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Botswana - Copper/Silver

Metal Tiger’s joint venture (JV) interest in Botswana currently centres on the high-grade copper and silver ‘T3 Project’ which is currently the subject of ongoing Prefeasibility Study (‘PFS’) work towards the development of an open-pit copper mine. 

Activities in Botswana are conducted under the JV's local operating company Tshukudu Metals Botswana (Pty) Ltd (‘Tshukudu’), which is held 30% Metal Tiger / 70% MOD Resources.

The PFS work programme commenced in early 2017, following the completion of the open-pit Scoping Study (released 6 December 2016), with the results of the PFS study expected by the end of 2017.

An updated and upgraded Mineral Resource Estimate for T3 was released on 24 August 2017. This incorporated the results of an infill and extensional drilling programme which was undertaken between the release of the maiden Mineral Resource Estimate in September 2016, and the end of Q1 2017.

Following the positive results of the upgraded Mineral Resource Estimate, a second phase of drilling (Phase 2 Drilling Programme) commenced in August 2017, with up to 70 diamond drill holes planned to test for potential extensions to the east and west of planned T3 open pit and to test the extent of the Zone 3 mineralised contact, located 300m below current T3 Resource. This Phase 2 drilling will also seek to delineate high grade copper intersections that have potential for underground mining down-dip from the planned open-pit.

Geophysical anomalies identified to the north and northeast of the T3 Resource by Induced Polarisation and/or Airborne Electromagnetic surveys will also be investigated during the Phase 2 drilling campaign.

In addition to the discovery at T3, reverse circulation (RC) drilling has confirmed significant copper mineralisation intersections at the 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.

T3 Scoping Study Highlights

The T3 Scoping Study is the first detailed study to be completed for the T3 Copper-Silver Project. It was undertaken to determine the potential viability of an open pit mine and sulphide flotation processing plant constructed onsite at T3 and to reach the decision to proceed to the PFS which commenced in early 2017.

The Scoping Study is equivalent to a Preliminary Economic Assessment (PEA), a low level technical and economic assessment that is not sufficient to support the estimation of ore reserves, further work is required before Ore Reserves can be defined 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:

  • 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.
    • 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.

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 scheduled to begin in 2019 with ore processing scheduled to commence later in 2019.

T3 Updated Mineral Resource Estimate

The T3 Project has a current (August 2017), JORC compliant Total (Measured, Indicated & Inferred) Mineral Resource Estimate comprising 36.0Mt @ 1.14% Cu & 12.8g/t Ag containing approximately 409kt copper and 14.8Moz silver (see Table 1 below).  This estimate is the first update since the Maiden Mineral Resource Estimate was released in September 2016.

The current Resource constitutes a 27% increase in Total Resource tonnes and a 16% increase in contained copper compared with the maiden Resource (at 0.5% Cu cut-off grade).

A quarter of the Total Resource tonnes are in the Measured Resource category (8.9Mt @ 1.27% Cu & 12.5g/t Ag), denoting a high degree of Resource confidence (at 0.5% Cu cut-off grade).

At a higher 1.0% Cu cut-off grade the upgraded total Mineral Resource Estimate comprises 20.6Mt at average grades of 1.43% Cu and 14.7g/t Ag.

The revised Resource model shows good grade continuity with horizontal widths of >1% Cu mineralisation up to 180m across the planned open-pit design.

Table 1: T3 Updated Mineral Resource Estimate (24 August 2017)

JORC Category Cut-off
Cu%
Tonnes
(million)
Grade
Cu%
Grade
Ag g/t
Contained
Cu (Kt)
Contained
Ag (Moz)
Dated: 24/08/2017
Measured
0.5
1
1.5
8.954
6.548
2.179
1.27
1.45
1.90
12.50
13.58
17.91
113.45
94.62
41.49
3.60
2.86
1.25
Indicated
0.5
1
1.5
11.202
7.240
2.200
1.19
1.42
1.89
12.50
14.07
18.07
133.43
102.52
41.62
4.50
3.28
1.28
Inferred
0.5
1
1.5
15.810
6.786
2.108
1.03
1.42
1.91
13.09
16.59
20.66
162.04
96.09
40.16
6.65
3.62
1.40
TOTAL

0.5
1
1.5
35.966
20.574
6.487
1.14
1.43
1.90
12.79
14.73
18.84
408.93
293.18
123.25
14.79
9.74
3.93

Note: rounding errors may be present.

Source: Mr A.I. Pretorius, MSc. Pri.Sci.Nat (Competent Person). The Mineral Resource estimation and classification of the T3 Copper/Silver Project was conducted and approved by Mr A.I. Pretorius, MSc. Pri.Sci.Nat.  Mr Pretorius is an independent consultant to MOD Resources Ltd and a member of the South African Council for Scientific Professionals (SACNASP Membership Number 400060/91).  Mr Pretorius has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

In addition to the revised Mineral Resource Estimate in Table 1, an additional, largely Inferred, low-grade Resource has been estimated using a cut-off of 0.25% Cu. Depending on the outcome of a future Ore Reserve Estimate (to be undertaken as part of the PFS), some of this low-grade Resource may be economic to process in which case it would be stockpiled separately for use as low-grade feedstock during or at the end of any future mining of T3.

Table 2: T3 Updated Mineral Resource Estimate – Low-Grade (0.25% Cu Cut-off)
(24 August 2017)

JORC Category Cut-off
Cu%
Tonnes
(million)
Grade
Cu%
Grade
Ag g/t
Contained
Cu (Kt)
Contained
Ag (Moz)
Dated: 24/08/2017
Measured
Indicated
Inferred
0.25
0.25
0.25
1.340
2.964
9.825
0.34
0.33
0.34
5.52
4.54
4.99
4.57
9.90
33.21
0.24
0.43
1.58
TOTAL 0.25 14.129 0.34 4.95 47.61 2.25

Note: rounding errors may be present.

Source: Mr A.I. Pretorius, MSc. Pri.Sci.Nat (Competent Person).

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 >1km long strike length and the copper and silver sulphide mineralisation occurs in veins and disseminations within host rocks that include mudstone, siltstone, sandstone and marl units considered part of the D’Kar Formation.  The footwall to the copper/silver Resource is generally defined by low-grade disseminated lead and zinc mineralisation within sediments also considered part of the D’Kar Formation.  

Mineralisation is very continuous and is dominated by mainly chalcopyrite with chalcocite and bornite copper sulphides occurring in lesser amounts.  Mineralisation extends from shallow depth (~35m depth) to the limit of drilling to date at ~480m vertical depth.  Minor malachite and chrysocolla oxide mineralisation occurs near surface between approximately 25-50m depth.

The T3 mineralisation type can be described as a sheeted vein deposit dipping at 20-30 degrees to the north with varying widths of disseminated mineralisation around the veins.  The deposit may represent multiple stacked, mineralised veins and units, thrusted one upon the other. 

This interpretation opens potential for resource extensions along strike east and west, as well as at depth and down dip.  This potential is being tested in the current drilling programme.

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 (see Figures 1 & 2 below). 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.

Figure 1: Plan view of current T3 pit design and revised block model showing copper grades for a slice through centre of Resource (1000m RL) along ~1,100m length.  (Note: >1.0% Cu extends up to ~180m horizontal width).  Plan also shows previously completed drill holes (Phase 1) and current drilling program (Phase 2).  Source MOD Resources, 24 August 2017.

Figure 2: Interpreted T3 cross section (looking east) showing Zone 2 below T3 Resource block model and planned pit outline. Adapted from MOD Resources, 30 March 2017.

Regional Exploration

Airborne Geophysics

A high-resolution Airborne Electromagnetic (AEM) geophysics survey was flown over a 50km strike of the T3 Dome, in June 2017.  This was flown to help fast track exploration for potential 'T3 type' vein hosted and 'structural contact type' copper/silver deposits, along the highly prospective and largely unexplored T3 Dome structure. The data interpretation was undertaken by Botswana based consultants Spectral Geophysics, with the helicopter survey flown by New Resolution Geophysics (NRG) of South Africa.

Spectral Geophysics have identified 19 geophysical anomalies (Figure 3) as potential exploration targets, which have been initially ranked A1 - A19 based on the geophysical characteristics of each anomaly in association with its interpreted geological setting, with further classification based on an approximate depth (shallow / mid-depth / deep) of the potential conductive source. Tshukudu's geological team is prioritising targets and preparing a drilling programme to test selected anomalies.

Figure 3: Airborne EM image of T3 Dome (channel 21) showing location of EM anomalies (A1-A19). The EM anomaly associated with the T3 deposit appears within the proposed T3 Pit (outlined in white). Source: MOD Resources 21 July 2017.

T20 Dome

The T20 Dome is 100km west of the T3 Dome, both are located within the same structural corridor (‘Central Structural Corridor’) as interpreted from magnetic geophysics survey data (see Figure 4). It is noteworthy that the T20 Dome also has extensive surface calcrete deposits, similar to the T3 Dome.  

The T20 Dome is subject to an ongoing soil sampling programme.  The initial 6km line spaced survey has outlined five potentially significant surface copper (and zinc) anomalies (see Figure 5) to date (peak copper at 23ppm, 22ppm, 18ppm, 17ppm & 16ppm respectively and peak zinc at 45ppm Zn). At least two of the five anomalies coincide with regional ENE trending structures interpreted from magnetics.  Follow up infill soil sampling traverses have been conducted around each of the anomalies to help constrain targets for follow-up drill testing in due course.

The T20 Dome soil sampling programme is also being extended to the east and north of Ghanzi to overlap the existing soil anomalies at T4 and T22.

The geology of the T20 Dome is interpreted to consist shallow dipping sediments including the prospective D’Kar Formation and Ngwako Pan Formation contact which hosts the large structurally related copper deposits in the eastern part of the Kalahari Copper Belt.

To date no drilling has been conducted at T20.

Figure 4: Kalahari Copper Belt showing the location of copper soil geochemistry and Airborne Electromagnetic (AEM) geophysics survey anomalies along the Central Structural Corridor consisting the T20 Dome and T3 Dome.

Figure 5:  Regional magnetic image extending ~100km from T20 Dome to T3 Dome.  Shows anomalous copper soil values at T20 Dome and the T3 soil anomaly on top RHS of plan.  Source: MOD Resources 20 June 2017

T2 Prospect

The T2 Prospect is located 20km north of the T3 Resource Area (See Figure 4), 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).

Joint Venture & Project History

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.

Metal Tiger owns its 30% interest in Tshukudu through its interest in Metal Capital Ltd and MOD owns the remaining 70%. In addition, Metal Tiger currently (1 September 2017) holds a 5.049% stake in MOD, giving an effective 35% stake in the JV Licence package.

The initial 14 JV Licences are adjacent to MOD’s existing Mahumo Project (T1) and cover the prospective 100km long Mahumo Structural Corridor. The Mahumo Project deposit has a (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.

Tshukudu has a focussed strategy of identifying potential new copper deposits not historically drilled before by previous owners, by targeting regional scale structures identified from regional geophysics, with relatively low cost, soil sampling grids and reverse circulation (“RC”) drilling.

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 (See Figure 4).

The Target 3 (T3) Prospect (now the T3 Project) 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).

Kalahari Copper Belt

The Kalahari Copper Belt (“KCB”) in north-west Botswana (See Figure6 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 (T1) 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. The geological setting and mineralisation is similar to Kamoa in the DRC.

As well as being attractive for its geological potential, Botswana was also ranked 2nd in the Africa Investment Attractiveness Index, below Namibia (2014 Fraser Institute Annual Mining Survey).

Figure 6: Location of the Kalahari Copper Belt and JV Licences

Neighbouring Properties

In addition to the 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 (T1) 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 (Cupric) 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.

Cupric’s Botswana subsidiary, Khoemacau, is developing the Starter Project at its Khoemacau copper/silver project in the Kalahari Copper Belt of northwest Botswana. The Starter Project involves the development of a new large scale mechanised underground mine at the Company’s flagship Zone 5 deposit. Ore will be treated at the existing Boseto process plant which is located 35 kilometres to the northwest. This Starter Project will produce 50,000 tonnes of copper and 1.4 million ounces of silver in concentrate per annum, with unit costs in the first quartile of the global production cost curve. The Company’s medium-term development strategy envisages that the Expansion Phase on Zone 5, along with development of other resources nearby, would increase production to over 100,000 tonnes per annum of copper in concentrate. The Company controls 4,040 square kilometres of mining and prospecting licenses which host total mineral resources in excess of 6.5 million tonnes of copper.

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