Known as the Kihabe zinc project, it is situated in far north-western Botswana, on the border with Namibia. Behind the initiative is Mount Burgess Mining NL – a Perth-based mining exploration company listed on the Australian Stock Exchange.
Kihabe is a hydrothermal, sedimenthosted zinc, lead and silver resource, with significant copper and vanadium credits, extending over a distance of 2.4 km. The initial resource – compiled by independent consultants and based only on RC drill results – confirmed 11 million tonnes grading 2.55% zinc equivalent, with more than 95% of the resource classified as indicated and JORC-compliant. This means that at current prices the in-ground value of the resource stands at around US$1 billion (R7 billion).
“Subsequently we have done about 2 000 m of diamond drilling, and this drilling is showing that our grades are significantly higher than the comparative results from our previous RC drilling,” reveals chairman and managing director Nigel Forrester in an exclusive interview with Mining Review Africa.
“It is quite possible that our stated 2.55% grade could be improved upon significantly, and we have conducted another diamond drilling programme to find out,” he adds. “We selected 10 original RC holes which were the main contributors to the calculated resource, and we are twinning these holes with diamond core to confirm the consistency of our findings,” Forrester explains,” and I am reasonably confident that we will find an increase in grade.”
The drilling team will also be carrying out infill drilling between the 100 m lines where the previous RC drilling was done, to target the high-grade zone within the resource and establish whether it is continuous.
“We will also be doing some deep drilling in selected sections which should result in additional tonnage for our resource,” Forrester continues. “Recent drilling results have also made us aware that we can probably extend the resource from 200 to 300 m in the north-east,” he says.
IMPROVED RESOURCE AND GRADE EXPECTED
“So at the end of the day we are confident that there will be a definite increase in the 11 million tonne resource, and a significant improvement in the grade,” Forrester contends.
“This will be confirmed when we receive our full complement of results from the latest rounds of diamond drilling, and that should be by the end of 2007,” he estimates. “At that point we should also have our test results from the metallurgical work we have been conducting to determine recoveries.” This combination of results should provide a pretty clear picture of what the situation is.
“Once we have studied all this information we will be in a position to determine our bottom grade cut for the entire resource,”
Forrester claims,” and when we reach that stage we will be able to have a pit design done. That will tell us what our potential stripping ratios should be, and give us a clear indication of the overall commerciality of the initial pit,” he points out.
“Assuming that this information is favourable, we will move into a pre-feasibility study,” he reveals, “and in the event of a positive result we will immediately start a bankable feasibility study (BFS). If circumstances remain normal throughout, we should be able to begin with the BFS in about 18 months time – in early 2009 – and to complete it by the end of that year,” he calculates.
Next phase for Mount Burgess – assuming the deposit is declared economic and ‘bankable’ – will be the negotiation of equity and project finance loans, as well as the obtaining of a mining licence plus the various associated environmental impact and other reports.
KICK-OFF IN 2010
“If everything goes according to plan,” Forrester estimates, “we are probably looking at commencing actual mining in two-and-a-half to three years, which means in the first half of 2010.”
“To date we have spent close to US$4 million (R28 million) on exploration, and it will easily cost us a minimum of another US$4 million (R28 million) to reach the BFS stage,” he reveals. “As far as capital expenditure for the actual concentrator and mine infrastructure is concerned, the estimate from the initial scoping study – plus the consideration of some five years of inflation – would easily drive this figure to around the US$150 million (more than R1 billion) mark.
Looking further ahead, Forrester confirms that Mount Burgess is busy with a variety of exploration programmes in Botswana and neighbouring Namibia. “We have a 1 000 km2 exploration licence in Botswana right on the Namibian border, and on the Namibian side we have an area of some 8 000 km2,” Forrester concludes.
The successful launch of the Kihabe zinc project would certainly add value to the Botswana economy. The metal is in short supply internationally, with 2007 world consumption of refined zinc estimated at almost 11.5 million tonnes, and supply falling short by very close to 150 000 tonnes at almost 11.35 million tonnes. The projection for 2008 is that zinc supply will just meet world consumption, which is expected to reach 12 million tonnes.