potential for the project. Maintain Buy, trading at 0.7x NPV.
?? Impact: No changes to numbers, but scoping study to enable an NPV
Given the early stage nature of the project, we have applied a sector EV/resource analysis to arrive at our A$80m valuation for Kitumba. However, the resource upgrade confirms our view that the deposit can support an economically feasible mine. We believe the scoping study results, due in August, should provide the necessary inputs and confidence to build a robust financial model. We believe this will provide significant upside to our current asset valuation.
?? Action: Reiterating our recent Buy – Kitumba the real deal BTR has ranked Kitumba among IOCG deposits globally; the project sits within the top quartile (at 0.25% cut-off) & within the top half (at 0.5% cut-off). Kitumba now has the third-largest contained resource of projects within our ASX pure-play copper coverage universe. Further upside exists to the resource, with BTR indicating that mineralisation remains open at depth & to the north.
?? Valuation: No change ($1.61/sh NPV, 10% discount rate) Our NPV is unchanged pending the Kitumba scoping study results due in August.
No thorn in BTR’s side
Following the recent completion of the Phase 5 drilling program, Blackthorn has announced an upgrade to the Kitumba resource within its 100%-owned Mumbwa copper project in Zambia. The resource has increased from 87Mt at 0.94%Cu to 187Mt at 1.14%Cu (0.5% cut-off), lifting contained copper by 161% from 818kt to 2,132kt. The Phase 5 drilling program completed 21 holes for 10,934m. The majority of these holes were infill or step-out holes to increase geological and grade confidence in the resource and to extend the existing resource. Blackthorn engaged MSA Group from South Africa to conduct the updated mineral resource estimate. MSA Group had undertaken the maiden resource estimate, announced in October 2009. The previously defined high-grade core (at 1.0% Cu cut-off) has been extended along strike (up from 260m to 440m), across strike (up from 135m to 170m) and at depth (previously between 215m-435m below surface and now between 150m-600m), with greater geological confidence.
Further upside potential
Blackthorn is confident that mineralisation at Kitumba remains open at depth and towards the north. Remodelling of existing geophysical data has found that copper mineralisation appears to be associated with low resistivity conductors, which are only partly tested by existing drilling. In addition, the company expects additional targets for drill testing to be identified from an Orion 3D deep penetrating geophysical survey, which is shortly to be commissioned.
On-going work has also improved understanding of the broader mineral system at Mumbwa, with the discovery of the Kakozhi prospect during Phase 5 drilling (see Figure 1). Follow-up soil geochemical sampling at Kakozhi has defined a broad copper anomaly, which Blackthorn plans to test during Phase 6 drilling.
BTR Price at posting:
$1.15 Sentiment: Buy Disclosure: Held
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