While such exploration is largely overlooked by major mining houses, the activity is crucial to sustaining their project pipelines for the future, writes Laura Cornish.
Privately-owned exploration-focused companies Copperzone Resources and Kalahari Copper, which both share a similar set of shareholders and management, have established a business model which fills this gap in the market – conducting early-stage exploration work which then leads to potential project generation for majors focused on the southern Africa region – specifically Zambia, Botswana and Namibia.
Founded in 2009, Copperzone Resources has become a copper-focused project generator in Zambia for a number of major mining houses.
“The company currently has 22 licenced areas in-country, 11 of which are subject to opt-in joint ventures with majors, most notably Rio Tinto.
“This model has been hugely successful and we are looking to replicate this in Botswana and Namibia through our more recently established Kalahari Copper,” says the companies’ chief geologist Paul Lemmon.
“Having obtained our first series of exploration licences in Zambia in 2010, we were approached by BHP Billiton who had become interested in some anomalous targets within our licence areas.
[quote]“Considering raising cash was extremely tough within the junior exploration market at the time, and would be for years to come, we adopted our project generator business model which forms earn-in joint venture alliances with majors who are financially able to invest in exploration to advance a project once we have proven that project to be highly prospective. Subsequently, we have developed a strong rapport with most majors over the years that have an interest in southern Africa,” explains Lemmon.
One of the largest contributing factors to both companies’ success is the management team and board members’ exploration and project generation expertise in Africa – within the junior mining sector specifically.
CEO (of both companies) Christian de Saint-Rome has 20 years of work as a financial advisor/broker/investment dealer with board experience on publically-listed exploration companies. Lemmon boasts 20+ years of experience working as a geologist in Africa.
“My strength lies in designing exploration programmes and building small companies around projects that I’ve sourced,” he says.
Within the family of companies, Kalahari Copper chairman Peter Walker is also a geologist by profession and was responsible for developing the Kevitsa nickel-copper-PGE mine in Finland through TSXV-listed company Scandinavian Minerals which was acquired by First Quantum Minerals in 2008.
The balance of board members and directors, including CFO Sam Legg, has extensive senior level experience with junior exploration public companies. And finally, the shareholder mix for both companies is supported by an “eclectic” group of experienced executives that have geological and/or financial backgrounds and have been involved in the junior exploration field.
In addition to this, Sprott Global funds are significant shareholders in Copperzone Resources. Anglo Pacific Group also invested in the company at a very early stage. Resource Capital funds have recently become important Kalahari Copper shareholders as well.
“Together our skill sets and experience have enabled us to build small, junior exploration companies focused on Africa around a commodity and/or a single country with a commodity mix.
“Coupled with this, we have highly competent local country managers that represent our partnerships in-country and contribute greatly to our success.”
Both Copperzone Resources (in Zambia) and Kalahari Copper (in Namibia and Botswana) were born after the team pinpointed prospective target zones and applied for the licence areas.
It is from this point onwards that the companies conduct exploration work, entailing airborne geophysics (magnetics and radiometrics) to help interpret sub-surface structures.
This creates specific areas of interest for ground exploration work comprising regional geochemistry. Based on anomalous results, in-fill geochemistry ensues.
“At this stage we have an interesting story and are ready to consult with the majors to consider joint venture agreements to continue exploring.”
Copperzone has today passed the half way mark on eight licences which have opt-in joint venture agreements in place. The next one to two years could see the establishment of new companies should the major wish continue developing any of the licences further.
The ultimate aim, Lemmon explains, is to evolve the opt-in joint ventures into new public listed joint venture companies with an exit strategy in place to create and deliver shareholder value after which the early-stage explorers can continue building on their pipeline of new projects.
To date Kalahari Copper owns 12 licenced areas in Botswana covering in excess of 4 000 km² of land. It also has 16 licenced exploration areas in Namibia where nine are owned through a wholly owned subsidiary.
The other seven are subject to acquisition from Teck Corp – a large-scale, diversified mining company headquartered in Canada. The company is awaiting ministry approval on these licences.
The licenced areas in Namibia are situated across two metallogenic belts – the Matchless Belt near Windhoek and the Carbonate Platform in Northern Namibia – and both are known to host copper.
The Teck Corp Kaoko land package (incorporating the Okohonga deposit) already offers a defined resource of 11Mt of 1.1% copper and silver credits and here the company is looking to increase the resource and advance to a scoping study later this year.
“Aside from this one deposit, there is a series of non-compliant drilled deposits with over 200 copper occurrences spanning over 100 linear kilometres, all of which are subject to significant exploration work this year.”
The junior explorer is also positioned within a metallogenic belt in Botswana with particular focus on the Kalahari Copper Belt where there has been a lot of activity in recent years from other companies including MOD Resources and Cupric Canyon.
“We are well positioned in that belt and will conduct significant exploration there in 2017,” Lemmon notes.
Kalahari Copper also has a licence area contiguous to the Mowana copper mine which recently re-started production after being on care and maintenance for a number of years.
“We are collaborating with the University of Botswana and are close to concluding an agreement which will see some of their professors and students accompany our exploration manager to this licence area to conduct exploration work.”
Lemmon and his team recently formed a new company called Sparrowhawk Gold which will focus on exploration work on Greenstone gold belts in central, East and West Africa.
“Gold is an attractive commodity at present and we believe this will continue for years to come.”
The company has thus far made applications for licence areas in Liberia and Tanzania and has also begun an in-depth process of target generation in the Central African Republic (CAR). Lemmon says both Liberia and the CAR are vastly under-explored countries and offer ideal project opportunities.
“We understand potential threats in the countries and won’t be cavalier about security risks either.”
In Tanzania (where Lemmon has extensive experience), the company is in discussions with a few companies which own gold resources which Sparrowhawk could opt into and provide further exploration work and expertise.
“We have also already engaged in early merger talks to list with a public company.”
Feature image credit: Copperzone Resources