Botswana begins to shape up as a major destination for copper exploration

Until now, the headlines surrounding the nascent copper mining industry in Botswana have been centred only on one major new project, the Khoemacau mine. This mine is owned by US-based and private-equity backed Cupric Canyon, which has at times mulled a listing for the Khoemacau subsidiary, but which to date has been concentrating on getting the project into production.

First copper is expected next year, with an annual output of around 60,000 tonnes of concentrate planned. With copper recently hitting four-year highs in London and eight-year highs in Shanghai, the timing couldn’t be better. And that’s why other companies are beginning to get in on the act too. Hitherto, northern neighbours Zambia and the Democratic Republic of Congo have dominated regional copper production. In industry circles, the Copperbelt that straddles those two countries doesn’t even need a geographical locator as a prefix, it’s so well known. But to the south, the Kalahari copper belt, which stretches from northeast Botswana to western Namibia, is beginning to make a name for itself too.

First came Khoemacau. But now the T3 project owned by Sandfire Resources Ltd (ASX:SFR), an asset which went through deals involving Metal Tiger (LON:MTR) and MOD Resources before ending up in its current home, has also been slated for development. All told, this is good news for Botswana, which relies on mining to generate a fifth of its Gross Domestic Product, the bulk of which comes from diamonds. But diamond prices have been depressed in recent years and pushed down even further by the economic gloom caused by the coronavirus.

Copper, on the other hand, has been on a tear. And that’s why, although diamond companies continue to poke around in Botswana, more interest is currently being generated by the likes of Kavango Resources (LON:KAV) and Power Metal Resources (LON:POW), two companies currently deep into copper exploration in Botswana. What’s more, Sandfire’s greenlighting of T3 may only be the first of several projects it has under its belt. Metal Tiger has a US$2mln capped net smelter royalty over the T3 project, but what may end up being more valuable, also an uncapped royalty over 8,000 square kilometres of adjoining acreage.

Either way, Metal Tiger looks likely to be a significant beneficiary. It holds around 6.3mln Sandfire shares or 3.5% of the company. Cobre Ltd (ASX:CBE), also has interests in the area, as do several other juniors.

Source: https://www.proactiveinvestors.co.uk/companies/news/935508/botswana-begins-to-shape-up-as-a-major-destination-for-copper-exploration-935508.html

10 months ago

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