After a false start with the Boseto open-pit mine of Discovery Metals, Botswana’s Kalahari Copperbelt – a ‘corridor’ of sediment-hosted copper/silver mineralisation extending south-west from Maun in Botswana through to the Namibian border and beyond – is on the brink of realising its early promise. Two mines – the T3 (Motheo) project of Tshukudu Metals Botswana and the Zone 5 project of Khoemacau Copper Mining – are on the immediate horizon and first production from both could be achieved by 2020.
A drill site at the T3 (Motheo) project (photo: MOD Resources).
The T3 project currently represents a joint venture (JV) between ASX-listed MOD Resources (70 %) and AIM-listed Metal Tiger (30 %) although the two companies have just announced an agreement which will see MOD acquiring Metal Tiger’s 30 % interest in T3, a move which is expected to streamline decision-making and enable accelerated financing and development of the project.
The two companies will continue to collaborate on the current JV’s exploration assets in the Kalahari Copperbelt which fall outside the T3 project although, as part of the agreement, MOD is provided with options to acquire Metal Tiger’s interests in any new discoveries that reach the scoping study level within three years, and an option to consolidate the remaining exploration assets three years after completion.
The T3 project is operated by the current JV’s in-country subsidiary, Tshukudu Metals Botswana. This will become wholly owned by MOD once the agreement referred to above is completed with the JV exploration assets outside the T3 project being transferred to a new JV company to be known as Tshukudu Exploration.
Progress on T3 has been rapid and it is now in the Feasibility Study (FS) stage, little more than two years after the initial discovery in March 2016, when an RC drill hole intersected 52 m at 2,0 % copper (Cu) and 32 g/t silver (Ag) from shallow depth.
There are currently between eight and ten drill rigs deployed on the Tshukudu tenements at any one time and, to speed up results, a sample preparation facility was commissioned in March this year in the town of Ghanzi, removing the requirement to export large volumes of drill core to Johannesburg for analysis. The facility has recently been processing over 100 samples per day.
In January this year, MOD announced the highly positive results of a Pre-Feasibility Study (PFS) on T3 outlining the potential for a low-cost, long-life, open-pit mine (although it should be mentioned that the deposit also has considerable underground potential).
The PFS presented two cases, with the nine-year Base Case being based on proved and probable ore reserves at a production rate of 2,5 Mt/a and the 12-year Expansion Case, with a 4 Mt/a production rate, on the reserves plus existing inferred, measured and indicated resources. The estimated average annual production of the Base Case would be 23 kt Cu and 690 koz Ag. These figures would rise to 28 kt and
903 koz if the Expansion Case were to be adopted.
The PFS estimated the capex for the Base Case mine at US$154,8 million and for the Expansion Case at US$191,6 million. Under either scenario, the economics are robust with the Base Case having an NPV (8 %, real, pre-tax) of US$281 million and a pre-tax IRR of 39 % with the equivalent figures for the Expansion Case being US$402 million and 38 %. The payback period for the Base Case is 2,7 years and for the Expansion Case 3,3 years.
In the Base Case the ore reserves would be mined from a single, four-stage open pit with a waste to ore ratio of 4,76 using conventional hydraulic excavators and rear dump trucks. It is envisaged that a contractor would be employed to undertake the mining under the technical and managerial direction of MOD. The processing route selected comprises a conventional SAG/ball mill and flotation circuit which would process run-of-mine (ROM) ore to produce a copper concentrate and tailings. Concentrate would be thickened, filtered and stockpiled prior to being loaded into 2 tonne bulk bags for storage and subsequent transport to third-party smelters.
The Expansion Case considers mining and processing at a rate of 2,5 Mt/a for the first three years as per the PFS Base Case. The process plant would then be upgraded to be able to process at a rate of 4,0 Mt/a during the fourth year. Mining would be from a single, five-stage open pit with a waste to ore ratio of 4,28. The optimised pit was modelled as per the Base Case except for the inclusion of inferred mineral resources and the reduction in processing costs due to grid power. Processing would be through the Base Case conventional SAG/ball mill and flotation circuit for the first three years. The process plant would then be upgraded – at an estimated capex of US$37 million – to process 4,0 Mt/a by the addition of a scats crushing circuit; rougher concentrate regrind mill; rougher flotation cells; concentrate storage tank; and a concentrate filter.
The likelihood that the Expansion Case will eventually be the model for project development was boosted earlier this month (July) when MOD announced a substantial 44 % increase in the total mineral resource at T3. The upgraded resource follows completion of a 90-hole programme of infill and extensional diamond core drilling around the planned pit at T3. Assuming a 0,4 % cut-off grade, the total revised resource tonnage now exceeds 60 Mt – with around 70 % in the indicated category – and contains approximately 590 kt of copper.
Commenting on the resource upgrade, MOD’s Managing Director, Julian Hanna, said that it provided “further confidence in the potential for significant discoveries that may exist in similar ‘buried domes’ within the T3 Dome complex where a major drilling campaign is underway.” One of these is the large A4 Dome, around 50 km to the south-west of T3, where the second hole to test the target sequence recently intersected visible copper mineralisation in veins within a zone extending up to 67 m downhole width.
Apart from the T3 project, MOD also has the T1 (Mahumo) underground project, in which it has a 100 % interest. Located 20 km to the north-east of T3, this was the original focus of the company’s activities in the Kalahari Copperbelt. The current resource (2,7 Mt at 2,0 % Cu and 50 g/t Ag) is relatively small but MOD is currently undertaking extension drilling, the objective being to delineate a resource of at least 10 Mt. It is envisaged that if T1 is developed as an underground mining operation, its ore could be processed at the proposed T3 plant.
Hanna and Kelemogile Tau, Exploration Manager for Tshukudu Metals, were among the speakers at the recent Botswana Resource Sector Conference (BRSC) in Gaborone. They indicated that the T3 Feasibility Study would be completed by the end of the first quarter of 2019 with a development decision to follow shortly thereafter.
Hanna said that with the ever-increasing scale of Tshukudu’s activities in the Kalahari Copperbelt, an accommodation village (Stage 1) was being built at Ghanzi (this was almost complete by the time of the BRSC), training programmes were underway to build the Tshukudu team and a permanent community relations office was operating full time in Ghanzi. He also said a substantial increase in employment was expected in 2019.
Tau explained Tshukudu’s exploration strategy. He said the company was targeting domes as copper – and other sediment-hosted deposits – commonly occurred in these structures and noted that the company had enjoyed great success using airborne EM technology, which had led to the identification of seven large conductive domes, several with similar characteristics to T3. He added that an exploration budget of 80 to 100 million Pula over 12 months had been approved and that an intensive exploration programme was currently underway.
While the T3 mine will be a substantial operation, the Zone 5 underground mine of Khoemacau Copper Mining – located more than 100 km to the north-east of T3 – will be bigger still and will involve a capex which is currently estimated at US$391 million, as Modern Mining explained in an article in last month’s issue. Its initial production will be 60 kt/a Cu and 2 Moz/a Ag. Early works are due to start in October this year with the full project release scheduled for Q1 2019 with the commencement of the boxcuts.
Khoemacau Copper Mining is the Botswanan subsidiary of US-based Cupric Canyon Capital. Cupric acquired the Khoemacau property in 2013. In 2015 it purchased the neighbouring Boseto property, including a new 3 Mt/a concentrator which was commissioned in 2012 by Australia’s Discovery Metals, and a Tailings Storage Facility (TSF). Discovery Metals mothballed the Boseto mine in late 2014.
Johannes Tsimako, Country Manager, Khoemacau Copper Mining, was also one of the speakers at the BRSC. He told the delegates that the first phase of development – the ‘Starter Project’ – would see the development of a 3,6 Mt/a mechanised underground mine at the Zone 5 deposit with the ore being trucked over a distance of 35 km (using 100-tonne trucks) to the Boseto concentrator for treatment. The concentrator will be upgraded to a capacity of 3,6 Mt/a to enable it to process all the ore produced by the Starter Project. Expected recoveries are 87,8 % (Cu) and plus 86 % (Ag).
The new mine – which will consist of three separate boxcuts and spiral decline systems, each able to produce 1,2 Mt/a – will use the sub-level open-stoping method with a planned conversion to backfill in the future. The orebody to be exploited dips approximately 60 deg south-west with an average thickness of 10 m. Mineable sulphides start at 100 m below surface.
Tsimako noted that considerable progress had been made on the project over the past year, with a new project leadership and execution team in place, Fluor appointed as the EPCM for the FEED phase, and the project substantially derisked.
Resources available to the project (including Zone 5 North which was discovered in 2016 and the Zeta NE deposit) total 185 Mt at 2 % Cu and 27 g/t Ag. Cupric, however, has extensive tenements in the Kalahari Copperbelt area extending over 4 000 km2 and total resources are estimated at 502 Mt at 1 % Cu and 17 g/t Ag.
According to Tsimako, the Starter Project is likely to be followed by further phases of development, with the first expansion being from 60 kt/a of copper to 100 kt/a, which would require a new plant to be built at Zone 5. Ultimately, he said, a yearly production of 180 kt/a plus of copper was possible based on current resources over the entire property area, including the Banana Zone located roughly 60 km south-west of Zone 5.
While MOD Resources and Cupric are by far the biggest players in the Kalahari Copperbelt, two other companies with tenements in the area are ASX-listed Kopore Metals and Kalahari Metals Limited (KML), a UK-registered explorer.
Kopore is a relative newcomer to the region but it has already built up an extensive landholding, with its two groups of tenements in Botswana being Ghanzi West (6 060 km2) and Seyetse (1 830,5 km2). It has also just announced the acquisition of eight contiguous exclusive prospecting licences (EPLs) covering 5 705 km2 in the Namibian extension of the Kalahari Copperbelt.
KML, for its part, is the holder of the Okavango and Ngami projects in Botswana which jointly cover 4 063 km2. Interestingly, Metal Tiger – MOD’s JV partner – announced in June this year an investment agreement which gives it the right to acquire up to 50 % of KML and, more recently, has announced that an exploration programme on the KML properties is in progress. This consists of airborne high-resolution magnetic and AEM surveys (which are being undertaken by New Resolution Geophysics) in the two project areas, with processed results expected in September this year.
Finally, what could be the long-term future of the Kalahari Copperbelt? All the players agree that it has the potential to support multiple mines and that it could become a significant copper mining district. It is highly unlikely that it will ever come even close to supporting the levels of production of the Central African Copperbelt of Zambia and the DRC but certainly an annual production of 200 000 to 300 000 tonnes plus of copper does not seem implausible in the long term, given the right copper price. If it does establish itself as a viable copper mining area, it will be very good news indeed for Botswana, a country which for too long has been reliant on its incredible – but now waning – diamond endowment.
Report by Arthur Tassell