Metal Tiger plc (LON:MTR), the London Stock Exchange AIM listed investor in natural resource opportunities, has announced a further US$1.5m equity investment into Botswana focused explorer, Kalahari Metals Limited. Following the Investment, Metal Tiger will be interested in approximately 62.2% of KML.
As part of the Investment, Metal Tiger has been conditionally granted a 2% net smelter royalty over all of KML’s wholly owned licences, being seven licences covering, in aggregate, 6,650km2 (together, the “Royalties”). The five exploration licences owned by Triprop Holdings (Pty) Limited (in which KML has a 51% interest) do not form part of the Royalties.
The Royalties will fall away should Metal Tiger invest a further amount at a lower valuation than the Investment, subject to a cap of US$500k. In other words, any further investment by Metal Tiger up to US$500k must be at the same valuation as the Investment if the Royalties are to be maintained.
KML will utilise the proceeds of the Investment to fund exploration drilling programmes at the Kitlanya East (‘KIT-E’), Okavango Copper Project (‘OCP’) and Kitlanya West (‘KIT-W’) projects, located in the Botswana portion of the Kalahari Copper Belt.
Environmental approvals are now in place for drilling on all of KML’s projects. Drilling and soil sampling programmes are planned to start at KIT-E in March 2020, followed by further target drilling at the OCP and KIT-W project.
Michael McNeilly, Chief Executive Officer of Metal Tiger, commented:
“This investment will allow the KML team to progress exploration and prove up other targets at KIT-E, Kit-W and OCP, and also increases Metal Tiger’s exposure to the highly prospective Kalahari Copper Belt, which currently includes our interest in KML, as well as in Sandfire’s T3 Project and A4 Project, where MTR has a capped US$2m NSR and a 2% uncapped NSR respectively.
“In the context of our expectation of an increasing global requirement for copper production, and therefore exploration, we expect the Kalahari Copper Belt to become an increasingly more valuable area to be situated and are delighted to increase our interest in the area.”
Drilling at KIT-E will initially consist of four scout diamond holes, which will target fold hinge structures identified in a recently completed detailed airborne electromagnetic (‘AEM’) survey, which may represent carbonaceous marker units in the lower D’Kar formation (‘DKF’) above the contact with the underlying Ngwako Pan formation (‘NPF’). This contact is host to the bulk of identified Cu-Ag mineralisation in the Kalahari Copper Belt. Intersection of the prospective DKF-NPF contact will significantly upgrade the potential for discovery of exploitable mineralisation on this project. Further sampling and a more extensive reverse circulation (‘RC’) drilling programme are expected to be initiated after assessment of results from the diamond drilling. It is worth noting that Sandfire’s T3 Project is circa 5km away from the border of the northern licence of Kit-E where drilling is planned.
Soil sampling traverses are planned over additional anticlinal targets, where Cu-Ag mineralisation may be upgraded. Results from the soil sampling are expected to assist in advancing these targets for geophysical follow-up and drill testing.
Recently completed drilling at OCP has demonstrated the effectiveness of targeting the prospective DKF-NPF contact using AEM modelling as a stratigraphic guide. Further diamond drilling is planned to target extensions of the contact from Cupric Canyon’s Zone 5 and Zone 5 north deposits after completion of the KIT-E drill programme.
Assays are still awaited from the previous drill programme.
AEM surveys have identified three prominent conductors located in fold hinge zones interpreted from magnetic data providing possible analogues to Sandfire Resources T3 deposit. In addition to testing for mineralisation, drilling these targets will provide important stratigraphic information for the project area. Diamond drilling is planned at KIT-W after completion of target drilling on OCP.
KML, which was incorporated in England & Wales on 3 May 2017, holds interests in 12 highly prospective exploration licences covering a total area of 8,595km2 in the Kalahari Copper Belt of Botswana, comprising two 100% owned exploration licences, five exploration licences subject to a binding earn-in agreement with Triprop Holdings (Pty) Limited (includes the Ngami Copper Project), and five exploration licences held by 100% owned subsidiary, Kitlanya Limited (see Table 1).
Notwithstanding Metal Tiger’s majority shareholding in KML, KML does not fall to be treated as a subsidiary of Metal Tiger as an agreement between the shareholders of KML precludes Metal Tiger from exercising control.
The net assets and net loss of KML incorporated into the Group’s results for the year ended 31 December 2018 were £796,000 and £73,000 (loss) respectively.
Table 1: Kalahari Metals Limited 100% Owned Exploration Licence Holdings with Granted Metal Tiger Royalties
|Licence Number||Registered licence holder||Issue date||Area (km2)||Metal Tiger Net Smelter Royalty (NSR)|
|PL148/2017||Kalahari Metals Ltd||1-Jul-17||999||2%|
|PL149/2017||Kalahari Metals Ltd||1-Jul-17||1,000||2%|
|PL342/2016||Kitlanya Pty Ltd||1-Jan-17||942||2%|
|PL343/2016||Kitlanya Pty Ltd||1-Jan-17||956||2%|
|PL070/2017||Kitlanya Pty Ltd||1-Apr-17||994||2%|
|PL071/2017||Kitlanya Pty Ltd||1-Apr-17||914||2%|
|PL072/2017||Kitlanya Pty Ltd||1-Apr-17||845||2%|
Link to Figure 1: Map of licences subject to the Royalties
This announcement contains inside information for the purposes of the market abuse regulation (EU No. 596/2014) (“MAR”).