Kavango Resources still optimistic in its hunt to discover the next Norilsk

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Suddenly, in the third week of September, shares in Kavango Resources PLC (LSE:KAV, OTC:KVGOF) shot up, recovering almost all the ground they’d lost since the end of July.


They are now trading at close to all-time highs, and indeed the only times they’ve been higher were at the peaks that began in June of this year.


Something’s afoot, and the market is just beginning to wake up to the fact that it could be very big indeed.


Two announcements so far this month have really served to underpin this optimism.


The first was that the company’s ongoing drilling at the KSZ project in Botswana has intersected what looks at first pass to be highly attractive rock at a depth of around 650 metres.


In mining terms that’s beginning to be deep, but what was more notable here was that the potentially mineralised rock that Kavango encountered was just where it thought it would be.


“It was our secondary target, but our internal estimate was that the Proterozoic was at 650 metres,” says Kavango’s chief executive Ben Turney, “and as it turned out we hit it bang on 651 metres.”


That’s as close to a bulls’ eye as you can get in exploration drilling, and apart from demonstrating that this particular campaign looks to be well thought out, it also has wider implications.


Because so far the Kavango model is working, and let’s not forget what it shows – that KSZ could be mineralised in the style of Norilsk, one of the world’s largest ever mining projects.


There’s a long way to go yet, of course. But so far so good – the company has been proceeding methodically with exploration and has yet to encounter any significant factor that might discount the model.


Indeed, the latest drill hole looks so promising that the company has decided to extend it to a depth of 1,000 metres, several hundred metres further than was originally planned.


The reasons are compelling: as the hole pushes on through the 800 metre mark it continues to intersect mafic and possibly ultramafic rocks, including visible chalcopyrite, which is copper sulphide.


In geospeak that means there’s a significant likelihood that the system is mineralised somewhere.


At the moment, all the company has to go on is a visual inspection of the core, but photographs of it are available for all to see on Kavango’s Twitter feed, and they do look compelling.


Assays are what’s required to turn the current spate of optimism into real knowledge, and these may take a little while to come in, given how busy the wider mining sector as a whole is at the moment.


It’s notable too that Kavango is undertaking two separate sets of assays, and is testing for a full suite of minerals, including precious metals, specifically the platinum group elements. What those results will show remain for now a matter of pure conjecture.


But if Norilsk really is a precedent or a model for KSZ, it’s worth remembering that as well as being one of the richest nickel deposits in the world, it’s also, outside of South Africa, one of the richest in platinum group metals.


So, what’s next?


Plenty, as it happens.


There’s the assays for one.


Then there’s a round of further downhole electromagnetic testing that Kavango will, geological conditions permitting, now be able to conduct from significant depths. The knowledge that that gleans can then be collated with the knowledge from this latest hole, and the model further refined.


In the meantime, the rig has been moved over to what’s known as Area B, around 20 kilometres away. Drilling commenced here on Monday night, into another area that surface and airborne surveys have shown to be highly prospective.


If that hole starts to look as promising as the current hole does right now, then the share price move we’ve witnessed over the past couple of weeks may start to look like just a first uptick.


Much remains to be proved. But the upside doesn’t come much better. If you’re looking for big game hunting, this is it.

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