Summary
Kalahari Copper Belt is regarded as a future hot spot for major copper discoveries
The belt is underexplored and could rival the copper-cobalt belt of Zambia and DRC, which produces 11% of world's copper and majority of world's cobalt
Junior explorers are leading 2021/22 drilling program and are on the hunt for Tier 1-2 discoveries
Majors are slowly catching up - Rio Tinto amassed large exploration acreage in the region
How do you find the next significant copper discovery?
Despite the declining trend in the discovery rates in recent years. There are some factors that significant finds have in common:
Factor 1: Application of new technology & modern geological exploration concepts to well known prospecting areas (e.g. Julmar nickel discovery in Western Australia).
Factor 2: Exploring under the cover. This prospects were historically very difficult to find.
In Equivest, we were on the search for the area that could fit the above criteria. We came across the Kalahari Copper Belt in Botswana and Namibia. Kalahari Copper Belt (KCB) has striking geological similarities to the Central African Copper Belt (CACB), which annually contributes to over 10% of world's copper supply and the majority of world's cobalt supply (Fig. 1). Kalahari Copper Belt is almost twice the size in an areal extent and highly underexplored due to 10-100 m cover of Kalahari desert sands covering the mineralised rocks.
The early exploration in the region took place from 1960 to 2000 and was lead by majors, such as Anglo American, Rio Tinto, US Steel. During that time, boreholes were drilled using an incorrect geological model. This, combined with less advanced remote sensing technologies resulted in a limited success in the belt. The exploration game changed at the start of the last decade, when number of junior miners discovered Tier 2 deposits in the region. Unfortunately, the mining crash delayed the exploration progress in the area. The hunt for Tier 1 deposit starts again on a renewed commodity cycle. Furthermore, Rio Tino silently amassed close to 10,000 km2 position in the belt in eastern Namibia.
In this article, we will dive into this newly emerging copper province and look at the history of exploration, geological controls and main players, with special focus on junior companies with exposure to upcoming drilling programs in the KCB.
Copper production potential from Kalahari Copper Belt
Central African Copper Belt is situated between Zambia and DRC and produces 2.2 MT of copper per year, which equates to 11% of world's copper supply (Fig.1). This region is also the worlds largest producer of cobalt.
Namibia and Botswana, which are Africa's top mining jurisdictions, offer a new copper mining camp that is just emerging after being hidden under the cover of Kalahari desert.
In 2020 USGS announced that:
" Kalahari Copper Belt is regarded as one of the world’s most prospective areas for yet-to-be-discovered sediment-hosted copper deposits." - USGS, 2020
Namibia and Botswana currently produce a fraction of Zambia and DRC's annual copper supply. In 2019, Namibia and Botswana combined copper production was 14 KT, equivalent to 0.07% of world's copper production (Fig. 1). Kalahari Copper Belt is currently not contributing to production.
Nevertheless, the changes are already on horizon, as two new mines are about to open. Cupric Canyon plans to produce 60 KT of copper per year from their Khoemaceu mine, starting in mid 2021. While, Sandfire Resources is working on an open pit mine at its Matheo deposit, which will produce 30 KT copper per year from 2023. Both projects have significant satellite discoveries and plan to expand them in the next years. This will add another 130 KT per year, taking total production from the region to 220 KT. In other words, 15 times what Namibia and Botswana are producing today!
Similarities between African copper belts
Central African Copper Belt (CACB) is a 450 km long geological feature, which extends between the southern DRC and northern Zambia (Fig.1). Rocks of the CACB are generally well exposed and can be mapped in the series of outcrops. The area was mined for centuries by locals for both copper and silver. The belt has spectacular grades of copper deposits, averaging 1-4%, compared to the world's average grade of 0.4%. Furthermore, the copper (Cu) is associated with high grades of cobalt (Co) and silver (Ag). The Cu-Co-Ag mineralisation is hosted by metasediments of Katanga Supergroup (900-735 Ma) and occurs as veins and disseminated sulphides within redbeds. Mineralisation is structurally controlled and is typically concentrated within large anticlines, synclines and faults (Fig. 3). Both open pit and underground mines operate in the region.
Kalahari Copper Belt (KCB) is twice the length of CACB and extends for approximately 1000 km between Botswana and Namibia. Almost 2/3rds of the belt are located within Botswana territory. There are extremely limited rock exposures within the KCB, as almost entire belt is buried under 10-100 m cover of Kalahari desert sediments (Fig. 3). Mineralisation style in the Kalahari Copper Belt is very similar to Central African Copper Belt. Ore is hosted in metasediments of Ghanzi and Nosib Groups (950-750 Ma). Similarly to CACB redbeds are common hosts for mineralisation, which is also structurally controlled (Fig. 3).
Why is the Kalahari Copper Belt underexplored?
Number of factors contributed to the KCB being underexplored.
1. Kalahari sediment cover Almost entire KCB is covered by 10-100 m of Kalahari desert sediments (Fig. 4). The cover obscures underlying copper bearing bedrock. Geophysical techniques were much less advanced in the past and not very favorable for undercover exploration. Furthermore, geochemical readings over the KCB are low when compared to other prospective copper provinces. This is a result of sediment cover, which impacts mobility and detectability of metals in the soil samples. Successful discoveries in recent years established that combining geophysical and geochemical methods in this region is a key. Copper values need to be compared against a background trend in the area. Additionally, zinc, which is more mobile than copper, can be used as a pathfinder element for copper mineralisation. TIP: These are some of the key aspects to look at in the presentations and press releases from explorers in the region.
2. Incorrect geological model
For a long time, an incorrect geological model was applied to exploration targets in the KCB. Due to the lack of outcropping bedrock geologists had to apply conceptual models. Sediment hosted mineralisation model was applied, without including structural controls on mineralisation. This lead to poor selection of drilling targets with lower grade and tonnage deposits only encountered.
3. Remoteness of the area Back in the 60s-90s the area was considered very remote, with unpaved and limited road access. Furthermore, electricity grid was poorly developed in the region. This made exploration more expensive, with helicopter access commonly required. What's more, lack of reliable power grids was a common issue for mine development. Things have improved significantly since then. Excellent paved road access exists in the area and new power projects are being subsidised by government - all aimed at opening up this attractive mining region.
History of exploration and resource growth
Early exploration in the region took place from 1960 to 2000 and was lead by majors, such as Anglo American, Rio Tinto, US Steel. During this phase, 3.2 MT of copper was discovered. Unfortunately, most of it scattered throughout minor deposits.
Three junior explorers were responsible for unlocking the discoveries that make today's Khomaceu and Matheo mines reserves. The discoveries were made shortly before the metal prices crash of 2012/13, by applying new exploration concepts and technologies in a well known area. Reserves in the belt doubled to 6.5 MT of copper by 2010 and then tripled to 15.3 MT by 2020 (Fig. 5). Quite an exponential growth!
Activity level in the Kalahari Copper Belt is increasing, with number of high impact exploration campaigns planned in the next 15 months. Junior explorers are leading the game. Nevertheless, majors are also taking first moves. Rio Tinto acquired significant acreage position in the western part of the Kalahari Copper Belt in Namibia in the last years (Fig 2.). The story of this highly prospective, underexplored region is unfolding.
Who are the players in the KCB
The most active exploration area is located in the western Botswana (Fig. 5).
Sandfire (SFR: ASX)
Australian mid-cap exploration and production company with focus in Australia, USA and Botswana. Sandifre is the largest acreage holder in the KCB. The company is actively working to open the Motheo copper mine, with production expected to start in 2023. The 2022 exploration budget in KCB is at an impressive 23 MUSD. The focus for exploration will be additional resources for Motheo mine. Furthermore, two new exploration targets (T23 and Ngamiland) are being planned.
Sandfire offers exposure to new discoveries in the Kalahari Copper Belt and has been historically a net buyer of acreage and discoveries in the region. Due to a large market cap and exposure to other geographic regions - we do not expect Sandfire share price to be significantly affected by their discoveries in their KCB acreage. At least not in the same way as junior explorers with small market caps can be.
Cobre (CBE: ASX)
Junior explorer listed on ASX at the end of 2020. In Q2 2021 Cobre acquired KCB assets and currently holds 8100 km2 of prospective acreage via 50% holding in Kalahari Metals Lmtd. Cobre Exploration team has long standing experience with the Kalahari Copper Belt and also Central African Copper Belt. Members of the team were behind major copper Kamoa discovery in DRC, now operated by Ivanhoe Mines. Cobre has catalyst reach 2021 planned in the Kalahari Copper Belt with drilling planned in Kitlanya East (Endurance & Preservance targets) and Kitlanya West license. Detailed drilling timeline is shown on Fig. 6. Anomalies in Kitlanya West have similar geophysical response (in terms of geological setting, conductivity, geometry, and scale) to the Sandfire T3, A4 and A1 discoveries. Example intercepts from recent drilling and Sanfire's A4 are: 33.0m @ 4.6% Cu & 74.3 g/t Ag. We also note that they have strong conductive targets within fold hinges aligning with soil anomalies. More information on the targets and detailed maps can be found in April 19 press release. Cobre's partner in exploration program is Metal Tiger, which owns 50% of Kalahari Metals Limited.
Metal Tiger (MTR: LSE) offers 50% exposure to drilling program by Cobre Limited in Kitlanya East and West. Furthermore, the company offers a more global portfolio exposure. Metal Tiger "pursues a hybrid public and private equity investing model. The preferred commodity investment exposure is base and precious metals." Metal Tiger largest investment is Sandfire Resources with MTR holding 3.8% of the company. Metal Tiger participated in the T3 discovery, which was sold to Sandfire and as a result MTR holds attractive Royalities linked to T3 (Motheo mine) and larger Kalahari acreage. Rick Rule owns 3.87% in Metal Tiger via RIBO Trust.
Kavango (KAV: LSE)
Kavango is a junior explorer that has built a significant position in the KCB over the last 2 years. The team has completed geochemical and geophysical surveys and are planning to drill exciting exploration targets this year, just west of town Ghanzi. Morula and Acacia targets are the two priority drill targets identified by Kavango and partner Power Metal. Acacia is a 4x4 km electro-magnetic anomaly with overlapping soil anomalies of copper and zinc located within "nose" of the anticline. Morula is a 2x12 km electro-magnetic anomaly, slightly offset by elevated soil anomalies. Kavango interprets it as a thrust fault that developed on the limb of the anticline. Company estimates that mineralisation is quite shallow within 120-200 m from the surface.
Power Metal (POW: LSE) offers 50% exposure to drilling program led by Kavango Resources on Morula and Acacia targets. Power Metal is quite diversified with several exploration projects in Africa, Australia and North America.
Other explorers are less active with the drill bit this year and include: Kopore Metals, Galileo Resources, Noronex, Arc Minerals.
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This article uses company releases, third-party data, and academic research. These may contain approximations and errors.
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