Kavango Resour. Share Chat (KAV)

Bozi: The most important thing is to maximise returns for KAV and shareholders. Before KAV partners up with someone for large scale exploration, it is sensible to prove that there is something worth further investigation - that way you are ensured a better deal.
So stage 1 is to put 6 - 12 holes into the upper level B area targets & the lower IOCG. For this, you do a limited deal with your drilling & geophysics partners - all or part of their costs in exchange for shares. You then know if this is likely to be a viable project.
Stage 2 is a move to sell the whole project to a major, hopefully retaining a meaningful stub equity.

For gaining service partner buy-in for Stage 1, this study is adequate. For Stage 2, proof of mineralisation (drill core) is necessary. Without that, you would be lucky to get just a few £M. Giving away half or more in the sort of intermediate deal you suggest would not be a great idea. Take a look at what Bluejay (LSE:JAY) have done - they basically sold out 51% their huge Disko Greenland NiCuPGE project in exchange for Kobold doing just $15M of target definition & drilling. Had they put in a few $M themselves to prove up the targets they had previously identified, they could have got at least 10x that from a major. Bluejay are frequently criticised for having a poorly performing Board, and despite their interesting projects I would not invest in that company for that simple reason. I reckon that KAV are too smart to fall into the trap of taking cash too soon.

Keith - I don't see how Mindea and Spectral are viable partners. They are specialist companies that provide specific services.

By all means get them signed up to a commercial deal that betters the standard terms for drilling contracts and data analysis but a partner for me has to be another resource company and particularly one with a producing asset that is profitable.

Otherwise we end up with another POW situation where we're carving up assets in dodgy deals only to repurchase our stake a couple of years later.

The KSZ needs a mid tier producer that can deploy £5-10m across the KSZ concurrently to either validate or dispel KAVs findings to date.

The thing is, that report says to me that the IOCG target is barely worth pursuing.

Huge Capex is required. Over double the amount required by SolGold for their tier 1 copper porphyry deposit in Ecuador.

I've been banging this drum for over 12 months now but we must secure the KCB EMP and drill our most advanced targets there.

It's all well and good the company providing valuations and conceptual reports but the market is not impressed. It doesn't appreciate the attempt at being fluffed.

Move over to the project with the lowest technical risk. Hopefully deliver a significant discovery. Build the company on that asset.

It really is as simple as that.

This mornings report caught my eye, am I correct in thinking no holes have been drilled into this taget?

Thanks in advance

I suspect this report was not for investors, but to give an independent view for potential exploration partners such as Mindea & the geophysics teams.

https://www.proactiveinvestors.co.uk/companies/news/988145/kavango-resources-great-red-spot-viewed-favourably-by-consultant-988145.html

Yes I totally agree MH.
It's a useful assessment to determine if it should be drilled. That said the assumptions and inputs into the assessment are not massively meaningful i.e while it uses a structured method, assumptive models are clearly just that.

I had the same thought about viability and economics of they found the mineralisation above the IOCG also.
KAV are looking to see if they can hit two birds with one drill in their plans so will see. If they can't find this I'd rather the IOCG was drilled later stages and focus on the other areas / mineralisation. Then go for the IOCG perhaps after shallower drilling and exploration of that area.

Kav have so much to go at it's great and the upside potential here is staggering IMO.
As long as they stay grounded and methodical .

Atb

Drilling without any validation is madness. Providing a toolkit for assessing whether what you could find is economically recoverable is a sensible step that sets KAV apart from some other miners who'd press on as a vanity, then latterly find they didn't have a workable find.

Secondly provides a great marketing piece for potential buyers too. Remember KAV won't be finding $6bn - it's all about being to sell off a discovery.

The study is the right thing to have done... now on to the drilling!

I do not disagree Keith but why try to put numbers on it when literally all input variables are unknown - type of mineralization, grade, metallurgy, depth, even whether 'it' there or not
All of this is to find out by drilling - so when are we drilling????????

A couple of comments on this:

1. Personally I can’t get all that excited about an economic assessment of something that may or may not exist. However, the purpose is to check that, if it does exist, it’s worth pursuing. So I think the exercise is worthwhile.

2. Unsurprisingly, it seems like the major obstacle to getting this into production would be the capex. On that, seems to me it would be a massive boost to find Karoo sulphide deposits above the IOCG (eg B1), since you would then obviously mine those first, and then turn to the IOCG with a lot of the mining infrastructure already in place and a decent whack of overburden already dug away. You would then have, I think, significantly reduced capex attributable to the IOCG itself. If I’m right about this, finding an economic deposit at B1 (and/or B3, B4) would represent a “double win”

tk95 - One of the biggest attractions of Kavango is that they target their expenditure extremely cost-effectively, and make a habit of double-checking results with external expertise. This makes them a highly credible exploration outfit, unlike many others I can think of. It is eminently sensible to get an external independent opinion of the potential economic feasibility of a huge project of this nature. If the opinion came back negative, in that it would be very difficult to generate a return on a project this deep, then you would not waste money drilling there, but move on to another project with better returns.

Could I interest you Sir in something that conservatively provides an IRR of 17% and a NPV value of $3bn? Potentially 31% IRR. Potentially more still if you consider that $1600/oz gold or $7700/tonne copper for example is low balling?

Yours today for a market cap of £8m.

I do need to drill and prove it Sir but all the indictors say it's there. Results from three separate surveying techniques (gravity, magnetics and CSAMT) appear to correlate with one another, while the established presence of magnetite from Hole KSZDD001 provides a further physical exploration lead.

What do say Sir? Suits you Sir? Suits me, I can tell you :)

GLA

what is the purpose of an economic viability report when we don't even know if this thing is mineralized?
Just want them to drill instead of all these distractions

The two most important factors in these theoretical calculations are the capital costs of block caving at depth, and the Uranium concentration.

A capex of $4.5 - 6.0 Bn is clearly only for the largest of companies to consider, and they may not be overly impressed with a relatively low IRR - the 31% scenario is certainly worthwhile, but the 17% one does not allow for much margin of error.

Half the value from Olympic Dam is in the Uranium, and until KAV has stuck a few drillholes into the hoped-for mineralised zones, we don't know if there is any U at all. It would be interesting to know how these estimates of concentrations of Au, Ag, Cu & U were arrived at. I will have a read through the full report.

However, a potential NPV of $8 Bn is certainly an interesting possibility for an $8 M market cap company - a 1000x increase in value would be very welcome :-) Plus of course the Noril'sk & Copper Belt targets.

Ah yes, I see what you mean. I’m afraid I don’t have a feel for the timing really.

Interesting about putting PVC down ahead of DHEM. Seems possible it could help at KAV, although presumably if you drill with a metal casing you’d have to take the casing out before you could PVC in?

Hi Metalhead,
KAV need to issue a prospectus before they issue the shares to KAV for Kanye. I thought you might have an idea of the timescale that might be involved. I get the impression it could happen in about 2 weeks from first submitting a prospectus for review.

On a different topic SFR announcement today discussed grouting and PVC. I assume this is just done after drilling is complete to keep the hole open for DHEM - any idea? I don't think I've come across this before.
'The hole was successfully grouted, PVC was run for the full length of the hole and is now awaiting DHEM. All assay results from the sampling of the drill hole are pending. '

Sorry Ella, I’m not sure what you’re referring to?

Hi Metalhead,
Do you think KAV will get their prospectus issued next week?

100% metalhead.

Gosh, both of you at the same time! Getting a shorting attack today, are we?

2022 year of discovery... tick tock
Today exactly one year ago KSZ drilling started...

B*llocks

gingerbread - you will soon understand that it doesn’t take much at all to get Ben excited. He is a good ‘performer’ and cleverly uses ‘hints’, ‘buzz words’ and facial impressions to get people excited. Having added more shares around 6p I am quite shocked to pop in after a few weeks and see the share price so low

Hi Ginger, don’t think that’s brand new but rather a replay from earlier in the week. The cluster has already been the subject of an RNS. Completely agree about Ben being excited, and with good reason. In the KSZ, if we hit one massive sulphide deposit, there will be many more. 9000 square km to go at, huge geophysical anomalies. If we start hitting with the drill, it really is not going to take long for people to cotton on that we’re going to have not a mine but a mining district

Whoops, I meant to say they found a significant amount of hydrogen in their recent helium well.