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Botswana - Copper/Silver

Metal Tiger’s interest in Botswana currently centres on the high-grade copper and silver Target 3 ‘T3’ Deposit for which a maiden JORC complaint Mineral Resource Estimate was established in September 2016 and an open-pit Scoping Study announced 6 December 2016.

Work to build on the T3 Scoping Study and progress to Prefeasibility Study (PFS) will commence early 2017. At the same time drilling will test the potential for westerly mineralisation extensions over a 3km strike.

In addition to the discovery at T3, reverse circulation (RC) drilling has confirmed significant copper mineralisation intersections at T2 West Prospect, which is approximately 20km north of T3 and 3.5km west of the MOD Resources 100% owned high-grade Mahumo copper/silver deposit.

Following the announcement of the T3 maiden Resource and Scoping Study resultant from a Phase 1 Drilling Programme, the project has moved into a Phase 2 drilling programme seeks to build out and upgrade the classification of the Resource envelope and feed into the Prefeasibility Study.

 

T3 Scoping Study Highlights

The T3 Scoping Study is the first detailed study to be completed for the T3 Copper-Silver Deposit. It has been undertaken to determine the potential viability of an open pit mine and sulphide flotation processing plant constructed onsite at T3 and to reach a decision to proceed to prefeasibility studies commencing in early 2017.

The Scoping Study is equivalent to a Preliminary Economic Assessment (PEA), it is a low level technical and economic assessment that is not sufficient to support the estimation of ore reserves, further work is be required before Ore Reserves can be outlined or to provide any assurance of an economic development case. Summary findings of the T3 Scoping Study were released on 6th December 2016, key highlights are set out below:

The Scoping Study considered an optimised design for a 220m deep open pit mining operation with on-site processing plant to treat 2Mtpa of ore with low cost expansion optionality if required. Pre-stripping of the first stage of the planned open pit is modelled to commence in 2019 with ore processing modelled to commence later in 2019.

  • Preliminary Base Case Model indicates robust financial metrics assuming consensus pricing (US$2.53/lb Cu):
    • Estimated pre-tax NPV10% approximately US$180M and IRR of 31%
    • Average annual pre-tax cash flow approximately US$44M pa
    • Estimated LOM production average 21.8ktpa Cu and 665kozpa Ag
    • Mine life of 10 years with 9.25 years of production
    • Estimated total project cost (=/-35%) circa US$135M (MTR share US$40.5M) including US$18M pre-strip and US$18.3M contingency.
    • LOM C1 costs of US$1.29/lb Cu including silver credits
    • Expected payback of 2.6 years.
  • Preliminary Upside Case Model indicates stronger financial metrics assuming elevated Cu price (US$3.00/lb):
    • Estimated pre-tax NPV10% approximately US$297M and IRR of 42%.
    • Average pre-tax annual cash flow approximately US$65M pa.
    • C1 costs are estimated at US$1.31/lb Cu including silver credits.
    • Expected payback period approximately 2 years.
  • Each US 10 cent/lb rise in Cu price estimated to add approximately US$ 25M to NPV.
  • Mineralised sequence which hosts T3 resource largely untested along strike and down dip.
  • Botswana Power Corporation has advised that grid power in planned to be extended along the Ghanzi Highway, approximately 12km from the planned mine, in mid-2019.

T3 Maiden Resource Details

The T3 Project has a current, maiden, JORC compliant Total (Indicated & Inferred) Mineral Resource Estimate of 28.36Mt @ 1.24% Cu & 15.7g/t Ag, containing approximately 350,200t copper and 14.27Moz silver at 0.5% copper cut-off grade. The Resource is resulting from the Phase 1 Resource Drilling Programme (see Table 1: T3 Phase One Mineral Resource below).

The Total Resource includes a high-grade core of 8.48Mt @ 2.16% Cu & 30.6g/t Ag, containing approximately 182,900t copper and 8.34Moz silver (at 1.5% Cu cut-off grade).

Notably, the majority (64%) of the Resource has been classified at Indicated, with the remainder in the Inferred category. An Indicated classification denotes a higher degree of geological knowledge and confidence in the deposit and is a necessary precursor for the consideration of economic viability studies.

Table 1: T3 Phase One Mineral Resource
JORC Category Cut-off
Cu%
Tonnes Grade
Cu%
Grade
Ag g/t
Contained
Cu (tonnes)
Contained
Ag (oz)
Dated: 26/09/2016
Indicated
0.5
1
1.5
18,071,000
10,103,000
6,773,906
1.35
1.84
2.12
16.7
24.2
29.6
244,320
186,198
143,675
9,724,550
7,848,794
6,450,935
Inferred
0.5
1
1.5
10,287,000
3,162,296
1,706,001
1.03
1.82
2.3
13.7
26
34.5
105,853
57,396
39,221
4,546,534
2,640,127
1,892,814
TOTAL
(Indicated
& Inferred)
0.5
1
1.5
28,358,000
13,265,000
8,479,907
1.24
1.84
2.16
15.7
24.6
30.6
350,221
243,678
182,912
14,271,083
10,488,664
8,343,592

The Mineral Resource has been defined along a 1.4km long strike length with the copper and silver sulphide mineralisation best described as a sheeted vein deposit dipping at 25 degrees to the north with a shallow north east plunge.

The sulphide mineralisation is very continuous extending from a shallow depth (circa 35m) to the limit of the drilling at 274m depth. The copper mineralisation consists mainly chalcopyrite with chalcocite and bornite occurring in lesser amounts.

Nearer to the surface, the copper mineralisation has been oxidised, with minor malachite and chrysocolla, occurring between 10-25m depth.

From the resource modelling it is considered there is potential for resource extensions to the north east (down-dip) and south west along strike, were the mineralisation is still open. This potential for extensions to the Phase One Resource remains undrilled and is likely to be the main focus of the Phase Two extension drilling, which will also seek to upgrade the classification of the existing Resource.

Given the geometry of the deposit, with wide zones of continuous shallow dipping mineralisation it is considered the project holds good potential for low-cost open-pit mining. If the deposit is mined the central core of high-grade vein hosted mineralisation may provide an opportunity for early payback of capital and the high silver content should provide significant concentrate credits.

T2 Prospect

The T2 Prospect is currently subject to a separate ongoing drilling campaign. Located 20km north of the T3 Resource Area, T2 consists two areas of copper soil anomalies with copper values over three times higher than the 28ppm Cu anomalies that led to the discovery of T3.

The T2-West soil anomaly, consists consistently high copper values up to 85ppm Cu over a circa 1.5km wide zone; whilst T2-East, consists a 1.5km wide zone of consistently high copper values up to 83ppm Cu.

Reverse Circulation drilling commenced to test the soil anomalies at T2 West on 10th August 2016, with the first batch of results from three holes (see news), confirming significant shallow copper mineralisation, including up to 5m @ 2.3% Cu & 42g/t Ag from 61m, and with intersections bearing a strong similarity to the widths and grades at MOD’s 100 % owned high-grade Mahumo (T1) copper/silver deposit, which lies only 3.5km to the east. T2 West, T2 East and Mahumo sit on the same regional structure and interpreted zone of Kalahari ‘prospective contact’ folding, that is thought to host Cupric Canyon Capital’s Zone 5 resource (Resource: 100Mt @ 1.95% Cu & 20g/t Ag).

Drilling at T2 is currently testing for continuity of mineralisation along strike from the first drill section and will then seek to target the mineralisation at depth in this complexly folded area.

Project Background

Thorough a joint venture (“JV”) with MOD Resources Ltd (ASX: MOD), Metal Tiger has a 30% stake in a highly prospective portfolio of 14 exploration licences within the Kalahari Copper Belt of northern Botswana.

The JV has a focussed strategy of identifying potential new copper deposits, by targeting regional scale structures identified from regional geophysics, with relatively low cost, soil sampling grids and reverse circulation (“RC”) drilling. Following the acquisition of the portfolio of licences in December 2015, the JV has identified a tiered pipeline of targets for follow-up.

Since drilling commenced in February 2016, high grade copper has been confirmed on two of the three targets tested. Drilling at Target 4 (T4) Prospect confirmed shallow copper and silver mineralisation in 5 of the first 6 RC holes with narrow (1m to 4m) zones of moderate to high grade (1.4% to 6.1% Cu) Cu/Ag mineralisation intersected along a 400m strike length of the 2-3km long T4 soil anomaly.

The Target 3 (T3) Prospect became the focus of the JV following the receipt of assay results for RC drill hole MO-G-12R, the third hole drilled at T3, which intersected 52m @ 2.0 % Cu from 78m down hole depth, including 14m @3.4% Cu and 72.7g/t Ag from 116m down hole. There was no previous drilling or outcrop at T3, which is interpreted from magnetic data to form part of a 25km long structural ‘dome’ (T3 Dome).

The T3 Project is currently the JVs most advanced prospect, following an intensive 6-month Phase 1 Resource Drilling Programme, it declared a JORC Complaint Mineral Resource Estimate on 26th September 2016.

The mineralisation at T3 consists of vein hosted and disseminated chalcopyrite, bornite and chalcocite within a 50-60m wide sequence of shallow dipping green siltstones and marl units (the ‘Target Sequence’).

The copper and silver mineralisation which is the basis for the T3 Phase One Mineral Resource is interpreted to be a Proterozoic or early Palaeozoic age, vein related sediment hosted deposit which is different to other known deposits and mines in the central Kalahari Copper Belt in Botswana.

The Mineral Resource has been defined along a 1.4km long strike length at T3 and the copper and silver sulphide mineralisation occurs in veins and disseminations within mudstone, siltstone, sandstone and marls as host rocks.

The resource occurs in sediments and veins, considered part of the D’Kar Formation. The footwall to the resource is generally defined by lower grade disseminated Pb and Zn mineralisation within the host rocks, still considered part of the D’Kar Formation.

The resource diamond drilling intersections to date are summarised in Figure 1 below.

Figure 1: T3 Resource Drilling Plan and Major Intersections

Note: The most recently reported intersections are denoted by the pink boxes. The white box is the RC ‘discovery hole’ which intersected the 52m @ 2.0 % Cu. The blue lines denote the course of the E-W strike (long) section (Fig. 2 and the perpendicular N-S cross section (Fig. 3).  These sections are also annotated with a selection of the recent results and the stratigraphic location of the Zone 1 (current T3 Resource), Zone 2 and Zone 3 copper mineralisation.

Figure 2: Interpreted T3 long section (inclined 60° South) showing Zone 2 below current T3 Resource (Zone 1)
Figure 3: Interpreted T3 cross section (looking east) showing Zone 2 below T3 Resource block model and planned pit outline.

The T3 Project is located approximately 70km NE of the T4 Prospect and is located parallel to the same structural trend known as the Mahumo Structural Corridor, that hosts MOD’s Mahumo Project (circa 20km NE of T3) and Cupric Capitals’ Banana Zone Deposit (60km NE) and Zone 5 Project (120km NE).

A continuing programme of regional exploration is running in tandem to the continuing T3 Resource drilling. Several new copper anomalies have been identified from an ongoing regional soil sampling programme being conducted over the regional exploration targets T2, T9 and T10, which are located to the north of the T3 Resource Programme area.

Kalahari Copper Belt

The Kalahari Copper Belt (“KCB”) in north-west Botswana (Fig. 4 below) is a relatively underexplored emerging copper province with a total of over 4Mt contained copper and 160Moz contained silver in current reported Mineral Resources. There are three major exploration and development projects in the area including MOD’s Mahumo deposit and Cupric Canyon Capital’s Zone 5 deposit.

The KCB stretches discontinuously for 800 km from central Namibia to northern Botswana. It consists of folded and greenschist metamorphosed metasedimentary rocks along the north-west edge of the Kalahari Craton. The Cu-Ag deposits occur in chemically reduced shales and siltstones that overlie oxidised sandstones with the distribution of mineralisation being structurally related. The mineralisation is typically predominately bornite, chalcocite, and chalcopyrite.

Botswana is not only attractive for its geological potential, being ranked 2nd in the Africa Investment Attractiveness Index, below Namibia (2014 Fraser Institute Annual Mining Survey).

botswana map2 fig2
Figure 4: Location of the Kalahari Copper Belt and JV Licences

JV Licence Details

On 10th November 2015, Metal Tiger and MOD Resources Ltd agreed a new Joint Venture (“JV”) to focus on the acquisition and development of highly prospective Copper-Silver interests in the Kalahari Copper Belt, Botswana. The new interests were to be acquired from the administrators of Discovery Metals Limited (“DMI”), which was placed into voluntary administration in February 2015.

Fourteen prospecting licences (“JV Licences”) with a total area of 6,374km2 in the central and western part of the Kalahari Copper Belt were obtained by the JV through the acquisition of Discovery Mines (Proprietary) Ltd (“DMI”) in a deal that completed on 16 December 2015. Formal approval for the transfer of 14 DMI prospecting licences, and associated licence extensions to 31 December 2016, was approved by the Minister for Minerals, Energy and Water Resources, Botswana, as announced 11 February 2016. Confirmation of the licence extensions enabled the JV to proceed to a planned drilling programme on 17 February 2016.  The licences have all since been reregistered in the name of Tshukudu Metals Botswana Ltd.

MTR owns a 30% interest in Tshukudu through its interest in Metal Capital Ltd and MOD owns the remaining 70%. In addition MTR currently (May 2017) holds a 4.59% stake in MOD giving MTR an effective 32.1% stake in the JV Licence package.

The 14 JV Licences are adjacent to MOD’s existing Mahumo Project and cover the prospective 100km long Mahumo Structural Corridor. The Mahumo Project deposit has a current (March 2015), resource of 2.7Mt @ 2.0% Cu and 50g/t Ag (2.5% CuEq). Importantly the JV Licences cover any possible extensions to the Mahumo Project both to the south and along strike.

The JV Licences and MOD holdings combined comprise 25 prospecting licences with a total area >10,000km2, making them the largest landholder in the Botswana Kalahari Copper Belt (Cupric Canyon Capital hold 3,995km2).

Neighbouring Properties

In addition to the MTR JV Licences, MOD has 100% holdings and various existing joint venture interests in 11 granted prospecting licences with a total area of approximately 4,187km2 in the central and western part of the KCB. MOD has been an active explorer in the area since 2011 and discovered the ‘Corner K Deposit’, now re-named Mahumo Cu-Ag Deposit in late 2011.

The Mahumo Cu-Ag Deposit was discovered by drilling a soil anomaly along the northern margin of a major structural zone (Mahumo Structural Corridor). The Stage One resource which is the basis for the Mahumo underground scoping study is currently the highest grade resource announced in the Botswana KCB and remains open below the limit of drilling along 2.4km strike length.

In November 2015 Cupric Canyon Capital announced results of a feasibility study for the potential development of an underground mine at their Zone 5 deposit. Zone 5 is located approximately 100km NE of Mahumo along the same interpreted structural contact as Mahumo. Currently reported resources at Zone 5 are 100.3Mt @ 1.95% Cu and 20g/t Ag (December 2015). Zone 5 is the most significant announced resource in the KCB and may demonstrate the wider potential of this relatively under-explored region.

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